RADCOM Ltd. Q1 FY2025 earnings call

• Benny Eppstein transitioned to lead RADCOM, highlighting the first quarter as exciting with record revenue and profitability improvement.
• The company achieved 17.5% YoY revenue growth, 6.5%+ increase in operating margins, and $4.4 million positive cash flow. Cash and cash equivalents stood at $99.1 million with no debt.
• Discussed agentic AI, leveraging GenAI and accelerated computing for real-time user and service insights. Collaborations with ServiceNow and Nvidia were highlighted, including partnerships to fast-track agentic AI vision.
• Extended and expanded a tier-one multi-year contract in North America. Telecom market trends like 5G standalone, open architecture, and AI-driven transformation were emphasized as growth opportunities.
• Participated in events like Nvidia GTC, Mobile World Congress, Futurenet World, and will participate in DTW Ignite, showcasing solutions and engaging with partners/customer prospects.

In the first quarter of 2025, RADCOM achieved a new company revenue record with a 17.5% year-over-year growth, reaching $16.6 million. Non-GAAP operating income was $3.1 million, which is 19% of revenues. The non-GAAP gross margin was 76.3%. R&D expenses were $4.3 million, up 5.8% YoY. Sales and marketing expenses were $4.2 million, an increase of $461,000 from the prior year. G&A expenses were $1 million, a decrease of $145,000 from the prior year. Cash and cash equivalents and short-term bank deposits ended the quarter at $99.1 million with a positive cash flow of $4.4 million.

• Raised full-year 2025 revenue growth outlook from 12%-15% year-over-year to 15%-18% year-over-year, with a midpoint of $71.1 million, representing a 16.5% increase compared to 2024.
• Expect to continue growth supported by pipeline and customer engagements, focusing on disciplined execution and delivering value to customers.

• Forward-looking statements involve risks such as actual results differing from expectations, momentum, strategic direction, future execution, demand for products/solutions including AI capabilities, market trends, innovation, partnerships, gross margins, R&D and sales/marketing expenses, grants from Israel Innovation Authority, and full-year revenue guidance.
• The company does not undertake to update forward-looking statements, and risks are outlined in press release and SEC filings.

Q: Arjun Bhatia asked about Agentic AI functionality, monetization, and free cash flow and capital use.

A: Benny Eppstein mentioned investing in R&D for Agentic AI, collaborating with partners, and having flexible monetization models. On free cash flow, they are looking into acquisitions and M&A opportunities.

Q: Ryan Koontz inquired about 5G standalone customer growth, gross margin mix, ServiceNow relationship, and NVIDIA deployment model.

A: Benny Eppstein noted similar growth pace for 5G standalone, gross margin varies by revenue mix with less third-party components improving it this quarter. ServiceNow partnership expands pipeline opportunities, and NVIDIA deployment involves DPUs installable in standard servers, with trials in labs and plans to expand to production.