Q2 2026 RADCOM Ltd Earnings Call

August 12, 2026

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. Results Conference Call for the second quarter of 2026. All participants are present in a listen-only mode. Following management's formal presentation, instruction 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 www.radcom.com later today. On the call are Benny Eppstein, RADCOM's CEO, and Hod Cohen, 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/investor-relations. Before we begin, I would like to review the safe harbor provision. This conference call will contain forward-looking statements.

Speaker #1: Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. results conference call for the second quarter of 2026. All participants are present in a listen-only mode.

Speaker #1: Following management's formal presentation, instruction will be given for the question-and-answer session. For operator assistance during the conference, please press *0. 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 #1: On the call are Benny Epstein, RADCOM CEO, and Hod Cohen, RADCOM's CFO. Please note that management has prepared a presentation for your reference that will be used during the call.

Speaker #1: 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/investor-relations. Before we begin, I would like to review the safe harbor provision.

Speaker #1: This conference call will include forward-looking statements. These statements involve known and unknown risks and uncertainties, including, but not limited to, the company's statements about its momentum, strategic direction and goals, market position and trajectory, future execution and delivery of value to customers and stakeholders, expansion within its existing customer base and broader footprint, development and enhancement of strategic partnerships, and the expected benefits and revenues from collaborations. These also include the success and expected benefits of new technologies, including AI, RADCOM ACE, RADCOM NEURA, RADCOM ADM, and RADCOM RACE.

Operator: Forward-looking statements in the conference call involve known and unknown risks and uncertainties, including, but not limited to, the company's statements about its momentum, strategic direction, and goals, market position and trajectory, future execution and delivery of value to customers and stakeholders, expansion within its existing customer base and broader footprint, development and enhancement of strategic partnerships and the expected benefits and revenues from collaborations. The success and expected benefits of new technologies, including AI, RADCOM ACE, RADCOM Neura, RADCOM ADM and RADCOM governance, including to enhance automation opportunities and customer engagements and the timing thereof. Demand for its product and solutions, and the ability to address new customer segments and extend its market reach. Trends in the telecom market, including the expected growth of 5G, AI, cloud-native deployments, network automation and autonomous networks. The timing, scope and sequencing of customer deployment programs.

Speaker #1: Including to enhance automation, opportunities, and customer engagements and the timing thereof, demand for its product and solutions, and the ability to address new customer segments and expand its market reach.

Speaker #1: Trends in the telecom market, including the expected growth of. 5G, AI, cloud-native deployments, network automation, and autonomous networks. The timing scope and sequencing of customer deployment programs; the effects of server infrastructure costs and supply constraints; and the timing and extent to which deferred deployments may move forward or return to a normalized cadence, customer relationships, competitive position, sales pipeline, commercial discussions, conversation of opportunities, and expansion within existing accounts, the anticipated scope, timing, implementation, benefits, customer transition, and expansion potential of the company's contract with the European operator, expectations with respect to gross margins, research and development, sales and marketing expenses, cash flow, non-GAAP profitability, free cash flow positivity, full year 2026 revenue outlook, future growth, including double-digit percentage revenue growth in 2027, the impact of foreign exchange rates, and hedging, resilience, long-term commitment, and continued investments, and the establishment, size, timing, initiation, and implementation, of the repurchase program and the company's ability to return capital to shareholders while continuing to invest in its platform and AI roadmap.

Operator: The effects of server infrastructure costs and supply constraints, the timing and extent to which deferred deployments may move forward or return to a normalized cadence, customer relationships, competitive position, sales pipeline, commercial discussions, conversation of opportunities, and expansion within existing accounts. The anticipated scope, timing, implementation, benefits, customer transition and expansion potential of the company's contract with the European operator. Expectations with respect to gross margins, research and development, sales and marketing expenses, cash flow, non-GAAP profitability, free cash flow positivity, full year 2026 revenue outlook, future growth, including double-digit percentage revenue growth in 2027. The impact of foreign exchange rates and hedging, resilience, long-term commitment and continued investments, the establishment, size, timing, initiation, and implementation of the intended share repurchase program and the company's ability to return capital to shareholders while continuing to invest in its platform and AI roadmap.

Speaker #1: The company does not undertake to update forward-looking statements. The full safe harbor provisions actual results to differ from these forward-looking statements are outlined in today's press release and the company's SEC filings.

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 filings. 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 non-cash stock-based compensation that has been expensed in accordance with ASC Topic 718, financial income, expenses, 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.

Speaker #1: 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.

Speaker #1: By excluding non-cash stock-based compensation that has been expensed in accordance with ASC topics 7(1)(8) financial income, expenses, 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.

Speaker #1: 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.

Speaker #1: Investors are encouraged to review the reconciliation of GAAP to non-GAAP financial measures, included in the quarter's earnings release, available on our website, www.radcom.com. Now I would like to turn over the call to Benny.

Operator: Investors are encouraged to review the reconciliation of GAAP to non-GAAP financial measures included in the quarter's earnings release available on our website www.radcom.com. Now I would like to turn over the call to Benny. Please go ahead.

Speaker #1: Please go ahead.

Speaker #2: Thank you, operator, and thank you all for joining us today to review RADCOM's results for the second quarter of 2026. Please turn to slide 7.

Benny Eppstein: Thank you, operator, and thank you all for joining us today to review RADCOM's results for Q2 2026. Please turn to slide 7. On 13 July, we announced our preliminary Q2 revenue expectations and revised our full year 2026 outlook. I would like to provide more specific context on what has changed within several customer deployment programs and why we remain confident in the underlying opportunities. The affected projects are primarily planned expansion phases with limited number of existing tier 1 customers. These customers continue to use RADCOM solution in their production networks and the projects remain part of the longer-term deployment roadmap we have developed with them. The delays do not reflect any weakening of our customer relationship, unhappiness with RADCOM solutions or pricing, project cancellation, or business loss to competitors. The main issue is cost.

Speaker #2: On July 13, we announced our preliminary second quarter revenue expectations and revised our full-year 2026 outlook. I would like to provide more specific context on what has changed within several customer deployment programs and why we remain confident in the underlying opportunities.

Speaker #2: The affected projects are primarily planned expansion phases, with a limited number of existing Tier 1 customers. These customers continue to use RADCOM's solution in their production networks, and the projects remain part of the longer-term deployment roadmap we have developed with them.

Speaker #2: The delays do not reflect any weakening of our customer relationship, unhappiness with RADCOM solutions, or pricing. Project cancellation or business loss to competitors. The main issue is cost.

Speaker #2: Across the industry, the price of server infrastructure needed for private cloud and on-premise deployment has risen sharply. In some cases, comparable server configurations now cost multiples of their previous levels.

Benny Eppstein: Across the industry, the price of server infrastructure needed for private cloud and on-premise deployment has risen sharply. In some cases, comparable server configurations now cost multiple of their previous levels, and this increase has occurred over several months, not several years. A large deployment may require dozens of servers across multiple sites, so this increase can add up to substantial infrastructure commitments for the customer. As a result, some customers are rethinking the timing, scope, and order of their infrastructure investments. They may need to rebalance budgets, prepare additional sites, or move portion of the expansion into later budget periods before approving the next deployment phase. RADCOM does not manufacture these servers. Our strategic value and profitability are derived from our software analytics and automated assurance capabilities. Still, our software must be deployed within an operating environment that is ready to support it.

Speaker #2: And this increase has occurred over several months, not several years. A large deployment may require dozens of servers across multiple sites, so this increase can add up to substantial infrastructure commitment for the customer.

Speaker #2: As a result, some customers are rethinking the timing, scope, and order of their infrastructure investments. They may need to rebalance budget, prepare additional sites, or move portion of the expansion into later budget period before approving the next deployment phase.

Speaker #2: RADCOM does not manufacture these servers. Our strategic value and profitability are derived from our software analytics and automated assurance capabilities. Still, our software must be deployed within an operating environment that is ready to support it.

Speaker #2: A project cannot move forward until the customer's infrastructure is prepared for installation. We have taken steps to reduce the risk within our control. For certain anticipated deployments, we have already secured hardware so that RADCOM can begin execution once the customer gives us the green light and the site is ready.

Benny Eppstein: A project cannot move forward until the customer's infrastructure is prepared for installation. We have taken steps to reduce the risks within our control. For certain anticipated deployments, we have already secured hardware so that RADCOM can begin execution once the customer gives us the green light and site is ready. Any further delay simply reflects the time customer needs to prepare their infrastructure before they can install our product. This affects primarily concentrated in private cloud and on-premises deployment. Public cloud projects are less dependent on purchase, shipment, and installation of physical infrastructure, and therefore, have been less affected. Based on our current customer discussions and project roadmaps, we believe that Q1 2027 is the first period in which deployment activity could begin returning to a more normal pace. One or more projects could potentially begin moving forward sooner, including during Q4 2026.

Speaker #2: Any further delay simply reflects the time customer need to prepare their infrastructure before they can install our product. This affects primarily concentrated in private cloud and on-premises deployment.

Speaker #2: Public cloud projects are less dependent on the purchase, shipment, and installation of physical infrastructure, and therefore have been less affected. Based on our current customer discussions and project roadmaps, we believe that the first quarter of 2027 is the earliest period in which deployment activity could begin returning to a more normal pace.

Speaker #2: One or more projects could potentially begin moving forward sooner, including during the fourth quarter of 2026. Some customers are also working through their 2027 budgeting processes, which should provide greater clarity on the timing and order of these projects.

Benny Eppstein: Some customers are also working through their 2027 budgeting processes, which should provide greater clarity on the timing and order of these projects. We have already secured hardware to support part of this activity, so RADCOM will be ready to execute as soon as customers finish their infrastructure planning and give us the go ahead. The key point is that so far, these projects have been delayed, not displaced. They remain associated with active customer relationships and established expansion roadmaps. However, customer must first fund and establish the underlying network and computing infrastructure on which our software will operate. Our customer relationships remain strong. Our competitive position remain intact, and we are not seeing customer move away from our solutions. As customer finish their infrastructure preparation and authorize these expansion phases, we believe deferred deployment activity should return.

Speaker #2: We have already secured hardware to support part of this activity, so RADCOM will be ready to execute as soon as the customer finishes their infrastructure planning and gives us the go-ahead.

Speaker #2: The key point is that so far this project have been delayed, not displaced. They remain associated with active customer relationships and established expansion roadmaps.

Speaker #2: However, customer must first fund and establish the underlying network and computing infrastructure on which our software will operate. Our customer relationships remain strong. Our competitive position remain intact, and we are not seeing customer move away from our solutions.

Speaker #2: As customers finish their infrastructure preparation and authorize these expansion phases, we believe the first deployment activity should return. Together with the long-term demand for AI-driven assurance, 5G visibility, and network automation, we believe we will return to stronger growth in 2027.

Benny Eppstein: Together with long-term demand for AI-driven assurance, 5G visibility, and network automation, we believe we will return to a stronger growth in 2027. Furthermore, our sales pipeline and our medium to long-term customer deployment plans remain unchanged. In fact, the pipeline continues to improve in quality, and a number of opportunities are now advancing to commercial discussions. We believe RADCOM will remain profitable on a non-GAAP in 2026. We also expect to return to double-digit growth in 2027. Please turn to slide 8, our financial highlights. Total revenue of Q2 2026 were $11.8 million. That is down 33.4% year over year from $17.7 million a year ago. Please turn to slide 9, our recent wins. A few weeks after the quarter ended, we secured three new contracts. Two were new customers, and the third was a renewal at an existing customer.

Speaker #2: Furthermore, our sales pipeline and our medium to long-term customer deployment plans remain unchanged. In fact, the pipeline continues to improve in quality, and a number of opportunities are now advancing to commercial discussions.

Speaker #2: We believe RADCOM will remain profitable on a non-GAAP basis in 2026. We also expect to return to double-digit growth in 2027. Please turn to slide 8, our financial highlights.

Speaker #2: Total revenue of the second quarter of 2026 were $11.8 million. That is down 33.4% year over year from $17.7 million a year ago. Please turn to slide 9, our recent wins.

Speaker #2: A few weeks after the quarter ended, we secured three new contracts. Two were new customers and the third was a renewal at an existing customer.

Speaker #2: First, as announced yesterday, we expanded our European presence by winning multi-year contract with new customer SETI Networks in Slovakia. SETI Networks selected RADCOM to deploy end-to-end AI-driven assurance across its mobile network.

Benny Eppstein: First, as announced yesterday, we expanded our European presence by winning a multiyear contract with new customer, CETIN Networks in Slovakia. CETIN Networks selected RADCOM to deploy end-to-end AI-driven assurance across its mobile network, from the radio access network to the core. CETIN is replacing its incumbent assurance provider with a single subscriber-aware platform built on RADCOM ACE. We were selected following a competitive multi-vendor RFP. We believe that this selection is evidence of our technology's strengths and the growing preference for our platform among European operators. CETIN is part of CETIN International and a wider e& and PPF Telecom Group. Together, they serve more than 12 million customers across 4 countries, which gives us a foundation to potentially expand across the broader group over time. Second, in Asia Pacific, we won a new customer through a competitive tender with a tier 1 operator and replaced the long-term incumbent.

Speaker #2: From the radio access network to the core, SETI is replacing its incumbent assurance provider with a single subscriber-aware platform built on RADCOM ACE. We were selected following a competitive multi-vendor RFP.

Speaker #2: We believe that this selection is evidence of our technology's strength and the growing preference for our platform among European operators. SETI is part of SETI International and a wider E&PPF telecom group.

Speaker #2: Together, they serve more than 12 million customers across four countries, which gives us a foundation to potentially expand across the broader group over time.

Speaker #2: Second, in Asia-Pacific, we won a new customer through a competitive tender with a Tier 1 operator and replaced the long-term incumbent. The deal is small, but it is an important reference win.

Benny Eppstein: The deal is small, but it is an important reference win. It put us in a strong position to compete for a much larger network-wide project with this operator. Third, we renewed the contract with an existing European customer for RADCOM Network Visibility. All these deals closed only a few weeks after the quarter ended. This shows the pattern behind the Q2 results. With operators, deal timing can shift. Demand for our solution and our competitive position do not. Please turn to slide 10, our strategy. Our priorities remain unchanged, expanding our tier 1 footprint, deepening our installed base, and advancing AI-native assurance for autonomous network. We will do all of this while keeping the operating discipline to support our profitability. Our partner-led model works alongside Nvidia, ServiceNow, AWS, and leading system integrators.

Speaker #2: It's put us in a strong position to compete for a much larger network-wide project with this operator. Third, we renewed the contract with an existing European customer for RADCOM network visibility.

Speaker #2: All these deals closed only a few weeks after the quarter ended. This shows the pattern behind the second quarter results: while operators' deal timing can shift, demand for our solution and our competitive position do not.

Speaker #2: Please turn to slide 10, our strategy. Our priorities remain unchanged: expanding our Tier 1 footprint, deepening our installed base, and advancing AI-native assurance for autonomous network.

Speaker #2: And we will do all of this while keeping the operating discipline to support our profitability. Our partner-led model works alongside NVIDIA, ServiceNow, AWS, and leading system integrators.

Speaker #2: It efficiently extends our reach and meets operators wherever they are in their AI and cloud journey. A key advantage for us is the significant reduction in total cost of ownership, or TCO, that we offer.

Benny Eppstein: It efficiently extends our reach and meet operators whenever they are in their AI and cloud journey. A key advantage for us is the significant reduction in total cost of ownership, or TCO, that we offer. Our platform is fully cloud-native and highly efficient, so it delivers far lower TCO than legacy solutions. That means lower CapEx and OpEx than our competitors. Also, our software can run on incumbent hardware and deliver much more efficient performance per watt. This means it can be deployed on the very same hardware an operator already uses with the incumbent assurance vendor. Reusing the same infrastructure means an easier migration with no costly rip and replace. It delivers real savings and better performance. Combine this with our TCO advantage and data that Telco AI depends on, and we believe we are well-positioned for long-term profitable growth.

Speaker #2: Our platform is fully cloud-native and highly efficient, so it delivers far lower TCO than legacy solutions. That means lower CAPEX and OPEX than our competitors.

Speaker #2: Also, our software can run on incumbent hardware and deliver much more efficient performance per watt. This means it can be deployed on the very same hardware an operator already uses, with the incumbent assurance vendor.

Speaker #2: Reusing the same infrastructure means an easier migration with no costly rip-and-replace. It delivers real savings and better performance. Combine this with our TCO advantage and data that telco AI depends on, and we believe we are well positioned for long-term profitable growth.

Speaker #2: We also remain financially strong, with solid cash position and no debt, enabling continued investment in our differentiated agentic AI capabilities and in expansion of our strategic partnership throughout this period.

Benny Eppstein: We also remain financially strong with solid cash position and no debt, enabling continued investment in our differentiated agentic AI capabilities and in expansion of our strategic partnership throughout this period. Please turn to slide 11, the telecom market. Operators continue to transition to 5G standalone and cloud-native deployments. At the same time, they are embedding AI deeper into their networks to automate operation, enhance the subscriber experience, and reduce operating costs. All of this is happening while data volume and network complexity keep growing. Yet, a gap remains between AI ambition and AI readiness. Most operators still lack the reliable subscriber-level data that these AI use cases depend on. We saw a shift in operator spending this quarter as some adjusted the timing and mix of their investment, which impacted our results, but near-term spending patterns can fluctuate without changing the market's underlying direction.

Speaker #2: Please turn to slide 11, the telecom market. Operators continue to transition to 5G standalone and cloud-native deployment. At the same time, there are embedding AI deeper into their networks to automate operation, enhance the subscriber experience, and operating costs.

Speaker #2: All of this is happening while data volume and network complexity keeping growing. Yet, a gap remains between AI ambition and AI readiness. Most operators still lack the reliable subscriber-level data that this AI use cases depends on.

Speaker #2: We saw a shift in operator spending this quarter. Some adjusted the timing and mix of their investment, which impacted our results. But near-term spending patterns can fluctuate without changing the market's underlying direction.

Speaker #2: The direction still points to what we provide, the data operators need to automate their network and run their more efficiently. The gap is exactly where RADCOM adds value.

Benny Eppstein: The direction still points to what we provide. The data operators need to automate their network and run there more efficiently. The gap is exactly where RADCOM adds value. As operator shifts from proof of concept commercial AI deployments, they demand unified end-to-end intelligence. This trend only increase the need for cloud-native AI-enabled service assurance solutions, such as RADCOM ACE and RADCOM Neura. We believe our position as leading assurance provider for 5G will continue to drive positive returns. Please turn to slide 12, our installed base. Alongside new opportunities, our installed base remain an important validation of our strategy and the durability of our technology in live large-scale networks. Work with One Global continue to progress as RADCOM ACE is deployed to monitor its 4G and 5G services.

Speaker #2: As operators shift from proof of concept to commercial AI deployments, they demand unified, end-to-end intelligence. This trend has only increased the need for cloud-native, AI-enabled service assurance solutions, such as RADCOM ACE and RADCOM Neura.

Speaker #2: We believe our position as leading assurance provider for 5G will continue to drive positive returns. Please turn to slide 12—our installed base. Alongside new opportunities, our installed base remains an important validation of our strategy and the durability of our technology in live, large-scale networks.

Speaker #2: We continue to work with one global customer as RADCOM ACE is deployed to monitor its 4G and 5G services. We continue to support key accounts, including AT&T and Rakuten Mobile, where our assurance solutions remain embedded in production networks, serving millions of subscribers.

Benny Eppstein: We continue to support key accounts, including AT&T and Rakuten Mobile, where our assurance solutions remain embedded in production networks, serving millions of subscribers. Taken together, these deployments indicate that demand among our existing customers remains strong and that expansion opportunities are progressing. That is true even as operators work through longer infrastructure lead times across the market. Please turn to slide 13, the launch of RADCOM ADM. During the quarter, we also launched RADCOM ADM, the Analytics Designer Module and new addition to the RADCOM ACE platform. It puts operators in control of their own analytics. What was once a month-long request to a vendor is now something their teams can do themselves in real-time. As networks become more automated, that speed become essential, and delivering it at scale requires engineering expertise that is hard to copy. ADM also strengthen our AI strategy.

Speaker #2: Taken together, this deployments indicate that demand among our existing customers remains strong and that expansion opportunities are progressing. And that is true even as operators work through longer infrastructure lead times across the market.

Speaker #2: Please turn to slide 13, the launch of RADCOM ADM. During the quarter, we also launched RADCOM ADM, the Analytics Designer Module and a new addition to the RADCOM ACE platform.

Speaker #2: It puts operators in control of their own analytics. What was once a month-long request to a vendor is now something their teams can do themselves.

Speaker #2: In real time. As networks become more automated, that speed becomes essential, and delivering it at scale requires engineering expertise that is hard to copy.

Speaker #2: ADM also strengthen our AI strategy. It feeds real-time data directly into RADCOM Neura, our agentic AI layer, making those agents more accurate and reliable.

Benny Eppstein: It feeds real-time data directly into RADCOM Neura, our agentic AI layer, making those agents more accurate and reliable. ADM will be generally available to existing and new customer later this quarter, and we see it as a clear path to expand within existing accounts through new use cases and higher value tiers. Please turn to slide 14, some more recent industry recognition. In February, we released RADCOM Neura, our suite of AI agents designed to work within the AI agent ecosystem. I am pleased to share that RADCOM Neura has since earned industry recognition. RADCOM is a finalist in the 2026 Light Reading Leading Lights Award for Most Innovative Telco AI/ML Product. As operators embrace AI to manage increasingly complex networks, we are proud that RADCOM Neura has been recognized for helping transform real-time network intelligence into smarter, more proactive operation.

Speaker #2: ADM will be generally available to existing and new customers later this quarter. We see it as a clear path to expand within existing accounts through new use cases and higher value tiers.

Speaker #2: Please turn to slide 14, some more recent industry recognition. In February, we released RADCOM Neura, our suite of AI agent designed to work within the AI agent ecosystem.

Speaker #2: I'm pleased to share that RADCOM Neura has since earned industry recognition. RADCOM is a finalist in the 2026 Light Reading Leading Lights Award for most innovative telco AI/ML product.

Speaker #2: As operators embrace AI to manage increasingly complex networks, we are proud that RADCOM Neura has been recognized for helping transform real-time network intelligence into smarter, more proactive operations.

Speaker #2: That recognition extended to our collaborative work across the ecosystem. A digital transformation word, or DTW Ignite, in Copenhagen, we were proud to be part of the winning team at the catalyst award.

Benny Eppstein: That recognition extended to our collaborative work across the ecosystem. At Digital Transformation World, or DTW Ignite, in Copenhagen, we were proud to be part of the winning team at the Catalyst Awards. Our catalyst was named Outstanding Catalyst in the AI and automation category. It showed that multi-vendor AI agents can collaborate to accelerate fault resolution, improve the customer experience, and advance level 4 autonomous networks. RADCOM contributed AI-driven assurance agents that rank issue by real customer impact. We also contributed RADCOM governance, our framework for managing how agents interact and for building trust through policy-based oversight. Please turn to slide 15, our go-to-market activity. From a go-to-market perspective, we also remain highly active throughout the quarter. We participated in DTW Ignite in Copenhagen, FutureNet World in London, and Network X Americas in Dallas, where we showcased our AI native assurance solutions and AI agent capabilities.

Speaker #2: Our catalyst was named Outstanding Catalyst in the AI and Automation category. It showed that multi-vendor AI agents can collaborate to accelerate fault resolution, improve the customer experience, and advance level four autonomous networks.

Speaker #2: RADCOM contributed AI-driven assurance agents that rank issues by real customer impact. We also contributed RADCOM Governance, our framework for managing how agents interact and for building trust through policy-based oversight.

Speaker #2: Please turn to slide 15, our go-to-market activity. From a go-to-market perspective, we also remain highly active throughout the quarter. We participated in DTW Ignite in Copenhagen, FutureNet Award in London, and Network X in Americas in Dallas.

Speaker #2: We showcased our AI-native assurance solutions and AI agent capabilities. Our executives also took the stage at this event, sharing our perspective on how operators can use AI, automation, and network data to build demand-driven networks.

Benny Eppstein: Our executives also took the stage at these events, sharing our perspective on how operators can use AI, automation, and network data to build demand-driven networks. They also spoke to the opportunity that agentic AI now presents. Customer and partner responses to our AI agent capabilities and AI native assurance solutions were very encouraging. We also held productive meetings with operators and ecosystem partners that we believe could translate into additional sales opportunities over time. Please turn to slide 16, our pipeline. As I mentioned, we are actively engaged across a healthy set of opportunities, several of which advanced during the quarter from technical evaluation and proof of concept to commercial discussions. The pipeline is steady, healthy, and progressing. We remain confident in our ability to convert this pipeline into both new business and continuing expansion within our existing customer base. Please turn to slide 17, my closing summary.

Speaker #2: They also spoke to the opportunity that agentic AI now presents. Customer and partner responses to our AI agent capabilities and AI-native assurance solutions were very encouraging.

Speaker #2: We also held productive meetings with operators and ecosystem partners that we believe could translate into additional sales opportunities over time. Please turn to slide 16, our pipeline.

Speaker #2: As I mentioned, we are actively engaged across a healthy set of opportunities, several of which advanced during the quarter from technical evaluation and proof of concept to commercial discussions.

Speaker #2: The pipeline is steady, healthy, and progressing. We remain confident in our ability to convert this pipeline into both new business and continued expansion within our existing customer base.

Speaker #2: Please turn to slide 17, my closing summary. To summarize, while our second quarter results and our revised full-year guidance were disappointing, our long-term fundamentals remain solid and our strategy is unchanged.

Benny Eppstein: To summarize, while our Q2 results and our revised full-year guidance were disappointing, our long-term fundamentals remain solid, and our strategy is unchanged. We offer a lower TCO, and operators can run our software and hardware they already own in a tighter spending environment that makes us an easier decision. Our customer relationships are strong, and our pipeline is broad and progressing. Several opportunities advanced to commercial discussions during the quarter. A few weeks after the quarter ended, we won three new deals. We also launched RADCOM ADM and earned industry recognition for RADCOM Neura. Financially, we remain debt-free, and we expect to remain profitable on a non-GAAP basis in 2026. We also continue to invest in the AI capabilities operators need to run their network efficiently. Please turn to slide 18 before I hand over to Hod, a word on capital allocation.

Speaker #2: We offer a lower cost of ownership, and operators can run our software on hardware they already own. In a tighter spending environment, that makes us an easier decision.

Speaker #2: Our customer relationship are strong and our pipeline is broad and progressing. Several opportunities advanced to commercial discussions during the quarter. A few weeks after quarter ended, we won three new deals.

Speaker #2: We also launched RADCOM ADM and earned industry recognition for RADCOM Neura. Financially, we remain debt-free, and we expect to remain profitable on a non-GAAP basis in 2026.

Speaker #2: We also continue to invest in the AI capabilities operators need to run their network efficiently. Please turn to slide 18 before I hand over to Hod, award on capital allocation.

Benny Eppstein: We remain confident in the company's long-term prospects and believe that repurchasing our shares represents a compelling use of capital at the current valuation levels. The board and management have decided to move forward. We will take the required steps to establish a share repurchase program of $20 to $25 million. We have already started this process and plan to finish it as fast as applicable rules allow. Once the required steps are done, we will start the buyback. With that, I'll now turn the call over to our CFO, Hod Cohen, to review the financial results in detail.

Speaker #2: We remain confident in the company's long-term prospects and believe that repurchasing our shares represents a compelling use of capital at the current valuation level.

Speaker #2: So, the board and management have decided to move forward. We will take the required steps to establish a share repurchase program of $20 to $25 million.

Speaker #2: We have already started this process and plan to finish it as fast as applicable rules allow. Once the required steps are done, we will start the buyback.

Speaker #2: With that, I'll now turn the call over to our CFO, Hod Cohen, to review the financial results in detail.

Hod Cohen: Thank you, Benny, and good morning, everyone. As a reminder, unless otherwise noted, I will refer to non-GAAP results. Reconciliations between GAAP and non-GAAP measures are provided in our press release and presentation. All comparisons are year-over-year. Please turn to slide 20, our quarterly financial highlights. Revenue for the Q2 was $11.8 million, down 33.4% year-over-year from $17.7 million. Gross margin in the Q2 was 76.3%. We recorded an operating loss of $2.2 million or -18.5% of revenue. Net loss was $1.5 million, or $0.09 per diluted share. That compares with net income of $4.2 million or $0.25 per diluted share in the same quarter last year. The decline was driven primarily by lower revenue in the Q2 2026.

Speaker #1: Thank you, Benny, and good morning, everyone. As a reminder, I will refer to non-GAAP results. Reconciliations between GAAP and non-GAAP measures are provided in our press release and presentation.

Speaker #1: All comparisons are ear over ear. Please turn to slide 20, our quarterly financial highlights. Revenue for the second quarter were 11.8 million dollars, down 33.4% year over year from 17.7 million dollars.

Speaker #1: Gross margin in the second quarter was 76.3%. We recorded an operating loss of 2.2 million or negative 18.5% of revenue. Net loss was 1.5 million dollars or 9 cents per diluted share.

Speaker #1: That compares with net income of 4.2 million dollars or 25 cents per diluted share. In the same quarter last year. The decline was driven primarily by lower revenue in the second quarter of 2026.

Hod Cohen: In H1 2026, operating income was $1.6 million or 5.1% of revenue, and we expect to remain profitable on a non-GAAP basis for the full year. Please turn to slide 21. Our net R&D expenses for Q2 totaled $5.3 million, up 15.9% year-over-year. This growth reflects two things. First, our continued investment in R&D to drive innovation and expand our product portfolio. Second, currency headwinds from the shekel-dollar exchange rate. To reduce currency exposure, RADCOM initiated a short-term hedging program of shekel expenses through the end of 2026. We plan to continue our strategic R&D investments to deliver advanced intelligence solutions. The focus is on agentic AI and multi-modal workflows while supporting our strategic partnerships and bringing new features to market. Sales and marketing expenses for Q2 totaled $4.7 million, an 8.8% year-over-year increase, mainly due to FX headwinds.

Speaker #1: In the first half of 2026, operating income was $1.6 million, or 5.1% of revenue, and we expect to remain profitable on a non-GAAP basis for the full year.

Speaker #1: Please turn to slide 21. Our net R&D expenses for the second quarter totaled $5.3 million, up 15.9% year over year. This growth reflects two things.

Speaker #1: First, our continued investment in R&D to drive innovation and expand our product portfolio. Second, currency adwins from the shekel dollar exchange rate. To reduce currency exposure, RADCOM initiated short-term hedging program of shekel expenses through the end of 2026.

Speaker #1: We plan to continue our strategic R&D investment to deliver advanced intelligent solution. The focus is on agent-to-agent and multimodal workflows while supporting our strategic partnership and bringing new features to market.

Speaker #1: Sales and marketing expenses for the second quarter totaled 4.7 million dollars and 8.8 year over year increase mainly due to ethics Edwin. We continue to invest in our sales capability to support pipeline growth and expansion in high value regions.

Hod Cohen: We continue to invest in our sales capability to support pipeline growth and expansion in high-value regions. On a GAAP basis, as shown on slide 22, our net loss for Q2 2026 was $3.1 million, compared with net income of $2.4 million in the same quarter last year. GAAP loss per diluted share was $0.18, compared with earnings of $0.15 per diluted share a year ago.

Speaker #1: On a gap basis, as shown on slide 22, our net loss for the second quarter of 2026 was 3.1 million dollars compared with net income of 2.4 million dollars in the same quarter last year.

Speaker #1: GAAP loss per diluted share was $0.18, compared with earnings of $0.15 per diluted share a year ago. The year-over-year move from GAAP net income to a GAAP net loss is driven by the lower revenue in the quarter. It also reflects our continued investment in R&D and in sales and marketing.

Hod Cohen: The year-over-year move from GAAP net income to a GAAP net loss is driven by the lower revenue in the quarter. It also reflects our continued investment in R&D and in sales and marketing. We ended Q2 2026 with 331 employees. Please turn to slide 25, our balance sheet. We closed the quarter with $109.7 million in cash equivalent and short-term bank deposits, reflecting positive cash flow of $1.3 million for the quarter. For H2 2026 as a whole, we aim to remain free cash flow positive. As Benny mentioned, we are confident in RADCOM's long-term outlook. So we view a buyback at current level as an attractive use of capital through a share repurchase program of $20 to $25 million. That process is already underway, and we expect to complete it as quickly as the applicable rules permit.

Speaker #1: We ended the second quarter of 2026 with 331 employees. Please turn to slide 25, our balance sheet. We closed the quarter with $109.7 million in cash, cash equivalents, and short-term bank deposits.

Speaker #1: Reflecting positive cash flow of $1.3 million for the quarter. For the second half of 2026 as a whole, we aim to remain free cash flow positive.

Speaker #1: As Benny mentioned, we are confident in RADCOM's long-term outlook, so we view a buyback at the current level as an attractive use of capital through a share repurchase program of $20 to $25 million.

Speaker #1: That process is already underway, and we expect to complete it as quickly as the applicable routes permit. Once the required steps are done, we will start the buyback.

Hod Cohen: Once the required steps are done, we will start the buyback. We are reaffirming our revised full year 2026 revenue outlook of $57 to $63 million, with a midpoint of $60 million as announced on 30 July 2026. That concludes our prepared remarks. Thank you. We will now end the call back to the operator for your questions.

Speaker #1: We are reaffirming our revised full year 2026 revenue outlook of 57 to 63 million dollars with a midpoint of 60 million dollars as announced on July 30, 2026.

Speaker #1: That concludes our prepared remark. Thank you. We will now end the call back to the operator for your questions.

Operator: 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 connected by Zoom, please use the raise hand button located at the bottom of your screen. Please state your name and company name before the question.

Speaker #2: 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.

Speaker #2: If you wish to cancel your request, please press star two. If you are connected by Zoom, please use the raise hand button located at the bottom of your screen.

Speaker #2: Please state your name and company before asking your question.

Operator: The first question is from Alinda Lee from William Blair.

Speaker #3: The first question is from Alinda Lee from William and Blair.

Alinda Lee: Perfect. Thank you. Yes, this is Alinda Lee from William Blair. Of the three contract wins shortly after the quarter end, it seems like these opportunities were included in the Q2 pipeline. Can you give us more color on what ultimately caused them to close in early Q3 rather than late Q2?

Alinda Li: Perfect. Thank you. Yes, this is Alinda Lee from William Blair. Of the three contract wins shortly after the quarter end, it seems like these opportunities were included in the Q2 pipeline. Can you give us more color on what ultimately caused them to close in early Q3 rather than late Q2?

Speaker #4: Perfect, thank you. Yes, this is Alinda Lee from William Blair. I have a quick question regarding the three contract wins shortly after the quarter-end. It seems like these opportunities were included in the Q2 pipeline.

Speaker #4: Can you give us more color on what ultimately caused them to close in early Q3 rather than late Q2?

Benny Eppstein: Hi, Alinda. Just on the course of the negotiation, legal work, compliance, and so on. That is the reason they did not make it to the quarter and ended up at the beginning of Q3.

Speaker #1: Hi Alinda. Just in the course of the negotiation, legal work, compliance, and so on, there is—and they didn’t make it to the quarter and ended up at the beginning of Q3.

Alinda Lee: Got it.

Alinda Li: Got it.

Benny Eppstein: It was more of a technical. Sorry.

Speaker #1: It was more of a technical—sorry, it's more of a technical process rather than the negotiation, which was completed in mid-Q2.

Alinda Lee: No, go ahead.

Alinda Li: No, go ahead.

Benny Eppstein: It's more of a technical process rather than. The negotiation was completed mid-Q2.

Alinda Lee: Got it. That's helpful. How should investors think about the relationship between bookings activity and revenue recognition over the next several quarters, given the deployment related delays from this past quarter?

Alinda Li: Got it. That's helpful. How should investors think about the relationship between bookings activity and revenue recognition over the next several quarters, given the deployment related delays from this past quarter?

Speaker #4: Got it. That's helpful. And how should investors think about the relationship between bookings activity and revenue recognition over the next several quarters, given the deployment-related delays from this past quarter?

Benny Eppstein: For those specific wins, I believe the customer readiness is more mature than the traditional customer readiness. I believe for some, they could be recognized through 2026.

Speaker #1: For those specific wins, I believe the customer readiness is more mature than the traditional customer readiness. So, I believe some of it could be recognized through 2026.

Alinda Lee: Got it. Awesome. Thank you.

Alinda Li: Got it. Awesome. Thank you.

Speaker #4: Got it. Awesome. Thank you.

Benny Eppstein: Thank you.

Speaker #1: Thank you.

Operator: The next question is from Ryan Koontz from Needham & Company. Please go ahead.

Speaker #3: The next question is from Ryan Koontz from Needham & Co. Please go ahead.

Ryan Koontz: Good morning. Wanted to ask you about these pushouts. Are these situations where a customer has a limited budget and they are spending their budget on more expensive hardware and thus less of your software, or are these complete pushouts of your software along with the hardware due to their hardware costs?

Speaker #5: Good morning. I wanted to ask you about these push-outs. Are these situations where a customer has a limited budget and they’re spending their budget on more expensive hardware and thus less of your software?

Speaker #5: Or are these complete push-outs of your software, along with the hardware, due to their hardware costs?

Benny Eppstein: Hey, Ryan. It is a combination. Some of it is due to site readiness through the hardware shortages and pricing. Some of it is due to budget. So what was allocated initially was not sufficient for this year, hence it has been pushed to next year. It is simply because of the group that we are working with and the budget that originally was allocated to them.

Speaker #1: Hey Ryan. It's a combination. Some of it is due to site readiness through the hardware shortages and pricing. Some of it's due to budget.

Speaker #1: So what was allocated initially was not sufficient for this year. Hence, it's been pushed to next year. It's simply because of the group that we're working with and the budget that originally was allocated to them.

Ryan Koontz: Got it. These pushouts are all related to 5G standalone?

Speaker #5: Got it. And these push-outs are all related to 5G standalone?

Benny Eppstein: 5G, yeah. Some of it is standalone, some of it is 5G related, yes. It is all 5G, though.

Speaker #1: 5G, yeah. Some of it's standalone, some of it's 5G related, yes. It's all 5G though.

Ryan Koontz: Great. Then maybe you mentioned some procurement of hardware. I know you guys do bundle some hardware with some of your products. What has that been like, and have you considered maybe some software redesign to require lower cost hardware, lower memory?

Speaker #5: Great. And then maybe you mentioned some procurement of hardware. I know you guys do bundle some hardware with some of your products. What's that been like?

Speaker #5: And have you considered maybe some software redesign to require lower-cost hardware, lower memory?

Benny Eppstein: We actually redesigned the software and it is pretty efficient comparing to our competitors. Hence we can also reuse some of the competitor hardware in order to promote our solution. So the design is pretty much, I think, ready. Having said that, for this delayed deployment, we actually acquired some of the hardware to mitigate the risk, and managed to secure some of the old pricing for our customers. Although we secured the hardware, the site was not ready in some cases. So it is a ripple effect overall on our deployments.

Speaker #1: Well, actually, we designed the software, and it's pretty efficient compared to our competitors. So, hence, we can also reuse some of the competitor hardware in order to promote our solution.

Speaker #1: So the design is pretty much, I think, ready. Having said that, for this delayed deployment, we actually acquired some of the hardware to mitigate the risk and managed to secure some of the old pricing for our customers.

Speaker #1: Although we secured the hardware, the site was not ready in some cases. So it's a ripple effect overall on our deployments.

Ryan Koontz: Thanks very much. That is all I have got.

Speaker #5: Got it. All right, Benny. Thanks very much. That's all I've got.

Benny Eppstein: Thank you, Ryan.

Speaker #1: Thank you, Ryan.

Operator: The next question is from Blair Carey. Please go ahead.

Speaker #3: The next question is from Blair Kerry. Please go ahead.

Blair Carey: Hello?

[Analyst 2]: Hello?

Speaker #6: Hello.

Benny Eppstein: Hello. Hi.

Blair Carey: Hello.

[Analyst 2]: Hello.

Speaker #1: Hello, hi.

Speaker #6: No.

Operator: Mr. Blair, are you with us? The next question will be from Tom Jacob. Please go ahead.

Speaker #3: Mr. Blair, are you with us? The next question will be from Tom Jacobi. Please go ahead.

Tom Jacob: Hello, can you hear me?

[Analyst 1]: Hello, can you hear me?

Speaker #6: Hello. Can you hear me?

Operator: Yes.

Benny Eppstein: Yes.

Speaker #3: Yes.

Speaker #1: Yes.

Tom Jacob: I cannot hear anything, if you can hear me.

[Analyst 1]: I cannot hear anything, if you can hear me.

Speaker #6: I can't hear anything if you can hear me.

Benny Eppstein: I can hear something now.

Speaker #7: I can hear something now.

Tom Jacob: Well, thank you for the new style of call, being able to say something by Zoom. Thank you for taking my questions. I have two of them. First of all, the bad result of Q2, they came quite surprising, and we had no clue after the Q1 call. So probably it came quite surprising for you as well. I would just like to know, is there more visibility for Q3 and Q4, or might that happen again?

Speaker #6: Oh, okay. That's great. Well, thank you for the new style of call, being able to say something by Zoom. And thank you for taking my questions.

[Analyst 1]: Well, thank you for the new style of call, being able to say something by Zoom. Thank you for taking my questions. I have two of them. First of all, the bad result of Q2, they came quite surprising, and we had no clue after the Q1 call. So probably it came quite surprising for you as well. I would just like to know, is there more visibility for Q3 and Q4, or might that happen again?

Speaker #6: I've got two of them. Well, first of all, the bad results of second quarter, they came quite surprising. And we had no clue after the Q1 call.

Speaker #6: So, probably it came as quite a surprise for you as well. I'd just like to know: is there more visibility for the third and fourth quarters, or might that happen again?

Benny Eppstein: We do have a better visibility for Q3 and Q4, and I believe the risk is reflected in the revised guidance that we have provided.

Speaker #1: We do have better visibility for Q3 and Q4, and I believe the risk is reflected in the revised guidance that we have provided.

Tom Jacob: Oh, I cannot hear you again.

[Analyst 1]: Oh, I cannot hear you again.

Speaker #6: Oh, I can't hear you again.

Benny Eppstein: I am saying that we have a pretty good visibility on the remaining of H2, and the revised guidance is reflecting the risk that is embedded in the numbers.

Speaker #1: I'm saying that we have a pretty good visibility on the remaining of half two and the revised guidance is reflecting the risk that we already that is embedded in the numbers.

Tom Jacob: Well, if you can hear me, I just try to tell my other question so you get them on record. I would like to know more about the share buyback process. Will you buy them at a stock exchange? What stock exchange might that be? Or will you make a direct offer? Because it is going to be quite hard to buy that many shares, will it not be? So how do you think about that process? That would be my second question. Unfortunately, I still cannot hear anything but me. I have been told that other people experience the same issue. So it would be great if you find a solution. Maybe people can hear us by phone, I do not know, but not via Zoom.

[Analyst 1]: Well, if you can hear me, I just try to tell my other question so you get them on record. I would like to know more about the share buyback process. Will you buy them at a stock exchange? What stock exchange might that be? Or will you make a direct offer? Because it is going to be quite hard to buy that many shares, will it not be? So how do you think about that process? That would be my second question. Unfortunately, I still cannot hear anything but me. I have been told that other people experience the same issue. So it would be great if you find a solution. Maybe people can hear us by phone, I do not know, but not via Zoom.

Speaker #6: Well, if you can hear me, I just tried to say to tell my other question so you get them on record. So I'd like to know more about the share buyback process while you buy them at a stock exchange or what stock exchange might that be?

Speaker #6: And will you make like a direct offer? Because it's going to be quite hard to buy that many shares. Would it be? So how do you think about that process that would be my second question?

Speaker #6: Unfortunately, I still can't hear anything but me. I've been told that other people experienced the same issue. So it would be great if you find a solution maybe people can hear us by phone.

Speaker #6: I don't know. But not via Zoom.

Hod Cohen: Yeah. Hi, it's Hod Cohen, RADCOM CFO. Regarding the share buyback, as we said, we are planning to establish a plan for share buyback of USD 20 to 25 million. The duration of it's still not clear, but it will need to be spread, of course, on several months and something like, we are saying it will be around, let's say, a year or two, because the trading volume in our stock is not so high. So it's going to be a little bit complex. But we are going to buy the stocks in the market. We are going to apply a 10b5-1 program, and this is how we are going to do that.

Speaker #1: Yeah. So as the high sort client, Radcom CFO, so regarding the share buyback, so as we said, we are planning to establish a plan for share buyback of 20 to 25 million.

Speaker #1: The duration of it, it's still not clear, but it will need to be spread, of course, on several months and something like we are saying like it will be like around, let's say, a year or two because we know the trading volume in our stock is not so high.

Speaker #1: So it's going to be a little bit complex. But we are going to buy the stocks in the market. We are going to apply a 10v5 program.

Speaker #1: And this is how we are going to do that. Operator, can you hear us?

Tom Jacob: Okay.

Benny Eppstein: Operator, can you hear us?

Operator: If you are connected.

Speaker #3: If you're connected.

Benny Eppstein: He cannot hear our answer. Maybe you can fix it from your side, operator.

Speaker #1: Cannot hear our answer. Maybe you can fix it from your side, operator?

Operator: If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are connected by Zoom, please use the raise hand button located at the bottom of your screen. Please state your name and company name before the question. This concludes the RADCOM Ltd. Q2 2026 results conference call. Thank you for your participation. You may go ahead and disconnect. Goodbye.

Speaker #3: If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are connected by Zoom, please use the raise hand button located at the bottom of your screen.

Speaker #3: Please state your name and company name before the question. Next call. This concludes the RADCOM LTD second quarter 2026 results conference call. Thank you for your participation.