Q1 2021 Radcom Ltd Earnings Call
On the visibility.
Okay.
And.
[music].
Ladies and gentlemen, thank you for standing by and welcome to the rack Com Limited results conference call for the first quarter of 2021, all participants are present and a listen only mode. Following management's formal presentation.
<unk> and instructions will be given for the question and answer session.
For operator assistance during the conference Please press Star Zero and.
As a reminder of this conference is being recorded and will be available for a replay on the company's website at www Dot rack com Dot com later today on the call of our Eyal Harari, <unk>, CEO and Amir Hi, Ron <unk> CFO.
Please note that management has prepared a presentation for your reference that will be used during the call. If you have not downloaded it yet you may do so through the link and the investors section of <unk> website at Www Dot rack com Dot com Slash Investor DAC relations before we begin I would like to.
Review, the safe Harbor provision.
Forward looking statements and the conference call involve several risks and uncertainties, including but not limited to the company's statements about its continued investment in technology and the R&D, the <unk> market and industry trends, the company's market position cash position potential unexpected growth the company's expectation with.
The respect to its relationships with rack and Penn and AT&T and the potential of the rack on the eighth product and the integration with Microsoft Azure and its ability to capitalize on the emerging <unk> opportunities and win more market share is potential expansion with a top tier Latam operator the.
Potential for additional partnerships with top cloud providers in the future and its revenue guidance. The company does not undertake to update forward looking statements. The full safe harbor provisions, including risks that could cause actual results to differ from these forward looking statements are outlined in the presentation and the company.
<unk> SEC filings and this conference call management will be referring to certain non-GAAP financial measures, which are provided to enhance the users overall understanding of the company's financial performance by excluding certain noncash stock based compensation expenses non-GAAP results provide information helpful and assessing right.
<unk> core operating performance and evaluating and comparing the results of operations consistently from period to period.
The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures included in the quarter's earnings.
The release available on our website now I would like to turn over the call to of Yao. Please go ahead.
Thank you operator, and thank you all for joining Investor day.
This morning, we issued the press release and you can go where first quarter 2021 results.
We're pleased with the financial results as the mall covered serviced and fifth consecutive quarter of fuel for the use of revenue growth both of.
And revenue for the first quarter of 2021 was $9 $1 million, representing 10% to use all of the these goals and then continuing improvement of our bottom line.
This revenue growth is supported by our strategy of procuring multiyear agreements for software and services, culminating in a significant contribution of recurring revenue.
Our consistent results come from the execution of these multiyear contracts with the leading operations globally and that will be.
Relative to remain agile and dynamic and ever changing business environment.
We are excited about our recently announced win at the top field and the time, operator, and we secured the multimillion dollar on the older for all of a radical mace issue and solution.
The selection process involves the multi vendor tender and which drove the original analyzed and evaluated vendors on the of Folgers and five G issuance capabilities.
This win was the choose based on our innovative technology and data capabilities of the reticle, Mace, which provides and intelligent automated assurance platform.
The rest of amaze will enable the spoke to open the door to resolve the nickel of quality degradation before the effect of the customer and as such and improve the overall customer experience.
This win expenses the deployment of our technology from the operations mobile network with the quotation to expand window, probably still confusion to the five day network in the future.
As mentioned in previous quarters, extending on the <unk> networks and built on cloud Native technology, which is why we recently C Corporation between telecom operators and public cloud providers like Microsoft Google and Amazon last month simple operators and announced the collaboration to build of cloud based five day.
Net well in the U S and the New York.
And as Broadcom has been transfusion into cloud native technology for the last few years. This is an encouraging trend we of all where do you see this come to fruition as we announced the integration of radical mace with Microsoft as you and it'll you'll join the first quarter.
This integration with the true enables the operator to ensure the quality of the <unk> standards.
That's the base rent is a cloud native function within the public cloud and when deployed on the jewel at the scale and manage through the Uber Netflix sales.
This integration also exemplify how will go into it the ability to support cloud native of operations.
Of our advanced cloud agnostic technology, and significant telecom experience puts us in an excellent position for the additional partnerships with cloud providers as we expect the customer to deploy in the multi cloud environments.
In addition, we are of course, we see more opportunities and now the engaged with multiple prospects of different stages of the sales cycle.
We believe the drug comes well positioned to win more market share is Pfizer continues to evolve.
We are still in the early days of these transfusion in North America and several countries in Asia operators on aggressively rolling out five followed.
Total the Europe, and then lastly, and America.
In addition, we are seeing several greenfield operators adopt the cloud native technologies rollout mobile services and extend to new market verticals.
T and T remains the key strategic customer and for US because of recent earnings calls AT&T stated did they added nearly 600000 subscribers and the quarter, which was their best net add first quarter and more than 10 years.
Our cash engage software is embedded into the mobile network and monitors and the customer experience as they continue evolving the underlying network infrastructure to the cloud.
We continue to deliver consistent cutting edge software releases to AT&T as we support the evolution of the cloud network.
We are also of August.
And we directly and in Japan is the aggressively rollout the world's first end to end of each of those network deployed on a nation wide scale.
We continue to support and record and we are forging and factory network build in addition, the Rockwood and plans to launch of Standalone <unk> network and the second quarter of 2021.
Preparation for this we have moved to the Reds Gourmet software implementation to monitor the standalone of fiber services.
During the first quarter telecom to be published and interview with Rakuten mobile CTO on the the nationwide rollout and the transfusion two five G and the importance of fraud solution and.
Both of them on this journey.
And it's the rock within mobile suit the old stated and the interview and assurances of the cycle when the oil and go Greenfield and networks, allowing reckless and analyze the events and real time diagnose them and you move the net book, but most importantly, it for voice recent data and both the true customer experience.
In addition to rolling out software releases for Standalone and five G. Radical solution is also being integrated into rec within the communications platform, which is already being market too.
And two operators worldwide and deployed and Japan.
Given this rock with the and is the leading for pioneer and deploying cloud native technology and transfusion and two five G. We are gaining invaluable hands on experience monitoring the first day of implementation of discussing the gauge technology.
And it further sales is a testament of our ability to innovate and build out your capabilities that we believe will increase over the market share and the future and as mentioned when deploying new technology, such as cloud native platform sulfides, the networks and assurance play inefficient and roll the monitoring service quality pin.
Pointing the network degradations and helping the operator improved and Echo performance. Therefore, we expect the reticle base to continue to gain further interest from operators and play an important role in facilitating the transition to five G for real time insight and net book performance of optimization, we are continuing to.
Invest strategically and R&D doing there and sort of a radical made solution and cause.
I will fight capabilities expand our AI, driven insights and seamlessly integrate our solution to the cloud we are continuing to extend our sales team and as mentioned we are currently engaged in multiple opportunities and looking to expand our pipeline as far as your gains momentum.
Just on the current industry conditions and all of the visibility.
We reiterate our full years 2021 revenue guidance of 39 million to $41 million on us.
With that I would like to turn the call over to Amit Hi, I was CFO, who will discuss the financial results in detail.
Please go ahead.
Thank you and good morning, everyone. This quarter marked another consecutive period of a few of those of your revenue growth with our first quarter revenue increasing by 10% year for you we succeeded in improving our bottom line.
Now please turn to slide six for our financial highlights to help you understand the results over the referring mainly to non-GAAP numbers, which exclude share based compensation.
The first quarter of 2021, with $9 1 million daus and the revenue increasing from $8 $3 million in the first quarter of 2020, our GAAP margin and the first quarter of 2021 on the non-GAAP basis was 75%. Please note that our gross.
Margin can fluctuate depending on revenue mix of.
The gross R&D expenses for the first quarter of 2021 on the non-GAAP basis were $4 $8 million and slight increase of two <unk>.
<unk> thousand dollars compared to the first quarter of 2020.
During the quarter, we received grant from the Israeli inhibition of authority for $68000.
Sales and marketing expenses for the first quarter of 2021 were $2 4 million dollar on the non-GAAP basis, approximately the same as the first quarter of 2020.
G&A expenses for the first quarter of 2021 on the non-GAAP basis were 800 of $9000 approximately the same of the first quarter of 2020.
Operating loss non-GAAP basis for the first quarter of 2021 was $1 1 million compared to an operating growth of $2 $5 million for the first quarter of 2020.
Net loss for the first quarter of 2021 and then.
Non-GAAP basis were $1 million or a net loss of seven cents per diluted share compared to a net loss was $2 4 million dollar or a net loss of 17 cents per diluted share for the first quarter of 2020.
On a GAAP basis as you can see on the slide five of our net loss for the first quarter of 2021 decreased to $1 $7 million or a net loss of <unk> 12 per diluted share compared to a net loss of two nanometer on dollars or a net loss of 21 cents per diluted shares for the first quarter.
2000 Twenty's.
At the end of the first quarter of 2021 of our head count was 273.
Turning to the balance sheet as you can see on slide nine our cash cash equivalents and short term bank deposits as of March 31, 2021 were $67 $3 million.
We believe that our strong balance sheet provides us with the flexibility to execute the opportunities ahead of us and route and.
And then <unk> through global uncertainty.
And our prepared remarks, I will now turn the call back to the operator for your questions.
Thank you ladies and gentlemen at this time, we will begin the question and answer session. If you will have a question. Please press star one if you wish to cancel your request. Please press star two.
Using speaker equipment and kind of with the handset before pressing the numbers questions will be polled and the order. They are of seat. Please standby, while we poll for your questions.
Okay.
The first question is from my line sorry of William Blair. Please go ahead.
Thanks, and the good morning, good afternoon, and the Israel and thank you for taking my questions I guess I'm just gonna start at the high level Jensen and.
I'm just trying to understand if you could provide some color on the spending and the.
Tissue and making environments and you're starting 2021 and we think prospects 2020 was the Goodyear, let's be clear, but are you seeing some of the prospects of of delayed last year. The company begin to come back on line are you starting to see maybe the decision making around five G rollout to pick or improve because we've been we've been watching the trend for obviously and a few of them.
And with delays on the beginning.
It's not sort of of switch like for G was help us thinks and sort of what the demand environment and it's looking like given the visibility.
The COVID-19 things like that.
Hi, Bob and good morning.
The yeah five genes the long term trend that we on the monitoring and carefully and we invest our focus on the.
Making sure we are capitalizing the growth of investment that's expected and five G. I.
I would say that we see encouraging.
The momentum and the five G era.
And we see them, all and mobile operators, taking more active steps towards five G investment.
I laid out.
And the timeline and previous calls we see a process of operators starting the ne.
And the investment typically from the radio side by buying the radio frequency of selecting the radio providers and starting to deploy the the.
On the antenna and then going to the second stage of going both strategically and nationwide investing into the cold and Echo what we also called the <unk> stand alone. So overall, we see the number of accumulating with mall operators being committed to the process, we see mobile operators starting to select the air.
Radio vendors and we see more peripheral starting to select and the vendors to the call.
And as I mentioned, we have increased and we increase and keep increasing over the since then and we know the two kept her day the opportunities and we follow very carefully the operators as they announce the bogus with the five day to make sure day.
We are the dead and.
And well positioned to to be and this opportunity and as they had been.
The other questions before and last year's mainly on the COVID-19 and whether it would be creating.
Creating some delay.
And I could say that the.
You know, we know telecom processes the of taking time and I can say over all of that is progressing as expected and there is the clear the investment and the industry towards five day that he has no the question of the.
It's the question of when and I would generally say that is the August and be as expected and we see and more.
More opportunities of one five G a wealth of Opel quarter.
Got it got it that's helpful. Maybe maybe the other.
Deeper.
And we talked a little bit about sort of the backlog on the P. O C. Do you have on.
And how it goes back out and or maybe even pipeline versus say last year of two years ago and you think about this opportunity some color that would be really helpful.
Okay. So first of all for POC as the.
One of the questions that's always the bean.
I mean, that's the is now we'd coffee than the friction on travel and how long.
Yeah.
Of the week, making get you'll see happened in the in this environment.
And what's nice about the rest of them and being day fully cloud native the supplier is out of the ability to deliver those of you will see also from remote utilizing all of the virtualization software doesn't necessarily require of us to install the physical hardware and which is these days more complicated.
Actually it allowed us to accelerate out of customer engagement demos build season and.
And we are the involved with the many activities with many different customers.
I'm not sharing exact bites and information, but what I can tell you is that the number of operators, we are engaged us increasing from quarter to quarter and.
And we are seeing the overhaul of positive trend and the pipeline.
Got it got it and know that that is.
Super helpful, Let's touch a little bit all of the cloud relationships honestly the azure relationship.
And it was really interesting.
Out there I just help us think true kind of how that gets monetized right. So we get the cadre of us wants to be on the telecommunications and the terrorists want the half software only cloud based solutions that integrate with applications that run on azure or some of the soft from around the azure.
Rod pumps.
The assurance software the liability of the network virtualization and those can all run on Azure and I guess does that make it easier to monetize is not just the longer term secular trend and capitalize on how should we think about where the monetization of that opportunity and how that will play out.
The what I would split it into and show them and long term view on the shorter term.
We see operators starting to engage with cloud providers in order to help them to build the fiber network.
And the the relationship with Microsoft Azure and others is in order to make sure that once the selecting the cloud partner the.
They know who we are one of the influence of providers that can actually deliver and D. C. U E of environment, there's not many of our industry competitors can really play.
This is very helpful on the and.
And the exposure into new accounts as we know the.
The cloud providers of marketing aggressively their solutions into the telcos is the workloads of the telcos of being considered as the as the big potential for the cloud providers on the longer term I believe that more and more of telcos will really move to a full public cloud implementation, but this is.
The going to take most of you and maybe three to five years and on the long for the most of that relationship at the.
Believe that this could be very important to be able to and.
The lives of our software is the salaries over those flow provides us one of the telecom market will be more mature to consume services and.
On the cloud so I think its both and bolting on the short term for enabling the exposure to immediate use and the to reduce the the entry barriers for months working with different carriers that the always been some Pfizer, Inc, which is what we aim and the on the longer term this could be and even most of the surgically bolt.
And as the telecom industry as I believe we will continue to migrate more and more to the public cloud environments.
Gotcha Gotcha Gotcha very helpful I might try and squeeze one more in and then.
And I'll jump back in queue.
You know visibility seems to have improved and the business will always be lumpy because of large contracts. It's it's not 100000 potential customers right and take the large carriers, but maybe talk us a little bit about the visibility you have this year and how that plays out as more and more of the business becomes a SaaS pure software subscription base model helped us.
And to visit.
Visibility that you're seeing this year and then and then how that might play out. Thank you.
Sure.
So and.
Our multiyear contracts.
And the allowing us to get more and more and bigger and bigger portion of recurring revenue as we deployed software and services on the on the tier one carriers, we mentioned our engagements and the festival dumping and we directly and that provide us really good the visibility on the multiyear.
The 70 is the revenue along the along of the contract period and as we expanded just in Q4 into five G engagement, which increase the other visibility further.
I believe that we the we do win of Rakuten and five G. On the Q4 and these new wins and then.
And this quarter with telecom operator, I was just the ability to increase and we keep maintaining significant part of our revenue and it's been recurrent which should give us the.
Very good insight into the yearly targets and this is why we were you're reiterating the guidance will be.
Got it. Thank you guys I'll jump out and do you think you're taking my questions.
And thinking about the.
The next question is from Alex Henderson of Needham and company. Please go ahead.
Great. Thank you very much.
I was hoping you could talk a little bit about the architectural commentary around moving to cloud more cloud native.
And to what extent are your software is based on micro services and how do you updated the.
Overtime as of day continuous integration continuous updating.
The deployment model or is it still somewhat monolithic and its architecture and I know, that's a fairly heavy lift, but obviously dramatically improves your your.
Agility and the.
The time to market with new features and functionality of once it's achieved could you talk about where you are on that process.
Sure. Alex This is the great question and the virtualization journey and started for radical and what are the 2014, we were starting with the first of all bolt and dollar solution into soccer and building them and the Virtualized environment.
And the this was already available in 2000, and we've seen since then we will the enhancing and mature and go the architecture and as you. All spoke on we are focused today on the micro services.
The Hooper and ethics environment.
And for all of our solutions. This is exactly what all of radical base on the boat, which was announced on the water of win for 'twenty.
And being involved with the of companies like Rakuten that of the using the cutting edge technology and for those of you follow the Rakuten cloud platform architecture. This is exactly a fully cloud native micro services architecture and as being the close partner of ours. This is the the target the architecture that we have.
We are supporting and we are of these days implemented with them integrating into their environment and I would say that we believe that we are quite advanced in our space and the is as you know we are walking with the one of the most of the advance carriers in the <unk>.
<unk> unit.
Cloud native environment.
Lots of we keep investing in R&D significant amounts as we believe that this is the this is our cutting edge and most of our and duty sources and the last two years, we're going through the day.
The transition from the virtualization I would say and if the architecture into the Kubernetes cloud Native micro services architecture. This is the in the last stages of implementation and is up with and are expecting to go lives and of Q2. This year and this is the way we are targeting to be fully ready.
And the G H.
As you mentioned so there is the big benefit on the operational efficiency for the is the way of using as you pointed the ICD and our development cycle.
Would it meet the most telecom so not yet mature to walk and disappoint the elbow traditionally the way, but definitely we see more and more parochial swinging into accepting and mobile edge on approach as leases.
And what we're green day and ours.
DNA and and I believe the strength will continue in the next two years.
So.
Clearly your you know your technology is there for on the cutting edge in terms of the architectural design.
It strikes me that if you look at the competitive landscape you're way ahead.
And the technology, three or four of five years ago, but there's a perception out there that the the competitors might be catching up but I don't think any of them have moved two of micro services based architecture. So could you talk a little of about what you see from a competitive landscape when when you're involved with the bracket 10 in terms of that spin.
Civic issue.
Yeah, sure and I agree with your statement, we really proud of and believes that all of the technologies is way more advanced and the competition I think the main difference and you look compared to couple of years ago. When we started to peach about virtualization and the importance of virtualization and for.
Two years ago, many many of our competitors worry and deny what's different today is the full and everyone is clear that five day is going to be cloud native and then the marketing of all of our competitors.
Already know to say the right messages, we don't see today and.
And Andy any of our competitors, so sketching up but you know we have limited visibility to competition and the message we are losing from.
Most of the customer we engage with is that what we have these more advanced and what the the other skin awful, but he said the ETA.
And again I want to eat and I, it's a different than before that when we played and the niche the.
Some people didn't believe will the will mature and become the the standup now everyone understand the this is what's needed and everyone is following the the trend and what we're doing in the last years and and trying to catch up with the micro services architecture.
Well, it's my understanding that the your.
Your line Virtualized version was competing with the hard.
Hard system refrigerators, and when you first came public.
And it's Craig's me that the move from most of your competitors was trying to figure out how to catch up on on a standardized virtualization.
The approach, which means that you're basically running the software and the virtualized manner as opposed to.
The changing the architecture to a re code to a two two micro services based architecture. So.
And if that's the case these guys are still way behind in terms of that technology and that's probably the most important delta between the.
Modern application companies and and anything that's that's more legacy and I assume that that's still the cases of am I, correct and that assumption as far as you can tell.
Yeah, I think again you're spot on.
This is what our assumption and.
And you know and the last five six years, we spend.
The $100 million.
And this all goes into those architectures I don't believe the.
Our competitors, whereas focused and invested strategically as us.
And the and this is why we we believe that our technologies the way superior than than the competitors the day and.
And the container environment and the the good thing is that when we see five G architectures ever.
The one is going towards this direction and this became the standard of the factory and the industry and.
Which is why we are very optimistic on on all of the.
And the position in the market.
So.
Clearly one of the major benefits of the Kubernetes architecture is the ability to have companies the code to a P of open API is the.
And take advantage of your technology with the additional functionality that the techs.
Turning to the company and and communicate the main the main so in that and in that environment.
Have you done any integration and are or are you seeing any.
Hooks into Hashi Corp of how are you, reaching the coding community.
And to what extent of.
Do you think that you know you're open API for our are changing of the value proposition of the technology.
And.
When we are talking about virtualization environment, one of the changes that he is very very important is the culture.
And if you looked on the telecom as it was five years ago.
Refrigerator and boxes and black box implementations and everyone was closed and by nature. When we move to virtualization. It wasn't on the about the change in the and the product itself. It's a true.
Of the culture of the company and the old approach when we are engaging today with the operators.
And where we can fleeting and the who are working and now we can reach other applications all of other applications and and reach US eats became the world from you know deployment of boxes and the field the world of software integration and making sure you get the most of them everything you do.
Things, we sold before the ITC environment I believe this trend would continue as more and more of a Netflix will move to more software environment.
And philosophy integration of these the it goes without saying that and we have lots of open API, we of the doctors into and part of the reticle Mace, we provide the icon technology, which is enable you to load feeds from other applications. We support open the API like Kafka and and others.
The to feed. The addition of big data is assurance and and Bob and he is the key data and data sources in order to monitor the customer experience and the same data could be used by other telecom applications for customer care business analytics and more so definitely integration and as part of our day to day and.
And this is part of the of the value of moving to cloud native environment and would using micro services. The poaching. Some areas. This is even even easier.
Great. Thanks.
And down on the technology and I wanted to go back to the.
The pipeline conversation and the sort of the timeline of when you win of transaction.
Obviously, there's some pretty big lag between the time you went on transaction and the time it actually shows up as.
As revenues.
I would assume that the there was the most of these native hygiene deployments that from the timing of when the times you have actually.
And then the installation and suddenly the qual.
Quality checks and other deliverables.
And that that could be the fairly lengthy time can you talk about.
How long it takes to go from closing the deal to recognizing revenue and <unk>.
<unk> is it the same as it was and the world.
And we are talking about usually two to three quarters.
And we start to see the revenue and the typical case.
I would say this is the beat.
Faster than the Fuji and spoke to in many cases was involved how old were limitations and.
Once we are doing it on five day, using the virtualization and soccer, we show and some of the time required for the start of the project. So we started the project earlier, but there is some some work around the integration.
And the typical case and it takes two three quarters until we start to see the revenue.
Okay and the one one more question the along that same line.
Can you talk us through where you are and where you expect to be in terms of the percentage of your business.
That is a subscription and slash recurring and.
And therefore highly visible and.
And what portion of your business is still a on more of a turns or.
The lumpy kind of right.
The installation and.
The revenue recognition model and where do you think it will be say a year from now of two years from now.
So we already do use the and.
The big shift and our business model towards the multiyear.
And the engagements and most of our regions and the recent the use of already structured on the and your current base.
The on the multi level I would say the significant part of our revenue is already.
And this way and the only a smaller part is the on the one time the revenue I expect this strength to continue but I would say that we are already and where they don't use flow those.
And part of the benefit of hoops and moved into the software of the product is that you are not requiring them to do and.
One time upfront investment, but you can spread the investment over the the terms of the contract.
And as the as I said this is our preferred business model and the recent deal and.
And the majority of our revenue is already the actual like that I expect this to continue as more and more the operators of moving to Fulgent and selecting of these business models and.
And but we do.
That being said the.
Might be some one time projects on a revenue sources as we still see that there's some telcos and see some getting.
And the traditional gives us model.
And the as we all of the work and we feel once we are not going to lose the deal in order to and if the customary and see so we're trying to find the the.
The REIT model the talks for both the.
The customer and us.
And the some specific projects that are really one of like one time and license of one time requirement that is still there, but overall the trend is definitely true.
The times revenue.
Is it fair to say that you're 75% or 80% of.
Recurring at this point.
I don't have the exact number and again and it's not something like myself, but I would say the ballpark of AG.
Is the is the wrong, though.
Perfect the I'll.
And I'll see the for things.
If there are any additional questions. Please press star one if you wish to cancel your request. Please press star two please standby, while we poll for your questions.
Okay.
The next question is from Sasha Karim of.
I Ipi. Please go ahead.
Hi, I got a couple of questions. My my line cut out towards the end of the last question I don't know, where you're giving some guidance that on roughly what's the model for the new Latam contracts and can you give us any any view on whether it says we're not the quarterly SaaS type revenue recognition or an annual revenue revenue recognition and.
And how would it size relative to say for example, the records and contracts. If it was the full year for your contribution.
Hi, good morning, So we didn't touch the the Latam contract.
The Latam contract as we stated these are currently covering.
And the specific part of the neck of this operator with the additional potential to expand and go into a multiyear and.
Once the operators continue with the instruments division to five Jeep and.
This is expected to be and not quarterly basis, but like more way.
The one time of year and then.
Currently we are engaged on the first part of the contract we got the oldest for the first half we've acceptance to further expense while the open. The calls. These are these are progressing with this transition into <unk>.
Great. Thank you and then and my next question would be regarding the Azure and yes, you'll deal the issue of partnership.
What would you say that the larger tier one operators and the last like Egypt willing to partner with with the Hyperscale cloud provider of like Microsoft because it sort of risks and the rest of the coming very dependent on it and they have to capabilities of running their own cloud. So is this more of an opportunity for you to win perhaps some of the tier two tier three.
<unk> that you Wouldnt have ordinarily gone for us.
But now you can go for the tier ones and the tier two tier threes.
So I think it's the we see the strength of the starting to partner with the with the cloud providers not only from the team the tools, but also from the tier ones and the cost.
The other.
A tier one operator would do is really is on the cloud, we see more and more tier one operators and partnering with the cloud providers in order to help them to build the data centers and the and the the private cloud environment as the interest.
And this is not the core competence. So this this relationship and the relationship with the cloud providers is not targeting going for the phase twos.
And you're also targeting to help us with the penetration and the tier ones, but I keep saying that the allow US also access due to some of the tier two and the until the end of the total starting to me great also to more advanced capabilities. This is part of the maturity of the market that you see that other.
And it's been still top of the costs are also starting to adopt those those architectures.
And finally, Microsoft does have some the vertical specific software expertise here through its acquisition of funds and that works.
And I appreciate right now and want yourself to the partner.
And what is the risk that's true that fund acquisitions and they could eventually moving to more deeper assurance and the kind of some type of stuff.
And I don't have any visibility into what Microsoft the open.
But I believe this day and insurances and other.
Here with the.
And you need the specialty also.
And that I don't see that the donkey have been necessarily.
Looking to invest.
But again I don't have any visibility into what they're doing.
And it could be that the Dell going into this direction, but in this case. The you know we believe the integrations with the best of breed solutions might be of better approach for way for most of the carriers and cloud providers.
Got it thank you.
There are no further questions at this time. This concludes the rack com L. T D first quarter 2021 results conference call. Thank you for your participation you May go ahead and disconnect.
And then.
[music] line.