RADCOM Ltd. Q1 FY2026 earnings call

• Core Financial Performance & Operating Discipline

  • The company delivered a strong start to 2026, sustaining sequential positive growth momentum from prior quarters
  • Improved profitability through effective expense management, even while increasing strategic R&D investment for long-term innovation initiatives
  • Maintained operating discipline that allowed conversion of top-line growth into expanded operating margins

• AI Product & Innovation Milestones

  • Launched RADCOM Neura, an AI agent suite purpose-built for the agentic telecom ecosystem, which converts real-time network and subscriber data into autonomous intelligence for issue identification, behavior analysis, and workflow automation across assurance, network operations, and customer care
  • Launched a second certified ServiceNow Store connector, RADCOM Network Case Validation and Verification, that embeds deeper network intelligence directly into ServiceNow service management workflows to reduce manual labor and speed issue resolution
  • Won the Best AI/ML Innovation award at the Global Connectivity Awards for the company's predictive complaint resolution agent, earning industry recognition for its AI-native assurance capabilities
  • Plans to expand the Neura agent suite with additional use cases across customer care, assurance, and network operations through the remainder of 2026

• Strategic Partnerships & Go-To-Market

  • Expanded ecosystem partnerships with NVIDIA, ServiceNow, AWS, and new partner Infosys to develop telco-specific AI agents and network use cases
  • Leverages a partner leverage go-to-market model that extends reach to new operators, accelerates sales cycles, and lowers adoption barriers without requiring proportional increases in direct sales and marketing investment, enabling efficient pipeline scaling
  • Participated in multiple major industry events (NVIDIA GTC, TM Forum Tour Tokyo, Mobile World Congress Barcelona) to showcase AI solutions alongside partners, generating productive customer and partner meetings

• Customer Deployments & Tier 1 Growth

  • Signed a multiyear renewal with a Tier 1 customer, expanding RADCOM ACE deployment to additional AI-driven automated network operations use cases
  • Advanced deployment work with 1GLOBAL for RADCOM ACE, which will monitor 4G/5G services supporting ~43 million subscribers
  • Expanded a relationship with a leading European operator via Rakuten Symphony for network visibility across virtualized and cloud-native network environments
  • Has ongoing embedded production deployments with AT&T and Rakuten Mobile supporting millions of subscribers
  • Active engagement in multiple new Tier 1 sales opportunities, with several progressing through technical evaluation and proof-of-concept stages

• Competitive Differentiation

  • Highlights 30+ years of domain expertise in Tier 1 operator networks, which general-purpose AI platforms cannot replicate due to lack of telecom-specific context for edge cases and large-scale operational workloads
  • Third-party independent analysis from ACG Research found RADCOM solutions lower operator total cost of ownership by up to 70% compared to competing solutions, driven by its patented cloud distributed architecture that reduces server requirements, data center space, and power consumption
  • Positioned uniquely to provide high-quality subscriber-level network data that is required for effective telco AI, calling the company a "refinery" that converts raw telecom data into usable intelligence for AI use cases

The transcript does not break out financial performance by separate product segments. Aggregate total company revenue for Q1 2026 was $18.6 million, representing 12% year-over-year growth. Non-GAAP operating income was $3.7 million with a 20.1% operating margin, up from 19% in Q1 2025. Non-GAAP gross margin was 76.5%, non-GAAP net income was $4.7 million ($0.28 per diluted share), and GAAP net income was $3.1 million ($0.18 per diluted share). Quarterly expenses included $5.1 million in gross R&D (19.7% YoY growth) and $4.3 million in sales and marketing (1.4% YoY growth).

Management reaffirmed its full-year 2026 revenue guidance of 8% to 12% year-over-year growth, maintaining the previously issued target range with no upward or downward revision. Management expects that new customer opportunities currently in the pipeline will begin contributing revenue in the second half of 2026, with some conversions expected in Q4 2026. The company expects the first deployments from joint partnership motions to reach production by the end of 2026 or early 2027. The company will continue making strategic R&D investments to advance its AI product roadmap and support strategic partnership initiatives.

The opening safe harbor statement notes that forward-looking statements are subject to a range of risks and uncertainties that could cause actual results to differ materially from expectations, including: risks related to timing of customer adoption of next-generation assurance solutions, which varies based on each operator's cloud maturity and AI readiness; risks related to development and market reception of new AI products including RADCOM Neura; risks related to successful execution of strategic partnerships and delivery of expected benefits from collaborations; risks related to the success of new AI technology and its integration into broader agentic AI ecosystems; risks related to competitive dynamics and competitors' ability to meet customer demand for cloud-native 5G standalone solutions. No additional specific operational failures or material risks were discussed in the call.

Q: Arjun Bhatia (William Blair) asked that given multiple active Tier 1 sales opportunities, when will these deals convert to revenue, and will the growth contribute to 2026 results or come in 2027/2028?

A: Management responded that at least part of the current pipeline will translate to revenue in the second half of 2026, with new customer revenue specifically expected to appear in Q4 2026 results.

Q: Arjun Bhatia followed up asking if RADCOM Neura uses a new monetization model, including whether it will be priced as an add-on, premium offering, or layered into existing contracts.

A: Neura will be monetized based on the number of AI agent use cases a customer acquires, but it will also be offered as part of larger bundled solutions and included in partnership offerings with firms like Infosys, with pricing structured based on specific customer requirements.

Q: Ryan Koontz (Needham & Company) asked for an update on the joint sales motion with key ecosystem partners like ServiceNow, including what is working and how the relationship will evolve.

A: The company is already working with existing customers and new prospects via joint sales, gaining expanded geographic reach from the partnership model, and has received positive customer response. Management expects the first joint production deployments by the end of 2026 or early 2027, noting that telco sales cycles are inherently long.

Q: Ryan Koontz followed up asking how growing 5G standalone core deployment momentum impacts RADCOM's business opportunities.

A: 5G standalone adoption is pushing customers to move to cloud-native architectures, and many competitors struggle to deliver these capabilities. RADCOM already supports all major cloud providers including private cloud solutions, so this trend pushes customers toward innovative modern solutions like RADCOM's, and combined with the company's new AI agent offerings, it is benefiting business globally.