Q2 2024 RADCOM Ltd Earnings Call
Hilik Itman: Since the start of the year, we have secured over 50 million in new contracts, including several seven-digit contracts across various geographic markets, while maintaining significant recurring revenues. This shows the demand for our leading solutions and boosts our revenues as operators transition to 5G. Our entire organization remains committed to delivering profitable growth, increasing our market share, and driving ongoing technology innovation as we look to provide long-term value to our customers and shareholders.
All participants are present in a listen only mode. Following management's formal presentation instructions will be given for the question and answer session.
Speaker Change: For operator assistance during the conference Please press Star Zero.
Speaker Change: As a reminder, this conference is being recorded and will be available for replay on the company's website at www Dot <unk> Dot com later today.
Speaker Change: On the call are <unk>, each month, Rad, <unk> interim CEO and <unk> <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 in the investors section of.
Hilik Itman: Turning to the telecom market, customer interest and selectivities are noticeably increasing in the U.S. and other regions. This upturn is evident in the number of opportunities our teams are currently pursuing and the 5G tender issued by operators. As the interim CEO, my primary focus is driving existing selectivities. In this role, I provide executive-level support for ourselves' efforts and spirit future innovations.
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Speaker Change: Before we begin I would like to review the Safe Harbor provision forward looking statements in the conference call involve several risks and uncertainties, including but not limited to the company's statements about five G and launches demand for the company's products and services sales opportunities sales.
Hilik Itman: The aim-hyde and interest in automated assurance and intelligence analytics to several key factors. First, most U.S. operators are progressing in their transition to 5G stand-alone networks, requiring the adoption of cloud-based automated assurance and intelligence analytics solutions. Additionally, as legacy assurance system age or reach the end of life, operator must replace outdated equipment as part of the natural-arbit cycle. Additionally, some competitors have not developed a cloud-native automated assurance and intelligence analytics solution, which requires significant already investment and investment that Radcom has made. This process reiterates to conducts our adieu diligence evaluating the available options in the market to identify new best-in-class automated assurance and intelligence analytics solutions.
Speaker Change: Cycles and pipeline momentum, maintaining an increasing profitability and growth its ability to provide value to customers and shareholders. The company's expected growth, it's expectations with respect to expenses and head count as well as grants from the Israel Innovation authority.
The company's expectations with respect to its relationships with its customers the potential of the company's long term vision and the use of artificial intelligence and its products levels of gross margin.
Speaker Change: The company's revenue guidance and the search for a permanent Chief Executive Officer. 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.
Hilik Itman: Given these market factors, we see significant opportunities to address our market share in the U.S. and other regions, driving sustainable and continuing goals while delivering more value to our shareholders. Adapting a cloud architecture is part of operator's transition to more efficient and dynamic software-centric network operations. We continue to see increasing cloud adoption, with operators replacing legacy with modern cloud-based networks. Our solution helps operators manage this transition efficiently and with customer-centric focus by gathering all the analytics across the cloud networks.
Speaker Change: And the company's SEC filings.
Speaker Change: In this conference call management will refer to certain non-GAAP financial measures, which are provided to enhance the users overall understanding of the company's financial performance by.
Speaker Change: By excluding certain non cash stock based compensation expenses non-GAAP results provide information helpful. In assessing <unk> core operating performance and evaluating and comparing the results of operations consistently from period to period.
Hilik Itman: In the previous course, we mentioned the importance of GNI and that all the leading public cloud providers or hyperscalers are emerging as having a pivotal role in the GNI ecosystem. During the second quarter, we announced that Radcom Network, our GNI application, was now available on AWS. All those GNI is in the innovation stage; customers see our innovation and total leadership in this space, which can be a door opener that lead to several opportunities. As demonstrated in our support for GNI on AWS and the contract win to offer our solution as a SaaS in the US, we continue engaging with operators and the cloud-based ecosystem.
Speaker Change: 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.
Operator: for the second quarter of 2024. All participants are present in a listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session.
Healy: <unk> in the quarters earnings release available on our website now I would like to turn over the call to Healy. Please go ahead.
Healy: Thanks, operator, good morning, everyone.
Healy: And thank you for joining us for second quarter flowed through to us before.
Hilik Itman: As a reminder, we offer potential customer integration with all the leading public cloud providers: Amazon Web Services, Microsoft Azure, and Google Cloud. And we believe our integration into cloud providers will help generate additional opportunities.
Speaker Change: Before diving into our results I want to provide an update on the CEO search process.
Speaker Change: The board has engaged with top executives, which was true and establish a committee to a point the next Q.
Speaker Change: Significant progress has been made and the corporate piece and then when stage candidate selection.
Hilik Itman: Turn it to the pipeline. We see positive market momentum that can drive growth, increase sales engagement, and lead to additional multi-year contracts. The more robust demand for cloud-based automated assurance and intelligence, analytics technology is reflected in our increased pipeline as we engage with multiple prospects across various sales cycle stages. While this sales process can take time and are unpredictable, we believe our solution aligns with operators' needs. Driver-unique value and address critical network challenges.
Speaker Change: The good news is as well.
Speaker Change: The way to the candidates newsworthy.
Healy: Especially the U S.
Speaker Change: Was the necessary leadership qualities and exclusive to drive <unk> growth and success.
Speaker Change: Are you fully come through them and the board the ability to appoint the right candidate.
Speaker Change: Hopefully this will assist with refundable it soon.
Speaker Change: Does the company feel we'll continue focusing on R&D.
Speaker Change: Innovation and customer success.
Hilik Itman: This set the stage for future business growth. In today's telecom microeconomic landscape, operator-six solution that helped them reduce significant costs while ensuring a seamless transition to 5G cloud network infrastructure and technologies. This is an essential use case for assurance and network analytics. This presents a significant opportunity for RADCOM, and we believe our position as an innovative automated assurance and intelligence analytics provider will continue to drive positive returns.
Speaker Change: Then I would be able to invest more time and driving utilization and think of the company to the next level of growth.
Speaker Change: Germany alongside the Newfield.
Speaker Change: Turning to the results.
Speaker Change: I'm excited to show a strong performance and execution in this quarter.
Speaker Change: I looked at the benefit of our customers trust and our ability to deliver value to our carrier grade and innovative solutions, we achieved solid growth momentum in both our top and bottom lines. We reached record quarterly revenues of $14.8 million up 20% from the second quarter of 2000.
Operator: Levels of Gross Margin. 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's SEC files.
Hilik Itman: Turn into our install base. AT&D remains key strategic customers, and we believe our business with these operators will remain strong. We continue to provide software enhancement and new releases to help them manage their network. In the second quarter, we were selected to provide a SaaS service assurance solution on AWS in the US for an existing customer. Deploying RADCOMs on AWS will enable this operator to achieve high level of automation and flexibility when using their automated assurance and intentions and analytics solution to gain, rid them inside and analytic into the network. This allows the operator to adapt quickly to network capacity changes and ensuring excellent customer experience and delivering top-quality service.
Speaker Change: We generated positive cash flow you think a new record of $86 1 million in cash cash equivalents and Ben can be.
Speaker Change: We achieved record <unk> revenue and profitability for the first six months of 2024.
Speaker Change: Since the start of <unk>, we have secured over $50 million in new contracts, including similar seven digits construct across various geographic markets, while maintaining significant recurring revenues. This shows the demand for our leading solutions and boost our revenues as operators transition to <unk>.
Speaker Change: Our entire organization remains committed to delivering profitable growth, increasing our market share and driving ongoing technology innovation as we look to provide long term value to our customers and shareholders turning to the telecom market customer interest and selectivity is noticeably increasing in the U S.
Hilik Itman: Joseph. We also announce that our collaboration with Arcutan Mobile in Japan has been extended to our strong, long-term performance and support. So this is the Arcutan Mobile. Remains robust following the renewal of our multi-year contract. We have achieved high satisfaction level within our install base by offering a robust and innovative product and focusing on customer requirements that needs, driving growth and recurring revenue.
Speaker Change: Other regions.
Speaker Change: This is evident in the number of opportunities our teams are.
Speaker Change: Currently pursuing and the <unk> tenders issued by operators.
Speaker Change: As the interim CEO My primary focus is larger than existing selectivity.
Hilik Itman: We continue to invest in sales and marketing to capitalize on the rising demand for our solutions. We have expanded our sales team to seize these opportunities by recognizing significant goals potential in our pipeline. We expanded our sales channels during the quarter, particularly in Europe and South America, by strengthening our partnership with local agencies and distributors. This approach allows us to address potential sales activities and effectively meet growing demand. Our combined indirect and direct sales teams ensure an increase present on the ground from a sales perspective. We are also actively participating in numerous industry events worldwide, where the sales team's engagement creates interest in our automated and intelligence analytics.
Speaker Change: This role I provide executive level support for our efforts.
Speaker Change: Efforts spirit's future innovations same heightened interest in not only through the assurance and intelligence analytics to several key factors first most U S operators are progressing in their transition to five do you spend it on networks.
Speaker Change: The adoption of cloud based automated assurance and intelligence analytics solutions. Additionally, legacy assurance system age or reach their end of life, operator must replace outdated equipment as part of the natural upward cycle. Additionally, some competitors have not developed a cloud native automated assurance and intelligence analytics.
Speaker Change: Solution, which required significant investment and investment with Broadcom has made this process. These operators to conduct thorough due diligence evaluating the available options in the market to identify new best in class automated assurance and intelligence and analytics solutions.
Hilik Itman: Our executive team frequently speaks at this event. Further announcing interest in our solution and solidifying our thought leadership in the five-year assurance and analytics space. This interaction has led to many promising discussions, including significant interest in our new generative AI application, which can translate into future sales opportunities. We believe we have a differentiated solution aligned with key market trends and are well positioned to address telecom operators' needs. We continue to enhance our software with additional automation, intelligence, and AI-based capabilities to add value and expand our customer use cases. We announce generative AI application support for AWS, so operators can roll out new services fast on AWS for improving operational efficiencies using Radcom-Ace enhanced by generative AI.
Speaker Change: Given these market factors, we see significant opportunities to increase our market share in the U S and other regions driving sustainable and continuing growth, while delivering more value to our shareholders.
Speaker Change: Turning to the cloud adopting the cloud architecture is bulk of operators transition to more efficient and dynamic software centric networks operations.
Eyal Harari: I'm excited to share our strong performance and execution in this quarter. Our results highlighted the benefit of our customers' trust and our ability to deliver value through our carrier-grade and innovative solutions. We achieved solid growth momentum in both our top and bottom lines. We reached record quarterly revenues of $14.8 million, up 20% from the second quarter of 2023. We generate a positive cash flow, hitting a new record of $86.1 million in cash, cash equivalents, and bank deposits.
Speaker Change: We continue to see increasing cloud adoption.
Speaker Change: These operators, replacing legacy with modern cloud based networks, our solution help operators manage this transition efficiently and with customer centric focus by gathering all the analytics across the cloud networks in the previous calls we mentioned the bolus of journey II and with all the leading public cloud provider of reliable schedules.
Speaker Change: Our emerging of having a pivotal role in the ecosystem.
Hilik Itman: Radcom is a company with many areas of expertise in the telco space. We know how to analyze data and deliver available insight to the telecom operators. So we approach all our product innovation from this unique perspective, starting from a foundation of a good data and telco domain knowledge. We will continue creating value for our customers and shareholders by building upon our strategic position as the living automated assurance and intelligence analytics platform for 5G and the cloud, innovating technologies empower our solution to significant product investment made over the year. We continue investing in R&D because we believe it is a cushion enabler for future business.
Eyal Harari: We achieved record half-year revenue and profitability for the first six months of 2024. Additionally, since the start of the year, we have secured over $50 million in new contracts, including several seven-digit contracts across various geographic markets, while maintaining significant recurring revenues. This shows the demand for our leading solutions and boosts our revenues as operators transition to 5G. Our entire organization remains committed to delivering profitable growth, increasing our market share, and driving ongoing technological innovation as we look to provide long-term value to our customers and shareholders.
Speaker Change: During the second quarter, we announced the terrestrial network application was now available on AWS. Although it is in the innovation stage cost and you'll see our innovation and thought leadership in this space, which can be a door opener that lead to sales opportunities.
Speaker Change: Administrated in our support for Gen AI on AWS and the contract win to offer our solution is a first in the U S. We continue engaging with operators and the cloud based ecosystem. As a reminder, we also potential customer integration with all the leading public cloud providers Amazon web.
Eyal Harari: Turning to the telecom market, customer interest and sales activities are noticeably increasing in the US and other regions. This upturn is evident in the number of opportunities our teams are currently pursuing and the 5G tenders issued by operators. As the interim CEO, my primary focus is driving existing sales activities.
Speaker Change: Microsoft Azure and Google cloud.
Hilik Itman: We serve as operator of smart copilot to navigate in 5G network complexity. This means continually evolving our automated assurance and intelligence analytics solution. Adding new AI power capabilities and use cases to maintain our 5G assurance leadership.
Speaker Change: And we believe our integration into cloud providers will help generate additional opportunities turn into the pipeline. We see positive market momentum that can drive growth increase sales engagement and lead to additional multiyear contracts.
Hilik Itman: I'm excited to announce that the company received industry recognition. We are recently named finalists for the 2024 Leading Lighter World.
Speaker Change: More robust demand for cloud based automated assurance and intelligence analytics technology.
Eyal Harari: In this role, I provide executive-level support for our sales efforts and spearhead future innovations. There is a heightened interest in automated assurance and intelligence analytics due to several key factors. First, most U.S. operators are progressing in their transition to 5G standalone networks, requiring the adoption of cloud-based automated assurance and intelligence analytics solutions. Additionally, as legacy assurance systems age or reach the end of life, operators must replace outdated equipment as part of the network upgrade cycle.
Speaker Change: <unk> increase.
Hilik Itman: This telecom focus program recognized the industry top companies' achievements in the next generation communication technology and innovation during the year to summarize. Our strong results demonstrate that our team is executing effectively. Our performance in the second quarter, and the consistent achievement across multiple quarters positions us for successful 2024, our business strategy and positive outcomes. As evident by our profitable goals and consistent positive cash flow, our momentum remains strong, and we believe the best is yet to come, as we aim to elevate the company's evolution and enhance shareholder value. We have experienced an increasing demand for our innovative assurance and analytic solutions across multiple regions.
Speaker Change: Increased pipeline as we engage with multiple prospects across various sales cycles stages.
Speaker Change: While this process can take time and are unpredictable, we believe our solutions align with the operators needs draw.
Speaker Change: Driving unique value and address critical network challenges. This set the stage for future business growth in today's telecom microeconomic landscape operators <unk> solutions that help them reduce significant cost, while ensuring a seamless transition to <unk> cloud network infrastructure and technologies.
Eyal Harari: Additionally, some competitors have not developed a cloud-native automated assurance and intelligence analytics solution, which requires significant R&D investment, an investment that Radcom has made. This process leads operators to conduct thorough due diligence evaluating the available options in the market to identify new best-in-class automated assurance and intelligence analytics solutions. Given these market factors, we see significant opportunities to increase our market share in the U.S. and other regions, driving sustainable and continuing growth while delivering more value to our shareholders.
Speaker Change: This will eventually use case for assurance and network analytics. This presents a significant opportunity for outcome.
Speaker Change: And we believe our position as an innovative automated assurance and intelligence analytics provider will continue to drive positive returns turning to our installed base.
Hilik Itman: This growing interest is evident in our expanding sales pipeline, which is the potential to drive future goals. Our entity is continuously innovating and supporting our customers' needs. Therefore, we remain confident, and we can deliver a fifth consecutive year of revenue goals and increase profitability.
Speaker Change: And this remains a key strategic customers and we believe our business with these operators.
Speaker Change: Rainstorm.
Speaker Change: Turning to provide software enhancements at June leases to help them manage their network.
Speaker Change: In the second quarter, we will selected to provide the SaaS service assurance solution on AWS in the U S for an existing customer deploying <unk> on AWS will enable this operator to achieve high level of automation and flexibility when using zelle dominated assurance and intelligence analytics solution.
Eyal Harari: Adapting a cloud architecture is part of operators' transition to more efficient and dynamic software-centric network operations. We continue to see increasing cloud adoption. For example, during the second quarter, we announced that Radcom Network, our GenAI application, was now available on AWS.
Hilik Itman: This gives us the confidence to raise our 2024 revenue guidance to a range of 68 million to 61 million dollars, up from the previous range of 57 million to 60 million dollars.
Hadar Rahav: We said I would like to turn the call over to Azar Rahav. I will see you for; we will discuss the financial results in detail. Thank you, Helik, and everyone for joining us today.
Speaker Change: To gain real time insights and analytics into the network.
Speaker Change: This allows the operator to adapt quickly to network capacity changes, ensuring excellent customer experience and delivering top quality services.
Hadar Rahav: Now, let's turn to the results. While the flight contained, Gap and NAN Gap with goal to review our financial performance, I will mainly refer to NAN Gap's numbers, excluding stock-based compensation, aggregation-related expenses, and the more estimated earlier in the call. Since the beginning of the year, we have secured over 15 million dollars in your contracts, including several seven-gauge contracts, equals various geogasic markets. Most of these revenues will be recognized in 2025 and beyond. These influx of contracts add, of course, the workers' demand for our leading solutions and positions as well to capitalise on the industry transition to 5G, significantly boosting our revenue.
Speaker Change: Also announced that our collaboration with Rakuten mobile in Japan has been extended to our strong long term performance and support. So this is what put on mobile remains robust following the renewal of a multi year contract. We have achieved high satisfaction level within our installed base by offering a robust and innovative.
Eyal Harari: Although GenAI is in the innovation stage, customers see our innovation and thought leadership in this space, which can be a door opener that leads to sales opportunities. As demonstrated in our support for GenAI on AWS and the contract win to offer our solution as a SaaS in the US, we continue engaging with operators and the cloud-based ecosystem. As a reminder, we offer potential customer integration with all the leading public cloud providers, Amazon Web Services, Microsoft Azure, and Google Cloud, and we believe our integration into these cloud providers will help generate additional opportunities.
Speaker Change: Product and focusing on customer requirements and needs driving growth in recurring revenue, we continue to invest in sales and marketing to capitalize on the rising demand on our solutions. We have expanded our sales team to seize these opportunities recognizing significant growth.
Speaker Change: Potential in our pipeline, we expanded our sales channels during the quarter.
Speaker Change: Particularly in Europe, and South America by strengthening our partnership with local agencies and distributors.
Eyal Harari: Turning to the pipeline, we see positive market momentum that can drive growth, increase sales engagement, and lead to additional multi-year contracts. The more robust demand for cloud-based automated assurance and intelligence analytics technology is reflected in our increased pipeline as we engage with multiple prospects across various sales cycle stages. While this self-process can take time and is unpredictable, we believe our solutions align with operators' needs, drive unique value, and address critical network challenges. This sets the stage for future business growth. In today's telecom microeconomic landscape, operators seek solutions that help them reduce significant costs while ensuring a seamless transition to 5G cloud network infrastructure and technologies.
Speaker Change: This approach allows us to address potential sales activities and effectively meet the growing demand our combined indirect and direct sales teams and Shaw and his group president on the ground from a sales perspective. We are also actively participated in numerous industry events worldwide.
Hadar Rahav: Now, please turn to Fly 5 for the financial I-Light. Second, water revenue goes up by 20 percent, which in the new record of 14.8 million dollars. Our positive star today year is driving by strong team execution, which has led to good financial performance revenue and profitable growth and measurable improvements to our bottom line. NAN Gap's net income for the second quarter was 3.1 million dollars, and the NAN Gap net margin was 21 percent, which was 20.23. Gap net income for the second quarter doubled to 1.7 million dollars, and EPS was up by a 120 percent compared to the second quarter of 2023.
Speaker Change: The sales team's engagement creates interest.
Speaker Change: Automated intelligence analytics.
Speaker Change: Our executive team frequently speak of the decisions further announcing interest in our solution and solid funding our thought leadership in the pharmacy assurance and analytics space. This interaction have led to many promising discussions include.
Speaker Change: Including significant interest in our new generative AI applications, which can translate into future sales opportunities. We believe we have a differentiated solution aligned with key market trends and are well positioned to address critical needs.
Eyal Harari: These are essential use cases for assurance and network analytics. These present a significant opportunity for Radcom, and we believe our position as an innovative automated assurance and intelligence analytics provider will continue to drive positive returns. Turn to our installed base.
Speaker Change: We continue to enhance our software with additional automation intelligence and AI based capabilities to add value and expand our customer use cases, we announced generative AI application support for AWS. So operators can rollout new services first on AWS for improving operational efficiencies using.
Hadar Rahav: Our gross margin on a NAN gap basis in the second quarter of 2024 goes to 75 percent. Note that our gross margin can vary slightly from quarter to quarter depending on the revenue mix. We expect that the sales quarter will remain at a similar level.
Eyal Harari: AT&T and DH remain key strategic customers, and we believe our business with these operators will remain strong. We continue to provide software enhancements and new releases to help them manage their networks. In the second quarter, we were selected to provide a SaaS service assurance solution on AWS in the US for an existing customer. Deploying Radcom Ace on AWS will enable this operator to achieve a high level of automation and flexibility when using their automated assurance and intelligence analytics solution to gain real-time insight and analytics into the network.
Speaker Change: <unk> enhanced regenerative AI.
Speaker Change: <unk> is a company who has many years of expertise in telco space, we know how to.
Speaker Change: Analysts data and delivers available insight to the telecom operators.
Hadar Rahav: Regarding our Indian investment, the company strategy is to continue investing at a similar level as in 2023, twin ends. Our vast combined solution increase our 5GB abilities, expand our AI driving insights, and seamlessly integrate our solution into the cloud. Our investment in research and development is vital to extending our technological leadership. This is the key and naveler for our future business. We believe that our India as a percentage of revenue will decrease, along with revenue increase. On a NAN Gap basis, our growth on the expenses for the second quarter of 2024 will fall 0.1 million dollars.
Speaker Change: So we approach all our products innovation from this unique perspective, starting form a foundation of good data and technical domain knowledge will continue creating value for our customers and shareholders by building upon our strategic position as the leading automated assurance and intelligence analytic platform for five years.
Eyal Harari: This allows the operator to adapt quickly to network capacity changes, ensuring excellent customer experience and delivering top quality services. We have expanded our sales team to seize these opportunities by recognizing significant growth potential in our pipeline. We expanded our sales channels during the quarter, particularly in Europe and South America, by strengthening our partnership with local agencies and distributors. This approach allows us to address potential sales activities and effectively meet growing demand.
Speaker Change: And the cloud innovating technologies and Paolo solution to significant product investment made over the year.
Speaker Change: Continued investing in R&D, because we believe it is a crucial enabler for future business. We serve this operator <unk> copilot towards navigated <unk> network complexity. This means continually evolving our automated assurance and intelligence analytics solution.
Speaker Change: These new AI powered capabilities and use cases to maintain our <unk> issuance leadership I'm excited to announce that the company received industry recognition. We recently named a finalist for the 2024, leading lighter world. This telecom focused program recognized the Andrews with top companies achievements is the next generation communication.
Hadar Rahav: Excluding any impact from exchange rates, we expect that our India expenses will remain similar in the next quarter. During the quarter, we will see the current of 180,000 dollars from the Israel Innovation Authority, the same as in 2023. We expect the Israel Innovation Authority grant to remain at a similar level in the third quarter.
Speaker Change: Knowledge and innovation during the year to summarize.
Speaker Change: Our strong results demonstrate that our team is executing effectively.
Speaker Change: Our performance in the second quarter and the consistent achievement across multiple quarters position us for a successful 2024 hour business strategy yet positive outcomes.
Hadar Rahav: It's really mentioned that the transition to 5GB presents attractive growth opportunities. We are excited about this potential and will continue to invest incrementally in certain marketing, mainly by expanding the global sales team. Additionally, in the last quarter, we expanded our sales channels by partnering with new local agents and distributors, allowing us to craft your more opportunities. In the second quarter of 2024, sales and marketing expenses, which 3.8 million dollars on a NAN Gap basis, an increase of 27% compared to the second quarter of 2023. In the second quarter of 2024, we are 1.2 million dollars on a NAN gap basis, an increase of 230,000 dollars from the second quarter of 2023.
Speaker Change: As evident by our profitable growth and consistent positive cash flow.
Eyal Harari: Our combined indirect and direct sales teams ensure an increased presence on the ground from a sales perspective. We are also actively participating in numerous industry events worldwide. Adding new AI-powered capabilities and use cases to maintain our 5G assurance leadership. I'm excited to announce that the company has received industry recognition. We were recently named finalists for the 2024 Leading Light Award. This telecom-focused program recognized the industry's top companies' achievements in the next generation of communication technology and innovation during the year. To summarize...
Speaker Change: Our momentum remains strong and we believe the best is yet to come.
Speaker Change: We aim to elevate the company's evolution and enhance shareholder value.
Speaker Change: We are experiencing increasing demand for our innovative assurance and analytics solutions across multiple regions.
Speaker Change: This growing interest is evident in our expanding sales pipeline, which has the potential to drive future growth.
Speaker Change: Our R&D team is continuously innovating and supporting our customers' needs.
Speaker Change: Therefore, we remain confident we can deliver our fifth consecutive year of revenue growth and increased profitability. This gives us the confidence to raise our 2020 for revenue guidance to a range of 58 million to $61 million up from the previous range of 57 million to $60 million.
RF: With that I would like to turn the call over towards RF.
RF: Our CFO will discuss the financial results in detail.
RF: Clinic and everyone for joining us today.
Hadar Rahav: This increase was mainly due to spatial expenses in court for the CEO's search. In the second quarter of 2023, this increase was mainly due to turn into the company's profitability, due to higher revenues and careful expensive management, operating profit on a NAN Gap basis, which 2.3 million dollars, going by 170% or 1.4 million from the second quarter of 2023. Our non-graph operating margin was 15.4%, doubling our operating margin in the second quarter of 2023. Net income on a non-graph basis was 3.1 million dollars, growing approximately 50% by more than 1 million dollars, compared to the second quarter of 2023.
Doug: Now, let's turn today Doug.
Doug: The slides containing GAAP and non-GAAP, Brazil to review our financial performance.
Doug: We'll mainly refer to non-GAAP numbers, excluding stock based compensation.
Doug: <unk> related expenses.
Doug: Organization of intangible assets related to acquisition.
Doug: As noted earlier in the call here since the beginning of the year, we have secured over $50 million in your contract.
Speaker Change: Instead of a seven digit contract there is no classic market.
Speaker Change: Most of these revenues will be recognized in 2025 and beyond.
Speaker Change: This influx of contracts underscores the robust demand for our leading solutions and positions us well to capitalize on the industry's transition to <unk>.
Speaker Change: Inefficiently boosting our revenue.
Hadar Rahav: Deloaded DPS for the second quarter was 20 cents, growing 7 cents from the second quarter of 2023. A training slide 7, our gap net income for the second quarter of 2024 was 1.7 million dollars. Deloaded DPS was 11 cents, growing 6 cents from the second quarter of 2023.
Speaker Change: Now please turn to slide five for the financial highlights.
Speaker Change: Second quarter revenue grew by 20%, reaching a new record of $14 8 million.
Speaker Change: As a positive to date you.
Speaker Change: In July then by strong team execution, which has led to good financial performance.
Speaker Change: <unk> and profitable growth and measurable improvement.
Speaker Change: Nine.
Speaker Change: non-GAAP net income for the second quarter with 3.1 million Dora and the non-GAAP net margin was 21%, which grew by 4% compared to the second quarter of 2023.
Hadar Rahav: Turning to the balance sheet, a training slide 11, we continued generating cash and ended the second quarter with 86.1 million dollars in cash, cash equivalents, and short-term bank deposits. Our account was 3.7 million dollars in the end of the second quarter of 2024. We expect our account to remain similar in the third quarter.
Speaker Change: GAAP net income for the second quarter doubled to one 7 million Dora and EPS was up by a 120% compared to the second quarter of 2023.
Speaker Change: Our gross margin on a non-GAAP basis in the second quarter of 2024 grew to 75%.
Hadar Rahav: That ends our preparatory marks.
Operator: I will now turn the call back to the operator for your questions. Thank you.
Operator: Ladies and gentlemen, at this time we will begin the question-and-answer session. If you have a question, please press Star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly list the handset before pressing the numbers. Your questions will be pulled in the order they are received. Please then buy while we pull for your questions.
Speaker Change: No.
Speaker Change: Margin can vary slightly from quarter to quarter, depending on your revenue.
Speaker Change: We expect the third quarter will remain at a similar level.
Speaker Change: Regarding R&D investment the company strategy is to continue investing at a similar level as in 2023.
Arjun Bhatia: The first question is from Batia Rosen of William Blair. Please go ahead. Yes, thank you, guys. It's origin here. I can grab the moment and the strong execution here. It sounds like you are getting some pretty good adoption from 5G contracts. I think you cited 50 million in these 5G contracts since the start of the year. What is driving that, in your view? Is it just where we are in the 5G cycle and build-out, or is there some other catalyst that you think is driving momentum with some of these contracts here? I thought I think that the momentum now is positive.
Speaker Change: In our <unk> solution.
Speaker Change: Our five gigabit mobility.
Speaker Change: Expand our AI driven insights.
Speaker Change: Seamlessly integrate our solution into the cloud.
Speaker Change: Our investment in research and development is vital to extending our technological leadership.
Eyal Harari: Now let's turn to the results. While the slides contain GAAP and non-GAAP results to review our financial performance, I will mainly refer to non-GAAP numbers, excluding stock-based compensation, acquisition-related expenses, and amortization of intangible assets related to acquisitions. As noted earlier in the call, since the beginning of the year, we have secured over $50 million in new contracts, including several seven-digit contracts across various geographic markets. Most of these revenues will be recognized in 2025 and beyond.
Speaker Change: Is the key enabler for the future business.
Speaker Change: We believe that R&D as a percentage of revenue will decrease along with revenue increase.
Speaker Change: non-GAAP basis, our gross R&D.
Speaker Change: R&D expenses for the second quarter of 2024 will solve 1 million Dora.
Speaker Change: Excluding any impact from exchange rate.
Speaker Change: The R&D expenses.
Hilik Itman: I know that it is not expected as three years ago in the 5G, but in this, at least in the last six or ten months, we see changing in the momentum. There is a much more opportunity of 5G transition. I think that it is related that, as I said, is also in the previous framework. The plan is nobody can stop it. The 5G is happening, and it is connecting very tight to cloud transition also. and Radcom is well positioned with our product and technology and experience. So we are not here for the last year; this is from the address of this requirement.
Speaker Change: Remain similar in the next quarter.
Speaker Change: During the quarter, we received the grant of $180000 from the Israeli innovation facility.
Speaker Change: Same as in 2023.
Eyal Harari: This influx of contracts underscores the robust demand for our leading solutions and positions us well to capitalize on the industry transition to 5G, significantly boosting our revenues. Now, please turn to slide 5 for the financial highlights. Our investment in research and development is vital to extending our technological leadership and is a key enabler for our future business. We believe that R&D as a percentage of revenue will decrease along with revenue increases. On an unapplied basis, our gross R&D expenses for the second quarter of 2024 were $4.1 million.
Speaker Change: We expect the Israel Innovation authority grant to remain at a similar level in the third quarter.
Speaker Change: Clearly mentioned the transition to five 2%.
Speaker Change: Attractive growth opportunity.
Speaker Change: We are excited about this potential and we'll continue to invest incrementally in sales and marketing mainly by expanding the global sales team. Additionally, in the last quarter, we expanded our sales channels by partnering with new local agents and distributors.
Speaker Change: And then guys to capture more opportunities.
Speaker Change: In the second quarter of 2020 for sales and marketing expenses.
Hilik Itman: So this is the momentum that I see. I would add that in general, we are still confident on the market evolving into 5G and we still see a demand for our products, and as we executed the well-discorded, we are expecting other goals journey to continue. And we do still see that 5G is strategic to top authorators and they are still focusing with the 5G programs and they continue to spend the improving to 5G spend the long and by that creating the demand for our products.
Speaker Change: Reached $3.8 million on a non-GAAP basis.
Speaker Change: <unk> of 27% compared to the second quarter of 2023 in the following quarter, we expect a gradual increase in sales and marketing expenses to support an increasing pipeline of opportunities.
Speaker Change: G&A expenses for the second quarter of 2024, well, one 2 million.
Speaker Change: non-GAAP basis, an increase of $230000 from the second quarter of 2023.
Speaker Change: This increase was mainly due to special expenses incurred for the CEO search.
Hilik Itman: I think that authorators, we can divide them into two goals. Those who are excited with our base AI and the autonomous solutions that we invest more strategically in the transition to 5G, and those who are more conservative in the class in the beginning, can increase their investment in motorway space. And we welcome definitely support this to models as we believe in long-term relationship and it all depends on the customer's experience.
Speaker Change: Turning to the company's profitability due to higher revenues and careful expense management.
Speaker Change: Waiting for FID early non-GAAP basis reached two 3 million dollar growing by 170% or $1.4 million from the second quarter of 2023.
Speaker Change: Our non-GAAP operating margin was 15, 4% doubling of operating margin in the second quarter of 2023.
Speaker Change: Net income on a non-GAAP basis was $3 1 million Dora growing approximately 50% by more than 1 million Dora.
Hilik Itman: One of the things I can on AWS, it sounds like you had one existing customer transition to your SaaS solution. When you think out over the next couple years, is this something you anticipate that most operators and most of your customers will shift to the SaaS model, your SaaS model over time? And as that happens, how are your economics, whether it's pricing or gross margins different or SaaS versus your kind of original offering. And third, I think that most of the operators will do the transition to cloud. Part of them will do it on private. Part of them are going to do that on public cloud, and then the option of SaaS is valid for us, and it's a big opportunity for the company to implement our product in more operator in SaaS because the advantages is clear of SaaS deployment.
Speaker Change: Turn to the second quarter of 2023.
Speaker Change: Diluted EPS for the second quarter was 20% Guang seven cents from the second quarter of 2023.
Speaker Change: As shown in slide seven.
Speaker Change: GAAP net income for the second quarter of 2024 with $1 7 million.
Speaker Change: Diluted EPS was <unk> 11.
Speaker Change: Growing six four.
Speaker Change: For the second quarter of 2023.
Speaker Change: Turning to the balance sheet.
Speaker Change: On slide 11, we continued generating cash and ended the second quarter with $86 1 million in cash cash equivalents and short term bank deposit.
Speaker Change: Our headcount was 307 at the end of the second quarter of 2024.
Speaker Change: We expect our headcount to remain similar in the third quarter.
Speaker Change: That ends our prepared remarks, I will now turn the call back to the operator for your questions.
Speaker Change: Thank you ladies and gentlemen at this time, we will begin the question and answer session. If you have a question. Please press star one if you wish to cancel your request. Please press star two.
Speaker Change: We're using speaker equipment kangri, what's the handset before pressing the numbers.
Hadar Rahav: So, yeah, I feel that if it will happen, we saw it this year, and we have an engagement with more customers in this area, so it's very positive.
Speaker Change: <unk> will be pulled in the order. They are received please standby while we poll for your questions.
<unk> Zhang: The first question is from <unk> Zhang of William Blair. Please go ahead.
Zhang: Hey, guys are generic.
Hadar Rahav: And is there, maybe this one's for Hadar, but is there anything that we should think about just from an economic perspective, margin impact from more staff adoption, or is it too early to follow this way? Yeah, I think that the advantage is very clear on us because it's the installation is much more easy, and the technology options are more advanced in this area, and it's very attractive mainly for medium and small customers that they don't need to buy some equipment, or, you know, everything with the cloud providers, so economical perspective is very attractive because it will be help us, you know, to get much more operators, compared to court solution or public cloud, or compared to private cloud or court solution.
Speaker Change: Brad.
Speaker Change: And the momentum and the strong execution here.
Speaker Change: It sounds like.
Speaker Change: You're getting some pretty good adoption.
Speaker Change: Biogen contracts I think you cited $50 million and new project contract clients will start of the year.
Speaker Change: Is driving that in your view is it just where we are in the project cycle and build out or is there some other catalyst.
Speaker Change: You think is driving momentum.
Speaker Change: With some of.
Speaker Change: This contract here.
Speaker Change: Hi.
Speaker Change: Focusing that.
Speaker Change: Okay.
Speaker Change: The momentum is positive.
Speaker Change: That is not what was expected.
Speaker Change: Three years ago in the slides, but in this at least in the last.
Speaker Change: Six or 10 months, we see.
Speaker Change: Changing into momentum.
Speaker Change: There is.
Speaker Change: Much more opportunity of slightly transitional thing that it's related as I said listen consume them previously.
Speaker Change: Pascal.
Speaker Change: Brendan.
Speaker Change: Nobody can stop it stop this trend.
Speaker Change: The strategy is working and it's.
Speaker Change: Connecting.
Speaker Change: Very very tied to cloud transition also.
Hadar Rahav: And I would like to add, I would like to add that the SAS model may improve our growth in the more operator transition to this model. The SAS model is the win-win situation. On the one hand, the operator gets course, and doesn't need to invest additional cost on the infrastructure and for what comes, the marginal cost will decrease while the revenue will increase, what they will improve the other growth margin.
Speaker Change: And welcome is well positioned with our product and technology.
Speaker Change: Great.
Speaker Change: So.
Speaker Change: So for the last year.
Speaker Change: Yes.
Speaker Change: To address this.
Speaker Change: Requirements.
Speaker Change: So this is.
Speaker Change: The momentum of the dicey.
Speaker Change: Hey.
Speaker Change: Uh huh.
Speaker Change: Yes go ahead sorry.
Speaker Change: I would add that in general we are still confident in the market evolving in two five G.
Arjun Bhatia: All right, that's very helpful. Well, thank you. I'll see you before here, and I can wrap it up again. Thank you, Arjun, for your question.
Speaker Change: We still see a demand for our products.
Speaker Change: <unk>.
Speaker Change: We executed well.
Speaker Change: We are expecting.
Alexander Henderson: The next question is from Alex Henderson.
Speaker Change: Germany to continue.
Alexander Henderson: Please go ahead. Thanks. So, we've obviously produced some very strong numbers over an extended period here, and there is obviously also some lumpiness in this business, which can't have an impact in any given quarter. So, as I'm looking forward to the September quarter, seasonally that's a little bit softer quarter. Should we anticipate that the business is a little bit more skewed to the December quarter and that the September quarter might be down a hair sequentially from the June quarter, or should we assume that the 14-8 is at least attainable again in the September quarter here?
Speaker Change: We do see let's see.
Speaker Change: <unk> is strategic to.
Speaker Change: Operator.
Speaker Change: It will go see we do expect the programs.
Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers. Your questions will be polled in the order they are received. Please stand by while we answer your questions.
Speaker Change: They continue to expand <unk> standalone.
Speaker Change: That created the demand for our products.
Speaker Change: I think that although it does seem you can divide them into.
Speaker Change: <unk> growth.
Speaker Change: Right.
Speaker Change: Why in deals done on a solution.
Speaker Change: We're always strategically in the transition to <unk>.
Speaker Change: It does to our market share with me.
Arjun Bhatia: Hey guys, it's Arjun here. Congratulations on the momentum and the strong execution here. I feel like it sounds like you're getting some pretty good adoption from 5G contracts. I think you cited $50 million in new 5G contract signings from the start of the year. What is driving that, in your view? Is it just where we are in the 5G cycle and build out, or is there some other catalyst that you think is driving momentum with some of these contracts here?
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: It's less than the beginning.
Speaker Change: The increase.
Speaker Change: Investment in the mall.
Speaker Change: To date.
Speaker Change: Definitely support.
Speaker Change: This is.
Hadar Rahav: So, I will take it. Alex, we are very excited with the results, and obviously our consistent execution is the driving doorbell. Rose. We did better than expected, and we are encouraged by our momentum and see a long one way of growth. We started this journey to continue and remain on pace to meet our guidance. Actually, we had a very good disability for 2024, and this is why we increased our guidance. If you look on the guidance, you see that we are likely to have the eye of the second half of the year. If you look on the eye range of other guidance, it could be around 18% year-over-year revenue growth, which is the solar acceleration to what we deliver in 2023.
Speaker Change: We believe the long term relationship and it all depends on the customer.
Speaker Change: And do it.
Speaker Change: Digi.
Speaker Change: Okay perfect very helpful. Thanks.
Speaker Change: And then.
Speaker Change: If I can on AWS.
Speaker Change: Yes.
Speaker Change: It sounds like you had one.
Speaker Change: Existing customer transition to your SaaS solution.
Speaker Change: You think out over the next couple of years is this something you anticipate that most operators in most of your customers will shift to the SaaS model. Your SaaS model over time and as that happens how are your economics, whether it's pricing or gross margin difference.
Operator: And now that it's not what was expected, it doesn't.
Speaker Change: Or SaaS versus.
Speaker Change: Versus your kind of original offering.
Speaker Change: And focusing that.
Hadar Rahav: I believe that this growth will be reflected in each of the next two quarters. We will see a linear award. This is in terms of the revenue. If we change the score, we expect a similar trend on the bottom line. As I said in the call, we would like to bring a similar level from the expenses and expect a gradual increase in sales and marketing. So, as I said, except any folks' impacts are the poor feet, and we believe that the poor feet and the percentage from revenue will be improved.
Speaker Change: Most of the operator.
Speaker Change: Will.
Speaker Change: Sure.
Speaker Change: Due to the transition to cloud.
Speaker Change: Most of them will do it on.
Speaker Change: The private part.
Eyal Harari: And Radcom is well positioned with our product, technology, and experience.
Speaker Change: Part of them are going to do the public cloud and then.
Speaker Change: The option of sources.
Operator: So we're not here, so for the last year, we've shown...
Speaker Change: This is valid for us.
Speaker Change: And 60.
Speaker Change: It's a big opportunity for us.
Speaker Change: The company too.
Speaker Change: To implement our Calder casino.
Speaker Change: Mobile operator.
Speaker Change: With us.
Operator: Yep, go ahead, sir.
Speaker Change: The advantages is clear.
Hadar Rahav: Second question is kind of on the same general trajectory. There has been an extremely large amount of volatility around the yen. One of your anchor customers, Rakuten, is based out of Japan. Does that have any impact on your business? No. And then, relatively speaking, the R&D is expected to be fairly flat. Sequentially, I'm assuming in June to September is the NRE also fairly flat. We believe that in the third quarter, the NRE will be at a similar level. And I expect that on the fourth quarter, we will see a decrease in the NRE due to the contribution of the system program.
Speaker Change: The <unk> deployment.
Speaker Change: So I assume that.
Speaker Change: Thank you.
Speaker Change: And we saw we saw it this year.
Speaker Change: We have an engagement with more customers in this area.
Speaker Change: So it's very positive.
Speaker Change: Okay.
Speaker Change: And is there maybe this one's for <unk>, but is there anything that we should think about just from.
Speaker Change: An economics perspective margin.
Speaker Change: Margin impacts from more SaaS adoption.
Speaker Change: So early to tell at this point.
Speaker Change: Yes.
Speaker Change: The advantage is very clear on SaaS because.
Speaker Change: It's.
Speaker Change: The installation is much more in UC and.
Speaker Change: On the technology options or more.
Speaker Change: The more advanced in this area.
Speaker Change: It's very attractive for May.
Hadar Rahav: I see. And then, just broadly speaking, I would assume that there is some upward bias to the OPEX as a total in the third quarter. Is it reasonable to think that you're fairly flat sequentially on the revenues and therefore a little bit of out for bias? Did the EPS and the third quarter ought to be maybe a hair below the 20 cent number? Yes. Great.
Speaker Change: Mainly for medium and small customers.
Speaker Change: They don't need to buy some.
Speaker Change: Or.
Speaker Change: Yes.
Speaker Change: Rich.
Speaker Change: With the.
Speaker Change: Cloud providers.
Speaker Change: So economical perspective is very attractive.
Speaker Change: It can be and plus.
Speaker Change: Two two.
Speaker Change: <unk> been much more operators.
Speaker Change: Compared to.
Hilik Itman: I wanted to go back to the commentary that you made on the call regarding end of life of competitive products in the field that are more appliance-based in nature. Obviously, the transition to 5G is a decision point for most companies. But is that causing an acceleration in that? Adoption rate that's meaningful, how large an EOL event is that for your competitors? Yeah, so first of all, the end of life is, it's not only related to 5D, but it's most of the time it's related. But also I want to emphasize that we see that also our competitors are the systems that start to build the end of life, and the connecting with the 5G is a real compelling event for transition to our system.
Speaker Change: To quote solution or.
Eyal Harari: It sounds like you had one existing customer transition to your SaaS solution. When you think out over the next couple of years, is this something you anticipate that most operators and most of your customers will shift to the SaaS model, your SaaS model over time?
Speaker Change: Public.
Speaker Change: Aldo.
Speaker Change: No.
Speaker Change: Compared to private clouds.
Speaker Change: Solution.
Speaker Change: In the last quarter.
Speaker Change: I would like to add that Dave just model may improve our gross margin in the mall operator transition to this modem.
Speaker Change: The SaaS model is a win win situation on the one in the operator for today's call.
Speaker Change: Does it need to invest the additional cost on the infrastructure and flat gross.
Eyal Harari: And first, I think that... Part of them will do it on the private cloud, part of them are going to do it on the public cloud, and then the option of SaaS is... The advantage of SaaS deployment is clear.
Speaker Change: The marginal cost will decrease.
Speaker Change: With annual rent increase.
Speaker Change: They will improve.
Speaker Change: Gross margin.
Speaker Change: Alright, Thats very helpful. Thank you I'll say before hearing back congrats again guys.
Speaker Change: Thank you our June for your question. The next question is from Alex Henderson. Please go ahead.
Speaker Change: Thanks.
Alex Henderson: You've obviously, producing some very strong numbers.
Speaker Change: Over an extended period here.
Hilik Itman: And we see that a lot of customers, also T1 customers, that's struggling with all the services showing platforms, and it's true that they try to, you know, to manage, but it's eventually, it's not working for them, so sure we cannot work forever, and obviously even for the next few years, so I think it's remarkably going to help us take more and more of our new customers. I would think that the install base for those appliance-based systems are multiples of your revenue in terms of, you know, your share is being fairly low in the historical 4G base, and that the magnitude of that upgrade cycle could be very substantial over the next two to three years.
Speaker Change: And.
Speaker Change: There is obviously also some lumpiness.
Speaker Change: In this business.
Speaker Change: Which.
Speaker Change: Can have an impact.
Speaker Change: In any given quarter, so as im looking forward to.
Speaker Change: The September quarter.
Eyal Harari: It will happen. We saw it this year, and we have an engagement with more customers in this area.
Speaker Change: Seasonally that's a little bit softer quarter should we anticipate that.
Speaker Change: That.
Speaker Change: The business is a little bit more skewed too.
Speaker Change: The December quarter in that.
Speaker Change: September quarter might be down here sequentially from the.
Operator: And is there, maybe this one's for Hadar, but is there anything that we should think about just from an economics perspective, the margin impact from more SAS adoption, or is it too early to tell at this point?
Speaker Change: The June quarter or should we assume that the <unk> is at least attainable again in the September quarter here mhm.
Speaker Change: So I will take it.
Alex Henderson: Hey, Alex.
Hadar Rahav: Yeah, I think that the advantage is very clear for Sass because...
Speaker Change: We do.
Alex Henderson: Obviously consistent execution.
Hadar Rahav: The installation is much easier, and the technology options are more advanced in this area. It's very attractive mainly for medium and small customers, because they don't need to buy some equipment or, you know.
Speaker Change: Right.
Speaker Change: Hello.
Speaker Change: We did better than expected and we are encouraged by the momentum.
Speaker Change: And one way of course.
Speaker Change: Thank you Sir.
Hilik Itman: Is that a fair way to look at this, you know, this transition? Yeah, sure, so we see in it, and again, our solution that is totally software-based, that cloud-native-based is totally in line with this transition and address all the customer needs in the server, and I saw it by myself a few times during the last quarter with the big customers.
Speaker Change: Daniel.
Speaker Change: We remain on pace to meet.
Speaker Change: Guidance.
Speaker Change: Actually we had a very good visibility for 2004 2024, and this is why we increased our guidance.
Hadar Rahav: And that's the way things will be. And with that... This will be El Paso, you know, to get much more operators compared to... CodeSolution or Public Cloud or Composite Cloud.
Speaker Change: If you look on the guidance you see that we are likely to win.
Speaker Change: And that will get you in there.
Speaker Change: If you look on the Io range of our guidance.
Speaker Change: 18%.
Speaker Change: <unk> Avenue.
Speaker Change: Which is the deliberation to what we delivered in 2023.
Hadar Rahav: compared to private clouds or cloud solutions.
Speaker Change: I believe that these calls will be reflected in each of the next two quarters.
Hilik Itman: Two last questions, and I'll see the floor. The $50 million in orders that you announced previously announced from the first half. Do you think that the order rate in the back half of the year is likely to be similar, or do you think that was a spike in wins and that there's more of a law here, short-term? So Alex, as you know, during the second quarter, we renewed our eight-figures contract with Rakuten, and this is thanks to our strong-game relationship with them. Except Rakuten, we won a new deal including 5G deals that had competitive interest, but we secured them due to our strong-game historical performance, the differentiated technology, and the established relationship.
Speaker Change: That will.
Speaker Change: We will see a linear world.
Speaker Change: This is in terms of the revenue.
Speaker Change: There is no change in the <unk>, we expect a similar trend on the bottom line.
Hadar Rahav: I would like to add that the SAS model may improve our growth margin if more operators transition to this model. The SAS model is a win-win situation. On the one hand, the operator saves costs and doesn't need to invest additional costs in the infrastructure, and for Radcom, the marginal cost will decrease while the revenue will increase, which will improve our growth margin.
Speaker Change: As I said in the call.
Speaker Change: I would like to maintain a similar level of R&D expenses and expect a gradual increase in the sales and marketing.
Speaker Change: They say they accept any folks in Bob's other fall season, we believe the fall season.
Speaker Change: Profit as a percentage from revenue will be improved.
Speaker Change: Second question just kind of.
Speaker Change: On the same general trajectory.
Arjun Bhatia: Alright, that's very helpful. Thank you. I'll see you before here, and congratulations again.
Speaker Change: <unk> been extremely large amount of.
Operator: Thank you, Arjun, for your question. The next question is from Alex Henderson. Please go ahead.
Speaker Change: Volatility around the yen.
Speaker Change: One of your anchor customers rock Tenn is based out of Japan does that have any impact on your business.
Alexander Henderson: You've obviously produced some very strong numbers over an extended period here.
Speaker Change: No.
Speaker Change: And then.
Hilik Itman: We will remain focused on profitable growth, and we are going to continue to push the pedal on it, because we believe that we are uniquely positioned to do it well. And we are confident that our differentiated solution is aligned with key technology trends and the well-positioned to address our customer's needs. But it's very out to predict what will be the level of booking during the next second half of the year. So suffice to say you've got a strengthening pipeline, but the exact closure dates are always difficult. I get it.
Speaker Change: Relatively speaking.
Speaker Change: The.
Speaker Change: R&D.
Speaker Change: <unk> to be fairly flat sequentially I'm assuming.
Speaker Change: June to September.
Ari: Ari also fairly flat.
Ari: We believe that in the third quarter.
Speaker Change: We will be at similar level and they expect that on the fourth quarter, we see decrease in there.
Speaker Change: Now we do.
Speaker Change: Due to completion of existing programs.
Speaker Change: I see.
Speaker Change: And then just.
Speaker Change: Just broadly speaking.
Speaker Change: Would assume that there is some upward bias to the opex.
Speaker Change: As a total.
Speaker Change: In the third quarter is it reasonable to think that.
Eyal Harari: So I will take it. Alex, we are very excited with the results, and obviously, our consistent execution is driving durable growth.
Hilik Itman: I just wanted to go back to NetTalk for a moment. What do you see as the trajectory of that business in terms of delivering incremental orders and backlog? Yeah, so first, I think the NetTalk is based on Gen.A.I. and as you know, Gen.A.I. today is a big hype around the Gen.A.I. And we see it not only in our areas, in all the areas of the industry today. And you know, we think that we have unique value here. Many the synthesis between our data and all the knowledge of NetTalk and use that synthesis together. We think that when we come to new operator, you know, and also on current customer, we want to see our vision and our leadership.
Speaker Change: Fairly flat sequentially on the revenues and therefore, a little bit of upward bias to that.
Speaker Change: The EPS in the third quarter ought to be maybe a hair below the 'twenty number.
Speaker Change: Yes.
Speaker Change: Okay great.
Speaker Change: I wanted to go back to the commentary that you made on the call.
Speaker Change: Regarding.
Speaker Change: End of life.
Speaker Change: Yes.
Speaker Change: Competitive products in the field that are.
Speaker Change: More appliance based in ne.
Speaker Change: Obviously, the transition to <unk> is a decision point for most companies, but is that causing.
Speaker Change: And acceleration in that.
Speaker Change: Adoption rate.
Speaker Change: Meaningful large.
Speaker Change: Alright.
Speaker Change: Whole event is that for your competitors.
Speaker Change: Yes, so first of all.
Speaker Change: At the end of life.
Speaker Change: It's not.
Speaker Change: Only related to fiber, but it's most of the time it's related.
Speaker Change: But also I want to emphasize that we see that.
Speaker Change: Also the.
Speaker Change: Our competitors.
Speaker Change: The systems are supposed to be end of life on the connection with the <unk>.
Hilik Itman: And I think that it's really advanced and progress, I think, in the sense, because nobody will want to go with this new service assurance system without a new sort of leadership on A.I. and Gen.A.I. Mainly because all the information transition that telecom is going to many to cost the money to save cost. So I think it will influence on our performance, for sure. And today, it's an emphasis in the new logo engagement. So I think it's very important for us. Great, thanks. Thank you, Alex.
Speaker Change: Really compelling.
Speaker Change: For transition to our.
Speaker Change: System.
Speaker Change: And we see that.
Speaker Change: The customer then.
Speaker Change: Tier one customer thats struggling.
Speaker Change: Sure.
Speaker Change: The old.
Alexander Henderson: The second question is kind of... On the same general trajectory, there's been an extremely large amount of volatility around the yen.
Speaker Change: All the service assurance platform.
Speaker Change: It's true that they try to do.
Speaker Change: Managed.
Speaker Change: Eventually it's not working for them.
Speaker Change: So shall we cannot walk forward.
Speaker Change: And that's really been sold.
Speaker Change: So over the next.
Eyal Harari: And does that have any impact on your business?
Speaker Change: She will so.
Speaker Change: Monthly.
Speaker Change: Going to help us.
Speaker Change: Take more and more new customers and new logos.
Speaker Change: I would think that the installed base of those appliance based systems.
Speaker Change: Our.
Speaker Change: Multiples of your revenue.
Operator: This concludes the Radcom Ltd. Second Quarter, 2024 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.
Speaker Change: Thanks.
Speaker Change: Sure as being fairly low.
Speaker Change: And the historical <unk> base.
Speaker Change: The magnitude of that upgrade cycle could be.
Speaker Change: Very substantial over the next two to three years.
Operator: due to the completion of existing programs. I see.
Speaker Change: Is that a fair way to look at this.
Speaker Change: No.
Speaker Change: Transition.
Speaker Change: Yes, sure so we.
Speaker Change: And we've seen it in.
Speaker Change: And again our.
Speaker Change: And we've seen that.
Speaker Change: Total software based cloud.
Speaker Change: Hello NICU days.
Speaker Change: It's totally in line with this.
Speaker Change: Transition.
Speaker Change: But with all the customer needs and desires.
Alexander Henderson: Okay, great. I wanted to go back to the commentary that you made on the call regarding the end-of-life AOL event. Is that for your competitors?
Speaker Change: Makes sense.
Speaker Change: Sure. Thanks during the last quarter customers.
Speaker Change: Yeah.
Speaker Change: Two last questions and then I'll see the floor.
Speaker Change: The $50 million in orders.
Speaker Change: <unk> previously announced from the first half.
Speaker Change: I think that the order rate.
Speaker Change: Back half of the year.
Speaker Change: Sure.
Speaker Change: Likely to.
Speaker Change: Be similar or do you think.
Speaker Change: That was a spike in wins.
Speaker Change: There is more of a lull here.
Speaker Change: Short term.
Speaker Change: So.
Alex Henderson: Alex as you know during the second quarter.
Alex Henderson: <unk> data.
Alex Henderson: Figure contract, we work with them.
Eyal Harari: Yeah, so, first of all, the end of life is... for the next few years. So, I think it's remarkably...
Alex Henderson: This is thanks to a really strong gain comes into a relationship with them and.
Washington: Washington, We won the new data, including <unk>.
Dan: The competitive battery CTO, Dan due to our strong gate silica performance differentiated technology and establish the relationship.
Alex Henderson: We remain focused on the profitable growth.
Speaker Change: We're going to continue to push that the data will need.
Speaker Change: Because we believe that really uniquely positioned.
Speaker Change: Vision to do it later.
Speaker Change: <unk>.
Speaker Change: Well begin with <unk>.
David: David solution.
Louise: Hi, Louise.
Louise: Key technology trends.
Louise: Well positioned to address our.
Louise: Our question really of our customers' needs.
Speaker Change: It's very hard to predict.
Speaker Change: Okay.
Speaker Change: What will be the level of bookings.
Speaker Change: Nick.
Nick: A second therefore steel.
Eyal Harari: I would think that the installed base of those appliance-based systems is.
Nick: Suffice to say, we've got a strengthening pipeline, but the exact closure dates are always difficult I get it.
Speaker Change: Just wanted to go back to net talk.
Speaker Change: For a moment.
Speaker Change: What do you see as the trajectory of that.
Speaker Change: Business in terms of delivering.
Speaker Change: Incremental orders and backlog.
Speaker Change: So first I think.
Speaker Change: The market based on agenda items.
Speaker Change: On January <unk>.
Speaker Change: Yes.
Eyal Harari: Yeah, sure. So, we've seen it, and again, our solution, which is totally software-based and cloud-native based, is...
Speaker Change: No.
Speaker Change: Is it the hype around.
Speaker Change: Jim.
Speaker Change: Yes.
Speaker Change: We see it not only in our area.
Speaker Change: In the area.
Speaker Change: And with me today.
Speaker Change: And we've seen that we have.
Speaker Change: Unique value here.
Eyal Harari: I can address all the customer needs in this car, and I saw it for myself a few times during the last quarter with big customers.
Speaker Change: Many of the.
Speaker Change: Since this is between our.
Speaker Change: Our data.
Speaker Change: All the knowledge.
Speaker Change: Networks and insights.
Alexander Henderson: Two last questions and then I'll go to the floor. The $50 million in orders that you previously announced for the first half, do you think that the order rate is...
Speaker Change: And besides together.
Speaker Change: Please.
Speaker Change: No.
Speaker Change: Thank you operator.
Speaker Change: <unk> also.
Speaker Change: Current.
Speaker Change: And customer we want to see our vision.
Speaker Change: Of course, we don't shipments.
Speaker Change: It's really.
Speaker Change: Advanced <unk> progresses in the said because.
Speaker Change: Nobody will Wuhan.
Speaker Change: Yes.
Eyal Harari: So, Alex, as you know, during the second quarter, we renewed our eight-figure contract with Rakuten.
Speaker Change: This new service assurance.
Speaker Change: This result.
Speaker Change: Both leadership on AI agenda.
Speaker Change: Mainly because the older inflammation transition that telecom is going to mainly to cost monitoring.
Speaker Change: To save cost.
Speaker Change: Thank you.
Speaker Change: We can influence on our performance for sure.
Speaker Change: And today.
Speaker Change: In person.
Speaker Change: The new logos.
Speaker Change: Engagement.
Speaker Change: So we'll see.
Speaker Change: Very important.
Speaker Change: And for Us.
Speaker Change: Great. Thanks.
Alex Henderson: Thank you Alex.
Speaker Change: This concludes the Rad Com LCD second quarter 2024, our results conference call. Thank you for your participation you May go ahead and disconnect.
Eyal Harari: Yeah, so first, I think the network is based on Gen-AI, as you know, and Gen-AI today is very... Man, you do it. You know, when we turn to a new operator, a new logo, and also to a current customer, they want to see our vision and our leadership. It's really a...