Q1 2025 RADCOM Ltd Earnings Call
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[music].
Operator: Ladies and gentlemen, thank you for standing by. The conference will begin shortly. Ladies and gentlemen, thank you for standing by.
Speaker Change: Ladies and gentlemen, thank you for standing by the conference will begin shortly.
Speaker Change: [music].
Speaker Change: Ladies and gentlemen, thank you for standing by welcome to the rack Com Limited results conference call for the first quarter of 2025.
Operator: Welcome to the Radcom Limited Results Conference call for the first quarter of 2025. All participants are present in listen-only mode. Following management's formal presentation, instructions will be given for the question and answer session.
Speaker Change: All participants are present in listen only mode. Following management's formal presentation instructions will be given for the question and answer session for operator assistance. During the conference. Please press Star Zero as a reminder, this conference is being recorded and will be available for replay on the company's website at <unk>.
Operator: For operator assistance during the conference, please press star zero.
Operator: As a reminder, this conference is being recorded and will be available for replay on the company's website at www.radcom.com later today.
Speaker Change: W Dot rack com dot com later today.
Operator: On the call are Benny Eppstein, Radcom's CEO, and Hadar Rahav, Radcom's CFO. Please note that management has prepared a presentation for your reference that will be used during the call. If you have not downloaded it yet, you may do so through the link in the Investors section of Radcom's website at www.radcom.com slash investor dash relations.
Benny Epstein: On the call are Benny Epstein ride come CEO and Hot Dara Halve Rad comes CFO.
Benny Epstein: Please note that management has prepared a presentation for your reference that will be used during the call.
Benny Epstein: Have not downloaded it yet you may do so through the link in the investors section of rack Com web site at Www Dot rack Com Dotcom Flash Investor Dash relations.
Operator: Before we begin, I would like to review the Safe Harbor provision. This conference call will contain forward-looking statements. Forward-looking statements in the conference call involve several risks and uncertainties, including but not limited to the company's statements about its momentum, strategic direction, and trajectory, future execution, and delivery of value to customers. development of and enhancing strategic partnerships and expected benefits from collaboration. The success of new technologies to, among other things, enhance automation, pipeline opportunities and customer engagements, demand for its products and solutions, including AI capabilities, trends in the market, innovation, expanding its business, the expected benefits of its AI-driven assurance solutions, its expectations with respect to gross margins, research and development, and sales and marketing expenses, grants from the Israel Innovation Authority and its full year 2025 revenue guidance, and future growth and profitability.
Benny Epstein: Before we begin I would like to review the Safe Harbor provision. This conference call will contain forward looking statements forward looking statements in the conference call involve several risks and uncertainties, including but not limited to the company's statements about its momentum strategic direction and trajectory future execution.
Benny Epstein: <unk> and delivery of value to customers.
Benny Epstein: Development of and enhancing strategic partnerships and expected benefits from collaborations.
Benny Epstein: The success of new technologies to among other things enhance automation pipeline opportunities and customer engagements demand for its products and solutions, including AI capabilities trends in the market innovation expanding its business the expected.
That's a it's a I driven assurance solutions, it's expectations with respect to gross margins research and development and sales and marketing expenses grants from the Israel Innovation authority and its full year 2025 revenue guidance and future growth and profitability.
Operator: 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 today's press release and the company's SEC filing.
Benny Epstein: 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 today's press release, and the Companys SEC filings and this conference call management will refer to certain non.
Operator: In this conference call, management will refer to certain non-GAAP financial measures, which are provided to enhance the user's overall understanding of the company's financial performance. By excluding certain non-cash stock-based compensation expenses, financial income expenses related to acquisitions, and amortization of intangible assets related to acquisitions, non-GAAP results provide information helpful in assessing Radcom's 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 release available on our website, www.radcom.com.
Benny Epstein: 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 financial income and expenses related to acquisitions and amortization of intangible assets related to.
Benny Epstein: Acquisitions non-GAAP results provide information helpful. In assessing Rad Comscore operating performance in evaluating and comparing the results of operations consistently from period to period.
Benny Epstein: 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 invest.
Speaker Change: Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures included in the quarter's earnings release available on our website www dot rack com Dot com now I would like to turn over the call Tibet. Please go ahead.
Operator: Now I would like to turn over the call to Benny. Please go ahead.
Benny Eppstein: Thank you, operator. Good morning everyone and thank you for joining us for Radcom's first quarter 2025 earnings call. The first quarter has been an exciting one, marking my transition to lead Radcom, a company driving innovation in the next generation assurance market for 5G. I am proud to work alongside an exceptional team with whom I've closely collaborated to expand key business initiatives and guide the company into the next phase of growth. Turning to slide 7, I will discuss the results. This quarter we achieved another record for company revenue, reflecting a 17.5% year-over-year growth with substantial profitability improvement and cash generation.
Speaker Change: Thank you operator.
Speaker Change: Good morning, everyone and thank you for joining us for <unk> first quarter 2025 earnings call.
Speaker Change: First quarter has been an exciting one marking my transition to lead radical accompanied driving innovation in the next generation assurance market. Besides Gee I am proud to work alongside an exceptional team with so much closely collaborated to expand key business initiatives and guide the company into the next phase of growth.
Speaker Change: Turning to slide seven I will discuss the results. This quarter, we achieved another record for company revenue, reflecting a 17, 5% year over year growth with substantial profitability improvement and cash generation.
Benny Eppstein: Our operating margins increased by more than 6.5% year-over-year, with $4.4 million positive cash flow. As of March 31, 2025, Radcom had cash and cash equivalent and short-term bank deposits of $99.1 million and no debt, ending the first quarter with its highest cash levels, continuing our growth trajectory. Looking ahead, we remain confident in our strategic direction and... We are on target to grow in revenue for the sixth consecutive year, supported by encouraging signs across our pipeline and customer engagement. As we close a strong first quarter, our focus will remain on disciplined execution and delivering consistent value to our customers.
Speaker Change: Our operating margins increased by more than six 5% year over year with $4 $4 million positive cash flow.
As of March 31st 2025, Russell had cash and cash equivalents and short term bank deposits of $99 $1 million and no debt.
Speaker Change: Ending the first quarter with its highest cash levels, continuing our growth trajectory.
Looking ahead, we remain confident in our strategic direction and execution.
Speaker Change: We're on target to grow in revenue for the sixth consecutive year.
Speaker Change: Sorted by encouraging signs across our pipeline and customer engagements.
Speaker Change: As we close a strong first quarter, our focus will remain on disciplined execution and delivering consistent value to our customers.
Benny Eppstein: Our core value lies in automated intelligence assurance solution, Radcom ACE, which delivers real-time service and customer-level experience data and Turning to slide Last year, we began introducing our generative AI capabilities into our solution. This year we are moving into Agenti.KI as part of our collaboration with market leaders as we'll be We anticipate an increasing demand for our data and insights as emerging AI-driven use cases continue to evolve. Agenti-KI requires real-time user analytics to drive customized services and products, support business processes, and operate autonomously based on those Agentic AI is the next frontier of artificial intelligence, which uses sophisticated reasoning and planning to autonomously solve complex, multi-step problems. AI agents ingest vast amounts of data, which then analyze challenges, develop strategies, and execute.
Speaker Change: Our core value lies in automated intelligence assurance solution, Racemase, which delivers real time service and customer level experience.
Speaker Change: Sites.
Speaker Change: Turning to slide eight.
Speaker Change: Last year, we began introducing our generative capabilities into our solutions.
Speaker Change: This year, we're moving into IDENTIKEY I as part of our collaboration with market leaders as we discussed below.
Speaker Change: We anticipate an increase in demand for our data and insights is emerging I driven use cases continue to invoice.
Speaker Change: <unk> requires real time user analytics to drive customized services and product support business processes and operate autonomously based on those insights.
Speaker Change: <unk> is the next frontier of artificial intelligence, which uses sophisticated reasoning and planning to autonomously solar complex multi step programs.
Speaker Change: AI agent ingest vast amounts of data, which then analyzed challenges develop strategies and execute tasks.
Benny Eppstein: Turning to slide nine, to our strategy. We see a great opportunity in the market for ultra fast development of analytics to enable fully automated customer care and network operation, optimizing quality in real time. Our strategic objective is to become a key provider of a real-time user and service experience insight for AI-powered telecom operators, supporting their network end-to-end across customer care, service management, and service orchestration. We are investing in few major areas related to our core company. One area includes leveraging accelerated computing and Gen AI technologies to provide high capacity, real-time user and service insights from customer service experience and usage metrics to advance customer intent models that will enable predictive customer satisfaction and customer intent to compete.
Speaker Change: Turning to slide nine to our strategy.
Speaker Change: We see a great opportunity in the market, which are fast development of analytics to enable fully automated customer care and network operation optimizing quality in real time.
Speaker Change: Our strategic objective is to become a key provider of real time user and service experiencing sites for AI powered telecom operators.
Speaker Change: Putting their network end to end across customer care service management and service orchestration.
Speaker Change: We're investing in a few major areas related to our core competency.
Speaker Change: One area includes leveraging accelerated computing and Ginny I technologies to provide high capacity real time user and servicing sites from customer service experience and usage metrics to advance customers don't model that will enable predictive customer satisfaction and customer intend to complain.
Benny Eppstein: Another area of investment is in agentic AI where we are collaborating with leading customer care, service management and orchestration platforms to provide fully automated customer experience-driven work. This covers a wide range, from delivering the best resolution in live call center interaction to resolving network incidents in operations, where real-time customer impact analysis is essential. This will also support network orchestration and optimization through processes that require resolution and optimization of real-time experiences. We believe the shift to agentic AI will require a robust telecom ecosystem.
Speaker Change: Another area of investment is in <unk>, where we are collaborating with leading customer care service management and orchestration platform to provide fully automated customer experience driven workflows.
Speaker Change: This covers a wide range from delivering the best resolution in live call center interaction to resolving network incidents in operations, where real time customer impact analysis is essentially.
Speaker Change: This will also support network orchestration and optimization through processes that require a resolution and optimization of real time experiences.
Speaker Change: We believe the shift to agenda will you require a robust telecom ecosystem.
Benny Eppstein: Moving Beyond Traditional, Siloed Automation Toward Collaborative Intelligence Slide 10 On that note, we announced important partnerships that will help fast-track our vision to bring these technologies to the service assurance market and enable real-time customer insights to empower business processes. Our partnership with ServiceNow leverages AIOps and agentic AI to offer an automated complaint resolution and predictive customer experience solution that supports customer As noted on slide 10, last week, at Knowledge 2025, ServiceNow announced the inclusion of Radcom among the first vendors to integrate with its AI fabric for seamless workflow. We are very excited to be part of this collaboration that delivers new levels of agent-to-agent and multi-modal communication for seamless wall-to-wall work.
Speaker Change: Moving beyond traditional.
Speaker Change: Siloed automation toward collaborative intelligence.
Speaker Change: Slide 10.
Speaker Change: Note, we announced important partnerships that will help fast track our vision to bring these technologies to the service assurance market and enable real time customer insights to empower business processes.
Speaker Change: Our partnership with service no leverage AI ops and agenda.
Speaker Change: Too often automated complaint resolution and predictive customer experience solution that supports customer care.
Speaker Change: As noted on slide 10 last week its knowledge 2025 service now announced the inclusion of Braskem among the first vendors to integrate receipts AI fabric for seamless workflows.
Speaker Change: We are very excited to be part of this collaboration that delivers new level of agent to agent and multi module communication for seamless wall-to-wall workflows.
Benny Eppstein: Slide 11 slide 13 Following our announcement this quarter of collaboration with NVIDIA, we have reached to the next phase of our development roadmap and have received requests from leading customers to move into their labs for evaluation of our cutting-edge, high-capacity user analytics solution. As noted on slide 11, in the coming quarters, we plan to deepen our partnership with strategic industry players to accelerate growth and expand our market share.
Slide 11.
Speaker Change: Following our announcement this quarter of collaboration within video with reach to the next phase of our development roadmap and have received requests from leading customers do move into their labs for evaluation of our cutting edge high capacity user and analytic solution.
Speaker Change: As noted on slide 11 in the coming quarters, we plan to deepen our partnership with strategic industry players to accelerate growth and expand our market share.
Benny Eppstein: This brings us to our install-based and slide 12. As published recently, we extended and expanded the renewal of T1 multi-year contract in North America, which reflects confidence in our best-in-class solution. We aim to extend our collaborations to include co-developing future-ready solutions alongside T1 customers as design partners. guided by deep understanding of their evolving needs and priorities. Rakuten achieved significant growth with its Open RAN network, the world's first commercially scalable Open RAN deployment, suppressing 8.5 million subscribers in Japan and ranking the most used mobile services among foreign radios. Turning to the telecom market, the global telecom market continues to grow, driven by key opportunities that underscore the strategic importance of 5G stand-alone networks.
Speaker Change: This bring us to our installed base in slide 12.
Speaker Change: As published recently, we extended and expanded the renewal of tier one multiyear contract in North America, which reflects confidence in our best in class solution.
Speaker Change: We aim to extend our collaboration to include co developing future ready solutions alongside tier one customers as design partners guided by a deep understanding of their evolving needs and priorities.
Speaker Change: Rakuten achieved significant growth with its open run network. The awards first commercially scalable open run deployment suppressing $8 5 million subscribers in Japan and ranking the most used mobile services among foreign residents.
Speaker Change: Turning to the telecom market.
Speaker Change: Mobile telecom market continues to grow driven by key opportunities that underscore the strategic importance of five G. Standalone networks high value use cases, including Iot private five G and mission critical services are fueling demand for ultra reliable high performance networks.
Benny Eppstein: High-value use cases, including IoT, private 5G, and mission-critical services are fueling demand for ultra-reliable high-performance technology. As the AI-driven digital grid emerges, telecommunication providers are uniquely positioned to serve as critical enablers for this AI-native transformation. integrating diverse technologies across hardware and software ecosystems. This accelerated shift continues to reinforce the strategic imperative for scalable, standalone 5G networks capable of supporting next-generation AI-powered applications. Fourth more, operators are increasingly turning to emerging AI technologies, including agentic AI, to boost their own productivity, optimize operational efficiency, and manage capital expenditure. We see these trends as creating unique growth opportunities for Radcom.
Speaker Change: Is the AI driven digital agreed emerges telecommunication providers are uniquely positioned to serve as a critical enabler support these AI native transformation.
Speaker Change: Integrating diverse technologies across hardware and software ecosystem.
Speaker Change: This accelerated shift continues to reinforce the strategic imperative for scalable Standalone <unk> networks capable of supporting next generation AI powered applications.
Speaker Change: For small operators are increasingly turning to emerging AI technologies, including <unk> to boost their own productivity optimize operational efficiency and manage capital expenditures. We see these trends is creating unique growth opportunities for radical.
Benny Eppstein: with extensive expertise and cutting-edge high-capacity user analytics technology to capture data, provide insights across diverse telecom networks, and business processes. Radcom is well positioned to capitalize on the data-centric demands of Agentech.
Speaker Change: With extensive expertise and cutting edge high capacity use our analytics technology to capture data provide insights across diverse telecom networks and business processes rack com is well positioned to capitalize on the data centric demands of <unk>.
Benny Eppstein: Another key trend presenting significant opportunity is the industry-wide shift toward open architecture. Growing interest in OpenAI framework, driven by multi-model, multi-domain technology integration, is accelerating this momentum. This evolution positions Radcom to help operators enhance their network with real-time, intelligent user experiences. We participated in NVIDIA GTC and Mobile World Congress in Barcelona in March where we showcased our solution with ServiceNow and Amazon Web Services. There was much interest in our innovative solution providing predictive customer experience insights and customer At both events, we held numerous meetings with prospective strategic partners and customers with potentials to generate sales opportunities.
Speaker Change: Another key trend presenting significant opportunity is the industry wide shift towards open architecture.
Speaker Change: Growing interest in open air framework, driven by multi model multi domain technology integration is accelerating this momentum this evolution positions Russell to help operators enhance their network with real time intelligence user experiences.
Speaker Change: We participated in Nvidia GTC in mobile World Congress in Barcelona in March where we showcased our solution with service now and Amazon Web services. There was much interest in our innovative solution, providing predictive customer experience insights and customer instant at both events, we held numerous meetings.
Speaker Change: With prospective strategic partners and customers with potential to generate opportunities.
Benny Eppstein: We also recently participated in FutureNet World, where our vice president of marketing and business development spoke at a panel about AIOps and generative AI-powered operations for the future of telco. In June, we will participate in DTW Ignite, which is part of the TM Forum's Global Alliance of Telco and Tech Companies. We will showcase our new Agente KI use cases with our partners, and we will collaborate on two TM Forum's Moonshot Catalyst programs. The first is an AI-driven telecom experience built on TM Forum Open Digital Architecture, ODA, and powered by Agentic AI. The Catalyst program includes Radcom, together with Salesforce, AWS, Verizon, Calvi, Telus, among others.
Speaker Change: We also recently participated in future and export.
Speaker Change: Our vice President of marketing and business development spoke at the panel about AI ops engineering powers operations for the future of telco.
Speaker Change: In June we will participate in <unk> ignite, which is part of the team Forum's Global Alliance of Telco and Tech companies, we will showcase our new agenda care use cases, with our partners and we will collaborating on <unk> catalysts programs. The first is an AI driven telecom experience built on <unk>.
Speaker Change: Same forum open digital architecture, OTA and powered by <unk>.
Speaker Change: The catalyst program includes <unk> com together with Salesforce AWS, Verizon Calvi tell us among others.
Benny Eppstein: The second is a Catalyst program that explores hybrid satellite communications and 5G networks, particularly for high-impact scenarios such as emergency response and remote business operations. Radcom is part of this Catalyst program together with companies including Bell Canada, Oracle, Airbus, Eutelsat, OneWeb, DigitalRoute, and more.
Speaker Change: Second is the catalyst program that explorer hybrid satellite communications and <unk> networks, particularly for high impact scenarios, such as emergency response and remote business operations.
Speaker Change: <unk> is part of this catalyst program together with companies, including Bell, Canada, Oracle Airbus Eutelsat, one way of digital route and more.
Benny Eppstein: Turning to slide 14 to summarize. The first quarter of 2025 continues the growth trajectory of our record-breaking 2020. positioning Radcom well to continue its sixth consecutive year of revenue growth. Our record result and positive momentum reinforced the strength of our technology, positioning us well for the year ahead. We are raising our full-year 2025 revenue growth outlook from 12% to 15% year-over-year to 15% to 18% year-over-year, with a midpoint of $71.1 million, representing a 16.5% increase compared to 2024.
Speaker Change: Turning to slide 14 to summarize.
Speaker Change: The first quarter of 2025 continued the growth trajectory of our record breaking 2024 positioning radical well to continue the sixth consecutive year of revenue growth our record results and positive momentum reinforces the strength of our technology positioning us well for the year ahead.
Speaker Change: We are raising our full year 2025 revenue growth outlook from 12% to 15% year over year to 15% to 18% year over year with the midpoint of $71 1 million.
Speaker Change: Presenting a 16, 5% increase compared to 2024.
Hadar Rahav: With that, I would like to turn the call over to Hadar Rahav, our CFO, who will discuss the financial results in detail. Thank you, Benny, and good morning, everyone. I will mainly focus on our non-GAP resource during this call, unless otherwise stated. A reconciliation of non-GAP to GAP measures is included in today's presentation in slide 3 as well as in our first release issued earlier today. Additionally, all comparisons are on a year-over-year basis, unless otherwise not.
Speaker Change: With that I would like to turn the call over to <unk>, Our CFO, who will discuss the financial results in details.
Speaker Change: Thank you Danny and good morning. This is Juan.
Speaker Change: I will mainly focus on our non-GAAP. So you on this call unless otherwise stated.
Speaker Change: And the Asian men get to get measure is included in today's presentation slides suite as well as in our press release issued earlier today.
Speaker Change: Additionally, Oh Campos dos <unk>, although ear basis unless otherwise.
Hadar Rahav: Now please turn to slide 16 for our financial highlight. Sales quarter revenue grew by 17.5 percent, reaching a new company record of $16.6 million. At the same time, we continue to manage and control our expenses while investing strategically and efficiently in increasing our investment in certain markets. This resulted in our highest ever non-deaf operating income of $3.1 million and 90% of revenues for the quarter. Our non-gap gross margin for the first quarter of 2025 was 76.3%. Please keep in mind that our gross margin may vary based on the revenue. Our non-debt greater than the expenses for the first quarter of 2025 were $4.3 million, up 5.8% year-over-year.
Speaker Change: Now please turn to slide 16 for all of the financial items.
Speaker Change: That's cool.
<unk> grew by 17, 5%, reaching in your company way code of $16.6 million.
Speaker Change: At the same time, we continue to manage and control a little cancels.
Both of them strategically and efficiently.
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Speaker Change: One second.
Speaker Change: This was a full hour.
Speaker Change: Oh.
Speaker Change: non-GAAP operating income.
Speaker Change: One we don't blow it out in 90% of Weibo's total Coco.
Speaker Change: Our non-GAAP gross margin for the first quarter of 2025.
Speaker Change: Once we close them.
Speaker Change: Please keep in mind.
Speaker Change: Gross margin borrowing base on the label.
Speaker Change: Our non-GAAP gross R&D expenses for the fourth quarter.
Speaker Change: Right well fault meter.
Speaker Change: All right.
Speaker Change: Okay.
Hadar Rahav: This reflects our focus on innovation and portfolio expansion. We will continue to invest strategically in R&D to develop additional information, gen-AI and the gen-PKI capabilities, and support our strategic partnerships and productization plan. We received a grant of $25,000 from the Israeli Immigration Authority during the quarter compared to $209,000 in the same quarter last year. We expect the Israel Innovation Authority grant to remain at a similar level as the first quarter of 2025 in the second quarter.
Speaker Change: This reflects our focus on innovation and portfolio expansion.
Speaker Change: We welcome cool cool.
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Speaker Change: So for me I don't think he I.
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Speaker Change: Well Glenn.
Speaker Change:
Speaker Change: When you blend innovation, that's really cool you only need a quarter compared to 209000 golar.
Speaker Change: In quarter one.
Speaker Change: <unk>.
Speaker Change: We expect we'll play innovation of Silicon Glen.
Speaker Change: Okay.
Speaker Change: And that's what else went to 25.
Speaker Change: In the quarter.
Hadar Rahav: Our net R&D expenses for the third quarter of 2025 were $4.3 million, an increase of $418,000 compared to the third quarter of 2024. We continue to actively promote our offerings to existing and prospective customers, which resulted in $4.2 million in sales and marketing expenses for the first quarter of 2025, and an increase of $461,000 from the first quarter of 2024. During the upcoming quarter, we expect a gradual increase in sales and marketing to support an increasing pipeline of opportunities and expand our partner and lucrative region.
Speaker Change: Our net R&D expenses for the first quarter.
Speaker Change: 25, well volkmann.
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Speaker Change: <unk> hundred $18000 compared to the first quarter of 2024.
Speaker Change: We continue to actively promote.
Speaker Change: Two existing and prospective customers, which were blocked out ballpoint to me then.
Speaker Change: Marketing expenses for the first quarter 2025, and then well I'll do the 1000 go home before Schuylkill.
Speaker Change: Cool.
Speaker Change: Young the upcoming quarter.
Speaker Change: Gradual increase there's been lots of teams.
Speaker Change: And then switching Python local football team.
Speaker Change: Think of a puzzle it's local to local.
Hadar Rahav: Namely, our GMA expenses for the third quarter of 2025 were $1 million, a decrease of $145,000 from the third quarter of 2024. Thanks to increased revenue and careful expense management, non-GAAP operating income for the first quarter of 2025 was $3.1 million, 19% of revenue and an increase of $1.4 million from the first quarter of 2024. Net income on a non-GEP basis for the first quarter of 2025 was $4.1 million or $0.25 per diluted share compared to $2.8 million or $0.18 per diluted share for the first quarter of 2024. On a gap basis, as shown on slide 19, our net income for the first quarter of 2025 was $2.4 million, an increase of $1.7 million compared to the first quarter of 2024.
Speaker Change: Let them do it for me.
Speaker Change: So the clock for 2025 1 million blowdown it'd be cool one other supportive price doesn't go out of quarter.
Speaker Change: Paul.
Speaker Change: Thanks.
Speaker Change: Great.
Speaker Change: That's cool.
Speaker Change: And it's really not.
Speaker Change: GAAP operating income for the first quarter 2025, or 3.1, you don't go down 19% of revenue and quick one for me and then go out from the fourth quarter.
Speaker Change: Cool.
Speaker Change: Net income on a non-GAAP basis for the first quarter of 2025 was $12 1 million too long or too.
Speaker Change: 25 cents per diluted share compared to $2.8 million or 80 cents per diluted share for the first quarter.
Speaker Change: 24.
Speaker Change: On a GAAP basis.
Speaker Change: Turning to slide 19.
Speaker Change: Net income for the first quarter or granted 25 or so million daughter.
Speaker Change: $1 7 million compared to the first quarter of 'twenty 'twenty four.
Hadar Rahav: At the end of the first quarter of 2025, our income was $318. Certainly to the bank. As shown on slide 22, thanks to our strong results, we ended the first quarter with the highest cash, cash equivalents, and shown term bank deposits of $99.1 million, which reflects a positive quarterly cash flow of $4.4 million.
Speaker Change: End of the first quarter of 2025 hour Alcon core Sweet Oh.
Speaker Change: Turning to the banks.
Speaker Change: As shown on slide 22 concept of a song because though we ended the first quarter okay.
Speaker Change: That's equivalent and short term bank deposits 99 going to 1 million in Philadelphia, which reflects a positive quarter on these calls so 000, you don't do it all.
Hadar Rahav: That concludes our prepared remarks.
Speaker Change: That concludes our prepared remarks.
Operator: Thank you, and I will now turn the call back to the operator for your questions. Thank you.
Speaker Change: Thank you and I will now turn the call back to the ultimate way so for your question.
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 if you are 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 lift the handset before pressing the number. Please stand by while we poll for your questions.
Speaker Change: Zinc speaker equipment kind of lift the handset before pressing the numbers. Please.
Speaker Change: Please standby, while we poll for your questions.
Arjun Bhatia: The first question is from Arjun Bhatia of William Blair, please go ahead. Robert, thank you so much. Benny, your comments on what you're doing with Agentic AI were pretty intriguing.
Speaker Change: The first question is from our June Bhatia of William Blair. Please go ahead.
Speaker Change: Alright.
Speaker Change: So much better.
Speaker Change: Your comments on what you're doing or or or.
Speaker Change: Pretty intriguing.
Benny Eppstein: I'm curious if you could just maybe expand on the sort of functionality that you're planning to build yourself, where maybe that interacts or integrates with what your partners are doing, and then how do you plan to monetize this? Is this, are your objective capabilities going to be monetized, or is that something you plan to include in the broader platform for your customers? Thank you.
Hum.
Speaker Change: Maybe expand on the sort of functionality.
Speaker Change: We're planning to build yourself.
Speaker Change:
Speaker Change: Maybe that interacts or integrated so that's why your partners are doing.
Speaker Change: And then how do you plan to monetize that.
Speaker Change: Our air injection capabilities.
Speaker Change: Or is that something you can find there.
Speaker Change: Including for our platform for your for your customers. Thank you.
Benny Eppstein: Hi, thanks for the question. I'm sorry, the line was not 100% clear, but I think that's up to the question. We do plan, we do invest in R&D when it comes to generative AI and agentic use cases. We closely collaborate with our partners. And when it comes to monetization, we have different models we're discussing as we speak right now. They're pretty flexible, and there's various, you know, type of models to address that.
Speaker Change: Hi, Yeah. Thanks for the question I'm sorry, the line was not Hunter.
Speaker Change: I'm just thinking here, but.
Speaker Change: I think look up to the question and.
Speaker Change: We do plan, we do invest in.
Speaker Change: In R&D when it comes to <unk> use cases, we closely collaborate with our partners.
Speaker Change: And and and and when it comes to monetization.
Speaker Change: Well I guess, we're discussing as we speak right now.
Speaker Change: Yeah.
Speaker Change: <unk> flexible and just you know any type of models too.
Speaker Change: To address that.
Benny Eppstein: I'm happy to take you through that in a separate poll. Okay, understood. And then just on the free cash flow generation has been pretty nice, at least thus far in Q1. Where are you, where do you think that can go this year and beyond as you keep generating cash? What are you thinking in terms of use of capital as you get more and more out of the balance sheet here? Sure. We're looking into different candidates when it comes to acquisition, M&A. There's a few opportunities that we are addressing as we speak, and maybe the second half of the year we will consider some other actions.
Speaker Change: Thank you again.
Speaker Change: Great.
Speaker Change: Well.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Understood.
And then just.
Speaker Change: The free cash flow generation has been pretty nice.
Speaker Change: At least thus far.
Speaker Change: In Q1, where are you where do you think that can go this year and beyond and as you keep generating cash.
Speaker Change: Oh, you know what are you thinking in terms of use of capital.
Speaker Change: Yes.
Speaker Change: And more on the balance sheet here.
Speaker Change: Sure.
Speaker Change: We are looking into different candidate when it comes to acquisition M&A.
Speaker Change: If you are opportunities that we are.
Speaker Change: Addressing as we speak and then maybe the second half so you wouldn't be considering some extra sports rights for sprouts, you slipping into M&A, we don't think it very carefully.
Benny Eppstein: But right now, our first priority is to look into M&A. We're looking very carefully, and the plan is to do something around our ecosystem.
Speaker Change: And the thing.
Speaker Change: Finish to do something around that ecosystem.
Benny Eppstein: All right. Perfect.
Speaker Change: Alright, perfect. Thank you.
Benny Eppstein: Thank you.
Speaker Change: Thank you.
Ryan Koontz: The next question is from Ryan Koontz of Needham & Company. Please go ahead. Thanks, really nice quarter there, guys.
Speaker Change: The next question is from Ryan Koontz of Needham and company. Please go ahead.
Speaker Change: Great. Thanks, a really nice quarter there guys.
Benny Eppstein: starting with. comments about 5G stand-alone core progress for the industry. Um, can you share any thoughts about, you know, where... Global Customer Count for Radcom. or even your, even your pipeline of customers. You know, what kind of growth do you expect we'll see year... from maybe exiting 24 to exiting 25.
Speaker Change: Starting with.
Speaker Change: Your comments about <unk> Standalone core.
Speaker Change: Progress for the industry.
Speaker Change: Can you share any thoughts about you know where.
Speaker Change: Customer global customer count for Broadcom.
Speaker Change: Even your even your pipeline of customers.
Speaker Change: You know what kind of growth do you expect we will see year over year from maybe exiting 'twenty four exiting 'twenty five as to how.
Benny Eppstein: how many you know production scale standalone networks that you see in your customer Any kind of high-level growth you think we might see there? We're projecting similar pace when it comes to growth, this is how we see it. The more 5G SA is progressing, we see higher demand for customer management and real-time user analytics and as of for now, I think we're, as you saw, we raise our guidance and then I think we will continue similar type of growth.
Speaker Change: How many you know production scale Standalone networks.
Speaker Change: Do you see in your customer base.
Speaker Change: Any kind of high level growth you think you might see there.
Speaker Change: Are we projecting similar basically it wants to grow the that's how we see it the more Oh five GSA is progressing we see higher demand for our.
Speaker Change: Customer management, and real time user analytics and it.
Speaker Change: It was as it is for now I think we.
Speaker Change: We were as you saw we raised our guidance and then I think we will continue.
Speaker Change: Continued stimulus second squad.
Hadar Rahav: Hadar, do you want to comment on this? Knowing Good, Benny. That's great. You made a comment about, you know, gross margins going forward can vary on mix. Can you unpack that a little bit as far as, you know, your current mix of... of Revenues and what some of the puts and takes there across different sources of revenue and how that affects gross margins. Thank you.
Speaker Change: Is that do you want to comment on this.
Speaker Change: No I'm good.
Speaker Change: Yeah.
Speaker Change: Okay, that's great.
Speaker Change: You made a comment about gross margins going forward can vary on mix can you unpack that a little bit as far as.
Speaker Change: Current mix of.
Speaker Change: Of revenues and and what some of the puts and takes there across different sources.
Speaker Change: Our sources of revenue and how that affects gross margin.
Bonnie: Okay I've got to take this question, yes, Okay, yes, thank you Bonnie.
Hadar Rahav: Yes, thank you Benny. So usually our gross margin is very between 72% to 76% and it's depending on the revenue mix. This quarter we had less third-party components which improved our gross margin. Yeah, it does. Thanks. And do you have much services mixed, professional services in that mix? No. Super.
Bonnie: They usually have a gross margin kneesies vary between <unk>, 72% to 76% and depending going to away. When you a mix did you say a quarter, we had let's see.
Bonnie: Third party company to watching pools, there other gross margin.
Bonnie: Does that answer your question.
Bonnie: Yeah. It does thanks and did you do you have.
Bonnie: Do you have much services mix of professional services in that mix.
Bonnie: No.
Bonnie: How much okay great.
Bonnie: Great.
Benny Eppstein: And last question, if I could, here on. ServiceNow Relationship, and as we think about the opportunity to scale there, you think about your customer base and their current customer base. among operators. How do those compare? Is there a lot of overlap today? Maybe a few key customers driving that? ServiceNow, Customer Base, Provide. sizable opportunity to grow your customer base. Sure, I absolutely believe that the partnership with ServiceNow will expand and increase our pipeline opportunities. ServiceNow is almost installed in most operators that we're working with. Our lucrative market, just to remind you, is North America, Europe, and Japan, and we see them playing significantly in those regions.
Bonnie: Super.
Bonnie: Last question, if I could here on <unk>.
Bonnie: Service now relationship and as we think about the opportunity to scale. There you think about your customer base and their current customer base among operators.
Bonnie: How did those compare or is there a lot of overlap today, maybe a few key customers driving that.
Bonnie: And.
Bonnie: If service.
Bonnie: It does just the service now customer base provide you.
Bonnie: A sizable opportunity to grow your customer count.
Speaker Change: Great. Thank you.
Speaker Change: Sure Ryan absolutely believes that the partnership with servicing I wouldn't expand and increase our pipeline of opportunities or service now he's almost an installed in most operators that we're working with.
Speaker Change: Our lucrative market and just to remind you is is that in North America, Europe, and Japan, and we see them playing out.
Speaker Change: Significantly in those regions.
Benny Eppstein: And obviously, they have more coverage than we are, so it's definitely opening doors for us to introduce our solution to more and more operators across those regions.
Speaker Change: Obviously, there's more coverage than and then than we are so it's definitely opening doors for us for sure.
Speaker Change: Did you do search solution to more and more operators.
Speaker Change: Most of those ranges.
Speaker Change: That's that's really great to hear thank you for that and maybe a last one if I could sneak it in about a <unk> relationship with Nvidia.
Benny Eppstein: And maybe the last one, if I can sneak it in, about your relationship with NVIDIA. What is the deployment model there for integrating that technology? Do you simply need access to customer-located servers? packaging your own, um... cloud infrastructure with NVIDIA with your product. What's the deployment model? I think the beauty here is that we're talking about the DPUs that can be installed in any server, like a standard server out there. So we can basically replace their NIC card with the DPU and get much better performance when it comes to what we discussed earlier, the user analytics space.
Speaker Change: What is what is the deployment model there for for that integrating that technology.
Speaker Change: Or do you simply need access to a.
Speaker Change: Customer located servers or will you be packaging your own.
Speaker Change:
Speaker Change: Cloud infrastructure with it with Nvidia with your products.
What's the deployment model for that.
Speaker Change: The beauty the beauty here.
Speaker Change: But the deep views that's getting started in any server like a standard server up there. So we can basically with meets their need card with the D. C U E.
Speaker Change: It gets much better performance when it comes to what we discussed earlier to user analytics space.
Benny Eppstein: And this is what could drive both automation, AI, and CCO reduction for our customers. And as mentioned on the call earlier, we are already doing some trials in labs with a few of the Tier 1 customers, and we're looking forward to extend that to production. That sort of infrastructure would be part of your customer's private cloud. Yes, but it also could be part of the AWS install base as well, so it's both.
Speaker Change: This is what could drive both automation and AI and CCR reduction for our customers. So.
Speaker Change: And as mentioned on the call earlier, we already knew.
Speaker Change: Thanks Charles.
Speaker Change: And let's see what.
Speaker Change: What fueled the tier a tier one customer sitting there looking forward to expand up to production.
Speaker Change: Got it sort of infrastructure would be part of your customers' private cloud typically.
Speaker Change: Yes, but it's also could be part of the AWS installed base as well so it's both.
Speaker Change: Got it.
Benny Eppstein: That's all the questions I've got. Thanks for that. Thank you.
Speaker Change: That's all the question I've got thanks for that.
Speaker Change: Thank you.
Operator: This concludes the Radcom LTD first quarter 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.
Speaker Change: This concludes the rack com L. T D first quarter 2025 results conference call. Thank you for your participation you May go ahead and disconnect.
Speaker Change: Okay.
Speaker Change: [music].