Ladies and gentlemen, thank you for standing by. Welcome to the RADCOM Ltd. Results Conference Call for the Second Quarter of 2022. As a reminder, this conference is being recorded and will be available for replay on the company's website 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. 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 its full year 2022 revenue guidance, expected growth in 2023, and expectations regarding the enterprise market for telecom operators. The company does not undertake to update forward-looking statements. Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures included in the quarter's earnings release. 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 second quarter 2022 earnings call. We achieved another strong quarter with solid financial results. Also, as recently announced, we won 2 new 5G assurance contracts and extended our multiyear agreement with AT&T. Total revenue for the second quarter was $11.1 million, representing a 12th consecutive quarter of year-over-year revenue growth, up 14% compared to the second quarter of 2021. I am pleased with the strong demand for our innovative solutions as we win new customer logos and expand business with our installed base. The 5G market is ramping up, reflected in the momentum of our business. In the first 6 months of 2022, revenue grew by over 15% compared to the first 6 months of 2021. With the growth in our business and the efficient management of cost, we have generated over $3 million in cash since the beginning of 2022, resulting in cash and short-term deposits reaching $73.1 million, a 4-year high. Since the beginning of the year, we have been at breakeven point, and we believe the positive momentum will continue into the second half of the year. As we announced in May, DISH selected RADCOM to monitor America's first 5G smart network. It started its nationwide rollout in May, launching in Las Vegas. After a month of testing, DISH's 5G network was made available to the public in over 120 U.S. cities, covering 20% of the U.S. population. We feel proud to be DISH's assurance partner as they roll out their 5G network. DISH chose RADCOM ACE to monitor their stand-alone 5G network, the first fully deployed on the public cloud. RADCOM was selected because DISH wanted a best-in-class assurance solution that seamlessly integrates into the cloud and provides network-wide visibility. Our previous R&D investments with partners like AWS to integrate RADCOM ACE with the public cloud providers have borne fruit. Our integration with AWS enables DISH to use AWS Cloud along with RADCOM ACE to simplify the 5G rollout and smartly manage the network services more automatically. As DISH moves forward with its nationwide rollout, it is expected to have more flexibility and capabilities to be leveraged to generate new revenue. In a recent Analyst Day hosted by DISH, they stated that the enterprise will be a significant opportunity for retaining new revenue streams with its smart 5G cloud platform. DISH can offer enterprise customers different flavors of private networks for advanced 5G connectivity and services. This is where our cloud assurance technology can help. DISH can offer enterprise customers our assurance solution to monitor these private networks to ensure service quality and certify SLAs. As a result, they could provide Service Assurance as a Service as part of their managed service to the enterprise. We believe the enterprise market for telecom operators has enough potential, with operators taking the 5G cloud and selling premium services for new revenue across multiple verticals. We also announced a new multiyear 5G assurance contract win with a European mobile network. This new order covers assurance for this European operator's 5G network. RADCOM ACE will enable the operator to monitor its end-to-end 5G network performance and provide end-to-end visibility that helps the operator make real-time, data-driven decisions and proactively improve its network performance, ensuring top-quality services are delivered to its customers. We are excited about these new wins and the progress we are making in integrating our assurance solutions into these networks. Like with DISH, we continue seeing lots of collaboration between telecom operators and public cloud providers like Amazon Web Services. For example, Telefónica Brazil recently validated AWS as an option for their 5G SA core. Telefónica wants to increase automation and drive new revenue with cloud-based 5G platforms. The ease of use and speed at which operators can roll out new network services with these public cloud providers continues to gain traction, as reflected in recent cloud providers' earnings results that have beaten analyst expectations. We believe that our integration into several cloud providers will continue generating additional opportunities. In addition, we will continue working with technology partners to integrate RADCOM ACE with other platforms to help operators manage the complexity of launching 5G and ensuring the customer experience. Last month, we announced RADCOM ACE integration into another cloud platform. Rakuten Symphony selected our cloud assurance technology as its service assurance solution that will be globally available in their Symworld marketplace. Rakuten Symphony is the business dedicated to selling the Rakuten Communications Platform and managed services to telecom operators worldwide. Symworld provides a single platform that includes all the applications, cloud and operational data that telecom operators need to run their networks more efficiently and launch services quickly. Making RADCOM ACE available in the Symworld marketplace with easy click and deploy access will increase our solution availability and comes with built-in workflows and unified data analytics to help more operators rapidly deploy and roll out 5G with Rakuten Symphony. We believe that being part of this platform will open significant opportunities for us in the future. We remain confident that our product offerings are best-in-class and will play an essential role in the 5G transformation as more opportunities evolve. We continue to enhance our software solutions with expanded automation and AI-based intelligence capabilities to bring value to our customers as they roll out 5G and move to launch advanced services. In addition, we are working with the Israel Innovation Authority and academic institutions to push cutting-edge technology forward in the telco space. Our solution automatically analyzes millions of user sessions in real-time and reveals underlying faults that would otherwise be unlikely to be identified quickly in 5G networks. Furthermore, with the amount of data increasing monthly, our solution continually evolves to help operators overcome the challenges of operating complex networks to ensure the quality of services. As we grow the business, we maintain our laser focus on retaining and nurturing top talent. Our employee retention efforts are bearing fruit as we have kept a similar headcount since the beginning of the year. We place a high priority on creating a culture that fosters success for our employees. We aim to provide attractive career paths and promote internal talent. Our team is composed of talented people with unique knowledge and expertise driving our success. I wish to take this opportunity to thank all RADCOM employees as they continue to help us meet our business commitments. The strong demand for RADCOM ACE and the 5G market ramp-up is reflected in the momentum of our business and our healthy pipeline opportunities. We are engaged with operators worldwide, looking to provide their customers with exciting new 5G services and use our solutions to make their networks more intelligent and automated. As a result, we see the number of engagements, the level of engagement, and RADCOM win rates very positively. At the same time, we continue to manage our expenses while investing in the business strategically and efficiently. To summarize, I am pleased with our performance in the second quarter. Revenues are up, and our bottom line continues to improve. We see solid demand for our solutions and remain focused on executing our strategy as more operators transition to 5G and look for innovative assurance solutions to support their network transformation. As a result, we remain confident in our business strategy and the role we expect to play in the 5G evolution. Thanks to the recent wins, our growing business in our installed base and our ongoing sales engagement, we have good visibility, and we are raising our revenue guidance to $45 million to $48 million, a second consecutive rise this year. We believe this accelerated momentum will continue into 2023 to deliver a fourth successive year of growth. With that, I would like to turn the call over to Hadar Rahav, our CFO, who will discuss the financial results in detail.

Thank you, Eyal, and good morning, everyone. Now please turn to Slide 8 for our financial highlights. To help you understand the results, I will refer mainly to non-GAAP numbers, which exclude share-based compensation. We ended the second quarter of 2022 with $11.1 million in revenue, increasing from $9.8 million in the second quarter of 2021. At the same time, as we increased revenue by over 14%, we managed costs and maintained the same operational expenses as in the second quarter of 2021. This contributed to us reaching a breakeven point and improving the bottom line. Our gross margin in the second quarter of 2022 on a non-GAAP basis was 72%. Please note that our gross margin can fluctuate depending on the revenue mix. We are pleased with our consistent growth trend and believe the positive momentum will continue into the second half of the year. Our gross R&D expenses for the second quarter of 2022 on a non-GAAP basis were $4.7 million, a decrease of $196,000 compared to the second quarter of 2021. We received a grant of $197,000 from the Israel Innovation Authority during the quarter compared to $70,000 in the second quarter of last year. As a result, our net R&D expenses for the second quarter of 2022 on a non-GAAP basis were $4.5 million compared to $4.8 million in the second quarter of 2021. We expect the Israel Innovation Authority grant in the third quarter to be a similar level as in the second quarter. Sales and marketing expenses for the second quarter of 2022 were $2.5 million on a non-GAAP basis, an increase of $221,000 compared to the second quarter of 2021. G&A expenses for the second quarter of 2022 on a non-GAAP basis were $841,000, the same as in the second quarter of 2021. Operating income on a non-GAAP basis for the second quarter of 2022 was $176,000 compared to an operating loss of $646,000 for the second quarter of 2021. Net income for the second quarter of 2022 on a non-GAAP basis was $50,000 or a net income of less than $0.01 per diluted share compared to a net loss of $304,000 or a net loss of $0.02 per diluted share for the second quarter of 2021. The positive net income was due to the increase in revenue and the decrease in operating expenses, offset by the unfavorable impact of changes in foreign exchange rates. On a GAAP basis, our net loss for the second quarter of 2022 was $1.2 million or a net loss of $0.09 per diluted share compared to a net loss of $1.1 million or a net loss of $0.08 per diluted share for the second quarter of 2021. At the end of the second quarter of 2022, our headcount was 284. Turning to the balance sheet, our cash, cash equivalents, and short-term bank deposits as of June 30, 2022, was $73.1 million. That ends our prepared remarks. I will now turn the call back to the operator for your questions.

The first question is from Alex Henderson from Needham & Company.

Congratulations on being able to raise the guide. Nice progress. It sounds like your level of visibility, the number of deals that you're chasing, the degree to which those are progressing is improving despite the economic conditions. Can you confirm that there's no impact from the macro environment based on the strategic importance of these projects, that you're fairly well insulated from that?

Alex, thank you for your kind words. Yes, our improved results and our overall execution is based on our recent and positive momentum with our new and existing customers. As we have continued to be focused on our projects and transformation to 5G networks, we don't currently see any impact from the global economic environment. We continue to see demand for our solution and we continue to see operators invest in the migration of their networks to 5G.

On a similar vein, can you just remind me, I believe you price in dollars globally. Is that still accurate?

Yes, our main part of the business is based on dollars. We do have some opportunities or business that are in foreign exchange, but the vast majority is in dollars.

So do you have any ForEx risk to the revenue base that we should be aware of?

No. I think it's a marginal effect. Our key accounts and our largest contracts are in U.S. dollars, and we do not anticipate any fluctuations due to foreign exchange.

And conversely, do you hedge the shekel?

Correct.

So the shekel has moved quite sharply against the dollar. At these levels, how much of a positive effect is that relative to your cost structure?

Yes, we do not hedge, and we did have some benefit from the weakening of the shekel as part of our expenses there. About 25% of our expenses are in shekels, and I think it's a couple of hundred dollars that we gained due to the change.

That's per quarter?

Yes.

So based on the current environment, with the shekel having fallen considerably, assuming it stays where it is, do you plan to accelerate spending?

As I mentioned in the previous calls, we are going to maintain our expense level. It might fluctuate a bit because of currency. Overall, we are looking to keep a similar level while increasing a bit our sales and marketing to reach more accounts. So any improvement there goes to the bottom line. As we see in this quarter, we managed to create some profit because of these savings in the R&D cost.

Can you provide insight into the interest income line? It's bouncing around between almost $1 million and a contribution to an expense. What should we expect in the back half of the year?

Overall, we are expecting a small positive. We have some money not in U.S. dollars, some in shekels, and some in other currencies. Overall, I think on average we are neutral to that. We are expecting to generate some money as the interest rates are going up, but it's not significant.

In terms of the pipeline, do you expect between now and year-end that you'll have additional wins that will give you visibility to continuing double-digit growth in 2023?

We are definitely continuing to engage with multiple opportunities. Some of them can close this year, and some at the beginning of next year, which will help us to improve our revenue for 2023. We already have very good visibility into 2023 and can expect double-digit growth based on what we have today. We still have some things to execute between our recent wins and progress with our existing accounts. Due to the fact that our business model is multiyear recurring, we already have the visibility for double-digit growth for 2023.

The next question is from Arjun Bhatia of William Blair.

Congrats on a good quarter. Can you talk about the Symworld partnership? What does that do for RADCOM, and what kind of operators does that help you reach?

We can go by ourselves to any operator globally, but we are focused on some operators which are most advanced with 5G. Having Rakuten Symphony as a partner is a big benefit for us as they are marketing their own telecom stack. Every operator that they engage with could be a potential growth opportunity for us. It accelerates our go-to-market efforts and allows access to smaller carriers that we may not approach directly. It's another strategic channel, and any success of Rakuten Symphony could translate into success for us.

Do you have any disclosures on how the partnership works and the economics involved if you succeed?

Rakuten are primarily priming the overall solution, and we could look at this as an OEM solution where we are one of the options within their overall stack. If Rakuten provides their solution, they could also include our component as part of their overall deal.

What do you expect in terms of the timeline for expansion opportunities with DISH using the RADCOM ACE solution?

It's very hard to predict when those expansion opportunities may arise. We just announced our win with DISH a few months ago, and we are focused on implementing our solution to ensure DISH gets the full value to support their 5G launch. We are engaged closely to make them successful, and while we have raised ideas and capabilities, we are mainly focused on providing them value under the multiyear agreement we signed recently.

Last one for me. What’s driving the pickup in gross margins, and how high can they go over time?

We believe that our gross margin will stabilize around the average gross margin from 2021, which is about 72%. This quarter, the gross margin was 72% due to third-party components. Of course, our gross margin fluctuates depending on the revenue mix.

Thank you. This concludes RADCOM Second Quarter 2022 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.