NASDAQ:RDCM RADCOM Q4 2023 Earnings Report $11.28 +0.47 (+4.35%) Closing price 04/17/2025 04:00 PM EasternExtended Trading$11.25 -0.03 (-0.27%) As of 04/17/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast RADCOM EPS ResultsActual EPS$0.17Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/ARADCOM Revenue ResultsActual Revenue$14.01 millionExpected Revenue$13.50 millionBeat/MissBeat by +$510.00 thousandYoY Revenue GrowthN/ARADCOM Announcement DetailsQuarterQ4 2023Date1/31/2024TimeN/AConference Call DateWednesday, January 31, 2024Conference Call Time8:00AM ETUpcoming EarningsRADCOM's Q1 2025 earnings is scheduled for Tuesday, May 13, 2025, with a conference call scheduled on Wednesday, May 14, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by RADCOM Q4 2023 Earnings Call TranscriptProvided by QuartrJanuary 31, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Ladies and gentlemen, thank you for standing by. Welcome to the Radcom Limited Results Conference Call for the Q4 and Full Year 2023 Results. All participants are present in a listen only mode. Following management's formal presentation, instructions will be given for the question and answer session. 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. Operator00:00:34On the call are Eyal Harari, Radcom's CEO and Hadar Rahab, 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 a conference 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. Forward looking statements in the conference call involve several risks and uncertainties, including but not limited to, the company's statements about full year 2024 revenue guidance, the 5 gs market and industry trends and expected increase in standalone 5 gs launches, the role the company is expected to play in the 5 gs transformation, expected increases in sales activities and opportunities, its pipeline, the expected impact of currency rates, the company's market position, cash position, potential and expected growth and profitability in 2024 and thereafter, its expectations with respect to research and development and sales, marketing expenses as well as grants from the Israel Innovations Authority, the company's expectations with respect to its relationships with Rakuten, DISH, AT and T and Vodafone its expectation to continue enhancing its software solutions and demand for its solutions of the role of its 5 gs solutions and cloud developments, its ability to capitalize on 5 gs opportunities and win more market share and the potential of the company's use of artificial intelligence in its products. Operator00:02:23The 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 the presentation 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 certain non cash stock based compensation expenses, financial income expenses, acquisition related 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 general accepted accounting principles. Investors are encouraged to review the reconciliations of GAAP to non GAAP financial measures included in the quarter's earnings release available on our website. Operator00:03:39Now, I would like to turn over the call to Eyal. Please go ahead. Speaker 100:03:45Thanks, operator. Good morning, everyone, and thank you for joining us for our Q4 and full year 2023 earnings call. You may have seen that earlier today, we announced a CEO transition. I will be stepping down as the CEO and Guy Shemesh will succeed me. I wish Guy and the Radcom team success in the coming years. Speaker 100:04:09Radcom was my home for over 20 years in various leadership positions. Radcom is close to my heart, and I will remain in an advisory role to ensure a smooth transition and to help ensure the company's continued success. Let me start with the financial results and the business updates, and then I will discuss the transition in my summary. 2023 marked an exceptional and record year for Radcom, extending the momentum of the last 4 years of growth. We achieved a revenue milestone of €51,600,000 representing 12% growth year over year, a 4th consecutive growth year. Speaker 100:04:50In the Q4, revenue was $14,000,000 representing a year over year growth of 14%, while our net margin reached a record level. We continued our path to sustain profitability, achieving record net income of $10,200,000 on a non GAAP basis or $700,000 on a GAAP basis for 2023. Our finances strengthened due to the positive cash flow that reached a record level of cash and cash equivalents totaling $82,200,000 with no debt. We crossed the $50,000,000 annual revenue threshold and scaled to a midsized software company. In 2023, our team executed well while delivering a record year, laying the foundation for the robust 2024 and beyond. Speaker 100:05:46I am proud of our employees and thank them for their dedication and commitment to delivering on our customer success and growth strategy during the year. Our strong results highlight the importance of our industry leading solutions in the growing 5 gs market. Looking at 2024, thanks to our strong execution and current visibility, we are confident in delivering a 5th consecutive year of revenue growth and increasing our profitable growth metrics. Our full year 2024 revenue guidance is $56,000,000 to $60,000,000 Since the October 7 attack and the resulting situation, our operation in Israel and globally have continued without interruption. While closely monitoring the situation, our Israel office is fully operational and running normally. Speaker 100:06:41At the same time, our business continuity plan is active, so we are prepared for any changes to the current situation. As demonstrated in the Q4 of 2023, our team works diligently to fulfill our customer obligations, grow the business and drive the company forward. For our customers, we continue to provide software enhancement and introduce new innovation software releases to assist them in managing their networks and ensuring great customer experiences. In 2023, we secured several new orders from our existing customer base, increasing our overall revenue from existing customers compared to 2022. AT and T, DISH and Rakuten remain key strategic customers. Speaker 100:07:31We believe our business with them will remain strong. We expect revenue from these customers in 2024 to stay at a similar level to last year, with potential for further growth. Due to the continual acquisition, we added Vodafone as a new customer in 2023. Vodafone is a British multinational operator operating in 21 countries, which provides potential growth area for more business in the future. During 2024, we will expand our focus on our sales activities to meet the expected 5 gs standalone monitoring demand with our leading 5 gs assurance solutions. Speaker 100:08:13Operators rely on assurance to navigate the transition to 5 gs and enhance operational efficiency. As they adopt next generation cloud technology to optimize cost and rollout 5 gs, the current macroeconomics landscape presents new opportunity for Radcom, a leading global cloud native assurance solution. We continue to enhance our software with additional automation, analytics and intelligence and AI based capabilities to bring value and expand use cases for our customers as the adoption of the 5 gs technology progress. We also rolled out Radcom Virtual Drive Test, a product we acquired as part of the Continual acquisition to help operators improve the customer experience while reducing costs. These product initiatives have already gained traction with potential customers and could lead to additional business. Speaker 100:09:11As I mentioned, our product strategy is making networks more intelligent and autonomous through AI powered analytics to save costs, improve the customer experience and drive operational efficiencies. Recently, we announced our position as one of the first assurance vendors to harness the power of generative artificial intelligence or Gen AI for real time and efficient management of 5 gs networks, Radcom's NetTalk. We are approaching this from the unique perspective of a company with years of expertise in the telco space and an advanced AI powered analytics point of view. These net talk applications enable operators to adopt the power of Gen AI and trusted data to manage their network operations faster and cost effectively. Executives and engineers can use natural language to tap into the wealth of data Radcom Ace produces as it's analyzed service quality. Speaker 100:10:12Operators can talk with their network and leverage the rich insights from Radcom Gen AI applications using customized large language models, LLMs. Gen AI will be a hot topic in 2024 and we will be showcasing our Radcom network use cases, which will continue to develop throughout the year, starting the Mobile World Congress at the end of February in Barcelona. Our market leading solutions, thoughtfully aligned with operator needs, which drives revenue, reduce operational costs and provides unique technology to address critical network challenges. We are confident that our unique innovative offering will drive sustained growth. Our pipeline continues to be healthy with good mix of opportunities from our current installed base and new customers. Speaker 100:11:05In 2024, we will expand and focus on our sales activities, which we believe will lead to additional contracts and increased market share. To summarize, 2023 was an exceptional record year for Radcom, continuing the last 4 years of growth momentum. We believe our strong sales and marketing engagements shows that the demand for our solution is robust. Our multiyear contracts also provide a strong backlog, driving consistent results and driving us good visibility into 2024 and beyond. Therefore, we are confident in delivering 5th consecutive year of revenue growth, further increasing our profitability and continuing the positive momentum in 2024. Speaker 200:11:51Thank you, Eyal, and good morning, everyone. Now please turn to Slide 8 for our financial highlights. While the slides contain GAAP and non GAAP results, it will refer mainly to non GAAP numbers, excluding share based compensation, acquisition related expenses and amortization of intangible assets related to acquisition and financial income expenses. We concluded the Q4 of 2023 with $14,000,000 in revenue and making a new record quarter and an increase from $12,300,000 in the Q4 of 2022. Our gross margin on a non GAAP basis in the Q4 of 2023 was 76%. Speaker 200:12:39Please note that our gross margin can fluctuate depending on the revenue mix. Our gross R and D expenses for the Q4 of 2023 on a non GAAP basis was $3,900,000 a decrease of $785,000 compared to the Q4 of 2022. We received a grant of $190,000 from the Israel Innovation Authority during the quarter compared to $160,000 in the Q4 of last year. Our net R and D expenses for the Q4 of 2023 on a non GAAP basis were $3,700,000 a decrease of $815,000 compared to the Q4 of 2022. Sales and marketing expenses for the Q4 of 2023 were $3,300,000 on a non GAAP basis, an increase of $401,000 compared to the Q4 of 2022. Speaker 200:13:47G and A expenses for the Q4 of 2023 on a non GAAP basis were 900 and $78,000 with no significant change from the Q4 of 2022. Operating income on a non GAAP basis for the Q4 of 2023 was $2,700,000 19 percent of revenue compared to an operating income of $608,000 5 percent of revenue for the Q4 of 2022. Net income for the Q4 of 2020 3 on a non GAAP basis was a record of $3,800,000 27 percent of revenue or a net income of $0.25 per diluted share compared to a net income of $1,300,000 11% of revenue or a net income of $0.09 per diluted share for the Q4 of 2022. On a GAAP basis, as you can see on slide 7, our net income for the Q4 of 2023 reached an all time high of $2,600,000 19 percent of revenue or a net income of $0.70 per diluted share compared to a net loss of $26,000 or a net loss of 0 point 0 $0 per diluted share for the Q4 of 2022. At the end of the Q4 of 2023, our outcome was 295. Speaker 200:15:29Now let's turn to the full year results. We ended 2023 with revenue of $51,600,000 an increase of 12% from 46 $100,000 in 20.22. On a non GAAP basis, our gross margin was 74% in 20 23 compared to 73% in 2022. Our gross R and D expenses for 2023 on a non GAAP basis were $16,900,000 a decrease of $2,100,000 compared to 2022. In 2024, we plan on investing in R and D at approximately the same level as in 2023. Speaker 200:16:21We received a cumulative grant from the Israel Innovation Authority for $736,000 during the year. In 2024, we expect grant from the Israel Innovation Authority to be at the same level as in 2023. Sales and marketing expenses in 2023 were $12,700,000 on a non GAAP basis compared to $10,900,000 in 2022. In 2024, we expect a gradual increase in sales and marketing to support an increasing pipeline of opportunities. G and A expenses for 2023 on a non GAAP basis were $3,800,000 an increase of $268,000 compared to the entire year of 2022. Speaker 200:17:23Operating income on a non GAAP basis for 2023 was also an all time high of $5,700,000 11% of revenue compared to an operating income of $1,100,000 2 percent of revenue for 2022. Net income for 2023 on a non GAAP basis was a record of $10,200,000 20 percent of revenue or a net income of $0.67 per diluted share compared to a net income of $2,900,000 6 percent of revenue or a net income of $0.19 per diluted share for 2022. On a GAAP basis, as you can see on Slide 7, our net income for 2023 was another record of $3,700,000 7% of revenue or net income of $0.24 per diluted share compared to a net loss of $2,300,000 or a net loss of $0.16 per diluted share for 2022. In 2024, we believe the dollar shekel ratio will stabilize at the current levels and not require hedging. Turning to the balance sheet. Speaker 200:18:50As shown on Slide 11, our cash, cash equivalents and short term bank deposits as of December 31, 2023, were $82,200,000 As was mentioned in the previous quarter, in 2023, we completed continual acquisition in the amount of $2,500,000 Thanks to our strong results, we generated a positive cash flow of $4,500,000 which led us to end the year with our highest level of cash. Now I will pass the call back to Eyal to summarize. Speaker 100:19:30As I mentioned at the start of my remarks, I'm stepping down after over 4 years as a CEO and 20 years in various leadership roles within the company. It has been an honor to lead the incredible team at Radcom. I'm proud to have led the company to suppress the $50,000,000 annual revenue threshold and scale the company up to a midsized company for the first time, while achieving profitable growth. I'm leaving the company in a healthy situation with excellent visibility into 2024 for continued growth and increased profitability while I move to my next challenge. Radcom is in the hands of a capable and talented management team. Speaker 100:20:14I'm confident that together, they will continue to lead the company, drive further growth and achieve new heights under Guy's leadership. Thank you to all the employees, customers, investors and partners I worked with who have put their trust in the company, and I wish the Board, Guy and Radcom every success. That concludes our prepared remarks. I will turn the call back to the operator for your questions. Operator00:20:45Thank you. Ladies and gentlemen, The first question is from Arjun Bhatia of William Blair. Please go ahead. Speaker 300:21:19Perfect. Thank you guys and Eyal congrats on the run, and it's been great working with you. Best of luck in the next chapter here. If I can start off on AI, it seems like some exciting announcements coming with NetTalk. But Al, can you maybe just talk a little bit about how generative AI makes Radcom and Assurance in general maybe a little bit more strategic and raises its profile? Speaker 300:21:53Like what are you looking for as the key kind of indicators that you're getting traction at customers and at telcos and that these Gen AI capabilities are resonating and adding value for your customer base? Speaker 100:22:11Hi, good morning. Thank you Arjun for the time it works. Gen AI is a big trend not only for telco industry, but for all the tech and we are looking to see how we can leverage these disruptive advancement. We believe Radcom is uniquely positioned as we collect a gold mine of data from the network by monitoring the real customer experience of all subscribers using other services. We are leveraging the AI technology for the last 3 or more years, trying to create automation and efficiencies for the operators. Speaker 100:22:52And with the Gen AI, we are trying to take it to the next level. So the idea is that we will we are becoming like a copilot for the operator enabling the engineers to do their task more efficiently and become even better experts in their domain because we make both our solution and all the data it provides as well as some industry standards and specs. We made it all available and accessible and by that we empower the engineers. This creates efficiencies for the operator, it allows them to work with more efficient teams. And of course, it also drives eventually improvement in customer experience. Speaker 100:23:37So this is where we are heading today. We are also looking on this strategically and we believe that in the next 3 to 5 years, Gen AI will continue to evolve and we'll be able to do even more sophisticated task that the technology is not mature today. And eventually the goal is to allow the Geni to do the closed loop and really improve the network by analyzing and taking the directives from the engineer or from the do the deep analysis of the try to understand the network condition and close the loop with the configuration or setting of the network and by that not only drive efficiency, but also improve network and improve customer experience. Speaker 300:24:33That's very helpful. And you talked about in your prepared remarks the pipeline and how you'll invest in sales and marketing. But when you're looking at JennyI specifically and maybe some of the early signs of success that you're having, do you anticipate that that will come through some of the customers that are earlier in the pipeline, the new customers coming in? Or do you think you'll primarily get these capabilities adopted, at least initially, with your existing customer Speaker 100:25:06So the Genent AI is now in an innovation stage. We are not foreseeing revenue in 2024 directly from those investments. It is important for our customers to see our innovation and our thought leadership in the space and they want to see our roadmap and our vision. So the influence is mainly indirectly. When we look on our pipeline, which is very strong and we have very good visibility into 2024 to continue our growth journey and accelerate, This is based on our Radcom ace product line with our new and existing customers. Speaker 100:25:46And I believe that Gen AI will be more long term contributor. Speaker 300:25:53Okay, got it. And then just maybe touching on the pipeline, you did mention that you're making you'll make some incremental sales and marketing investments because you're seeing demand, which certainly makes a lot of sense. Can you just maybe give us a sense for where you're seeing traction in the pipeline and the incremental resources that you're dedicating to sales and marketing, is that to grow, get more customers in the pipeline or convert the existing customers? Just give us a sense for where you'll be directing those in 2024? Speaker 100:26:29Sure. So as I discussed this and also in previous calls, we are following very carefully the evolution of 5 gs and primarily the 5 gs standalone, what I call the strategic 5 gs. What we see is that the early adopters in the market are in North America and some advanced countries in Asia like Japan and South Korea. And this is where we started to put our focus already a few years back. In the last couple of years, we are starting to accelerate our sales investment as we see additional regions starts to progress. Speaker 100:27:05And I believe 2024 is going to be pivotal for 5 gs SA technology. We see more efforts and more progress in Europe. Europe, as we know, is more scattered. There are more operators in smaller countries, and we beef up the team in order to make sure we have good visibility and enough boots on the ground to capture the opportunity. And we will continue to invest during the year in order to make sure we keep with the 5 gs base. Speaker 100:27:37We have the privilege that our customers are really known. We know what they are doing. We see their buying frequencies. We see them partnering with their network vendors to build their 5 gs network. And we see the public announcement on when they are going to 5 gs assay and this is where our solutions becomes critical. Speaker 100:27:59As we see that the market is going to the next step, we are also going to the next step with our sales and marketing. And if I would quantify that, we are talking about 20% to 30% increase in our teams globally, again with the main focus in Europe, but also increasing some of our other teams as where we see both already opportunities in our pipeline and very importantly where we want to continue and increase our pipeline to support our multiyear growth plan. Operator00:28:45The next question is from Alex Henderson of Needham and Company. Please go ahead. Speaker 400:28:53Thanks. Yes, I was a little surprised that you're deciding to move on Speaker 500:28:59at such a young age. I don't understand that. Just hard to fathom, but congratulations Speaker 400:29:09on the decision. I was hoping you could talk Speaker 500:29:13a little bit about the rate of growth. You've produced double digit growth in each of the last 2 years. Speaker 400:29:24Is it reasonable to think that in 2024 that total budget growth is attainable on the top line? And you mentioned several times in the call potentially accelerating it. Is it reasonable to think that the acceleration is going to happen here? Speaker 100:29:45Thank you, Alex. Yes, as you saw our guidance for the year, we are looking to continue at minimum with double digit growth. And if you look on the higher range of our guidance, this could be further accelerating compared to what we do today. Our business model with over 70% recurring revenue is supporting our long term growth and it's all based on the execution on keeping the run rate and further evolve with our existing customers and winning new logos and enhancing our market share. I believe that 2024 is the year that we will start to see more in a 5 gs assay as I previously commented. Speaker 100:30:30And this is why we continue and increase our sales and marketing. So definitely the plan is to and the trajectory is to continue this double digit growth over the monthly year. And I'm personally optimistic that we can actually accelerate our growth and it all depends on the pace of the operator adopting the 5 gs SA getting into live and our ability to execute well and win those new logos. From past experience and with 20 years in the telco, usually with any technology evolution, takes a lot of time, but once the technology is mature is maturing, then you start to see the adoption rate goes much higher. And the next 18 to 24 months is where we expect the 5 gs SA to really become more popular and this is why I definitely believe there is a potential to accelerate the growth even further. Speaker 500:31:31So given that backdrop of 10% plus growth, you're talking about a pretty significant acceleration in spending around sales and marketing, if I'm reading it correctly, Speaker 400:31:44a 20% to 30% increase in the number of teams. Is that can you give us some sense of what do you think the marketing line is likely to do under that scenario? Are we talking about compression in operating margins this year? Speaker 100:32:02So we are in a process of shifting and moving resources from R and D to sales and marketing. The increase is incremental. So we will get some of the increase in the 1st part of the year and some of the increase will come only later the year. And as answer to our June, this will follow the development of the 5 gs SA. So I think this is the best vote of confidence in the business we see and we will adapt it to the pace of new 5 gs SA RFPs that we see, new opportunities we want to cover. Speaker 100:32:41We want to make sure we don't miss the market opportunity and we believe the next, as I said, 18 to 24 months are going to be critical to win the market share and we want to be ready with the teams. We are going to focus in we're already very strong in North America. We are going to increase our presence in Europe and in specific countries we find the best fit to our product lines where quality matters, where we are looking for innovation, where we look for assurance solutions that will allow them to do the transformation like Japan as we work for many years with Rakuten. And this is why we are coming with this strategy. Speaker 400:33:27I understand the strategy. I'm looking for some quantification of the strategy. Is it reasonable to Speaker 500:33:33think, given the commentary around sales and marketing expansion, that you're going to compress the operating margins in 2020 for? Speaker 100:33:46No, the operator margin will improve as we are looking to grow significantly in the revenue and the overall increase in the operation on the operational cost will be lower than the increase in the revenue. Speaker 400:34:03Okay. So if I'm talking about 20% to 30% increase in the number of teams, what does that translate in terms of the sales and marketing expansion? How do I Speaker 500:34:17that's clearly well ahead of your revenue growth. Even if Speaker 300:34:21I hold your R and Speaker 500:34:21D flat, it wouldn't be enough to produce that type of investment growth. So what am I doing to offset it? Are other elements of the sales and marketing costs coming down as a result of the mix shift within sales and marketing? How do I get 20% to 30% increase in the number of teams without increasing the cost by some more amount? Speaker 100:34:47As mentioned, we are going to be lowering our R and D expense to cover some of the growth in the sales and marketing. And overall, the sales and marketing is not the biggest expense for the company. So it's not that we're going to increase the overall operation expense in 20%. And we're going to have only moderate increase to the operating expense because of this shift. And the sales and marketing increase of teams we take gradually saw on the overall numbers over the year, we are going to have lower impact on the as it's not a full impact from January, some of them will come in the 2nd part of the year. Operator00:35:40The next question is from Charles Eliot with IPI. Please go ahead. Speaker 100:35:48Thank you. Speaker 600:35:50Eyal, first, thanks very much for all you did for the shareholders over the last few years and good luck. In terms of your future, are you going on to an equally active role or is it more likely you pick up take a sort of Chairman's position and or non executive positions? Speaker 100:36:10Sorry, can you repeat the question without to hear you? Speaker 600:36:13I'm sorry, is this better? Can you hear me better now? Speaker 100:36:19Yes. Speaker 600:36:25Executive role or non executive or something like an active Chairman? Speaker 100:36:34I'm going to be supporting the company and guys in the transition for the next period of time, making sure Radcom is going to be successful. And in parallel, I will later share my plans on what I'm going to do next. But no, I'm not going to stay as a Chairman or in the Board of Radcom. Speaker 600:37:03Thank you. A few more questions. With your balance sheet so full of cash and the company now generating free cash flow, is it a prospect that you that Radcom returns some free cash returns more to investors through buybacks or through a dividend increase? Or do you want to conserve your cash to get revenues well above $100,000,000 in a few years and grow further from there? Speaker 100:37:37So it's more of the second. We still believe that while we are generating cash and profitable and we generate over $20,000,000 in the last 2 to 3 years. This allow us to have a very good position in the market first and foremost with our customers that we are it allows us to engage and take more risk in terms of seeing how we can increase our market share. We did our first M and A last year and we believe there might be opportunities to further increase our strategic position in the market and we want to make sure that we have this opportunity. And the option of dividends or buybacks is something being discussed, but we believe that in the current stage, there is a better use with looking on keeping our strategic position and keeping the options for additional M and A that will allow us further growth. Speaker 600:38:43Thank you. And one final question. You mentioned Vodafone. Did it come through your acquisition of Continual? Or was this a kind of a greenfield new customer win? Speaker 600:39:01And should we look at this as a similar size to some of your big customers now like Rakuten or AT and T even or is it significantly smaller at the moment? Speaker 100:39:15At the moment, it is a significant smaller. It is a customer inherent with M and A of Continual. Vodafone was the key customer for Continual. One of the values we saw by partnering Continual and create this great synergy. We believe that with the power of Radcom, the richer product set that we have and the wider portfolio, we can further expand with more value. Speaker 100:39:46We are working today with Vodafone as a certified vendor. We are which allow us to have better visibility to their requirement and needs. And we're working with few countries, but Vodafone is a large enterprise with many operations around Europe mainly and out of Europe. And we believe that with Radcom Power and Technology, we can further expand both with the original continual product line as well as the Radcom Aids in its technology. So it can definitely can scale into a size of Rakuten or even AT and T as Vodafone as an enterprise is very large. Speaker 100:40:28But at this stage, we have initial activity with them, but I believe this relationship could further grow in the near future. Operator00:40:48This concludes the Radcom Ltd. 4th quarter and full year 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallRADCOM Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) RADCOM Earnings HeadlinesRADCOM (NASDAQ:RDCM) shareholders have earned a 15% CAGR over the last five yearsMarch 28, 2025 | finance.yahoo.comRadcom developing next-generation networking data plane solutionFebruary 27, 2025 | markets.businessinsider.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.April 19, 2025 | Paradigm Press (Ad)RADCOM Developing Next-Gen Networking Data Plane Analytics Solution, Powered by NVIDIA BlueField-3 DPUFebruary 27, 2025 | prnewswire.comRadcom (RDCM) Gets a Buy from William BlairFebruary 20, 2025 | markets.businessinsider.comRadcom: Solid Execution And Differentiation Could Drive More UpsideFebruary 20, 2025 | seekingalpha.comSee More RADCOM Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like RADCOM? Sign up for Earnings360's daily newsletter to receive timely earnings updates on RADCOM and other key companies, straight to your email. Email Address About RADCOMRADCOM (NASDAQ:RDCM) provides 5G ready cloud-native, network intelligence, and service assurance solutions for telecom operators or communication service providers (CSPs). It offers RADCOM ACE, including RADCOM Service Assurance, a cloud-native, 5G-ready, and virtualized service assurance solutions, which allows telecom operators to gain end-to-end network visibility and customer experience insights across all networks; RADCOM Network Visibility, a cloud-native network packet broker and filtering solution that allows CSPs to manage network traffic at scale across multiple cloud environments, and control the visibility layer to perform analysis of select datasets; and RADCOM Network Insights, a business intelligence solution that offers insights for multiple use cases enabled by data captured and correlated through RADCOM Network Visibility and RADCOM Service Assurance. The company also provides solutions for mobile and fixed networks, such as 5G, long term evolution (LTE), voice over LTE, voice over Wifi, IP multimedia subsystem, voice over IP, and universal mobile telecommunication service. It sells its products directly to customers through executives and sales representatives, as well as through a network of distributors and resellers in North America, Asia Pacific, Latin America, Europe, the Middle East, Africa, and Israel. The company was formerly known as Big Blue Catalogue Ltd. and changed its name to RADCOM Ltd. in 1989. RADCOM Ltd. was incorporated in 1985 and is headquartered in Tel Aviv, Israel.View RADCOM ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? Why Analysts Boosted United Airlines Stock Ahead of EarningsLamb Weston Stock Rises, Earnings Provide Calm Amidst ChaosIntuitive Machines Gains After Earnings Beat, NASA Missions Ahead Upcoming Earnings Tesla (4/22/2025)Intuitive Surgical (4/22/2025)Verizon Communications (4/22/2025)Canadian National Railway (4/22/2025)Novartis (4/22/2025)RTX (4/22/2025)3M (4/22/2025)Capital One Financial (4/22/2025)General Electric (4/22/2025)Danaher (4/22/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 7 speakers on the call. Operator00:00:00Ladies and gentlemen, thank you for standing by. Welcome to the Radcom Limited Results Conference Call for the Q4 and Full Year 2023 Results. All participants are present in a listen only mode. Following management's formal presentation, instructions will be given for the question and answer session. 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. Operator00:00:34On the call are Eyal Harari, Radcom's CEO and Hadar Rahab, 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 a conference 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. Forward looking statements in the conference call involve several risks and uncertainties, including but not limited to, the company's statements about full year 2024 revenue guidance, the 5 gs market and industry trends and expected increase in standalone 5 gs launches, the role the company is expected to play in the 5 gs transformation, expected increases in sales activities and opportunities, its pipeline, the expected impact of currency rates, the company's market position, cash position, potential and expected growth and profitability in 2024 and thereafter, its expectations with respect to research and development and sales, marketing expenses as well as grants from the Israel Innovations Authority, the company's expectations with respect to its relationships with Rakuten, DISH, AT and T and Vodafone its expectation to continue enhancing its software solutions and demand for its solutions of the role of its 5 gs solutions and cloud developments, its ability to capitalize on 5 gs opportunities and win more market share and the potential of the company's use of artificial intelligence in its products. Operator00:02:23The 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 the presentation 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 certain non cash stock based compensation expenses, financial income expenses, acquisition related 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 general accepted accounting principles. Investors are encouraged to review the reconciliations of GAAP to non GAAP financial measures included in the quarter's earnings release available on our website. Operator00:03:39Now, I would like to turn over the call to Eyal. Please go ahead. Speaker 100:03:45Thanks, operator. Good morning, everyone, and thank you for joining us for our Q4 and full year 2023 earnings call. You may have seen that earlier today, we announced a CEO transition. I will be stepping down as the CEO and Guy Shemesh will succeed me. I wish Guy and the Radcom team success in the coming years. Speaker 100:04:09Radcom was my home for over 20 years in various leadership positions. Radcom is close to my heart, and I will remain in an advisory role to ensure a smooth transition and to help ensure the company's continued success. Let me start with the financial results and the business updates, and then I will discuss the transition in my summary. 2023 marked an exceptional and record year for Radcom, extending the momentum of the last 4 years of growth. We achieved a revenue milestone of €51,600,000 representing 12% growth year over year, a 4th consecutive growth year. Speaker 100:04:50In the Q4, revenue was $14,000,000 representing a year over year growth of 14%, while our net margin reached a record level. We continued our path to sustain profitability, achieving record net income of $10,200,000 on a non GAAP basis or $700,000 on a GAAP basis for 2023. Our finances strengthened due to the positive cash flow that reached a record level of cash and cash equivalents totaling $82,200,000 with no debt. We crossed the $50,000,000 annual revenue threshold and scaled to a midsized software company. In 2023, our team executed well while delivering a record year, laying the foundation for the robust 2024 and beyond. Speaker 100:05:46I am proud of our employees and thank them for their dedication and commitment to delivering on our customer success and growth strategy during the year. Our strong results highlight the importance of our industry leading solutions in the growing 5 gs market. Looking at 2024, thanks to our strong execution and current visibility, we are confident in delivering a 5th consecutive year of revenue growth and increasing our profitable growth metrics. Our full year 2024 revenue guidance is $56,000,000 to $60,000,000 Since the October 7 attack and the resulting situation, our operation in Israel and globally have continued without interruption. While closely monitoring the situation, our Israel office is fully operational and running normally. Speaker 100:06:41At the same time, our business continuity plan is active, so we are prepared for any changes to the current situation. As demonstrated in the Q4 of 2023, our team works diligently to fulfill our customer obligations, grow the business and drive the company forward. For our customers, we continue to provide software enhancement and introduce new innovation software releases to assist them in managing their networks and ensuring great customer experiences. In 2023, we secured several new orders from our existing customer base, increasing our overall revenue from existing customers compared to 2022. AT and T, DISH and Rakuten remain key strategic customers. Speaker 100:07:31We believe our business with them will remain strong. We expect revenue from these customers in 2024 to stay at a similar level to last year, with potential for further growth. Due to the continual acquisition, we added Vodafone as a new customer in 2023. Vodafone is a British multinational operator operating in 21 countries, which provides potential growth area for more business in the future. During 2024, we will expand our focus on our sales activities to meet the expected 5 gs standalone monitoring demand with our leading 5 gs assurance solutions. Speaker 100:08:13Operators rely on assurance to navigate the transition to 5 gs and enhance operational efficiency. As they adopt next generation cloud technology to optimize cost and rollout 5 gs, the current macroeconomics landscape presents new opportunity for Radcom, a leading global cloud native assurance solution. We continue to enhance our software with additional automation, analytics and intelligence and AI based capabilities to bring value and expand use cases for our customers as the adoption of the 5 gs technology progress. We also rolled out Radcom Virtual Drive Test, a product we acquired as part of the Continual acquisition to help operators improve the customer experience while reducing costs. These product initiatives have already gained traction with potential customers and could lead to additional business. Speaker 100:09:11As I mentioned, our product strategy is making networks more intelligent and autonomous through AI powered analytics to save costs, improve the customer experience and drive operational efficiencies. Recently, we announced our position as one of the first assurance vendors to harness the power of generative artificial intelligence or Gen AI for real time and efficient management of 5 gs networks, Radcom's NetTalk. We are approaching this from the unique perspective of a company with years of expertise in the telco space and an advanced AI powered analytics point of view. These net talk applications enable operators to adopt the power of Gen AI and trusted data to manage their network operations faster and cost effectively. Executives and engineers can use natural language to tap into the wealth of data Radcom Ace produces as it's analyzed service quality. Speaker 100:10:12Operators can talk with their network and leverage the rich insights from Radcom Gen AI applications using customized large language models, LLMs. Gen AI will be a hot topic in 2024 and we will be showcasing our Radcom network use cases, which will continue to develop throughout the year, starting the Mobile World Congress at the end of February in Barcelona. Our market leading solutions, thoughtfully aligned with operator needs, which drives revenue, reduce operational costs and provides unique technology to address critical network challenges. We are confident that our unique innovative offering will drive sustained growth. Our pipeline continues to be healthy with good mix of opportunities from our current installed base and new customers. Speaker 100:11:05In 2024, we will expand and focus on our sales activities, which we believe will lead to additional contracts and increased market share. To summarize, 2023 was an exceptional record year for Radcom, continuing the last 4 years of growth momentum. We believe our strong sales and marketing engagements shows that the demand for our solution is robust. Our multiyear contracts also provide a strong backlog, driving consistent results and driving us good visibility into 2024 and beyond. Therefore, we are confident in delivering 5th consecutive year of revenue growth, further increasing our profitability and continuing the positive momentum in 2024. Speaker 200:11:51Thank you, Eyal, and good morning, everyone. Now please turn to Slide 8 for our financial highlights. While the slides contain GAAP and non GAAP results, it will refer mainly to non GAAP numbers, excluding share based compensation, acquisition related expenses and amortization of intangible assets related to acquisition and financial income expenses. We concluded the Q4 of 2023 with $14,000,000 in revenue and making a new record quarter and an increase from $12,300,000 in the Q4 of 2022. Our gross margin on a non GAAP basis in the Q4 of 2023 was 76%. Speaker 200:12:39Please note that our gross margin can fluctuate depending on the revenue mix. Our gross R and D expenses for the Q4 of 2023 on a non GAAP basis was $3,900,000 a decrease of $785,000 compared to the Q4 of 2022. We received a grant of $190,000 from the Israel Innovation Authority during the quarter compared to $160,000 in the Q4 of last year. Our net R and D expenses for the Q4 of 2023 on a non GAAP basis were $3,700,000 a decrease of $815,000 compared to the Q4 of 2022. Sales and marketing expenses for the Q4 of 2023 were $3,300,000 on a non GAAP basis, an increase of $401,000 compared to the Q4 of 2022. Speaker 200:13:47G and A expenses for the Q4 of 2023 on a non GAAP basis were 900 and $78,000 with no significant change from the Q4 of 2022. Operating income on a non GAAP basis for the Q4 of 2023 was $2,700,000 19 percent of revenue compared to an operating income of $608,000 5 percent of revenue for the Q4 of 2022. Net income for the Q4 of 2020 3 on a non GAAP basis was a record of $3,800,000 27 percent of revenue or a net income of $0.25 per diluted share compared to a net income of $1,300,000 11% of revenue or a net income of $0.09 per diluted share for the Q4 of 2022. On a GAAP basis, as you can see on slide 7, our net income for the Q4 of 2023 reached an all time high of $2,600,000 19 percent of revenue or a net income of $0.70 per diluted share compared to a net loss of $26,000 or a net loss of 0 point 0 $0 per diluted share for the Q4 of 2022. At the end of the Q4 of 2023, our outcome was 295. Speaker 200:15:29Now let's turn to the full year results. We ended 2023 with revenue of $51,600,000 an increase of 12% from 46 $100,000 in 20.22. On a non GAAP basis, our gross margin was 74% in 20 23 compared to 73% in 2022. Our gross R and D expenses for 2023 on a non GAAP basis were $16,900,000 a decrease of $2,100,000 compared to 2022. In 2024, we plan on investing in R and D at approximately the same level as in 2023. Speaker 200:16:21We received a cumulative grant from the Israel Innovation Authority for $736,000 during the year. In 2024, we expect grant from the Israel Innovation Authority to be at the same level as in 2023. Sales and marketing expenses in 2023 were $12,700,000 on a non GAAP basis compared to $10,900,000 in 2022. In 2024, we expect a gradual increase in sales and marketing to support an increasing pipeline of opportunities. G and A expenses for 2023 on a non GAAP basis were $3,800,000 an increase of $268,000 compared to the entire year of 2022. Speaker 200:17:23Operating income on a non GAAP basis for 2023 was also an all time high of $5,700,000 11% of revenue compared to an operating income of $1,100,000 2 percent of revenue for 2022. Net income for 2023 on a non GAAP basis was a record of $10,200,000 20 percent of revenue or a net income of $0.67 per diluted share compared to a net income of $2,900,000 6 percent of revenue or a net income of $0.19 per diluted share for 2022. On a GAAP basis, as you can see on Slide 7, our net income for 2023 was another record of $3,700,000 7% of revenue or net income of $0.24 per diluted share compared to a net loss of $2,300,000 or a net loss of $0.16 per diluted share for 2022. In 2024, we believe the dollar shekel ratio will stabilize at the current levels and not require hedging. Turning to the balance sheet. Speaker 200:18:50As shown on Slide 11, our cash, cash equivalents and short term bank deposits as of December 31, 2023, were $82,200,000 As was mentioned in the previous quarter, in 2023, we completed continual acquisition in the amount of $2,500,000 Thanks to our strong results, we generated a positive cash flow of $4,500,000 which led us to end the year with our highest level of cash. Now I will pass the call back to Eyal to summarize. Speaker 100:19:30As I mentioned at the start of my remarks, I'm stepping down after over 4 years as a CEO and 20 years in various leadership roles within the company. It has been an honor to lead the incredible team at Radcom. I'm proud to have led the company to suppress the $50,000,000 annual revenue threshold and scale the company up to a midsized company for the first time, while achieving profitable growth. I'm leaving the company in a healthy situation with excellent visibility into 2024 for continued growth and increased profitability while I move to my next challenge. Radcom is in the hands of a capable and talented management team. Speaker 100:20:14I'm confident that together, they will continue to lead the company, drive further growth and achieve new heights under Guy's leadership. Thank you to all the employees, customers, investors and partners I worked with who have put their trust in the company, and I wish the Board, Guy and Radcom every success. That concludes our prepared remarks. I will turn the call back to the operator for your questions. Operator00:20:45Thank you. Ladies and gentlemen, The first question is from Arjun Bhatia of William Blair. Please go ahead. Speaker 300:21:19Perfect. Thank you guys and Eyal congrats on the run, and it's been great working with you. Best of luck in the next chapter here. If I can start off on AI, it seems like some exciting announcements coming with NetTalk. But Al, can you maybe just talk a little bit about how generative AI makes Radcom and Assurance in general maybe a little bit more strategic and raises its profile? Speaker 300:21:53Like what are you looking for as the key kind of indicators that you're getting traction at customers and at telcos and that these Gen AI capabilities are resonating and adding value for your customer base? Speaker 100:22:11Hi, good morning. Thank you Arjun for the time it works. Gen AI is a big trend not only for telco industry, but for all the tech and we are looking to see how we can leverage these disruptive advancement. We believe Radcom is uniquely positioned as we collect a gold mine of data from the network by monitoring the real customer experience of all subscribers using other services. We are leveraging the AI technology for the last 3 or more years, trying to create automation and efficiencies for the operators. Speaker 100:22:52And with the Gen AI, we are trying to take it to the next level. So the idea is that we will we are becoming like a copilot for the operator enabling the engineers to do their task more efficiently and become even better experts in their domain because we make both our solution and all the data it provides as well as some industry standards and specs. We made it all available and accessible and by that we empower the engineers. This creates efficiencies for the operator, it allows them to work with more efficient teams. And of course, it also drives eventually improvement in customer experience. Speaker 100:23:37So this is where we are heading today. We are also looking on this strategically and we believe that in the next 3 to 5 years, Gen AI will continue to evolve and we'll be able to do even more sophisticated task that the technology is not mature today. And eventually the goal is to allow the Geni to do the closed loop and really improve the network by analyzing and taking the directives from the engineer or from the do the deep analysis of the try to understand the network condition and close the loop with the configuration or setting of the network and by that not only drive efficiency, but also improve network and improve customer experience. Speaker 300:24:33That's very helpful. And you talked about in your prepared remarks the pipeline and how you'll invest in sales and marketing. But when you're looking at JennyI specifically and maybe some of the early signs of success that you're having, do you anticipate that that will come through some of the customers that are earlier in the pipeline, the new customers coming in? Or do you think you'll primarily get these capabilities adopted, at least initially, with your existing customer Speaker 100:25:06So the Genent AI is now in an innovation stage. We are not foreseeing revenue in 2024 directly from those investments. It is important for our customers to see our innovation and our thought leadership in the space and they want to see our roadmap and our vision. So the influence is mainly indirectly. When we look on our pipeline, which is very strong and we have very good visibility into 2024 to continue our growth journey and accelerate, This is based on our Radcom ace product line with our new and existing customers. Speaker 100:25:46And I believe that Gen AI will be more long term contributor. Speaker 300:25:53Okay, got it. And then just maybe touching on the pipeline, you did mention that you're making you'll make some incremental sales and marketing investments because you're seeing demand, which certainly makes a lot of sense. Can you just maybe give us a sense for where you're seeing traction in the pipeline and the incremental resources that you're dedicating to sales and marketing, is that to grow, get more customers in the pipeline or convert the existing customers? Just give us a sense for where you'll be directing those in 2024? Speaker 100:26:29Sure. So as I discussed this and also in previous calls, we are following very carefully the evolution of 5 gs and primarily the 5 gs standalone, what I call the strategic 5 gs. What we see is that the early adopters in the market are in North America and some advanced countries in Asia like Japan and South Korea. And this is where we started to put our focus already a few years back. In the last couple of years, we are starting to accelerate our sales investment as we see additional regions starts to progress. Speaker 100:27:05And I believe 2024 is going to be pivotal for 5 gs SA technology. We see more efforts and more progress in Europe. Europe, as we know, is more scattered. There are more operators in smaller countries, and we beef up the team in order to make sure we have good visibility and enough boots on the ground to capture the opportunity. And we will continue to invest during the year in order to make sure we keep with the 5 gs base. Speaker 100:27:37We have the privilege that our customers are really known. We know what they are doing. We see their buying frequencies. We see them partnering with their network vendors to build their 5 gs network. And we see the public announcement on when they are going to 5 gs assay and this is where our solutions becomes critical. Speaker 100:27:59As we see that the market is going to the next step, we are also going to the next step with our sales and marketing. And if I would quantify that, we are talking about 20% to 30% increase in our teams globally, again with the main focus in Europe, but also increasing some of our other teams as where we see both already opportunities in our pipeline and very importantly where we want to continue and increase our pipeline to support our multiyear growth plan. Operator00:28:45The next question is from Alex Henderson of Needham and Company. Please go ahead. Speaker 400:28:53Thanks. Yes, I was a little surprised that you're deciding to move on Speaker 500:28:59at such a young age. I don't understand that. Just hard to fathom, but congratulations Speaker 400:29:09on the decision. I was hoping you could talk Speaker 500:29:13a little bit about the rate of growth. You've produced double digit growth in each of the last 2 years. Speaker 400:29:24Is it reasonable to think that in 2024 that total budget growth is attainable on the top line? And you mentioned several times in the call potentially accelerating it. Is it reasonable to think that the acceleration is going to happen here? Speaker 100:29:45Thank you, Alex. Yes, as you saw our guidance for the year, we are looking to continue at minimum with double digit growth. And if you look on the higher range of our guidance, this could be further accelerating compared to what we do today. Our business model with over 70% recurring revenue is supporting our long term growth and it's all based on the execution on keeping the run rate and further evolve with our existing customers and winning new logos and enhancing our market share. I believe that 2024 is the year that we will start to see more in a 5 gs assay as I previously commented. Speaker 100:30:30And this is why we continue and increase our sales and marketing. So definitely the plan is to and the trajectory is to continue this double digit growth over the monthly year. And I'm personally optimistic that we can actually accelerate our growth and it all depends on the pace of the operator adopting the 5 gs SA getting into live and our ability to execute well and win those new logos. From past experience and with 20 years in the telco, usually with any technology evolution, takes a lot of time, but once the technology is mature is maturing, then you start to see the adoption rate goes much higher. And the next 18 to 24 months is where we expect the 5 gs SA to really become more popular and this is why I definitely believe there is a potential to accelerate the growth even further. Speaker 500:31:31So given that backdrop of 10% plus growth, you're talking about a pretty significant acceleration in spending around sales and marketing, if I'm reading it correctly, Speaker 400:31:44a 20% to 30% increase in the number of teams. Is that can you give us some sense of what do you think the marketing line is likely to do under that scenario? Are we talking about compression in operating margins this year? Speaker 100:32:02So we are in a process of shifting and moving resources from R and D to sales and marketing. The increase is incremental. So we will get some of the increase in the 1st part of the year and some of the increase will come only later the year. And as answer to our June, this will follow the development of the 5 gs SA. So I think this is the best vote of confidence in the business we see and we will adapt it to the pace of new 5 gs SA RFPs that we see, new opportunities we want to cover. Speaker 100:32:41We want to make sure we don't miss the market opportunity and we believe the next, as I said, 18 to 24 months are going to be critical to win the market share and we want to be ready with the teams. We are going to focus in we're already very strong in North America. We are going to increase our presence in Europe and in specific countries we find the best fit to our product lines where quality matters, where we are looking for innovation, where we look for assurance solutions that will allow them to do the transformation like Japan as we work for many years with Rakuten. And this is why we are coming with this strategy. Speaker 400:33:27I understand the strategy. I'm looking for some quantification of the strategy. Is it reasonable to Speaker 500:33:33think, given the commentary around sales and marketing expansion, that you're going to compress the operating margins in 2020 for? Speaker 100:33:46No, the operator margin will improve as we are looking to grow significantly in the revenue and the overall increase in the operation on the operational cost will be lower than the increase in the revenue. Speaker 400:34:03Okay. So if I'm talking about 20% to 30% increase in the number of teams, what does that translate in terms of the sales and marketing expansion? How do I Speaker 500:34:17that's clearly well ahead of your revenue growth. Even if Speaker 300:34:21I hold your R and Speaker 500:34:21D flat, it wouldn't be enough to produce that type of investment growth. So what am I doing to offset it? Are other elements of the sales and marketing costs coming down as a result of the mix shift within sales and marketing? How do I get 20% to 30% increase in the number of teams without increasing the cost by some more amount? Speaker 100:34:47As mentioned, we are going to be lowering our R and D expense to cover some of the growth in the sales and marketing. And overall, the sales and marketing is not the biggest expense for the company. So it's not that we're going to increase the overall operation expense in 20%. And we're going to have only moderate increase to the operating expense because of this shift. And the sales and marketing increase of teams we take gradually saw on the overall numbers over the year, we are going to have lower impact on the as it's not a full impact from January, some of them will come in the 2nd part of the year. Operator00:35:40The next question is from Charles Eliot with IPI. Please go ahead. Speaker 100:35:48Thank you. Speaker 600:35:50Eyal, first, thanks very much for all you did for the shareholders over the last few years and good luck. In terms of your future, are you going on to an equally active role or is it more likely you pick up take a sort of Chairman's position and or non executive positions? Speaker 100:36:10Sorry, can you repeat the question without to hear you? Speaker 600:36:13I'm sorry, is this better? Can you hear me better now? Speaker 100:36:19Yes. Speaker 600:36:25Executive role or non executive or something like an active Chairman? Speaker 100:36:34I'm going to be supporting the company and guys in the transition for the next period of time, making sure Radcom is going to be successful. And in parallel, I will later share my plans on what I'm going to do next. But no, I'm not going to stay as a Chairman or in the Board of Radcom. Speaker 600:37:03Thank you. A few more questions. With your balance sheet so full of cash and the company now generating free cash flow, is it a prospect that you that Radcom returns some free cash returns more to investors through buybacks or through a dividend increase? Or do you want to conserve your cash to get revenues well above $100,000,000 in a few years and grow further from there? Speaker 100:37:37So it's more of the second. We still believe that while we are generating cash and profitable and we generate over $20,000,000 in the last 2 to 3 years. This allow us to have a very good position in the market first and foremost with our customers that we are it allows us to engage and take more risk in terms of seeing how we can increase our market share. We did our first M and A last year and we believe there might be opportunities to further increase our strategic position in the market and we want to make sure that we have this opportunity. And the option of dividends or buybacks is something being discussed, but we believe that in the current stage, there is a better use with looking on keeping our strategic position and keeping the options for additional M and A that will allow us further growth. Speaker 600:38:43Thank you. And one final question. You mentioned Vodafone. Did it come through your acquisition of Continual? Or was this a kind of a greenfield new customer win? Speaker 600:39:01And should we look at this as a similar size to some of your big customers now like Rakuten or AT and T even or is it significantly smaller at the moment? Speaker 100:39:15At the moment, it is a significant smaller. It is a customer inherent with M and A of Continual. Vodafone was the key customer for Continual. One of the values we saw by partnering Continual and create this great synergy. We believe that with the power of Radcom, the richer product set that we have and the wider portfolio, we can further expand with more value. Speaker 100:39:46We are working today with Vodafone as a certified vendor. We are which allow us to have better visibility to their requirement and needs. And we're working with few countries, but Vodafone is a large enterprise with many operations around Europe mainly and out of Europe. And we believe that with Radcom Power and Technology, we can further expand both with the original continual product line as well as the Radcom Aids in its technology. So it can definitely can scale into a size of Rakuten or even AT and T as Vodafone as an enterprise is very large. Speaker 100:40:28But at this stage, we have initial activity with them, but I believe this relationship could further grow in the near future. Operator00:40:48This concludes the Radcom Ltd. 4th quarter and full year 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.Read morePowered by