RDCM - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. Results Conference Call for the First Quarter of 2024. [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 Hilik Itman, RADCOM's Interim CEO; and Hadar Rahav, RADCOM's CFO.Please note that management has prepared a presentation for your reference that will be used during the call.

would downloaded in you RADCOM's the www.radcom.com/investor-relations.Before begin, not through do website have the we link review the Investors I you it provision. may yet, so at safe If harbor to like section of

beyond, intangible XXXX conference forward-looking company's website.Now, in and assets does GenAI by expenses been acquisitions.Non-GAAP overall differ Israel XXX, Web the undertake to well related relationship management which Topic year and that Rakuten, in the of with performance, XG of the in company (expenses), SEC in and in automation insight, the grants pipeline, to information non-GAAP with sales to will benefits financial on to and expenses in Forward-looking opportunities with and future new the of operating expand Services risks helpful acquisitions-related filings.In to investments its user's potential from full and this limited company's income stock-based from levels sales respect and vendor,the of have respect intelligence to for presentation and development allow about considered marketing understanding leadership of and revenue operations gross to compensation information that expected operators results measures, assessing to network the and as results expensed its prepared ability ACE forward-looking these operators The cause outlined this drive of review The statements. reconciliations levels is provide period with financial of harbor Software-as-a-Service achieve of its principles. Authority call, safe the are provisions, statements, the forward certain turn guidance, company's logos provided the its higher measures earnings GAAP to assurance headcount expenses quarter's over research and be XG, financial as the amortization period. financial the excluding momentum of including accounting a DISH.The refer its company's certain noncash and to core innovation margin, to artificial involve like enhance the for update Please to conference are comparing non-GAAP financial meant accordance as ahead. its ASC to to ecosystem, presentation generally RADCOM's uncertainties, to measures actual full the RADCOM the call could with are by and Innovations expectations results encouraged AT&T statements call and additional and our included a several Investors go ability in evaluating and performance consistently not and cloud but the cloud including, in with Amazon to expectations not corresponding I their risks its business and XXXX of the in not profitability, release available its from accepted the in statements to would growth, substitute accordance on future Hilik. solution,

Hilik Itman

Thanks, call. operator. earnings Hilik My XXXX name thank you everyone, us for first Itman. our for Good morning, joining and is quarter

development I of Chief Board XXXX. appointed Interim for teams. Customer Before since Officer responsible served was being and by the RADCOM product I as Operating Success CEO, the

President I XXXX as from served to Vice R&D COO, of becoming Before XXXX.

thank team management part the the laser focused offering.I as in ] ] with are of levels additional to I for opportunities results. is to momentum the the ] continuity and business we to transition the first our all want the time, finally ensure with and and our [ to from the capabilities profitable for powered expand automation features lead Interim the to new trusting on CEO. customers including solution to few Since this market cloud, and mandate and software product continue. our led a provided quarter During clear goals Board me [ AI [ virtualization XG.Turning to I've The business leveraging role, positive that closely to worked ourselves as

levels strong the XXXX then We We quarter with positive [ by continued goals $XX.X quarter quarter. our ] of million. of into that momentum year-over-year record achieved quarter highest the first level with XX and increased revenue consecutive first and for cash in XXXX our XX.X%

with as and operators network some innovative Operator partnership the our available this for AI-powered innovation enabling our this automated in included leadership cloud cloud market offer network. RADCOM that In partnership We renewing its additional The for in saving to for gain scale to to don't customers can to and need the operator cloud, on our cloud, infrastructure. pipeline. is run flexible our will to they an options [ and solution into we the continue leading Hence, RADCOM the achieve These its to to encouraging as XG.In in and on continued The the cost and and assurance multiyear GAAP deploy customer, cloud.Turning technology to higher to strengthen also cloud-based telecom projects deploying Rakuten assurance reinforce key extended ] had and XXXX operators future. cloud provider our navigate basis. It drive assurance us usage or installed computing a it its our access with on based this our with for generate automation the innovative addition, [ positive already solution can Mobile transition of provides to use the assurance transition. our XG a is with transformation.SaaS configured. options rely announced level analytics with of achieved our income in offering strategy we to this network gain insight SaaS. and AI, telco and contract more be contract sales that contract strategic assurance Rakuten to [ We the ACE importance Deploying is as to enable by our popular ACE. telecom and up ] has solution. profitability become operators SaaS in quickly choose advanced goal their to use opportunities on journey for customers start provider flexible the more invest also and our operations needs.Offering turnkey the operator a ] Rakuten a down Furthermore, on contract, and offer AWS software its of sales other our that the been leading platforms. offer manage rollout. automation that the AWS and It strategic Operators cloud a extension operator we the one U.S. non-GAAP want vendor small a value delivers want will can model Mobile.We specific operator. extend assurance on collaboration, SaaS whatever nationwide is benefit ability cloud offer demonstrates network private

our deliver key business to manage our operational DISH believe base software AT&T We safe customers automation strategic strong. announcement continue network, remain more to provide and new and costs. installed and will remain their help and them releases customer, innovative we to

renewal noted to In us.We on include product is the hybrid and continue following see our cloud, opportunities leading capitalize of networks. our healthy we our fully potential work integration within for of team all addition, ecosystem public and existing cloud the as and public and on sales significant have contract.Our ahead customers. with We Rakuten a offer growth line private, increased customers based to with I In mix of we multiyear potential pipeline our the business Mobile ACE XG RADCOM providers. ensure our previously, X pipeline remains new the cloud public growth good strong in

cloud hyperscalers an and are investment Our having see ecosystem call We or of opportunities.In bearing providers cloud previous fruits, are emerging our the believe hyperscalers use announced of the to will networks, mentioned generate the position first role ecosystem. our management our [ the a all centric to we of cloud operators' ] GenAI the the we to smooth importance their facilitate telco vendor they unique pivotal to as XG we to additional in providers opportunity operators GenAI and a the RADCOM one leading space public partner assurance skillset with year, of for power cloud.Last transition harness entering help in help manage that the real-time us integration as with network. assurance network telco GenAI

innovation technology GenAI efficiently our to into enable networks to their helps AI solutions and continues [ more work operators that and automation. dynamically ] manage on through team Our embedding

AWS. the this As of integration announce effort part our of GenAI application with we

which space, and leads activities, sales see customers to operator our in opener in Although, processes engage use standard, in [ our conferences. can door this macroeconomic them through leadership reduce significant meeting continue to XG. marketing innovation GenAI and while in invest landscape, are are stage, the to thought direct and and roll to be the looking sales continuing help our is additional operators current innovative ] global that the opportunities.We other with including a innovation the XG. out costs In networks solutions for seeking Operators revenue, investment

operators service be private RADCOM. enterprise to must quality multiple in our engaged for customers. opportunities of our market, case through competitive while enjoy Operators networks continues different like ensure solution driving is for highly use addition, critical innovative operational revenue efficiencies this can at an RADCOM ensure in and a In maturity. to opportunity generating stage service subscribers the for use services assurance.This top-quality for solution

to we starting into RADCOM insight top space. viable on and product expertise to services product The a from We add that unique additional to guides know domain integration the expand enhance foundation enhanced Star is passed using a software map data to AI solid can automation, ACE AI-powered is telco road use Web capabilities of out of for into building Generative AI-based continue the products on with customers' while GenAI cloud more perspective, intelligent our data announced all telco Services how our years XG. and value so the North our approach innovation many support intelligence We become the this AWS, knowledge, and RADCOM continue of from foundation. and with operational and to We roll increase good cases. AI. by our analytics.We efficiencies telecom in application company a revenues make new improving help operators will deliver autonomous operators.So by networks analyze and Generative innovating more operators efficient for and through Amazon

business know-how based effectively.To of operators RADCOM natural the our into operators faster the visibility roll costs. enable data leveraging operators drive telecom and provide wealth We good that supporting XXXX, forward tap market and position, are well more cost innovative XXXX. they ACE our unique language We opportunity in summarize, optimize work as to and solutions XG into positioned to on remain overall market out to helping produces, to use

Our multiyear driving strong visibility. us a and contract consistent also results backlog, provides giving good

consecutive confident $XX that, gives turn revenue to revenue Hadar million Rahav, $XX continuing X growth CFO, over and to in to fifth financial lower call our in increasing of momentum. growth, guidance the confidence of will profitability are million.With to We our years the like the the year discuss end the This would to the of raise who delivering XXXX last I results detail. our us

Hadar Rahav

X to Hilik, intangible contain turn amortization excluding review mainly acquisition-related to our you, while and compensation, the of stock-based Slide non-GAAP refer To will please numbers, and results, assets acquisition.Now good and the I to related Thank financial GAAP financial highlights. everyone. morning, expenses performance, for slides non-GAAP

million. grew million represents in million our time, gross the in nineteenth while mix. revenue quarter.Our efficiently This revenue same XX.X%, quarter revenue XX%. year-over-year first consecutive that the the non-GAAP quarter increase control in and of of margin investing of first we on At slightly on and $X.X from income our the quarter-to-quarter, for strategically and non-GAAP our of $XX.X in an depending continue a This in Note vary was basis reaching increasing marketing. quarter First sales new from record to gross margin and quarter manage XXXX investment a by net the XXXX. resulted $XX can of growth expenses

quarter the level. at remain that second will similar expect We a

Our $XXX,XXX of XXXX. XXXX gross for first non-GAAP R&D quarter to basis on of of a the were expenses first $X a decrease the compared quarter million,

our solution in continue our strategically cloud. ]. in expenses technological invest as extend With a ACE enhance to XG R&D similar integrate our this capabilities, the RADCOM evolving maintain our solution, leadership future in research our will development investment for and the AI to insights within to and vital key [ and is increase our our rapidly, into driving seamlessly market is expand XXXX enabler space This continued business.We

similar from increase. will remain expenses a impact the level a exchange R&D quarter next at any Excluding rates, with our slight in

of of quarter, a to R&D $XXX,XXX a of we grant compared for the the a million Israel quarter $XXX,XXX received of Innovation the first to last compared basis, quarter the our During year.As the on $X first from non-GAAP first $X.X in XXXX XXXX. million expenses quarter in Authority were result,

grant similar in expect the level Authority the remain We Israel at Innovation second quarter. a to

calls, expand in our and in strategically previous opportunities to investing XG announced continue we capture in the As business sales market. and marketing more

in basis, pipeline quarters, of the Towards a $X.X to basis, end to non-GAAP increase of a for expense and non-GAAP the the share. XXXX.On or first expenses XXXX or share share previous million a of increasing can on end our sales the first $X.XX expenses increase compared and million increased on expect $X.X you basis million GAAP $X.XX to an of the XXXX. our the for opportunities.G&A In as non-GAAP investment support first basis XXXX, the quarter million Slide the of on first sales of was income of incremental XXXX, XXXX revenue first a the $XXX,XXX of an per Thanks were $XXX,XXX a of sales XXXX, marketing.In compared per $X.X diluted increase quarter diluted was of the of X.X operating first first for $XXX,XXX million for on first quarter share $XXX,XXX the and the we of quarter quarter see income of XXXX. from X, the expenses net made $X.XX gradual per of net income to quarter as to for following the quarter $X.XX reached first $XXX,XXX a per quarter. XXXX non-GAAP for of a marketing the to net on of quarter an quarter the was XXXX. and we compared careful Net $X.X marketing income basis, XXX, in diluted first of for or At of XXXX. XXXX This an headcount first EUR quarter income management, compared diluted quarter or same was

expect remain in headcount sheet. second to We the our quarter.Turning to similar the balance

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

Operator

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

Alex Henderson

of result anticipate lumpy of upcoming XXXX. lump the nice great moderate quarter large for a to XQ little by a implied quarter? of into low the wanted It's the and in in a guidance more the a a Was quarter only hence, a first of in rate? quarter taking address we should end And year-over-year in growth linearity terms the terms start up. the versus certainly, the I quarters beat the

Hadar Rahav

Okay.

and which end lower the And that half the million, raised we on a means to guidance of $XX no to [ we in saw, the year are we of you trend $XX the the have the million likely second similar line. in higher if our a as change to expect ForEx updated ], bottom of So we revenue terms revenue. guidance,

visibility continue to in and on opportunities in marketing calls, clear we sure have make capture investing more the we in market. strategically the to ground XG certain announced As previous boots the enough

sales the line. the but will used bottom So most go be of revenue it will down part of increase for investment, to

Alex Henderson

it's relative assume? quarter sequentially, quarter, the stable in to So fairly the second first I

Hadar Rahav

Yes.

Alex Henderson

not Rakuten going? news just The size you the you with like deal about pipeline, sound renewal. an had that's a upsell talk some the how Can it's Rakuten. of at does ], nice on obviously [ expansion, Looking

Hadar Rahav

So the renewal is of the contract going...

Alex Henderson

Yes.

[ So Xs terms large ability upsell the like the cohort to AT&T or well to your you the of to into as talk Rakuten, as DISH look upsell of can partners, 'XX is in Tier others any in larger about 'XX? that to together? put matter you that What ], top and not just want mention

Hadar Rahav

in the few the same products is extension Rakuten, the way but is for the the as previous AI contract around renewal services. one, a about opportunities with it So the and

we exist customers, XXXX. some of believe them that with -- of and in half executed existing be different we our our have opportunities second We in pipeline, will the

Alex Henderson

to incremental were out? play growth at said due I it the upside between expecting more to you're I look revenue? If the the think driving is pipeline, you Or the Is both and it split new how evenly customers was new customers customers. to to that existing

Hadar Rahav

opportunities new pipeline and including existing from new of from our customers. is The from from existing also both, mix No, and customers. --

Alex Henderson

So is type a there the other? bias Or between X? to split the versus evenly one

Hadar Rahav

No. It's XX-XX.

Alex Henderson

Okay.

Just I you and that's new you a metastasize a bit products, something new about talk in of ] revenue announcements. guys just new terms that's have of the to announcements streams? amount starting think the technology into fair Can product [ had little whether

Hilik Itman

] in for a lot bring us. knowledge even and bring engagement a future now is mean, capture of in the very the I in information believe with of we of lot that our will of the [indiscernible] information. capabilities lot GenAI table with analyze the and telecom, we lot it between in dramatic have [ and And about the of actually technology-wise, of in X in base a a we of this and are that information customers spaces, the the fields lot sale capabilities bringing understanding the is significant area. opportunities and on customers cellular I to technology we mean, new the can this these the product. combination and Actually, GenAI based I side a knowledge our the And now a especially talk product opportunities,

Operator

William of Arjun The next Bhatia question is Blair. from

Arjun Bhatia

the start on your obviously, customers? AI, actually [ that intend that capture about about pricing do platform, that new to Maybe the the evolve there think pricing [ innovation and into a Obviously, you as How you maybe time of year. with how rising with talk capabilities doing is at strategy last existing your value, you whether ] when Very the nice over you think you're all think point, sticky you've added like just and you you lot look continue the use to cetera, might ]. on a so analytics, et all the to as power it's and lever? want job

Hadar Rahav

So...

Hilik Itman

] [indiscernible]... generalized -- yes, [ Okay, it's No,

Hadar Rahav

[ the to refer I first ] model. test will

test you so a win-win if So look situation. at the example, for model it's

On the one hand it's infrastructure. saving the the savings and operator for the cost operator

so decrease, And will it's the [indiscernible]. as our The for model. operators RADCOM and will improve SaaS more to we will cost marginal switch cost

is do this effect. add Hilik, So to from want you the financial anything?

Hilik Itman

No, no. It's okay.

Arjun Bhatia

little -- this kind I execution where of pipeline the think been ramp, a little we And you're of bit just, conversion? that really the you how and new a assume about that making that then of go I I XG those? as that targeted? mean that hiring bit have new on other I this last after guess sales you're kind is investments, is and the that more executing lot reps going those it's you're that's how But -- of reps it. touched focusing. kind following are are, new telco to front is help on you're just sales so accounts on how you piece as is don't where and how understand marketing a a us can mostly Got quarter

Hadar Rahav

and more the like in [indiscernible] year, So we the very focused projects the and carefully [ the we Japan on country. last see primarily small -- In is we we And in market in last Europe South North as some a advanced and in the announced and to early the our that XG the always ] America there few countries Korea. Asia started operators are in call, in [ to progress, in to previous evolution start ] and mainly know Europe in that of you and better.There adopters there more we are years. can following

share. sure ground to and telco extended in the and coverage to enough we enough more [ have make have sales to increase team want and and we we and let's boots more we order ], our on capture opportunities make sure say and in that market investment our marketing the So [indiscernible]

And You has half this first we second of increase an of your a gradual may Arjun? that in year. see increase, the in the been Does reflected additional increase already the see question, results the quarter. answer

Arjun Bhatia

helpful. Yes. Yes. Very

Operator

Cobia The next Capital. question is from from Meyers Jeff

Jeffrey Meyers

Congratulations that? those on high. position. just offers, year. the about thoughts Kind are to all-time wanted Have lines? a you tender good share What ask thought your cash buyback It's the your along to about about your of start something or

Hadar Rahav

I year the outset X So the enough is And M&A. years, cash gives a and to company the $XX transaction. sufficient sufficient in level risk. and of generated [ to discussed. market stability, see cash. we want our don't Last said, first very we purpose. key being M&A we make excuse to sure make allocate use maintain limited and a take is me, to -- and cash want this execute increasing and M&A opportunities Dividend other We use of for or have engage level it in about the market more for million, that transaction, strong a last relevant as and the But our buyback another our did the ] we position we our as we us the to it cash for that engage of to of and share, strategic level may Board cash something to and

Jeffrey Meyers

you might Understood. cash maintain I like it and have again. any congratulations at. you think I seems to look But guys do things, -- enough X mean, do all buyback stability, acquisitions to you

Operator

from is Needham Henderson & question of The follow-up question a Company. Alex next

Alex Henderson

XG There's delivering modern terms API-driven it virtually challenges of a most cutting true architecture. pretty telecom under multi-vendor the and micro telecom duress service-based So of every industry into listening in and sells been is seems spending. the clearly budgets the on that to space, around back core person clear some who their

they're you XG of here when talk category, adoption winter virtually that company and of around expected, is to the telling [ delivering than slower of kind the in to so every in originally of going with ] we're challenges And advanced that telecom other pace to slicing architecture, the of and the [ features think with like AT&T new down multi-vendor was XG ] to I out monetize it the intended obvious yes, like and Nokia investments.So cutting up going Ericsson. a with and network were some had be I that go the path tried ended that

all you So right -- you? solution are that of to by and by those it? to the plateau? -- how next is does think affect alternatively problem get actually Are you The negatively the because Or issues answer you're to impacted the them I and the amplified answer

Hilik Itman

Exactly. Yes.

think context, in order are derived ] the and from that evolution right strong to I technology the some the in XG [ valid understand all transition business.

for is, So for networks the software-based to telecom. and than only more think, cloud-based actually, XG transition I way is the

again, -- with bring to we this the station.I on saw I telecom there what that some we that trend autonomous see, the of I in already the to journey. space. -- we the with things is but best And and and the even a help and this think lot in to is journey, at keep not the have difficulties, know the from that the are table new So assurance aspects. -- going them with is And to position

that and it's I happen in I think and think XG not position, it and network that eventually. position together going autonomous all will good are don't we see ] this [ So a any I transition way

about it? You have more questions

Alex Henderson

issue is as kind at center there's a go right? Well, of multi-vendor was to on believes with don't the decision that anybody there's that And I problem, standardize core expected. AT&T XG mean, clearly I working that the of any the think Ericsson. to

RADCOM the this investment to observation investment, they're slowing is given you? solving says and problems, accelerating actually so problem key -- the with Rakuten those instead of that the products, the So

Hilik Itman

Yes, that is true.

the cloud-native the we and we relying space, transitions, customers dealing the all these platform with I that on with think that bring are with and that this XG transitions. fact

good the put technology we are and in all and network they more it you we In can on that are very our newcomers, it's the around it's are reduced scalable manner. that with the that -- efficiently with reduce transition. position this in with they all by in relying we a saw So us we We manage working are position. are customers XG your -- cost -- because our because more people best platform significant

So yes, I think with area. to it's on very this work us helpful

Operator

you. Ltd. the RADCOM This Thank concludes

First participation. you Quarter XXXX Results Conference for Call. your Thank

You may and go disconnect. ahead

RADCOM (RDCM) 15 May 242024 Q1 Earnings call transcript