RDCM - Earnings call 3 2023

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. Results Conference Call for the Third Quarter of 2023. All participants are present in a listen-only mode.

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

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

Hadara 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.

intangible product of its intelligence satisfaction. the cloud headcount, call conference not midsized benefits the and development operating potential will presentation could and forward-looking and The these to in statements the the forward-looking not assets in to revenues and corresponding several financial company's risks about but expenses in of RADCOM's its core and the acquisitions. to is increases margin statements expectations of presentation measures grants noncash well XG are assessing update marketing, results differ related does statements. accordance additional expectations management profitability certain SEC company's investments accounting gross continued Forward-looking to the year this expenses, prepared as a of of which principles. software financial refer potential measures to harbor are Authority, and expenses, and GAAP to not and to on provide the including, operations XG performance. sales this substitute accepted non-GAAP the including from company's growth, the its uncertainties, to company rollouts actual information involve guidance, in limited statements period and potential to Investors a research full stock-based the considered information and to certain of acquisition-related The reconciliations respect financial be review in quarter's in period. in and comparing helpful to compensation levels safe cause the the In scale up momentum, of generally with XXXX the potential opportunities, results the meant non-GAAP and to, call, available pipeline, company, website. the enhance filings. The war XXXX as operating company's networks, earnings generative environments AI its respect understanding performance customer market with full the revenue to in in artificial further that overall clients, our Non-GAAP regarding included expected and conference compensation the results provided deployment user's its effects release By consistently solutions amortization encouraged of are stock-based outlined for and the Israel provisions, undertake in sales Innovation risks investments to on multiple to from evaluating and measures, Israel, financial excluding the with from to of

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

Eyal Harari

we by XX our attack Israel. nations Thanks, and on home XX was hope them attack on earnings depeest come in the third X joining you over affected Good is worst I the history those the felt Israel with the and kidnapped, operator. victims has will call. from strategy October by years for at attack to and XXX affected. wishes with heart for been least and to safely. and on global This terrorist this people scale, condolences a and and they our to by morning, is sympathies thank situation us everyone, commenting RADCOM start quarter wanted in family appealed XXXX The extend

We ones. We individual with the also pray every loved act of emphatize and their occured. that impacted for violence the victims, have strongly their condemn and families

will confident wishes, RADCOM. are all and of grateful to I for their we win. confidence stakeholders are terror our thank best in customers, continued unwavering want that not for let Israel in and their strengths support We partners and

operations in we and and continue to Our and needs Israel are without well-being. attending families' their interruption, employees our

activated. running business we plan And operational Israel the cylinders. Our fully continuity has are monitoring is been closely while all our office and situation, on

overall so the picture, of outside don't our to Israel, Looking impact of broader these we workforce is our at businesses. events expect most

are and As adapt means in a which are we operations to can the cloud, evolving software company, agile the our situation.

all Our are running as center global planned. regions spend support multiple

provided commitments remain our growing business. the on customer company driving to the focusing in We our continue XX/X commitment support We and fulfilling fast still forward.

for to Our want XXXX obligation XXXX. devotion. appreciation pave to and for I hard diligently work continues for way work express and our to their fulfill my the team

ensure software year, provide revenue line. believe profitability XXXX into analytics will operators to This in reinforce up business to Net the first the in a extend and experiences. Turning in fourth a continued growth. third we expect third in We of revenue X-year with million, quarter driving year-over-year months scale Strong history. led company's to gross continue midsized The of guidance high, as QX improve for a reached performance, bottom the growth financial time results. team growth double-digit and achieved income delivered to our consecutive and as revenue AI-powered of positive XXXX our that revenues we improving percentage of first to X excellent continue consecutive company XXth growth during good $X.X we execution momentum the quarterly We deliver fourth for and up here and record quarter quarter margin. the our customer quarter the improvements and XXXX. this

our customers. to Turning

new made accounts, thanks existing have to in and our good focused performance. progress team our We

existing to higher accounts and additional during continue meet teams customer and the With cutting-edge our to further value scale activities releases increased customer to our base. expansions their software the demand provide year, deliver by

clear, continue may pace out vary. operators roll market networks. to We XG while and see direction the their in XG market. Turning to invest the is The

invest all services. solutions solid they continue to these and complexities, customer announced in a can experience excellent best-in-class simultaneous that experience We easily believe United the by operator a transformation. XG the latency opportunities multiple and operator different managing significant America. couple the Signal examples, and solutions. experiences [indiscernible] offer in growth application latest enjoy Therefore, of mobile current to Japanese our highly mobile published XG setting country's like report These we A market. Open downlink services our world and results performs uploads. The network competitive efforts ago, speed that customer mobile after we States maturity. its of weeks expert highly speed Rakuten connectivity demand report on years United in are for receive ensuring as at measures. vital another increased high-quality, conferencing in XG launching the engagements enhance in first, sales their stages mix high-quality Assurance of delivering in with include carrier-grade wireless lower continued marketing It been newest the delivered X.X have to are faster DISH customers the investment meet showed deliver expected just in research. several and stated key the in validated largest North XG States. accessible strong new video heavy Also, and In DISH in AT&T engaged better recently for subscribers as

especially So market, their to processes, product a next-generation provide and assurance in we streamline to improve cloud generate the continue their forward economic to rely in for and trend control as technology on play optimize help pressure their there this portfolio in customers Operators to invest best-in-class out them as opportunities they competitive highly drive RADCOM to current This climate could to R&D our innovate. networks and the solutions to efficiencies are assurance across with costs them enhance XG. and to turn cost the roll leads operations. new

some unique updates assurance their continue skill having and GenAI the is and GenAI Web of more push of set help GenAI, all leading or Services, cloud hyperscalers the our into We technology the to to Azure providers quarter. work dynamically XG We an cloud team the exciting have hope in to bring networks cloud operators on space. the hyperscalers leading and as a boost mentioned pivotal are integration I to In these cloud telco-centric public AI previous solutions, providers, our X innovations through generative the We and AI emerging those ecosystem. Microsoft The into Cloud. to automation. potential We share Google role ecosystem. enable already fourth in all Amazon offer embedding or with importance opportunity to customers see calls, working their efficiently public manage hard within

Turning pipeline. to our

continue continual advanced technologies to scope grow boosted Demand Our healthy, new be to to pipeline existing our portfolio. business further unique has solutions and for cloud-focused logos. be the by offering continues integration our of the enriched with strong, that assurance

So can investing market create sales contracts market engagement share. additional the we continue that to need in sales increase more and and our multiyear

solutions innovative moves capabilities expand bring with and intelligence software our value cases enhance forward. deliver to as to automation, technology continue customers for XG AI-based use We additional and and our

have to we and capabilities our innovative multiple months, features announced XX last the solution. Over

autonomous Our more is AI-powered product strategy through intelligent our and making network analytics.

and that product As the use XXXX continue pillars transformation to we we discussions work internal those X our the and drive strategy company. beyond, our of plan growth for begin guide to

positive our in quarter and our and and as we full growth. the performance, QX progress our have revenues while and seeking this customers. increasing We will results. believe sustainable beyond this business summarize, fourth good continue expand value To profitability advancing in on in we year made deliver innovate We to will momentum improving

be continues with growth and pipeline new existing to opportunities Our healthy, logos. offering

and of would the who million. to business to discuss our in over the results CFO, Therefore, revenue With our that, million Hadar, we financial our value progress like our turn of $XX the Our solutions strategy will I reiterate strength XXXX call in guidance overall of model. business to detail. demonstrates the $XX

Hadar Rahav

Thank excluding I you, share-based compensation, acquisition-related assets. mainly Eyal, good To intangible everyone. and and numbers, refer you non-GAAP help the results, of acquisition understand to amortization expenses will morning,

the to for XX.X% achieved quarter reaching in increase X and consecutive highlights. XXth representing year-over-year financial quarter, growth revenue an revenues of second the Now, a from We in million, Slide quarter the XXXX. please third $XX.X record turn of

for focus sixth the approach Third double million, to the managing and revenue of a This with strong digit quarter take high. expenses quarter continue efficiently. $X.X net XX%. time, to investing same a with we non-GAAP income business year-over-year At innovation a year resulted by our on the of in growth delivered grew in

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

a $XXX,XXX on year. similar will go the fourth basis million, the to of quarter XXXX quarter compared that will at were quarter R&D of the third $X.X We expect expenses Israel remain decrease We to quarter the a XXXX. $XXX,XXX to Innovation a non-GAAP a level. Authority for of received during third quarter of third last in of grant the from $XXX,XXX compared the I

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

the on We the marketing to a increased drove expect and an $XXX,XXX for income Sales Israel the the for basis, fourth XXXX. $X of the of $X.X XXXX quarter XXXX. quarter the was at million to quarter quarter of compared were million grant non-GAAP XXXX third level. of quarter. to of expenses quarter compared revenue quarter the G&A in this basis, of to of non-GAAP non-GAAP the Authority and third income increase similar million $XXX,XXX on third Innovation third third for Operating expenses were remain a $X.X for The on XXXX basis third quarter a an XXXX. of similar

of per income for the bank Slide income $X.X diluted third our diluted loss share loss $X.XX to X, or interest mainly net net $X $X.X On on or was short-term XXXX can a basis, a financial the $X.X of share non-GAAP of the per third the This to rate the of loss on to share. XXXX diluted or XXXX or net a share for of of income $X a Net third income XXXX. you was compared quarter million of diluted $X.XX was for Our million net see per income net per due million income basis, on for loss of compares $X.XX million, quarter deposits. for a a quarter a million of of quarter $X.XX third as GAAP XXXX. third net net quarter of

change quarters $X.X third to from to million million. we for amount plan quarter change and compensation a quarter, the of company's in in estimation the efficiency This This the that this retaining $X.X success the RCU employees quarter second its stock-based first of of compared the recognized October the year. the rate estimation in and onetime million expense key increase in led of a resulted future grand XXXX. expenses in from $X.X The reflects

We XXXX, quarter to fourth expect our expenses to the XXX. of stock-based be the of At compensation the previous in levels. quarter the was third end headcount similar

our slightly rise headcount the quarter. in expect to fourth We

sheet. Turning to the balance

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

Operator

question-and-answer Thank [Operator at you. Ladies and begin Instructions]. the gentlemen, session. time, we will this

The first Arjun Bhatia from William of ahead. question go Please is Blair.

Faith Brunner

Arjun. for on Faith It's

for you of couple a Just guys. questions

can the on the is clear talk XG bearing sizes and rollout different but the market about here, you overall, that guys what are in maybe about talked is how is depending locations and the seeing you You direction there? pace

Eyal Harari

I revenue. see think I you the see we for the we on pace, if in to quarter double-digit another we previous bottom important the line. We see see emphasize see optimistic consecutive progressing months. we the that is our and as as X you most our income see, strategically. net also improvement We remarks, still on continue can growth, quarter And able that tripled, current to my the is are that of that our So the to mentioned with about also are impact immediate development market are even this both operators with and very revenue XG to XG our look if that continue our growth able in we

While varying activity between and there is space. overall more in as see this is we industry, more pace customers, that an

in slow, go that operators are some XG. are more there now many are operators While there investing

in matter like a timing of it's So always telco.

we continue I most are performance managing think KPIs grow for encouraging to the very consistently. part our very, and is improve us that to

Faith Brunner

on if then and And working the I you quick priorities going asking platform? where solutions you're Okay. embedding had are do next customers general high to to guys what or just quarter these But announcing of another more be know so. across where talk your the and in platform, the AI these level for, one. concentrate you're you kind called out across are

Eyal Harari

X automation. mainly our AI we is So labor-intensive RADCOM invested a is as platform more lot to to of work years gain that we only for improving replace in efficiencies. in from that an last do the it today way insurance we value with cloud feel cost savings are see to enabler looking and the The platform built. What operators

you also see our cost, it you taking can customer do close much gain to So affects today efforts the loop to gain are by as platform most increase and efficiencies better quality that operator AI, them how when of possible the not the and efficiency and we done are experience. across that actions better but automate only manually can the the with

the our will lot processes we them those close X have huge I the network have we of the in share advantage sets we selected XXXX to the by more goals. capabilities, mentioned, the and about quarter by we our and from technology automation a AI as and next So And more provide data and once leverage loop again, that, analyze to monitoring elaborate network realtime improve plans. that

Faith Brunner

for Well, the right. me. quarter. All Congrats again Perfect. that's on it

Operator

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

Alex Henderson

safe. wanted all And just and your with Eyal hope I attack horrific guys your hearts country. terrorist you employees and Great. this family I on express to to are my team, relative

quarters. into of I quarter. should higher be you've Or a to commented model, the about range. Looking that more margins that you recent normal bit causing regress a type similar the see what a in to third to we that like posted little frame? expect number quite will that in bit persist the back of gross the XX.X% you talk number is in the kind the at you and something whether the quarters historical quarter than that's mix think fourth That's a above 'XX Can and time mix

Eyal Harari

before, continues that So as and gross tending margin. you our some us our to as mentioned we what range And said, this the now quarter-by-quarter, the a we as the Alex, as the that XX%, improve to run. are below very we us there profitable we starting might and we are revenue is of XX-ish trends and What this, as long create fluctuations, on gross comment to be you recall, profitability, grow. -- XX% the the again, being we seeing trending with the the but incremental mix between very for is allow -- higher vary is a scale, revenue level And also be are to grows. range a allows software most revenue. to revenue our We significant company, to looking depending, similar on and we to be sizable. improve some a to know, is which that margin what's with see in efficiencies improvement This with of expect driving

Alex Henderson

Great.

it going we're reasonable it that we're at for then to year. think good to and [indiscernible]. logical here the it's that type sounds a XX least Is like margin XX have -- a XX-ish So

Eyal Harari

exactly fluctuations. we and years, there couple this trend, what very some see performance are see as It's the last hard to the might of where But think are heading. you our I estimate be in you is

Alex Henderson

of set in is of Israel. for you up the portion Okay. pretty compares what cost Obviously, the on can And shackle OpEx Israel. easy is your the of a remind outside side, structure us setting on weakness of shekel percentage OpEx is Then what based?

Eyal Harari

them Israel. of XX% based are high-paid about are employees. in of employees our Most So

So XX%, our or I range. of something believe cost XX% on is around XX% based so sheke

Alex Henderson

done So this have you hedging? [indiscernible]. guys are you in Or

Eyal Harari

of And in and to profitability. the we is if did in part some required. to helps But most Typically, shekel time to the U.S. dollars. currently, time mainly improve from of paid weakness we leveraging are cash us very continue short our past hedging what

Alex Henderson

more shekel think to offset do Given growth be And to you that is any good growth? into merit pretty given than going like raises but spending reason because X% a 'XX? there the any any X%, in is level, to the it's OpEx guidance, what believe look

Eyal Harari

still we XXXX we our as speak. Again, building workmen for are

if We incrementally our as continue strategically, to and keep as mentioned, similar are additional look we I and in our to see levels, -- have marketing coverage. better we R&D we we sales want and opportunities, increase

growth, fluctuations not foreign stage have I XXXX the Of we we expectations, exchange consistent important can that is the profitability, have expect. course, better and something once but the are the all trending plans, revenue are margin. in will we very guess part gross things in this the modeling

So sense model company I a good we the of where think heading. can we are the for get and

Alex Henderson

was Going rising. line are of surprised that it down caused income interest declined solid the is to or to something sort down a in quarter-to-quarter? on come you're some charge $XXX,XXX income quarter-to-quarter rates interest Is -- statement, as there generating little cash that I the some there that

Eyal Harari

couldn't the Sorry, I hear Alex, can you you well. repeat question?

Alex Henderson

line quarter-to-quarter. Sorry, the interest $XXX,XXX declined income

do that to direction. level. interest rising there I a December recover June might why we it rising to quarter sequentially to Can thought in talk in or And rates cash have some the occurred? Was back offset? would other expect gone Given charge have the and quarter the balances, you it

Eyal Harari

previous some the compared foreign debt also see lower before. fluctuate we of the the in in quarter they bit, quarter income, of and in So some interest on. changes the were We customer so rates also exchange our to that have in the and net

is is current particularly exposed this believe what and are in to the good we entirely the expect rates due exchange foreign we overall, to. both a of estimation that interest So for level we some future, change

of.. most So

Alex Henderson

on to going were surprised me. rates for the I line? question okay. thoughts tax rates interest as was interest And declined any up. But Last But

Eyal Harari

The?

Alex Henderson

some are geographies that that expectations coming you're change Any heard operating in anything? Yes. there certain the pike forward? you I've euro in in might that increases taxes tax going down impact

Hadar Rahav

level expect quarter fourth No, the we the same in expense XXXX the of in and end

Alex Henderson

Thanks. right. your appreciate All I time.

Operator

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

go may and You ahead disconnect.

RADCOM (RDCM) 8 Nov 232023 Q3 Earnings call transcript