Ralph Fong - Investor Relations Tim Ti - Chief Executive Officer Eric Lam - Vice President, Finance

Ladies and gentlemen, thank you for standing by for UTStarcom’s Third Quarter 2017 Earnings Conference Call. Please note that we are recording today’s conference call. I will now turn over the call to Mr. Ralph Fong, Director of The Blueshirt Group. Please go ahead, Mr. Fong.

Thank you, operator and good morning everyone. Welcome to UTStarcom’s third quarter 2017 earnings conference call. Earlier today, we distributed our earnings press release. You can find a copy at our website at www.utstar.com. In addition, we have posted a slideshow presentation on our website, which you can download and use to follow along with today’s call. On today’s call, we have Mr. Tim Ti, Chief Executive Officer and Mr. Eric Lam, Vice President, Finance. Before we get started, let me refer you to the company’s Safe Harbor statement on Slide 2. This call will include forward-looking statements relating to the company’s business and strategic initiatives. Those statements are forward-looking in nature and are subject to risks and uncertainties that may cause actual results to differ materially and adversely from the company’s current expectations. The risks and uncertainties include factors identified in the company’s latest annual report on Form 20-F and the current reports on Form-6K filed with the Securities and Exchange Commission. All forward-looking statements included in this call are based upon information available to the company as of the date of this call. That information can change, if so, the company assumes no obligation to update any such forward-looking statement. I will now hand over the call over to UTStarcom’s CEO, Mr. Tim Ti.

Thank you, Ralph and thank you everyone for joining our call today. We appreciate your interest in UTStarcom. As Ralph mentioned, you can download the call presentation from the Investors section of our website. Please note that unless otherwise stated, all figures mentioned during this call are in U.S. dollars. Please turn to Slide 3. I will begin our call with an overview of the third quarter highlights and I will discuss how we are capitalizing on our near-term opportunities, while positioning ourselves for sustained long-term growth. After that, I will turn the call over to our VP of Finance, Eric Lam who will present the financial details. Please turn to Slide 4. You can see our results that we are capitalizing on our immediate market opportunities. The results were solid exceeding expectations. Revenue growth was outstanding and we are profitable again. Most important, robust demand in Japan and India drove our sales momentum. Japan is leading the work in the 10G to 100G upgrade within metro networks and the transition is accelerating now in India. There is a massive ongoing build-out of the telecom infrastructure. We have been active in India for years and our commitment to the market is now paying off. Our sales volume into the country is rising with our key customers. We expect this immediate market opportunities to remain robust. Mobile device usage continues to grow, especially in India, and the consumers are demanding faster data speeds and better quality of service. According to industry statistics, a global commercial router market should grow 15% annually from $27 billion in 2015 to $73 billion by 2022. Our products enable our customers to meet the demands of layered consumers. So, we are targeting to capture our share of that expanding market. Please turn to Slide 5. To…

Thank you, Tim and thank you everyone for joining the call today. I will review our financial performance for the third quarter of 2017. Now, let me begin with Slide #9 where I will highlight a few key items for the third quarter. Revenue was up 59% year-over-year ahead of our expectations. Our strategy of focusing on high-value products resulted in strong gross margin performance. We also continued to manage our expense carefully contributing to positive operating income in the quarter versus an operating loss last year. Non-GAAP net income was $2.5 million, which compares to non-GAAP net loss of $1.5 million last year. Finally, we remain highly focused on cash generation and maintaining a strong balance sheet. We generated positive operating cash flow and ended the third quarter with a solid cash position. Now, please turn to Slide #10 so that we can review the non-GAAP revenue. Please note that the non-GAAP revenue excludes IPTV revenues. In the third quarter, total non-GAAP revenue was $26 million compared to $60 [ph] million in the same quarter last year. The year-over-year increase in revenue was largely due to higher revenue in Japan and India. Japan accounted for approximately 60% of revenue, India about 31% and the rest of the world the remaining 9%. Now, please turn to Slide #11 and #12 our gross profit and gross margin. Please note that non-GAAP cost of sales and operating expenses excluded stock-based compensation, legacy IPTV costs and costs related to legacy India Department of Telecom revenue. In the third quarter, non-GAAP gross profit was $11 million, up from $4 million a year ago. Non-GAAP gross margin improved significantly to 41% from 24% in the same period last year. The year-over-year increase in gross margin was largely attributable to favorable product mix. We are very…

Thank you, Eric. In summary, we are encouraged by our solid third quarter results and the momentum we have been building throughout 2017. We continue to believe we have the right strategy investing in research and development, and strengthening our product portfolio with the high value product solutions. We are confident that the actions we took in the last 18 months and our diversity of our product solution, geographies and the revenue stream will provide us with the foundation to drive profitable growth. With that, Eric and I would like to take your questions. Operator, please open the lines for Q&A.

Thank you, operator and thank you for your participation ladies and gentlemen and we may now disconnect.

That will conclude today’s conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.