Radcom(US:RDCM)2021-11-11 18:35Financial Data and Key Metrics Changes - Total revenue for Q3 2021 was $10.2 million, an increase from $9.8 million in Q3 2020, marking the ninth consecutive quarter of year-over-year revenue growth [9][35] - Gross margin for Q3 2021 on a non-GAAP basis was 70%, with gross R&D expenses slightly decreasing to $4.5 million compared to Q3 2020 [35] - Net loss for Q3 2021 on a non-GAAP basis was $333,000, or $0.02 per diluted share, compared to a net income of $246,000, or $0.02 per diluted share in Q3 2020 [39] Business Line Data and Key Metrics Changes - The company continues to invest in R&D, launching a new AI solution as part of RADCOM ACE, which analyzes data sessions in real-time to identify faults in 5G networks [10][12] - The integration with Amazon Web Services (AWS) allows telecom operators to utilize cloud services for managing network services more efficiently [15][16] Market Data and Key Metrics Changes - The automated assurance market is expected to grow, driven by the need for AI/ML-driven automation for 5G and cloud solutions [13] - Greenfield operators, such as Rakuten and DISH, are entering the telecom space, leveraging advanced technology without legacy constraints [17][19] Company Strategy and Development Direction - The company is focused on enhancing its cloud-native technology and expanding partnerships with public cloud providers to ensure service quality for 5G networks [14][15] - RADCOM aims to capture market share by targeting operators that are advancing in 5G technology, particularly those that are cloud-native [58][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the continued growth in 2021 and 2022, citing a strong sales pipeline and increased visibility [9][32] - The transition to 5G is still in its early stages, with significant movement expected in the coming years as technology matures [52][53] Other Important Information - The company received a grant of $205,000 from the Israel Innovation Authority during the quarter, down from $478,000 in the same period last year [36] - An employee retention program was launched, which will increase stock-based compensation expenses by $2.7 million annually for the next two years [37] Q&A Session Summary Question: Clarification on RSU expenses - The CFO confirmed that the RSU grant will increase expenses by $2.7 million per year for the next two years [44] Question: Impact of shekel exchange rate on cost structure - The CFO explained that quarterly shekel expenses are about $5 million to $6 million, with a projected impact of $150,000 to $180,000 per quarter due to exchange rate fluctuations [46][47] Question: Transition to full 5G - Management indicated that the commitment to 5G is high among top operators, but practical implementation is still in the single-digit percentage range [51][52] Question: Sales pipeline and customer characteristics - The company is primarily targeting Tier 1 operators focused on 5G, with a mix of traditional and greenfield carriers in the pipeline [58][60] Question: AWS integration and new opportunities - The company is seeing a mix of new opportunities and existing customers requiring AWS integration, which is crucial for cloud-centric models [62][63]