Radcom Ltd (RDCM) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. first-quarter 2012 results conference call. All participants are at present in 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 April 23, 2012. I would now like to hand over the call to Ms. Noga Fisher. Ms. Fisher, would you like to begin?

Thank you, Mikel and thank you all for joining us. With me today are RADCOM's CEO, David Ripstein and CFO, Gilad Yehudai. By now, we assume you have seen the earnings press release, which was issued earlier today. It is available on all the major financial news feeds.

Before we begin, I would like to review the Safe Harbor provision. Forward-looking statements in the conference call involve a number of risks and uncertainties, including, but not limited to, product demand, pricing, market acceptance, changing economic conditions, product technology development, the effect of the Company's accounting policies and other risk factors detailed in the Company's SEC filings. The Company does not undertake to update forward-looking statements.

In this conference call, management will be referring 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 charges, non-GAAP results provide information that is useful in assessing RADCOM's core operating performance and in evaluating and comparing our results of operations on a consistent basis 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, which are included in this quarter's earnings release. Now I would like to turn the call over to David. Go ahead please.

Thank you, Noga and thank you all for joining us today. The first quarter was another period of expanding sales activities and strategic progress in line with our gross spend for 2012 and beyond. We are particularly excited about our sales pipeline. We are participating in more tenders for larger scale opportunities than ever before and we are winning our fair share.

The increased demand reflects the market's ongoing massive adoption of smartphones. This has created an overload of data traffic that make it much harder for operators to maintain high-quality services. This is translating into a direct loss of the operators' customers and revenue motivating them to make significant investment in solutions. That is why we are seeing more demand for our Service Assurance solutions.

In addition, operators are beginning to take a more comprehensive approach to quality, one that includes the dimension of Customer Experience Management or CEM applied to data services. This is opening up a new area of sales activity, as well as the potential for partnership.

This is very good for RADCOM. Since we offer the gold standard solution for both Service Assurance and Customer Experience Management, we have been seeing very significant repeat orders demonstrating that our existing customers are pleased with the performance of our products.

Last year, our focus was to scale up our local sales and support capabilities to make sure we could address the increased demand. We built out our presence in Latin America, Singapore and India. In addition, we created partnerships with major network elements and IT vendors in order to fully address the CEM potential with Tier 1 players. All of this positions us very well.

As a result, our pipeline is very strong and our backlog remains at a near historical high. This makes us very confident regarding the future and give us a good visibility for growth on a yearly basis. On a quarterly basis, however, our results have been fluctuating. As the systems we serve get larger, deployment is generally carried out in stages with payments tied to milestones. With large customers and large projects, milestone sign-offs can be delayed even when a system is already installed and the customer is happy.

During the first quarter, these delays totaled almost $1 million giving us sales of $5.6 million, $1 million less than we expected. And this translated into a net loss for the quarter. We are confident that this will work itself out for the year. However, it is clear that it is more meaningful to judge our performance across multiple quarters.

Taken as a whole, with extremely strong markets, the industry-best products, a strong presence in strategic markets and strong sales pipeline and backlog, we feel confident and on track regarding our future prospects. We look forward to reporting our progress in the quarters ahead. With that, I would like to stop to let Gilad go through the financials and then we will open the line to take your questions. Gilad, please.

Thank you, David and hello, everyone. Since you have the press release before you, I will just go over the highlights. To give you a better understanding of our results, I will be referring only to non-GAAP results, which exclude share-based compensation. Revenues for the first quarter were $5.6 million, similar to the level in the first quarter of 2011. As David mentioned, this does not include $1 million that we had expected to be able to recognize during the quarter. This will even itself out in the coming quarters.

Sales were more or less balanced between all of our target regions -- Europe, North America, Latin America and the Far East. This shows that our sales organization is working well in all territories. Our backlog is at a very high level, providing us with good visibility for strong positive momentum in 2012.

Our gross margin for the quarter was 68.4%, which is good for this level of sales and in line with our projections. Operating expenses for the quarter were $4.5 million, unchanged compared with the fourth quarter. As we explained previously in the last quarter's report, we completed the scale-up of our global sales, marketing and support capabilities by the end of last year, so our expenses remained steady this quarter and we expect them to continue at a similar level for the next quarters. With the growth that we expect in our revenues, this will translate into a stronger bottom line.

You will notice that we recorded tax expenses for the first time this quarter. This reflects that with the holding taxes that were due on revenues from a significant project in Central America, the tax totaled $120,000 during the first quarter. With unchanged revenues, higher operating expenses and tax liabilities, we recorded a non-GAAP net loss for the quarter of $650,000, or $0.10 per share. We expect to improve the bottom line on an annual basis. Back to you, David.

Thank you, Gilad. Before taking your questions, I would like to thank you for your ongoing support and for participating in this call. We are very excited about the future and look forward to reporting our progress in the quarters ahead. With that, we would be happy to take your questions. Operator?

(Operator Instructions). There are no questions at this time. Mr. Ripstein, would you like to make your concluding statement?

Yes. Thank you, Noga. Thank you, Gilad and thanks to all of you for your support and for participating in this conference call.

Thank you. This concludes the RADCOM Ltd. first-quarter 2012 results conference call. Thank you for your participation. You may go ahead and disconnect.