Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Limited Results Conference Call for the First Quarter of 2025. 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 Benny Eppstein, 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. This conference call will contain forward-looking statements. Forward-looking statements in the conference call involve several risks and uncertainties, including, but not limited, to the Company's statements about its momentum, strategic direction, and trajectory, future execution and delivery of value to customers, development of and enhancing strategic partnerships and expected benefits from collaborations, the success of new technologies to, among other things, enhance automation, pipeline, opportunities and customer engagements, demand for its products and solutions, including AI capabilities, trends in the market, innovation, expanding its business, the expected benefits of its AI-driven assurance solutions, its expectations with respect to gross margins, research and development and sales and marketing expenses, grants from the Israel Innovation Authority and its full-year 2025 revenue guidance and future growth and profitability. 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 today’s press release 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 related to acquisitions, 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 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, www.radcom.com. Now I would like to turn over the call to Benny. Please go ahead.

Thank you, operator. Good morning, everyone and thank you for joining us for RADCOM’s first quarter 2025 earnings call. The first quarter has been an exciting one, marking my transition to lead RADCOM, a company driving innovation in the next-generation assurance market for 5G. I'm proud to work alongside an exceptional team, with whom I've closely collaborated to expand key business initiatives and guide the company into its next phase of growth. Turning to Slide 7, I will discuss the results. This quarter we achieved another record for company revenue, reflecting a 17.5% year-over-year growth with substantial profitability improvement and cash generation. Our operating margins increased by more than 6.5% year-over-year, with $4.4 million positive cash flow. As of March 31st, 2025, RADCOM had cash and cash equivalents, and short-term bank deposits of $99.1 million and no debt, ending the first quarter with its highest cash levels, continuing our growth trajectory. Looking ahead, we remain confident in our strategic direction and execution. We are on target to grow in revenue for the sixth consecutive year, supported by encouraging signs across our pipeline and customer engagements. As we close a strong first quarter, our focus will remain on disciplined execution and delivering consistent value to our customers. Our core value lies in our automated, intelligent assurance solution, RADCOM ACE which delivers real-time service and customer level experience data and insights. Turning to Slide 8. Last year we began introducing our generative AI capabilities into our solutions. This year we are moving into agentic AI as part of our collaboration with market leaders as will be discussed below. We anticipate an increase in demand for our data and insights as emerging AI-driven use cases continue to evolve. Agentic AI requires real-time user analytics to drive customized services and products, support business processes…

Thank you, Benny, and good morning to everyone. I will mainly focus on our non-GAAP results during this call unless otherwise stated. A reconciliation of non-GAAP to GAAP measures is included in today’s presentation in Slide 3, as well as in our press release issued earlier today. Additionally, all comparisons are on a year-over-year basis unless otherwise noted. Now, please turn to Slide 16 for our financial highlights. First-quarter revenue grew by 17.5%, reaching a new company record of $16.6 million. At the same time, we continued to manage and control our expenses while investing strategically and efficiently in increasing our investments in sales and marketing. This resulted in our highest ever non-GAAP operating income of $3.1 million and 19% of revenues, for the quarter. Our non-GAAP gross margin for the first quarter of 2025 was 76.3%. Please keep in mind that our gross margin may vary based on the revenue mix. Our non-GAAP gross R&D expenses for the first quarter of 2025 were $4.3 million, up 5.8% year-over-year. This reflects our focus on innovation and portfolio expansion. We will continue to invest strategically in R&D to develop additional automation, Gen-AI- and agentic AI based capabilities and support our strategic partnerships and productization plans. We received a grant of $25,000 from the Israel Innovation Authority during the quarter compared to $209,000 in the same quarter last year. We expect the Israel Innovation Authority grant to remain at a similar level as the first quarter of 2025 in the second quarter. Our net R&D expenses for the first quarter of 2025 were $4.3 million, an increase of $418,000 compared to the first quarter of 2024. We continue to actively promote our offerings to existing and prospective customers, which resulted in $4.2 million in sales and marketing expenses for the first quarter…

Thank you. [Operator Instructions]. The first question is from Arjun Bhatia of William Blair. Please go ahead.

Thank you so much. Benny, your comments on what you're doing with Agentic AI were pretty intriguing. I'm curious if you could just maybe expand on the sort of functionality that you're planning to build yourself, where maybe that interacts or integrates with what your partners are doing, and then how do you plan to monetize this, are your Agentic capabilities going to be monetized, or is that something you plan to include in the bottom platform for your customers? Thank you.

Yeah, thanks for the question. I'm sorry, the line was not 100% clear, but I seem to have captured the question. We do plan, we do invest in R&D when it comes to Agentic AI and Agentic used cases. We closely collaborate with our partners, and when it comes to monetization we have different models we're discussing as we speak right now. We're pretty flexible, and there's various types of models to address that. I'm happy to take you through that in a separate poll.

Okay. Understood. And then just maybe for a second, the free cash flow generation has been pretty nice, at least thus far in Q1. Where do you think that can go this year and beyond as you keep generating cash, what are you thinking in terms of use of capital as you get more and more on the balance sheet here?

Sure. We're looking into different candidates when it comes to acquisitions, M&A. There's a few opportunities that we are addressing as we speak. And maybe the second half of the year we will consider some other actions, but right now our first priority is to look into M&A. We're looking at it very carefully, and the plan is to do something around our ecosystem.

Alright, perfect, thank you.

Thank you.

The next question is from Ryan Koontz of Needham & Company. Please go ahead.

Hey, thanks. Really nice quarter there, guys. Starting with your comments about 5G standalone core progress for the industry, can you share any thoughts about where, in terms of global customer count for RADCOM or even your pipeline of customers, what kind of growth do you expect we'll see year-over-year from maybe exiting 2024 to exiting 2025, as to how many production-scale standalone networks that you see in your customer base, any kind of high-level growth you think we might see there?

We're projecting similar pace when it comes to growth. This is how we see it. The more 5G is progressing, we see higher demand for customer management and real-time user analytics. As of for now, I think we raise our guidance, and I think we will continue similar type of growth. Hadar, do you want to comment on this?

No, I'm good, Benny.

That's great. You made a comment about gross margins going forward can vary on mix. Can you unpack that a little bit as far as your current mix of revenues and what some of the puts and takes there across different sources of revenue and how that affects gross margin?

I will let Hadar take this question.

Yes, thank you, Benny. So, usually our gross margin is very between 72% to 76%, and it's depending on the revenue mix. This quarter, we had less third-party components, which improved our gross margin. Does that answer your question?

Yes, it does. Thanks. And do you have much services mixed, professional services in that mix?

No.

Not much, okay, great, super. Last question, if I could, here on ServiceNow relationship. And as we think about the opportunity to scale there, you think about your customer base and their current customer base among operators how do those compare, is there a lot of overlap today, maybe a few key customers driving that, and does the ServiceNow customer base provide you a sizable opportunity to grow your customer count? That would be great. Thank you.

Sure, and I absolutely believe that the partnership with ServiceNow will expand and increase our pipeline opportunities. ServiceNow is almost installed in most operators that we're working with. Our lucrative market, just to remind you, is North America, Europe, and Japan, and we see them playing significantly in those regions. And obviously, they have more coverage than we are, so it's definitely opening doors for us to introduce our solution to more and more operators across those regions.

That's really great to hear. Thank you for that, Benny. And maybe a last one, if I can sneak it in, about your relationship with NVIDIA. What is the deployment model there for integrating that technology, do you simply need access to customer-located servers, or will you be packaging your own cloud infrastructure with NVIDIA, with your products, what's the deployment model for that?

The beauty here is that we're talking about the DPUs that can be installed in any server, like a standard server out there. So we can basically replace any card with the DPU and get much better performance when it comes to what we discussed earlier, the user analytics space. And this is what could drive both automation, AI, and CCO reduction for our customers. And as mentioned on the call earlier, we're already doing some trials in labs with a few of the Tier 1 customers, and looking forward to expanding that to production.

Got it. So that infrastructure would be part of your customer's private cloud, typically?

Yes, but it also could be part of the WS install base as well, so it's both.

Got it. So that's all the questions I've got. Thanks for that.

Thank you.

This concludes the RADCOM Ltd first quarter 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.