Financial Data and Key Metrics Changes - Revenues for Q1 2025 were $60.4 million, an increase of 0.5% compared to $60.1 million in Q1 2024 [7] - GAAP gross margin for the quarter was 64.8%, up from 64.4% in Q1 2024 [9] - Net income for the quarter was $4 million or $0.13 per diluted share, compared to $2.1 million or $0.07 per diluted share in Q1 2024 [9] - Non-GAAP net income for Q1 2025 was $4.7 million or $0.15 per diluted share, down from $5.2 million or $0.17 per diluted share in Q1 2024 [10] - Cash, cash equivalents, and marketable securities totaled $95.7 million as of March 2025 [10] Business Line Data and Key Metrics Changes - Services revenues for the quarter were $32.6 million, up 3.4% year over year, accounting for 54% of total revenues [8] - The Enterprise UC and CX business accounted for 90% of revenues, with a 7% year-over-year growth in the Microsoft business [16] - The CX connectivity business increased by 2% year over year [17] - The Conversational AI business grew above 10% year over year, with a strong pipeline of new opportunities [17] Market Data and Key Metrics Changes - Revenues by geographical region were split as follows: North America 8%, EMEA 30%, Asia Pacific 14%, and Central and Latin America 4% [8] - The top 15 customers represented 52% of total revenues, with 36% attributed to the nine largest distributors [8] Company Strategy and Development Direction - The company is focused on two key strategic initiatives: growing the connectivity business and investing in conversational AI initiatives [15] - The goal for the conversational AI sector is to achieve 50% growth for the full year as opportunities mature [16] - The company is transitioning towards AI-powered voice services, with a strong emphasis on integrating advanced GenAI technologies [14] Management's Comments on Operating Environment and Future Outlook - Management noted that while gross margin and profitability were lower than planned due to tariffs and increased R&D investments, the company is operating from a position of strength [41] - The company has withdrawn its previously provided annual guidance due to the fluidity of the tariff situation and plans to resume providing an outlook once rates are determined [12][21] - Management expressed confidence in achieving growth and profitability in the coming years, supported by a strong balance sheet and a dominant connectivity franchise [42] Other Important Information - The company acquired 500,000 ordinary shares for approximately $5.2 million and declared a cash dividend of $0.18 per share [11] - The estimated tariff-related cost impact for 2025 is approximately $3 million to $4 million, down from an initial potential impact of $10 million to $12 million [47] Q&A Session Summary Question: Plans regarding tariff impact and manufacturing relocation - The company plans to proactively move manufacturing out of China to mitigate tariff impacts, with steps already taken to shift production to other countries [46] Question: Trends in Microsoft ecosystem regarding Operator Connect vs Direct Routing - The market is transitioning towards Operator Connect, which is expected to become the preferred method for connecting SBCs [48] Question: Strategy for Cisco opportunity and managing go-to-market dynamics - The company has a long-standing presence in the service provider space and is confident in gaining market share due to its established relationships and competitive advantages [50][52]