RDCM - Earnings call transcript Q2 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. Results Conference Call for the Second Quarter of 2022. [Operator Instructions] As a reminder, this conference is being recorded and will be available for replay on the company's website at www.radcom.com later today.

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

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

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

corresponding further continued operators, uncertainties levels with its and Authority. telecom expected to company's regarding its does statements the The and Innovation below the in full enterprise about momentum, Israel demand the contracts, and in In forward-looking year keeping statements, compensation involve additional further growth benefits them results opportunities, information RADCOM's harbor including update certain user's risks expectations performance. excluding in the financial filings. relationships from development, additional assessing that limited for financial expectations is measures, expectations for market of non-GAAP the XG, the By not the play XXXX operations accounting facilitating and full non-GAAP call, potential core and be to in reconciliations conference and overall about research several call investment in role respect prepared enhance review provided outlined growth, provide stock-based our the are evaluating understanding noncash statements the but which quarter's financial potential earnings for to a forward-looking and Investors guidance, expectation of in to presentation in encouraged interest its differ the statements. non-GAAP engagements this meant XXXX, revenues, accordance actual period. to multiyear pipeline the its from safe Forward-looking the risks products measures are revenue to Rakuten of helpful certain conference from including consistently the the company's provisions, The with measures performance results principles. expenses the The these could substitute transition of expenses, referring SEC this included release its on to cause management not undertake in to gain from for to an information and company's to presentation operators and financial important are to and to will expansion GAAP with considered from AT&T its in available of generally accepted not of company be and grants company's period results operating comparing website.

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

Eyal Harari

second morning, representing revenue strong up quarter XX% everyone, announced, we joining with Thanks, the operator. X for new XG We second us and assurance quarter won Good and multiyear AT&T. quarter achieved a call. extended earnings another agreement Also, results. with as for quarter financial our thank in solid consecutive year-over-year was of you for recently XXXX $XX.X XXth million, Total contracts revenue growth, our business momentum to compared compared up, our over by of win XXXX. I with customer the logos the our solutions second innovative grew of to first am In expand with the months quarter months base. reflected of XXXX, as we pleased the for revenue and X market is ramping strong the first in XX% our X of business. XG new The installed XXXX. demand

we year over Since into the will believe momentum beginning X-year efficient and since $XX.X short-term high. in positive the management point, and $X have second cash beginning we cost, in business the a our in growth generated deposits million, of the breakeven cash XXXX, resulting the continue million the at of year, have of reaching we the been half. With and

feel out the in network. started U.S. XG proud network-wide DISH to chose cloud to of in stand-alone As its first over assurance made ACE Vegas. U.S. their Las DISH selected smart seamlessly XG XXX RADCOM a because It solution on a network, public best-in-class first as public After and was covering America's the into the to wanted XG testing, network their May, RADCOM network. monitor available partner to launching DISH's We monitor DISH they fully DISH's the roll that be May, XG deployed cities, of in XX% month was assurance in the provides cloud. integrates RADCOM visibility. selected announced nationwide we rollout population.

investment like Our AWS the to R&D public fruit. RADCOM with cloud with partners ACE borne integrate previous have providers

along more RADCOM automatically. enables to rollout the AWS XG simplify and DISH to use smartly with manage Our AWS ACE integration services Cloud with network

DISH flavors forward This retaining assurance monitor be XG to private SLAs. will services. have for offer DISH, hosted of to recent revenue. and nationwide new capabilities more stated certify flexibility XG Analyst can it advanced our rollout, its leveraged where and for to customer can new that with offer DISH Day move solution cloud by enterprise different a As opportunity customers private is be generate assurance ensure its they streams In smart networks our to and is can networks the significant with quality connectivity help. DISH enterprise platform. to these expected cloud technology enterprise service revenue

a services Service the enterprise enough service potential premium has believe for as revenue As multiple to Assurance selling of operators a verticals. cloud provide market for managed XG the Service operators new part telecom result, across and We the they with enterprise. could their as taking

enable operator network real-time, delivered RADCOM operator's XG proactively are top-quality XG with and its mobile make visibility assurance ACE decisions assurance XG customers. We This a covers will performance and multiyear its network. improve services European the provide performance, network also a end-to-end to this new operator order new contract announced network. ensuring helps that data-driven to end-to-end its the win for European monitor

lots and providers we Amazon collaboration excited making solutions in cloud with progress seeing of Web into are telecom our Like about wins Services. continue integrating operators new and We are networks. like the these we assurance between these DISH, public

new platforms. these validated their and recently drive increase believe providers Brazil option an providers' to for our can network of opportunities. in services with use Telefónica roll XG cloud-based beaten revenue The and ease We example, SA providers cloud as AWS have which traction, Telefónica XG gain analyst reflected with core. wants out public expectations. generating results cloud For operators into several earnings recent new speed additional continues integration and that continue to that will cloud automation

customer run In platform. its technology Symphony platforms Rakuten integrate more that increase Communications cloud and the addition, and announced comes are will operators will Symworld solution telecom We more in Symphony complexity another to manage remain role unified ACE continue the Making networks to part services product data with launching that globally is Symphony. RADCOM and XG best-in-class the other ACE to operators will to help with click We Last operators month, our the availability efficiently opportunities to with cloud opportunities of marketplace. as with deploy solution with to that fast. application, believe launch technology essential and assurance we Symworld we the access built-in partners available and RADCOM and easy worldwide. platform the Rakuten selected more roll that service ensuring into operators RADCOM XG be transformation telecom our out assurance experience. integration confident workflows in and their deploy our play Rakuten this Symworld need help dedicated of and data and offerings future. the marketplace an analytics includes being services rapidly as ACE the evolve. significant open for XG will managed cloud the in selling Platform will provides all operational single us in which business their platform Rakuten working available

advanced solution and capabilities enhance services. to to software and value with continue out bring automation our to AI-based roll customers our move XG as expanded We to they intelligence launch

Innovation In institutions are and academic the forward with addition, space. working we Israel cutting-edge technology with the push telco to Authority

data reveals analyzes solution unlikely network crisscrossing in identified of of of and the otherwise be monthly, sessions in the faults quality amount to solution network will the continually of to Furthermore, Our XG ensure that help challenges be the networks. overcome to millions operating quickly our evolves underlying services. operators with increasing automatically real-time user complex

maintain we on our top laser business, we focus talent. retaining grow and nurturing the As

have high and aim priority a efforts retention fruit headcount similar fosters bearing culture employees. on the talent. place to employee Our paths we since We success as kept creating that attractive our the are career internal promote We the beginning year. of for provide

reflected opportunities. our RADCOM with knowledge meet in healthy ramp-up help of unique the they our is expertise this driving our and strong market is XG of I our take for talented and thank demand all Our opportunity business wish composed and us The continue to to ACE pipeline as RADCOM to success. employees the commitments. people momentum business team of

are and use their with to and services to looking customers our exciting intelligent operators XG network solutions engaged automated. make more We worldwide, their provide new with

their a engagement As innovative number same line and the to our At on quarter. strategy second Revenues solid and more XG in network with continues operators we We time, for transition continue demand am solutions of are expenses rates engagements, RADCOM while as the to see manage for look of our business to focused and we to our the and up level efficiently. investing pleased performance the the result, our very bottom transformation. I positively. win improve. solution strategically To our in executing remain see support and assurance summarize,

believe role of the will remain are we the we would over and wins, deliver sales results we XG CFO, visibility strategy our our consecutive our in evolution. discuss play our in successive like the rise With guidance to installed business confident and Thanks a who the detail. will momentum result, our we base business this call to $XX fourth to in XXXX to growth. in Hadar and year. million, revenue recent turn the to financial a this have $XX Rahav, to year our million We good accelerated continue that, to growing into second a As expect raising ongoing engagement, I

Hadar Rahav

and Eyal, you, everyone. Thank good morning,

and our understand in in To you increased help $X.X point I maintain turn we to Slide the We increasing expenses us share-based Now improving refer revenue, of same results, the costs XX%, second mainly the reaching to second quarter bottom ended the to compensation. million from operational time, revenue This and XXXX. as for $XX.X XXXX line. exclude non-GAAP contributed over please the we XXXX. quarter X a the managed with quarter the of numbers, will in million of by highlights. which as second At breakeven same financial

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

our with into continue believe growth trend pleased the will and are year momentum We consistent half. second positive the

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

As to a XXXX million of $X.X result, net were basis second non-GAAP second in quarter our million the XXXX. the on quarter expenses of for R&D a compared $X.X

expect Slide compared XXXX on be on Operating second for than in Innovation revenue quarter or expenses compared of the million non-GAAP a diluted income XXXX. unfavorable of $X.XX and of non-GAAP the XXXX. second for the to quarter was share $XXX,XXX of million share XXXX income a of a X, the the of $X.X was a increase our basis the of of of share in of end operating for $X.XX of net quarter the of of XXXX. as compared Net loss second impact to $X.X operating was $X.XX quarter quarter. second as to The per for a income change quarter similar expenses level loss a to XXX. a quarter non-GAAP rates. or second loss well second per as G&A you on as loss were of diluted or second the On on in XXXX, At net XXXX $XXX,XXX per XXXX. Israel see the an net loss XXXX. share basis, of offset marketing by increase compared quarter GAAP a Sales on decrease quarter or a XXXX the XXXX quarter for second exchange expenses, of of second to in third quarter a for non-GAAP our We net an $XXX,XXX of $X.X $XXX,XXX the net of to due loss positive the net can the for diluted basis, $XXX,XXX Authority second grant the headcount a of second the diluted second per a was the the for less of basis foreign in and basis $XX,XXX was net quarter $X.XX net were the million quarter loss income in

to balance Turning the sheet.

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

Operator

Instructions] Alex first The from Henderson & [Operator Company. question is Needham from

Alex Henderson

guide. Congratulations on being the able to raise

progress. nice So

that pretty answer number be this, to sounds visibility, deals sure. no the It you're conditions. anyway just is the you're to going importance your strategic but fairly from the of I improving progressing that? of know the to impact Can these the on I ask confirm there's of think much well from based environment you that are level degree like which chasing, projects, I'm to despite it insulated that those macro the economic

Eyal Harari

for Alex, our kind new customers. you and and overall our and with thank based your on recent momentum execution existing our words. positive our improved our is results Yes,

XG our As we have global transformation be focused any see impact networks, the to we don't projects currently to from continued and environment. economic on

We demand XG. migration in of invest continue and our we operators continue for to to to networks the their solution see see

Alex Henderson

price On vein, that believe I a Is remind you dollars me, accurate? similar globally. can just you still in

Eyal Harari

repeat? you can Sorry,

Alex Henderson

Is Yes. in I that believe you dollars price accurate? globally.

Eyal Harari

Yes, yes.

opportunities business we or have that the our dollar. dollar. vast majority foreign And based do of on in are some part but main business is in exchange, -- Our is

Alex Henderson

you do have we that any to revenue ForEx base So risk of? aware be the should

Eyal Harari

No.

I marginal think effect. it's a

key do we exchange. in Our due largest accounts and dollar, any U.S. -- anticipate and fluctuations to with not our are contracts foreign

Alex Henderson

you your shekel, you recall, look And conversely, don't I correct? -- structure, hedge if the operating as I at

Eyal Harari

Correct.

Alex Henderson

how against dollar. -- So year-over-year. the that these little relative down has is positive cost At It's but the much shekel sharply quite structure? obviously a bit, levels, it's substantially the down moved still your to of

Eyal Harari

to have like the about So yes, gained as our in some benefit did expense weakening couple we the our do not of dollars there. so I hundreds due shekel, we of I expenses part believe shekel XX% change. between and is hedge, think that something and we -- a of of the of of it's the

Alex Henderson

That's per quarter?

Eyal Harari

Yes.

Alex Henderson

where current forward? stays considerably, of you the environment, bit shekel accelerate How So that the a having the do to probably based on set fallen does spending? little it with plan assuming to it is, up going OpEx

Eyal Harari

we So our level as I reach our the accounts. previous sales maintain are bit to in expense overall, looking -- might we a calls, marketing to But It bit a of to while are currency. going we more are level. keep similar because a order mentioned in and fluctuate increasing

to goes there bottom improvement any So the line.

in see R&D some in of we managed we create the As this savings these to cost. quarter, profit because

Alex Henderson

All right.

terms an half to as And be the quarter. What out we assuming current over line? $X It's of in So almost around stay expect in should at million give a all the can we we quarter over second using between be of sense of first of contribution interest back bit time, expense using the year? levels? bouncing the in a you you what place what little stable the just rates exchange should the in a and us the income go

Eyal Harari

small shekels, other -- never the we positive. the some know looking dollars, in some currencies. we expecting So of -- overall But I fluctuations U.S. money on because some believe can in of overall, do predictable. are increased in not neutral -- see average that to in interest have a have the I know, the not fluctuations on rates as interest going -- we we in cash that think We you are the And that. not up. rates But are are always are, you as

but are think, we some So X% something year. -- money, expecting to a I not generate it's like

Alex Henderson

thing? on kind line, around Right. of the quarter $XX,XXX, And then continue rate a tax $XX,XXX just

Eyal Harari

Yes.

Alex Henderson

Okay.

that sounds expect continuing it very the of of that and challenging in meaningful and now year-end you 'XX? like Do that achieve do be is Or additional give In down well. growth little wins growth will might to terms that point? have you in think pipeline, it's have the double-digit to this you'll more between at slowed rate bit visibility progressing environment XXXX you it a such things that

Eyal Harari

opportunities. to So with we are definitely multiple continuing engage

are XXXX. definitely Some some of next next to this them -- can year, year close and improve year, help of of which revenue beginning will the to our us

our have We we we prepared some we fact double-digit to multiyear to as as growth -- recurring, I continue wins XXXX. good we due my with progress good that you -- today. in have already the have between visibility the and accounts. you XXXX double-digit that order our recent with visibility to As already visibility and accelerate for execute And -- higher have into remarks, have still and believe is, even I and to our for noted already the growth. can we model things in work already know, our we very business obviously existing have growth And

Alex Henderson

Just of any by impacted subscribers to in the not clear, number you're be way.

for of lowering impact So have instance, an Rakuten the you, they that doesn't on right? expected subscribers number

Eyal Harari

some models customers We pay we have we using grow. business as that you different what call are -- that have

they most with additional prices like not we accounts enterprise on -- of a dependent our Overall, subscriber. is of that spend upside some are anticipated. Some more than have with with grow minimum if them

Operator

Blair. is of The next question William from Arjun Bhatia

Arjun Bhatia

access there had RADCOM? over about operators Symworld wouldn't marketplace. that help kind Congrats for should of have, guys. that you good that years? what this does you otherwise? reach partnership the contribution you And Can we a do of that expect couple to next just have does their quarter, you What of talk kind on What on getting

Eyal Harari

within ourselves XG -- on and -- Having to operator assurance, are as are for us will look are and possible the expanding a the And Rakuten globally, potential to that Symphony engaged a today big marketing any feel the there as a advanced is would are, by stack. to maturity in benefit solution with in we driver us today that some own are size. every areas we on go they stack. upside and be for and I their the their a partner operators a which regions going can is parallel, they but into focused operator we telecom growth terms assurance in looking which be that we of most fit as best So

And So efforts. first, approach, technology, our is smaller already cases, pre-integrated integrated allow access of carriers lot it us. go-to-market our always being accelerates in also that that are not some the by the approached with solution a

Our focus -- that carriers success on and any But channel it's would that another us on Rakuten strategic our Xs. additional success growth. I Tier the of could more accelerating that, is be would Symphony really a for for look

Arjun Bhatia

do if And disclose of carriers what to come part that agreement? are partnership -- there, the we terms able works? with you get have a that you additional that are you -- just of have anything there should as can you the that If in economics is do in you how Rakuten expect that

Eyal Harari

OEM are they I part part the their solution, eventually, kind mainly as all within are -- providing OEM of on overall if include would deal. are they this solution, it's options our solution. that their reselling, could overall like overall of also the we So stack. an And their that of look And one then Rakuten priming

Arjun Bhatia

further a terms a Okay. continues. you with expand as you helpful. in have the rollout And that the opportunities What DISH road that potentially talked Very of you Got about it. then expect to talking do down lot near to of play line process anything -- still long is Is Or happen that from out? expansion that it multiyear can we're those term about? there how there? this take is time opportunities

Eyal Harari

months to hard say. few X very like think partnering our ago, months win just it's announced So We DISH with I ago. X, a

on to the solution get implementing that solution launch network. ACE and our we their the the sure DISH and build RADCOM So now XG make full busy support of up benefit are

successful. make them raised ideas very to possible we additional We most with them closely hard are value for And obviously with to the multiyear could now mainly make provide upside providing predict on the engagement them signed that agreement sure this capabilities, out and me engaged when But to this value focusing them with we we recently. multiyear come. -- of we are

Arjun Bhatia

one for there last We and then the there. And me. picked margins up gross was see enough. Fair did that Okay. momentum

that talked high time? already can about you the driver And do how there? well. that think over think I as What's go you

Hadar Rahav

Well, margin XXXX, will gross was we quarter, gross believe XX% margin that this And XX%. margin third-party be the the gross components. due around to average in around that was our

Of course, our the revenue gross margin fluctuates on depending mix.

Operator

Call. Second concludes Quarter Conference participation. your you. RADCOM Thank Thank you XXXX This for Results

and ahead may You go disconnect.

RADCOM (RDCM) 11 Aug 222022 Q2 Earnings call transcript