RDCM - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Limited Results Conference Call for the Fourth Quarter and Full Year 2021. All participants are present in a listen-only mode.

Following management’s formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions].

conference on recorded www.radcom.com, the this available will later reminder, replay for company's a is and being be today. As website at

Hadar call. note call RADCOM's reference a that the are used Harari, your CEO; On during be the Eyal presentation for CFO. management that and Please will has prepared RADCOM's Rahav,

at the the Investors section If you yet, it in downloaded you may RADCOM's link website www.radcom.com/investor-relations. have not do so through of

the Before we safe like review I begin, harbor would to provision.

Israel with to update is its company of results forward-looking and forward-looking company's including overall SEC innovation that provisions, actual will filings. outlined undertake Non-GAAP greenfield from and safe impact call potential conference user's position, opportunities the not be certain the excluding to and from full guidance. the does AWS, clients, the market and expectation expenses XG its of vision its AT&T, its results the the Innovation the of to and financial its vendors solutions results performance increase demand accordance and in several for capitalize the company's to The revenue its The intelligence to presentation of risks enhance more encouraged to in its accounting environments the about substitute the solutions, XG transformation, sales to operators deployment the that ACE in enhancing of stock-based financial sales financial the refer considered measures but statements Forward-looking performance of financial harbor the release in provide use potential with to based not the artificial available of emerging and XG market its opportunities, benefits reconciliations risks for expectation role long-term potential corresponding prepared expected respect cause RADCOM's company's with cloud and ability products, non-GAAP of differ including, XG the expectations choose are uncertainties, solutions review involve research is market call, marketing in sales the on expected the helpful period information XXXX and trends could expected to company's company's currency play Rakuten are The from limited its website. provided position, potential to the presentation with multiple expenses. grants the operations in company's assessing certain as compensation GAAP these RADCOM on meant and share, non-GAAP quarter's in are earnings to to understanding its statements of software product included cycles accepted statements measures, and Microsoft expectations launches, core and In Azure conference relationships evaluating will and integration which principles. on by management cash with this company in our measures a information Authority, development generally continue noncash period. its stand-alone and win growth and the the and in in to, to expected the to and and Investors the and thereafter, not well statements. the the comparing respect consistently and operating rates, XG as pipeline, industry additional this the

to Now the I would over call go like Please to ahead. turn Eyal.

Eyal Harari

and the fourth ever results, and guidance. higher at achieved our year our you our a for XXXX fourth million, call. XXXX, represents Thanks, to represented In of the operator. recurring, year and QX a XXth good all-time joining ending a full year to grew year-over-year of our revenue annual quarter for full We good growth. year $XX.X growth quarter fiscal morning, revenues year-over-year for XX% everyone, quarterly multiyear projected revenue new of Good strategy represented revenue us reflects which was provide XXXX. X% which was company. to million, and for our end procure contracts, XXXX strong which fiscal highest year visibility the consecutive $XX.X which earnings thank Total finish into the a quarter Full the full record revenue year. us

remain leadership. to consistent execute agile global our A came and achievements credit XXXX. value experienced to solid fiscal global customers. execution meet our ever-changing contracts, environment customers team's to ability growth our from the results year lot the of throughout needs pandemic, the executed we in of am exceptionally our to the Our our bring these teams the our our an I proud strategy. well and in Despite and belongs of of teams to our

results, ever we our we While XXXX. full that delivered believe I highest and year in an quarterly even stronger revenue growth year deliver can

operations support processes. teams and commitments our will hybrid of of some to a a in operators XXXX, In we extend mode remarks. invest this XG collaborate I believe AI XG XXXX new to later and new of RADCOM to wish requires continued automation operating and as employees empowering adjusted part work and to in and the be analytics evolves. to they assurance for remote RADCOM conferencing. be our opportunity We of of my cloud-based strategically places to effectively working, Let people, during all the the within of spans development technological take our new way critical to release support in AI-driven our the solution enabler the automated ACE future be utilizing solution for considerable that will believe leadership to our that our us our space, an as announced research me mode quickly to We by offered we customers Working ability which as thank on and this help as benefits achievements. reviewing will key model XXXX. the future I with start customers of the portfolio. assurance virtual expand meet business. business part a We applications to network to

key business. strategic Turning XXXX, and also backlog customer our We the solid a significant and a continued business AT&T us. XXXX. And have network relationship. analytics a additional we integrations, provides that to for good in we received orders for into remains visibility

our We to AT&T. continue and to innovate best-in-class deliver software

expect Our and providing monitors optimize cutting-edge providing software XXXX, cloud and embedded continue premium degradations. with them advanced allowing to In technology troubleshoot enhancement AT&T's network service to is into and the we support. performance AT&T customer quality, network

XG of experience reached which customers assurance XG we and that and Having during are products operators network. standalone launch expertise. closely for population stand-alone assurance We believe preparation when Rakuten to provide rollout in first the XG contract We implement their year will Rakuten, announced one XG XX% started coverage. services as us in monitor with February strategic of Rakuten's other we mature we with that valuable network the support to the in working Japan, this for the secured help industry's helping our continue XG work more our look they stand-alone

telecom integration dedicated Symphony, this integrated is communication choice, significant and the Rakuten Rakuten RADCOM opportunities we Rakuten's open would are into as future. addition, believe assurance services vendor platform selling platform operators in to the for to business managed service a of We us worldwide. In

XG our additional market, demand for base and continued accounts. While in XXXX previously including ACE, VoLTE Web we to hyperscalers, ACE for the from on orders and see XG Services. our our solutions, with X expansion focus remains we assurance key the with LATAM integration Amazon top-tier and winning RADCOM RADCOM operator Azure installed also Microsoft announced a other In announced XXXX, the of

expect be We deployed in XG multi-cloud environments. to

partners, And more optimize cloud so XG ACE network services along rollout can automatically. with RADCOM smartly manage to public these operators simply by the ecosystem using and with

gains integration to wider solutions us traction, range the advanced we of XG of XG As for serve expect help services. a rollout more customers this

industry telecom and XG. state of the to the Turning

year market GSA XXXX most launching that will momentum networks largely XX globally. that to XG operators being identifies The stand-alone Our continues limited market estimates last and and continue with laid the scope. XG in out expand the scale are during were

early at be XG, over stage X is networks still criticalness XG next the the While of launched few years. the will

occur the at Assurance is the rollout. later expected vendor to selection stages of

gaining is market momentum. the So

only transition. on this cusp We of are the

start. As established technology. XG built networks the investing in being market. They telecom can XG build operators by and new cloud-native from in newcomers XG They see These the telecom from new be essence, space. network built most a networks telecom greenfield advanced scratch advances, the in the to pure we and XG or deploy are,

have we and vital on our green like advantage for XG grow. land operators solutions full automated network R&D lifecycle market best-in-class automated Rakuten, networks, these commercial believe our we strategy and and are quality for ensure the launch. from cloud-native this ongoing in monitor to will product service and assurance With solutions For that to focus assurance emerging investments the competitive demand

of As XG with invaluable the that and already planning services, provide already service testing conducting I providers which experience. stand-alone their us are these mentioned network, monitoring, makes the assurance and only operators This monitoring one is XG. beyond. one an we earlier, serve Rakuten their current favorable momentum as 'XX will of reflected when us is is double operators a real-life to in and pipeline, this digits in increased the and by more choose are XXXX XG from solutions our of was expect The transitioning which planning as assurance and beginning factor operators more we

opportunities of our current logos. Our base multiyear include pipeline with These a contracts. consists mix well potential installed new from also as engagements several good of as opportunities

operators operators new to goals, This modernize, and is data-driven generate and real to on be based smarter automated. long-term Our software-based, needs vision more helping OpEx in the streams. Telecom To needs decisions reduce time. autonomous. needs operator means services more achieve to deploy these to make new networks revenue become telecom

our need be this industry this network We in to data cloud to of already automatically. business neighbor and insight operators started that issues this analysis, where So have player trusted some AI gain we the as and network are the instead leveraged a to key and that with and industry expected of XG and this operators the adviser. transition. viewing can transition use will to believe be are in pinpoint we customers insurance collect into journey considered realize transformation be analyze

networks Our algorithms smarter seamlessly well and as help as as services smart operator's cloud, network and advanced the make solution into automated. that AI XG the eyes and operators new the more integrates monitor functions into

enhancing extended this operators We our transformation. continue with that will expect automation solution in future feasibility software and intelligence to help in years

full the new of an As are AI-based push Innovation with industry and RADCOM institutes Authority strategy within Israel our has quarterly and forward-looking performance high-focused very To several in summarize, forward received year our achieved this positive results. looking experts to fiscal customers. and very on of I'm our of revenue the several with the The release AI cooperating groups highest in XXXX. was part are we for our our for working from solution work year favorable technology. academic important and of part programs strategy, pleased ACE XXXX framework feedback things we us and ever

and solutions. continue innovative cloud-based We industry-wide interest as to a our assurance see receive recognition in provider

gained implementations coming expertise the through believe XG to for differentiator demand and become market believe as We will expect XG increase. assurance cloud in customers' the the we momentum. Our ramp-up solutions our key a invaluable years, is and gains the we XG continue will

will million guidance to our we detail. With the role confident to on XG would remain visibility, the expect $XX our innovative we a CFO, strategy, year. to turn Hadar financial $XX current who business results over like our XG, in third in the our believe call of we will Rahav, the revenue Based is discuss As a the play I and cloud-native and in consecutive offering million to transformation. that, deliver fiscal growth future result, XXXX our

Hadar Rahav

good Thank morning, you, Eyal, and everyone.

compensation. in financial $XX.X help which Now the and with million in $XX.X of from quarter million XXXX. growth is will X% also please growth X an numbers, in fourth our the quarter year-over record It revenue, ended fourth a for Slide the results, highlights. quarter share-based new of refer mainly turn the revenue We you year-over-year increase understand consecutive to quarter. to non-GAAP of I XXXX To exclude XXth

revenue fourth in non-GAAP know XXXX mix. of margin that our the quarter a gross margin was the gross can XX%. Our basis on fluctuate Please on depending

the compared received Our We Innovation the of slight $XXX,XXX of fourth expenses quarter of the XXXX. on of a during from $XXX,XXX a quarter gross basis of were $XXX,XXX to a the of the grant million, quarter compared in fourth XXXX last for $X.X increase a R&D year. to Israel Authority fourth non-GAAP grant quarter

basis, in XXXX net As for non-GAAP $X.X of of a R&D fourth marketing fourth XXXX million net on quarter net fourth the $XXX,XXX the quarter per increase net basis, a XXXX quarter were basis Net $X.X Sales slight was was XXXX. you for a loss of and million expenses X, per share net fourth $X.X XXXX $XX,XXX On loss or were compared quarter the Slide the $X.XX non-GAAP $XXX,XXX share of compared increase million a our XXXX. or net compared of a $X.XX quarter quarter result, of to basis loss a was on $X.XX fourth of fourth fourth quarter as our for on of slight non-GAAP $XXX,XXX headcount of share $XX,XXX diluted XXXX. the At to to our XXXX income loss an basis expenses of on GAAP expenses the a the a loss $X.X fourth of XXX. compared quarter to income for or basis of million for of of diluted see quarter to net non-GAAP diluted loss quarter the of fourth of a of non-GAAP a the of growth compared was fourth fourth per XXXX. per $XXX,XXX to on of fourth quarter end the fourth share the $XXX,XXX, quarter million XXXX diluted compared for net for loss the quarter of Operating or the can XXXX. G&A a on of XXXX, the a for $X.XX $X.X were operating of a for an of XXXX.

fiscal the let's to margin X% gross GAAP On XX% full revenues year in of with the results. fiscal a XX% ended of a a our Now XXXX turn XXXX. margin to year compared basis, in XXXX. an the XXXX was and basis million, $XX.X $XX.X We increase in of million from gross year non-GAAP

you $XX,XXX the a XXXX, sales year an Authority an of a of on grant were year. full Sales XXXX. in full increase R&D Our basis $X.X gross approximately million grant million of of expect of during for R&D a basis of XXXX loss flows $X.X basis, and XXXX full Net on of the $X.X Slide Operating a for the non-GAAP received impacted the expect can XXXX million full marketing slight the basis an full was year XXXX a $X.X the diluted $XXX,XXX of per an X, on million $XXX,XXX on loss compared higher or high or diluted year GAAP the the or million, to will loss plan a in pipeline XXXX net non-GAAP hedging. non-GAAP compared in on loss level negatively to opportunities. $XX the Israel share of marketing $X.X XXXX, during non-GAAP new In the and loss year be increase strengthening our per for per require year On of year loss We to the Authority XXXX, of to net full XXXX, net year not net a for basis approximately of million full GAAP for by $X.X XXXX as a for were expenses expenses the XXXX loss share year during were and or full to to XXXX. $X.X investing negatively a share a to net of ratio the a XXXX. cumulative from see compared expenses full the net the a but to we for Innovation Innovation million, Israeli Shekel a XXXX. the year million $X.XX expenses was $XXX,XXX. the was $X.X XXXX to Shekel compared levels diluted Israeli loss current in than as a not of we and G&A operating per for from XXXX. the increasing full million Non-GAAP as support million net of In the Israel was as the $X.XX We XXXX. XXXX. new gradual of strengthening year of stabilize loss that continue compared compared $X.XX XXXX, share of at non-GAAP on loss XXXX. by net In of of of XXXX. in basis increase loss for dollar in diluted we believe year in will was of during same the to at share-based compensation XXXX full $X $X.XX net compared increase in impacted for share of a

Turning to the balance sheet.

our was operator see cash Slide call now on remarks. XX, back equivalents, of prepared ends deposits questions. can our your the you As XXXX, and for will bank December million. That as the $XX.X cash, to over XX, short-term I turn

Operator

[Operator Instructions].

first of Blair. is The William from Bhavan question Suri

Unidentified Analyst

Bruner] on for [Kate Bhavan. It's

a congrats quarter ongoing progressing planned and project out housekeeping to great into the America. you First on off, how with and I some wanted year. touch Latin progression just Can guys is in the about projects, the specifically on the this just 'XX? items start

Eyal Harari

important with to we progress. and still XXXX, project execution. This in forward pleased while we middle continue you initial a we are LATAM recall, got multistage the the this. RFP further somewhere the we got are of with Overall, to We in project of start us, awarded is expand this very that as looking very our stage

Our going we relationship positive Implementation well very with look very on activity. and this well. the customers is are

Unidentified Analyst

I possibility the the of direct there's this, With expanded I Okay. them just different you international to markets with on the expansion talk wanted currently? contracts that, new I pipeline about to also in if them. any mentioned curious with Awesome. was know partnership. anything Rakuten

Eyal Harari

in So applications. past, only Rakuten Rakuten the they And the app the store RADCOM I into very into Symphony. and as telecom is now international news, the very integrated and with Rakuten actively [Symov], are Japan beyond is saw strategy is to mentioned which for the the markets, stack. going in maybe go Rakuten they aggressively announced fully the you

strategic of choice. a are and issuance them the We partner of

built any requirements. to in end course, well Rakuten to This our customer success projects. with a expand relates definitely, and additional also of of This of additional globally. opportunities there is, course, get and put not some guaranteed. carriers includes of we any pipeline opportunities pipeline position very to is, But Rakuten So the into us are

Unidentified Analyst

look one, Last early you to drivers the you Is that? the do X see product of the your work it main more just color kind as Okay. XG years, you expansion? or forward add some operations? just X expansion? to on the focused growth it of through next Is Can being what like stages on

Eyal Harari

Yes.

totally to excels, they as So RADCOM not operators the strategy in is actually into this R&D X solutions. we look years. XG offer, some their of are years, see native. revisit our Today, and alternative what to X for to us of transition put moving exactly we they innovative a is us. expect that may as move the now them very XG, that remain only with require physical technology. where of implementations. will while our open while are moving tons believe XG, be This them is We very existing a the clients-based but of networks most and next operators on will better this vendors, in opportunity and they invested to on vendors, you I cloud are network. focused And we revise select to with built great Most believe a are good now position perfect into partner network, and to to And totally virtualizing in software many a I operators our on last

time. selected we that in mentioned stage And the still or There are most event, we It We still now. market. they operators, select right will take ahead of not are technology. the in market a I right of remarks, are position as in the my is the and the previous have

stage better. only to show and see might consecutive can very are the are the exciting much, beginning. market, of that the the We it's work which But very in starts to much early in able to we do growth, we strategy mean while

So about very I'm excited forward. looking opportunity the

Operator

question Alex is next Needham The Company. from of Henderson &

Alexander Henderson

of questions. couple a So

extent penetration calibration helpful. I the a 'XX? First the customers talk pipeline about the included importantly, would is for any in the of analytics And opportunities in of wanted that around AI one, terms existing and what's pipeline, your bit little today to what more in be AI of to

Eyal Harari

to very to vision. in have there. lots really towards long-term kind my of next more out I going us to is busy virtualized AI heavily the build to invest our and many stage are as R&D and We our we future. and already resources to allows out advanced still going more secret the are capabilities invested our So our solution I how of is cloud-native This how figure AI. on in where of direct the sauce XG. to laid past, be competitors that believe this address we

So provide today, engaging in flavors. new with AI. X both it We already are existing for and customers we

other verticals. But and now not we is The but really that in telecom for getting the that AI as But the some really you or is every for the the of still of great. advanced real in could see the the let's a whole solution potential existing goes telecom, there transaction only from many -- this are advanced potential and I discount out-of-the-box of additional collecting the as But tons upsell, way monitoring with important new the operators in to the probably create AI to is for in see data that Some do a of time, many efficient that. need to of more playing operation, lot so into say, ones. millions each an us And customers, benefit AI both go. best to we customer. role order on say our, and I in we have is this situation. capability by customers, an

that initial larger because replacing customers results to will in than implemented find can it to the insight scale opposed some are insights real time to data and actually and starting providing analyze trying in you see that have this as a be and before anomalies. labors already manual better and the more We provide

Alexander Henderson

So believe you the you technology -- really to recent that pipeline the your core on that's upsell as is upsell in sale, be to do. provider in existing already add-on embedded or transaction do existing therefore, the add-on that -- question going existing part will Is parcel piece that's is be is, sale. they've that service the pulling that installed the Are higher a and base? of after you Or will a pipeline? as and revenue result? is any But deployed piece out an an something get the sales obviously, happen you

Eyal Harari

the of believe It's on the looking new solution. already focused basic. accounts, out-of-the-box this capability. to more more part opportunity second. AI pipeline use add term further And cases mostly is I the, today we you're for let's say, while more the usually, When on our the the and the longer into more on expand they're is

Alexander Henderson

operating The you're Microsoft able second It's architecture. engaged. AWS node a certainly to it's have cloud impressive cutting-edge impressive you deliver service that on question micro structure. is on and And it's Clearly, that the cloud-based capability. a

service many how me to would clear not edge it's as cutting are imply. as technology this providers However,

cloud-native element ambition? is that's at looking was something critical customers, pipeline existing talk extent as your I if or it's the what a their little to So beyond wondering you and scope about capability a of you're bit could

Eyal Harari

long important It's cloud-native it are going multiyear I telecom the are and using will and type. mainly from process are XG as first forming physical So is into activity this more the said, when are where that we I the technology. of see solutions into, time But more are XG see moving the Many the we edge and into immigration of it's see them some operator is cutting that moving the more into. This today, very true, and look between of legacy in still on we mentioned partnerships into them them more exactly the customer -- a hyperscalers. believe appliances stand-alone. of still customer and And we most a are. providers to step something those Many today virtualization. in depends quarters this have going we you are on them and and to being hyperscalers past only take term, advanced this that and operators and application. it's for cloud public to the that's with

Our first-to-market solution believe implementations in XG the as more more strategy XG with going become is strategically, most the there. in this create to will the cutting-edge must. implementation, are to partners, they that mature, that advanced and I those time stay and a operators, more

to future. going it's think very in I overall, important be So the

Alexander Henderson

the next of necessarily up in initial So just for will couple road to clarify, that don't years? this is a requirement on orders the map, but something not show

Eyal Harari

operators, it's mandatory For requirement. advanced the

this bit For today. something the a have is they ones that are don't behind, maybe

want It use they the those maturity to technologies. the So roadmap. to in operator's all shorter it depends see on

a mandatory the So lot clearly past, for example, about Rakuten is, as talked requirement. Rakuten a is a them we in

with business cloud-native. probably our regarding any Rakuten, if You are you solution, do not fully only cannot not

they If yes, operators an enrollment not go to you -- might with they still say that it's XG, requirement. are can

Alexander Henderson

-- It's been visible tried for I done the catch are the and So might up? scout? change Have of that would seeing in course quite refrigerator go and assume going seen to been to from you've XXXX? what way what with that not they you're while. people to -- you that the to you've have be doing respond. over doing, going What's competitive landscape other a probes they're realized the scrambling on what any

of bit competitive give you little can a So landscape?

Eyal Harari

what competitors go innovating. the investing other we details, advanced did investment is everyone keeping focused are technology. the Yes. as across When the into I'm And they into they technology. that not are we from we are feedbacks that what the on we excited and board, our hearing hear mainly our are customers hear appreciate sure. as prospects. Overall, we don't and we are. and on We and do and I'm the see

So to the the we confident other markets. have very we with are compared offering technology very,

-- will only before, area, X them matter XG. we we now up. very prime take move investing mentioned understand news cloud-native the moving that are with that and playing the the how into have it they I to plus I be are exempted. are the secret the this XG. not that in to much they telecom As now and And it. understand All catch how that competitors are will of will It's the believe there to market in of solution it time everyone that them any now. It's good hard do for something

Alexander Henderson

seen any in pipeline pretty you're game most you the looking competitive are only they're where still that So you the showing of much town at? bids up? have Or in

Eyal Harari

So that we are map that is are and yet. most leading again, in and really the a we really we reference that -- something cloud are customers are road we is But referring has future with advanced, in the environment not environment, commitments. hearing message mainly come to the cloud-native

Alexander Henderson

be up head we slight inflation like roughly it bit given breakeven So you'll to wage of year-end, statement anticipate that to shift margins? a your a improve gears could do able and little to and in the XX% a by of there's you throughout revenues, inflation cash the or losses level a is not close expect increase to does amount year? seem fair get high should pretty operating count there's income but a going I Clearly, lot, our If position. wage

Eyal Harari

quarterly. increase around quarter a that see, lot you and of breakeven ratio, as are already Shekel So can reflects to $XX inflation the million at we dollar this

in the So point. somewhere of higher with to meet the we are breakeven really we looking the part see guidance, guidance, the if

You similar. should see something

So as our keep mentioned to increase in range. are we yes, marketing. we and Hadar expecting sales before, is about levels looking Overall, are looking this the to, do R&D similar the some

closer So are are to get decrease we going if to into loss execute we profitability. to continue our able to growth, and our

Alexander Henderson

of You terms only year headcount. last couple added of a in people

count So you are increase in expecting hold larger XXXX? a

Eyal Harari

as and marketing, on as a bit overall and go forces. are we where and are advance, we and plan, looking before, a maybe more sales to sales and more we we mentioned we now more No, little are address but want territories the XG to to around slight I to and after maybe have increase, into around we resources need grow opportunities be headcount the expand those more

Alexander Henderson

going side, that a flow of cash in Is to lot you're it the 'XX. on that correct? actually seems then cash generate And

Eyal Harari

But year-to-year. highest date X shift few generated We depends milestone you cash. I ensured believe the sometimes sure. not not overall, specific projects I'm look be it's there that payment cash millions from could think on exact current the and can the level, years, are I and makes in be are if burning that we something as our in with we large and XXXX. we working -- not fluctuations on we sense, it sometimes cash the a but and last

results this the and and would revenue improve As grows, better. our only be even go

Operator

results concludes call. for This the you Ltd. XXXX RADCOM full fourth year participation. and quarter Thank conference your

You may go ahead and disconnect.

Eyal Harari	Chief Executive Officer
Hadar Rahav	Chief Financial Officer
Alexander Henderson	Needham & Company

RADCOM (RDCM) 26 Feb 222021 Q4 Earnings call transcript