RADCOM Ltd. Q3 FY2024 earnings call

• Hilik Itman welcomes Benny Eppstein as new CEO starting December 1st, with Hilik resuming COO role focusing on product development. - Achieved record quarterly revenues of $15.8 million. - Secured a seven-figure multi-year contract with a North American operator for advanced mobility experience analytics after a competitive tender process. - Operators continue to invest in networks and advance 5G deployments, with strong interest in the RADCOM ACE platform. - Transition to 5G standalone presents challenges but more operators moving towards solutions. - Strong demand for cloud-based automated assurance and built-in AI capabilities, with a healthy pipeline. - Positive customer feedback across sales cycle stages. - AT&T, DISH, and Rakuten remain key customers with high satisfaction. - Continued investment in R&D and sales/marketing, with expectations of gradual increase in Q4. - Recognized in the Best AI/ML Innovation category for Global Connectivity Award.

Third quarter revenue grew by 20% to a record $15.8 million. Non-GAAP net income for the third quarter was $3.7 million with a non-GAAP net margin of 24%, which grew by 6% compared to the third quarter of 2023. GAAP net income was $2.3 million, up from a net loss of $0.3 million compared to the third quarter of 2023. The non-GAAP gross margin for the third quarter of 2024 was 75%. The acquisition of Continual in May 2023 has complemented the RADCOM ACE platform, contributing to new sales opportunities and pipeline generation.

• Raised 2024 revenue guidance to $59 million to $62 million. - Fourth quarter gross margin expected to remain similar to the third quarter. - Multi-year contracts like the North American operator deal will start recognizing revenue in 2025. - Expect continued growth in 2025 with organic and inorganic opportunities, leveraging multi-year contracts and recurring revenue.

• Forward-looking statements involve risks such as 5G market trends, sales cycles, AI use, mergers & acquisitions, and differences between GAAP and non-GAAP financial measures. - Challenges in 5G standalone transition for operators lacking skills. - Potential differences between actual results and forward-looking statements outlined in SEC filings.

Q: About the new seven-figure deal with the North American operator and the role of Continual.

A: Continual acquisition complements RADCOM's platform, contributing to new opportunities and logo growth, and the deal is multi-year with revenues to be recognized in 2025.

Q: Expansion path for the North American customer and deal structure.

A: It is a multi-year contract with annual license, and revenues will be recognized upon delivery and acceptance.

Q: 2025 growth potential and fourth quarter guidance.

A: Expect continued growth, sustaining operating profit growth, with a healthy backlog from multi-year contracts.

Q: Geographical markets and 5G demand.

A: Main focus on North America and Europe, with most demand from voice over 5G due to critical need in transitions, and expecting voice over 5G deployments in 2025.