Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Limited Results Conference Call for the Fourth Quarter and Full Year 2022. All participants are present in a listen-only mode. Following management's formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] 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. On the call are Eyal Harari, RADCOM's CEO, and Hadar Rahav, 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 it 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 the 5G market and industry trends, the role the Company is expected to play in the 5G transformation, sales opportunities, sales cycles, visibility, leads, pipeline and backlog, the expected impact of currency rates, the Company's market position, cash position, potential and expected growth, including scalable and profitable growth, and momentum in 2023 and thereafter, levels of recurring revenues and gross profit from such activity, its expectations with respect to research and development and sales and marketing expenses, as well as grants from the Israel Innovation Authority, the Company's expectations with respect to its relationships with Rakuten and AT&T, its ability to handle future growth and meet demand, its expectation to continue enhancing its software solutions and demand for its solutions, deployment of its 5G solutions in cloud environments and the potential benefits to its clients, its ability to capitalize on the emerging 5G opportunities and win more market share with new and existing customers, the potential of the Company’s vision and the use of artificial intelligence in its products, and its revenue guidance. The 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, 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 generally 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. Now I would like to turn over the call to Eyal. Please go ahead.

Thanks, operator. Good morning, everyone, and thank you for joining us for our fourth quarter and full year 2022 earnings call. The fourth quarter was a solid finish to a record year as we expanded our install base with multiple top-tier mobile operators. During 2022, we delivered record revenue each quarter, representing a third successive year of growth. Fourth quarter revenues were $12.3 million and full year revenues were $46.1 million, a 14% year-over-year growth, and we reached an inflection point for the Company, delivering a profitable year on a non-GAAP basis while generating a positive cash flow of $7 million, ending the year with a record level of cash and on a non-GAAP basis, a net income of $2.9 million. We also had an encouraging start to 2023 by announcing that we had secured another North American contract for our solutions. This exciting news continues the positive momentum since the beginning of 2022. This additional win brings us over $50 million in new contracts over the last 12-month period. The new multi-year contracts secured during 2022 on top of our current agreements provide good visibility and a strong backlog for 2023 and beyond. As the business grows, we carefully manage our expenses and believe we can maintain scalable, profitable growth. We delivered a record-breaking year despite the current economic headwinds. We believe this positive momentum will continue into 2023 and expect an even more robust growth year in 2023. Based on our current visibility, we are providing full-year 2023 revenue guide of $50 million to $53million. Turning to our customer activities. In 2022, we announced the renewal of our contracts with AT&T and Rakuten. These are important milestones as they remain key strategic accounts with whom we have strong relationships and partnerships. We continue to innovate and provide software…

Thank 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, I will refer mainly to non-GAAP numbers, excluding share-based compensation. We ended the fourth quarter of 2022 with $12.3 million in revenue and a new record quarter, an increase from $11.2 million in the fourth quarter of 2021. Gross Margin. Our gross margin in the fourth quarter of 2022 on a non-GAAP basis was 73%. Please note that our gross margin can fluctuate depending on the revenue mix. Our gross R&D expenses for the fourth quarter of 2022 on a non-GAAP basis were $4.7 million, a decrease of $60,000 compared to the fourth quarter of 2021. We received a grant of $160,000 from the Israel Innovation Authority during the quarter, compared to a grant of $194,000 in the fourth quarter of last year. Our net R&D expenses for the fourth quarter of 2022 on a non-GAAP basis were $4.5 million, similar to the fourth quarter of 2021. Sales and marketing expenses for the fourth quarter of 2022 were $2.9 million on a non-GAAP basis, an increase of $347,000 compared to the fourth quarter of 2021. G&A expenses for the fourth quarter of 2022 on a non-GAAP basis were $942,000, an increase of $105,000 compared to the fourth quarter of 2021. Operating income on a non-GAAP basis for the fourth quarter of 2022 was $608,000 compared to an operating loss of $158,000 for the fourth quarter of 2021. Net Income for the fourth quarter of 2022 on a non-GAAP basis was $1,320,000 or a net Income of $0.09 per diluted share compared to a net loss of $237,000 or a net loss of $0.02 per diluted share for the fourth quarter of 2021. On a GAAP…

Thank you. [Operator Instructions] The first question is from Alex Henderson of Needham & Company. Please go ahead.

Great, thanks so much and congratulations on the great and consistent execution you guys really are delivering that the right mechanics in your business and it's good to see. I was hoping we could talk a little bit about the commentary around sales and market putting what do you think your OpEx investment will look like over the course of 2023? I assume your gross margins will stay pretty much where they are, but I also would assume that it is a little bit more aggressively on the sales, just some guidance there?

So thank you Alex and yes we are finishing a great year with improvements on all of our KPIs. As pointed out, we are looking to keep our operation expense in similar levels in in general as we are seeing out ability to be efficient and continue to deliver on with our current team, even so we are growing with our customer base. We are keeping our R&D expense and technical staff in similar expense compared to 2022 and we are looking to gradually increase our sales and marketing as we see there is additional opportunities and we want to have better reach to more accounts as 5G is progressing.

Just so I can understand, I mean I would think that you have at least some wage inflation to deal with, is it the shekel that is offsetting, the weakness in the shekel over the last year offsetting the wage inflation is that how you are delivering stable OpEx or because it seems like [indiscernible]?

So yes, we do have some weakening of the shekel in terms of the dollar which allows us to optimize and beat our cost as our R&D main cost is in Israel and in shekels. We did also some optimization and cost savings activities to adjust our operational expense and this is why we are able to maintain similar leverage despite also the inflation and some salary adaptions we need to do.

One of the other variables is a little challenging for us to analyze externally is the change in cash generation in the company over the course of the year has raised your cash balances and the interest rate on your cash balances are going up. So can you give us some sense of where we ought to be in terms of the interest income over the course of 2023? It was up quite sharply quarter-to-quarter and I do not know whether that is a function of something unusual in the numbers, a translation just the rise of interest rates on your balances.

Hadar, can you take this?

Yes sure. So we ended the last two years with consistent cash flow and believe that with the transition to profitability together with strong collection from our large customers and the expected interest on the bank deposit of course based on the [indiscernible] we will continue to generate cash during 2023.

Well yes, I would assume so, but I guess my question is, in the interest income line should we be using 500K a quarter to roughly 2 million for the year similar to what you earned in 2022 or is there something in there that in 2022 that overstated that it should be down a little bit or interest income to go up? Can you give us some guidance on the interest line for 2023?

Yes, I feel between 2 million to 3 million is let's say on the bank deposit during the 2023.

Okay, so are there any offsets to that or is that just what we should be using?

No this is the [indiscernible] account [indiscernible] financial income.

Yes the other two lines Hadar could you just a little guidance on is the NRE line, is that going to be as you are now getting a little larger, is that NRE line some of the government subsidies going to start coming down? We are assuming it is going to come down 150K for the year, is that right or is it going up or any thoughts on that?

So Alex, can you repeat it?

Yes, the NRE, the subsidies you get from the government, the NRE line, any sense of whether that is going to go up, down, sideways for 2023?

So currently the innovation [indiscernible] concentrating in only companies in the [indiscernible] and we believe in [indiscernible] ground to going to 2023 it will be not only 50% from growth 2022 and it will be recognized given the trust [indiscernible].

And then tax line, any guidance on tax?

Sorry?

The tax line and any guidance on the tax line?

We guided the tax, will be on a similar with of course it was in 2022 because we believe that our [indiscernible] large territory offset the expected profitability [indiscernible].

Okay thanks. Can you talk just a little bit about the pipeline? What the whiteness of what you are looking at is, is there a lot of transactions that are being slowed down as a result of the conditions in the marketplace and to what extent you think that you could have some news flow in the first half of the year or is it going to be mostly in the back half of the year, just some sense of timing of what you are chasing? Thanks.

So our timing is solid and we have a good mix of opportunities between our existing customers and new customers. We are monitoring like everyone the news and we see telecom operators continue to invest in 5G, but they are also looking how they need to adapt to the new macro economy. It's very hard to predict in telecom and in RADCOM in specific when exactly these will happen. But I think most importantly is that we are starting 2023 with very good visibility into the year based on our good performance in 2022 which gives us the confidence that this would be another gold field. Any we have in our pipeline the mix of opportunities different stages, definitely some could still happen in the first half of the year as long as there is no unforeseen delay due to the macro economy, but is very hard to predict.

All right, thank you so much.

Thank you, Alex.

Hey guys it is Faith on for Arjun. Again, congrats on the quarter. I just wanted to talk a little bit now that you've breached that inflection point, what are the levers that you guys have at your disposal from both the top line perspective as well as margins that I know you touched on previously to kind of keep this level trending as you kind of go back towards historic net income numbers?

So, thank you Faith and good morning. I think to start with 2022 was a third consecutive year of growth and as you see our guidance, we are looking to continue growing also in 2023 in double digit levels. In the software company with the gross margins of 73% in 2022 and we are looking to have similar levels in 2023. A lot of the top line goes to the bottom line. I mentioned in my prepared remark and was asked in the previous questions, we are able to maintain our operational expense in controlled manner and we did not see a need to increase our operational teams despite these goals and additional customers that we work with. This is why we say that a significant part of the top line is inflated to the bottom line. We see this trend in profitability KPI improving along the last three years along with growth. So as we are expecting to also grow this year working and executing with our existing and new customers we are expecting this to be improving also the profitability and continue to generate cash flow during 2023.

Okay great, thanks. And then I just want you to talk about RADCOM ACE for a second, we've been hearing a lot about it in your recent deals, can you just talk about how this solution brings customers to the table and how it is contributing to the overall pipeline?

So, RADCOM ACE is a solution that was born in the cloud for telecom operators as they transform into 5G. And like many of our competitors who are based on legacy and platforms that will build for the 4G networks and appliance base, we build ground up all our technology around [indiscernible] and cloud native architectures. This allows us now to be focused not only on the infrastructure, but we are continuing to add more innovation into the value. Some of our other market players are busy today to ingrate or build cloud native solutions, this is something we already have for the last two years and we got endorsement from the recent wins, companies like DISH that are very advanced in the cloud may be the only operator that is fully cloud native utilizing AWS. So this allows us to direct our R&D investment into creating additional edge. And as pointed out before, AI technology is amazing and we are trying to harness these great tools to allow additional value to our customers as they are required to optimize and save costs and by leveling this technology we are able to add a lot of machine based applications for automation and it is aligned with our long term strategy to help operators become more autonomous. So we are seeing great response from our customers and prospects about RADCOM ACE and we believe this is probably the best product out there for 5G assurance in the cloud.

Awesome, thanks for the color and again congrats on the year.

Thank you, Faith.

This concludes the RADCOM Ltd. fourth quarter and full year 2022 results conference call. Thank you for your participation. You may go ahead and disconnect.