RADCOM Ltd. Q2 FY2025 earnings call

• RADCOM delivered strong Q2 results with 19% y-o-y revenue growth, extending the growth trajectory.
• Benny Eppstein focused on driving global sales, expanding strategic partnerships, and leveraging AI and accelerated computing technologies.
• The company is addressing operators' pain points related to data volume growth, visibility, and network complexity, simplifying automated assurance for AI-driven networks.
• Collaboration with NVIDIA is progressing well, with some customers moving from initial discussions to lab deployments.
• Focus on three critical goals: delivering measurable value, growing customer base using AI technologies, and expanding assurance offerings via strategic partnerships.

In Q2 2025, RADCOM achieved a new revenue record of $17.7 million, reflecting a 19.3% year-over-year growth. Non-GAAP operating income was $3.4 million, representing 19.5% of quarterly revenues. Non-GAAP gross margin for the quarter was 76.2%. The company ended Q2 with over $100 million in cash and remained debt-free.

• Management remains confident in full-year revenue guidance of 15% to 18% growth, supported by healthy customer engagement and market shifts toward intelligent, automated real-time assurance.
• Priority for capital allocation includes potential M&A, with progress being made on a few candidates.

• Risks include foreign exchange rate impacts, potential tariffs, success of new technologies like AI, ability to deliver consistent value while driving operational excellence, and impact of market trends on growth and profitability.

Q: Could you touch on how the partnership with service management system vendors like ServiceNow and AWS is going?

A: The partnership is going very well with co-development and interconnecting platforms, with some connectors already in place and agent-to-agent use cases being built.

Q: How should we think about capital allocation with $100 million in cash on the balance sheet?

A: Potential M&A is the first priority, with progress on a few candidates and decisions to be made on capital allocation based on progress.

Q: What percentage of pipeline do you see coming from existing customer expansion versus new logo wins?

A: Around 2/3 from existing and 1/3 from new.

Q: Can you give color on where new Tier 1 opportunities are in the RFP process and timing of decisions?

A: Participating in more than a few RFPs globally, with at least a few expected within the next half of the year.

Q: Any opportunity in the direct-to-device satellite space?

A: There are active opportunities in certain customers, but capital allocation is still unclear.

Q: Any change in the competitive environment relative to peers?

A: Competitors are shifting out of telcos while RADCOM is doubling down on innovation, supporting TCO reduction and AI journey for customers, with no big differences in competitive landscape.