RDCM - Earnings call 4 2023

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. Results Conference Call for the Fourth Quarter and Full Year 2023 results. [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.

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

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

and increase and trends the company's in stand-alone statements full statements expected in Forward-looking risks year the and XG not role but XXXX is expected call conference including, in guidance, market the increases about industry and limited expected several revenue the company sales Israel and with marketing launches, expected and involve uncertainties, to, transformation, grants market XG XG profitability impact the in the play to and sales activities thereafter, the respect the from as development the position, company's and its position -- and Authority. pipeline, of -- to currency growth potential research in expenses its opportunities, XXXX expectations well risk. cash Innovations as expected and

with expectations relationships XG products. its the continue AT&T the artificial Vodafone. company's solutions respect its company's its and solutions its capitalize the developments, to of The opportunities XG solutions more on win market DISH, role and share to cloud and its software of of Its enhancing for ability with and and potential intelligence its expectation Rakuten, demand to and of use

provisions, including in company's forward-looking could the does to these the the that undertake safe update risks not filings. and company harbor actual statements SEC presentation The outlined differ results forward-looking cause are statements from to full

of company's certain which are related to refer to user's financial will performance assets compensation non-GAAP and intangible provided overall financial noncash of conference expenses, expenses, stock-based measures, the excluding call, income acquisition-related amortization financial this management acquisitions. In by to enhance the expenses understanding certain

is Investors the to earnings not of corresponding and period financial results substitute provide the are information of and encouraged for our reconciliations operating release considered be measures with a the this quarter's accordance prepared in The to non-GAAP meant period. on available presentation in in principles. operations review website. the comparing to information assessing helpful accounting financial from measures included core accepted of general additional results evaluating RADCOM's performance Non-GAAP to consistently GAAP

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

Eyal Harari

operator. Year Thanks, morning, XXXX everyone, for and joining our Quarter Good Full and Call. for you Earnings thank Fourth us

down RADCOM the have and today, announced may me. the transition. seen coming You in that Guy will stepping I CEO team earlier as success CEO years. the and I Guy will we succeed Shemesh the be wish

my an in my RADCOM RADCOM role over for help years ensure will was home XX various advisory remain I to and continued small a in transition and ensure positions. is the company's to leadership success. heart, close

then my results start RADCOM, the discuss in I transition XXXX And business with and the momentum me marked the last updates. summary. the the Let years year of an for extending X growth. of exceptional and financial will record

year-over-year fourth record reached growth In while revenue milestone net growth quarter, revenue a $XX million, the million, of level. XX% was fourth We of consecutive a margin achieved year-over-year, growth a year. a representing representing $XX.X XX%, our

for We to or record on basis a of $X.X path non-GAAP achieving income $XX.X GAAP on a million profitability, continued the our net a basis million sustain XXXX.

beyond. while executed $XX.X Our million cash million XXXX the of flow software revenue a finances cash no company. In threshold team robust to to laying year, record scaled record strengthened and due a the crossed level well our We cash a the positive midsized $XX XXXX, reached annual debt. delivering foundations that and the and with totaling for equivalents

and thank during and and on the year. proud growth them I commitment for delivering dedication employees strategy success their to our am of our customer

solutions in highlight Our importance results our industry-leading the growing market. of strong this XG

strong execution growth we delivering our to and are metrics. fifth confident profitable growth year at and thanks increasing a of our Looking in current revenue consecutive visibility, XXXX,

$XX revenue million million. year guidance XXXX full to Our $XX is

the continued X Since and interruption. October in operation have without globally attack the our Israel and resulting situation,

We Israel continuity running the operational the we situation, our is any At our changes time, prepared active, the office is same and monitoring plan fully are for are closely business situation. current so to normally.

As fulfill drive and demonstrated the obligations, fourth quarter our to forward. customer the team diligently in company business of works XXXX, the our grow

to provide revenue our assist customers experiences. In networks existing we existing ensuring software XXXX. introduce managing and secured customers. new Rakuten DISH overall customers, their orders increasing software innovation base and we our key enhancement from customer to continue AT&T, strategic and XXXX, from our and to great them For to customer new in releases remain several compared

business them our remain We with strong. will believe

in provides We which to operator at to these in continual a area level for added stay XX for customers Due from is business a Vodafone more operating expect revenue with multinational future. year potential XXXX. a potential in to further British we Vodafone countries, in customer last as XXXX acquisition, similar the growth growth. new the

the assurance During to on monitoring XXXX, Operators sales expected our solutions. our meet on we demand rely with to navigate enhanced assurance stand-alone efficiency. XG will transition XG our focus to operational the activities expand and leading XG

opportunity and new they landscape cloud-native global macroeconomic to the RADCOM, out As presents leading cloud XG, roll next-generation cost adopt for technology solution. a assurance optimize current

capabilities progress. with software AI-based for XG enhance technology and analytics to is and cases of the continue customers adoption additional intelligence the our bring value to use automation, our and We expand

product reducing rolled of out a Virtual experience we improve part to Test, also continual acquired We the as acquisition Drive while operators customer help RADCOM costs. the

and with traction gained additional already could lead have initiatives potential to business. customers product These

autonomous making AI-powered our costs, efficiencies. drive more the through is to save improve operational and mentioned, customer experience I and product intelligence analytics networks strategy As

company the the and a with and of analytics our announced this RADCOM's advanced or space point unique approaching vendors for XG of we management of assurance expertise Recently, of of an first AI-powered view. the as years one networks. in NetTalk, Gen position we artificial the generative AI, intelligence real-time of efficient to power from are perspective harness telco

enable effectively. can cost to operations Executives These and NetTalk manage the natural AI wealth engineers language is power applications of AI its to network their using of to talk faster tap adopt and data and data RADCOM Gen operators trusted insights into network Gen LLMs. as rich Operators quality. through can produces RADCOM leverage their large language and with analyzed customized the use applications service the models,

to Barcelona. be NetTalk starting the a AI RADCOM in at will will the throughout we'll we in of year, Mobile develop be the our World Gen hot cases, XXXX, and topic use continue February which Congress showcasing end

the challenges. drives critical provide to network address aligned which technology Our with revenue, costs and thoughtfully market-leading operator needs, solutions reduce unique operational

that drive growth. unique will offering our confident are innovative We sustained

we was Our expand years increased of growth activities, healthy new XXXX and sales our current contracts To momentum. we on our last share. opportunities RADCOM, continues will installed focus continuing with be pipeline and market to summarize, and record In believe lead additional for good year XXXX, base an customers. which of mix to X exceptional will from the

strong sales engagement our marketing demand and believe shows for the that solution We our is robust.

also our consistent year in and into momentum contracts positive provide XXXX strong visibility of in we and profitability fifth us confident Therefore, XXXX. driving further revenue good consecutive results multiyear Our increasing beyond. growth, backlog, continuing delivering are and driving the a

Hadar Rahav

and morning, everyone. Eyal, Thank you, good

to Now our Slide for financial please turn X highlights.

I refer the mainly would to non-GAAP While slides numbers. non-GAAP and results, contain GAAP

income of assets acquisition-related intangible expenses to expenses. related and and compensation, amortization amortization share-based Excluding financial

XXXX quarter fourth and with million the making an the concluded of million in new We increase a $XX.X $XX fourth record and quarter of revenue from quarter in XXXX.

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

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

fourth to expenses basis quarter fourth quarter a the basis, of for $X.X from the of basis fourth XXXX for change of fourth XXXX. XXXX XXXX million, for million. significant On compared no of compared a quarter G&A and non-GAAP $XXX,XXX, $XXX,XXX $XXX,XXX were on fourth were non-GAAP with Sales non-GAAP the $X.X expenses the of an XXXX. R&D XXXX. the were quarter increase a expenses quarter of net fourth quarter the on of to of decrease marketing a Our

of quarter XX% revenue of net $X.X of revenue a net to income $X.XX XXXX. for on per income XXXX income compared of fourth $X.X or income operating income the was of basis quarter the a diluted record income XXXX the share or a basis revenue XXXX. $XXX,XXX, for non-GAAP an for fourth of of non-GAAP million, Net fourth to Operating X% for fourth of a $X.X net of quarter of million, a on revenue share $X.XX of XX% compared diluted million, of per XX% was quarter of the

net for of XXXX, ] quarter end an X, share can million, basis, On of our zero At of the outcome high the the a XXX. fourth XXXX. quarter was net to income or diluted quarter $XX,XXX XXXX loss or net Slide share a you for GAAP compared per revenue diluted a reached of loss $X.XX XX% cents fourth all-time of our income the a of net as per $X.X on of of fourth see of [

let's the results. to turn Now full year

XXXX our with an compared from non-GAAP in XX% XX% $XX.X was XXXX. XX% XXXX. XXXX On gross million, ended $XX.X million basis, We increase of revenue in in a to of margin

for expenses decrease a R&D on XXXX. as were on XXXX we a in the same of investing non-GAAP R&D basis XXXX. level plan In million, million Our $X.X approximately XXXX, gross to compared $XX.X in at

the in as XXXX, to $XX.X we the basis grant from to same expenses compared $XX.X during from at We XXXX. on million XXXX and XXXX. a Sales in in Innovation cumulative Israel received In Israel Innovation for level expect were year. marketing be million Authority $XXX,XXX grant the non-GAAP Authority a the

basis entire XX% an compared also $X.X expect year of revenue revenue gradual for compared on and million, high XXXX expenses of opportunities. of we of increasing XXXX. a XXXX, for sales in of an to on an increase Operating a million, to $XXX,XXX all-time basis $X.X pipeline non-GAAP the XXXX of was non-GAAP income X% $X.X support for In a million, were marketing G&A of operating XXXX. to an increase income

Slide of net of XXXX. revenue $X.XX loss see per share to per X% a XXXX million, revenue share diluted net or net for million, a $X.XX income income on On record revenue a can on compared X, you of to income net of income for a income net or our was million XXXX GAAP non-GAAP or XX% share of a compared $XX.X income of basis $X.X XXXX. of for $X.XX a as loss share net $X.X of of of of diluted diluted X% a per Net million, $X.X another diluted per $X.XX a basis, record for a net or was

In the believe XXXX, at and require not current will stabilize dollar-shekel levels hedging. we ratio the

to balance sheet. the Turning

As as XX, shown cash $XX.X on cash, million. deposits Slide were of December our XXXX, bank and short-term equivalents XX,

As the us to the quarter was we of $X.X highest we mentioned in previous led generated with $X.X million, of the flow results, amount million. our Continual acquisition cash. cash XXXX, which strong in Thanks completed positive our to level of a end year in

Now I summarize. to the to pass will call back Eyal

Eyal Harari

X of at time I growth. CEO start remarks, stepping I the lead over roles up years annual to first and to a years as proud XX the company suppress honor to threshold been and am the As led to I'm a an incredible company. It RADCOM. company for profitable my team revenue various the while leadership have within the has midsized the million mentioned the company down in scale achieving $XX at after

further back challenge. leaving Guy's under confident Thank while for Guy in remarks. growth employees, will That our to together, partners have leadership. management the success. will the profitability, and hands increased the wish a the put continue is move Board, I company RADCOM capable in RADCOM operator talented that continued a of turn prepared heights to who to and I with and they situation their company you lead healthy the customers, I drive in the with XXXX I'm into all for visibility next am and to the company, investors my team. new achieve excellent I I questions. call concludes your every trust the and worked and growth

Operator

we time, The this question-and-answer at go Bhatia William [Operator Blair. session. Arjun question of Please from is Instructions] ahead. gentlemen, and Ladies the you. begin will first Thank

Arjun Bhatia

makes and on customer at strategic you, congrats with on in been I and and as its adding little telcos raises Eyal, a seems next are best RADCOM coming maybe you like run, with key If Like Eyal, in traction off kind and working talk the your indicators AI here. bit for little NetTalk. for can start AI luck of you're capabilities these the are But getting you exciting of base? announcements customers about generative chapter at great maybe It bit it's just assurance how can looking AI. gen that a general, more and a profile? what value resonating the some

Eyal Harari

older kind only see disruptive not RADCOM believe Gen Arjun, uniquely words. And is for a to the as data all but how of for telco network advancement. is We positioned collect big mine by AI industry, customer can leverage services. for all we monitoring the the of you, real Thank looking this trend, are from we a subscribers using we tech. the gold experience

to AI, gen to it are technology automation AI last next and the create the efficiencies to leveraging are We trying the And years, more take the or the trying for operators. level. for we with [indiscernible]

will is engineers in and their becoming to provides well the and all that we we specs, we all both operator, better efficiently copilot like make as and standards enabling So task available the we do because become industry a experts it data as accessible. our make it their are the domain -- and some the idea solutions even more for

the empower And to the improvement This teams. it customer we efficiencies for that, with efficient them in operator. more eventually course, allow drives by also creates engineers. And experience. of It's work

heading So this are is we where today.

that be in also AI technology we not more X believe And even are to this We next mature able on strategically, continue sophisticated to is gen task and the X to evolve. looking do today. that will will years, the

only experience. do conditions loop from setting intent but the network do really the eventually, or of close efficiency, with network or improve goal gen closed the to the the deep and loop and understand improve taking the network and the the is not and but the allow configuration by to And the and the customer also directives AI analyzing really the drive the analysis by try configurator and engineer to of network that, improve from

Arjun Bhatia

remarks get that success customer how capabilities specifically that, you That's and some you early that some the the come of customers earlier prepared in customers pipeline anticipate of you'll Or And do helpful. we're very the talked gen at initially at signs with When looking think your you do marketing. you're AI sales and of adopted, pipeline, in. the in about you'll are through invest maybe in and the new that primarily will coming existing base? these least your having,

Eyal Harari

So the gen AI is now in an innovation stage.

important in revenue is road they or and vision. investments. the in see directly And space. foreseeing not are XXXX to to We from those see our our map customers and leadership want for innovation our our thought It our

customers. based journey and existing visibility we that looking influence to is be line So our very are will contributor. we the AI long-term more new And This good which RADCOM our on our is on our indirectly. with and strong mainly pipeline, product I is have very gen into When XXXX [indiscernible] even growth accelerate. believe continue and

Arjun Bhatia

it. the maybe just on pipeline. then And Got touching Okay.

mention the to did where lot makes seeing that marketing. -- because you're make making you'll the sales dedicating you're pipeline a give of just existing the incremental that or in maybe for and pipeline convert customers Can which you're investments you You traction seeing marketing the and more incremental you're get that us certainly in sense. to and sales demand, sense a grow, Is resources customers. some

us XXXX. a be those for give you'll sense Just directing where in

Eyal Harari

Sure.

the adopters carefully some XG North stand-alone, in see as the like in XG I are -- and this early also calls, Japan is market the primarily and the countries that discussed XG. call following I [indiscernible] we of are what in South What the America previous evolution in we and strategic these in very So in the Asia, Korea.

know, see investment started to And already And starts couple years, Europe. believe our see our are back. this pivotal scattered. the efforts accelerate starting XG more be where as a SA [ we is for In ] sales and last I We as few going to in is we more we is put to to progress. Europe, of focus regions we technology. progress XXXX additional years more

countries, the team boots continue will visibility operators sure to on smaller more to to we we are make and And order year sure make to ground and enough we There with in good beef opportunity. XG in up have the capture pace. we invest during the order in the the keep

are customers what that buying see privilege our know have their they known. We We frequencies. We the really doing. are

We vendors on SA. is becomes the going where see see XG are solutions And they network, we XG to announcement critical. build with them our to partnering public and their when the this network

Europe see we are teams. next XX% quantify step our that our going XX% also pipeline opportunities I step, to talking our And see importantly, we marketing. to with main Globally, next we as is the want support the growth to would that, already of As about going our the and increase our and if very in increasing the also both multiyear market other sales to increase our are with teams we and where focus to again, in plan. in current pipeline continue where we some but

Arjun Bhatia

it leave Perfect. you and the you, helpful. appreciate taking Thank Very Okay. questions. there. I'll I guys,

Operator

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

Alex Henderson

young times the here? several acceleration to age. bit in you think on it. years. last reasonable if think it about the was -- that is you to congratulations surprised going line. Is that to happen alleged the accelerating little on is growth Is of I that produced potentially the the just reasonable little hard on each in containable it rate produced growth XXXX mentioned fathom, such move to the the A X And talk in of top hoping you've call, think double-digit I I decision. understand it could a to but a growth that

Eyal Harari

at Thank you with what do to And our you we on you, for Alex. if are the looking be guidance, we double-digit year, Yes, further as range compared continue look higher accelerating guidance to growth. of our today. saw this minimum could the

XX% existing Our with is supporting winning and run it's on further and with growth. business execution the market revenue recurring rate keeping enhancing the new our on over logos our model our evolve and long-term based And share. customers all

why commented. I XG we our year I previously that is in see and SA, start is the XXXX sales to believe as continue that marketing. will and this And more increase we

and trajectory over to [ double-digit is definitely, month this is the -- year. to ] the plan continue and So growth the

matured is But why is more to And time. to I'm past expect and usually personally the to the our believe on into evolution, the adoption the is depends experience technology I is in XG really the it the XG the XX SA XX with the further. live new operator accelerate definitely of and -- telco, is logos. optimistic win growth, to goes higher. popular, accelerate execute SA much From that then there a we getting months we rate can even any and our ability where maturing, start actually once and become those this adopting lot takes see And years it you potential XX to the well with next and pace all growth of technology a

Alex Henderson

teams. us you scenario. year. correctly, and So in operating mean, likely acceleration to around sales XX% line of talking it Is growth, marketing, what reading of and in this that I I'm margins about give sense compression given of that -- in you're you a we're do the that think is a under do backdrop number XX% sales some about can to marketing spending increase pretty talking XX%-plus if significant the

Eyal Harari

to increase in moving and R&D are the and incremental. shifting of marketing. we sales That is from resources process So

increase the will the So development increase we the answer first the later the SA. year of come will the an get only this XG Arjun, some some of in And part of will as and in to follow the of year.

see, sure vote adapt want new said, opportunities will SA are to and that the this best we is to pace don't we going we ready share, new to to and opportunity, make the we we believe teams. miss confidence we to with the business RFPs market I of market we of next, the and win So the to as XX in We want months I want think cover. it the critical XX see, to the be XG be

are North strong America. focus -- very to We already we're going in in

to where And to we this strategy. And this specific for going are many we Europe. in solutions where look to Japan the the increase like our is for quality work we coming assurance them in find with We countries, matters fit we are that are years looking transformation best innovation, lines presence where allow for we do as with product with our will Rakuten. why

Alex Henderson

quantification I around think margins XXXX? understand of in looking going strategy. and expansion it the compress the Is strategy. given commentary that operating marketing reasonable I'm some to sales to the for you're the

Eyal Harari

operational No, the margin increase to on and the be overall in looking the operator increase lower will grow improve we in the revenue as the the the revenue. in the -- will operation in increase than -- significantly cost are the

Alex Henderson

Okay.

I'm I if growth. ahead XX% how about to of of produce sales it enough the well and investment revenue does clearly flat, number be expansion? the of increase type terms Even I growth. to wouldn't XX% teams, in R&D -- hold your that's that if marketing -- of Is mean, translate do that your it in So talking what I

and other within am marketing marketing? How offset mix of as costs what the it? do I doing result shift So sales number cost increase to coming I -- by XX% XX% sales in a similar without of a there elements the increasing are of get teams the amount? down to Is the and

Eyal Harari

not our of marketing and the biggest the lowering is marketing. the company. overall, the And growth expense be in and for to in going to sales R&D the some cover expense are we mentioned, As sales

shift. operating operation have increase we that expense not overall And the this it's to only going going the to of a So in we XX%. increase the are to are because expense moderate And on numbers lower the take over teams have going sales overall to and as full -- so it's will year, from January. are of impact the we impact a gradually not increase the on marketing

of will them second come in of year. Some the part the

Operator

next from of Charles The question is Elliott IPI.

Charles Elliott

thanks first, years the last few the good all did for for much you and Eyal, very year shareholders this over luck.

Or future, are it your of take on you an and of terms more nonexecutive you is role? sort Chairman's a to active like going In -- equally or position positions.

Eyal Harari

can hard question, repeat you. it you was Sorry, to the hear

Charles Elliott

I'm me sorry. this now? hear Is better? you Can better

Eyal Harari

Yes.

Charles Elliott

role Executive or something Chairman. active an or nonexecutive like

Eyal Harari

supporting going time, in what I'm be But transition sure my successful. RADCOM. the Board and no, making be this I or the company later guys And next. a of in stay to on for clients going RADCOM would parallel, the Chairman to of in not will I'm next period the to going going share I as to is

Charles Elliott

sheet want your well full generating through flow, you revenues million company it a now conserve a Or in further and returns returns free or decrease. years there? cash grow to $XXX do more prospect free questions. through few buybacks and With investors flow, cash to some so your dividend RADCOM cash balance above to more you of is -- A few cash the that from get that a

Eyal Harari

to we and share. This increase very the take market terms of more and customers -- risk cash that profitable of believe we while that good with generate So over are to we the a million $XX our and our engage it seeing X market, in second. still foremost how We we us years. can in X allow us in position last it's to percent allows are generating more have and the

there buybacks our opportunity. stage, of something keeping for to make dividends We market. that discussed, auction did M&A keeping want that the we position the options further first and in on in sure And growth. being our we the or opportunities a we this might be will looking us the increase allow current year, with have and believe last further strategic our additional believe better to And we position strategic that is M&As but is there use

Charles Elliott

question. One final

should come or at Or customers through kind a Did moment? win? AT&T Vodafone. of greenfield your Continual? your big significantly this it of a to of Or size this Rakuten smaller new look at as even? like mentioned And You acquisition customer some similar the greenfield, was now is it we

Eyal Harari

inherent it the Vodafone customer. It for At is key a is customer smaller. moment, the We was with of significant a a Continual. M&A Continual.

synergy. RADCOM, have values We we the of with saw believe the power that value. the Continual set and great and retail of we portfolio, can product wider more partnering with by further the this that One expand create we

We with today working are certified a Vodafone vendor. as

with power technologies. and as line And Europe. can allow but We a we with are its is we to large Continual -- believe And it needs. RADCOM original few that out requirements have better we and working the are to visibility of with Europe with both technology, Vodafone expand countries, around and us operations the mainly a enterprise further many the and product [indiscernible] as well the RADCOM

So activity the grow as it future. even stage, I initial AT&T it of have definitely, relationship very large. could But with Rakuten but Vodafone a size further is we near into or as scale can at enterprise can in them, this believe this an

Operator

Fourth LTD your RADCOM XXXX Full the Quarter Conference Call. Thank Results participation. concludes you for Year This and

go You may ahead and disconnect.

RADCOM (RDCM) 31 Jan 242023 Q4 Earnings call transcript