Yaron Ravkaie - Chief Executive Officer Ran Vered - Chief Financial Officer

Alex Henderson - Needham and Company Dmitry Netis - William Blair Josh Goldberg - G2 Investment Partners Alex Henderson - Needham and Company Noah Steinberg - G2 Investment Partners

Ladies and gentlemen, thank you for standing by. Welcome to RADCOM Ltd. Third Quarter 2016 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, November 1, 2016. On the call today is Yaron Ravkaie, RADCOM’s CEO and Ran Vered, RADCOM’s CFO. 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. Please note that the 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 a link on the Investors section of RADCOM’s website at www.radcom.com/investor-relations. If you have any trouble, please send Mark Rolston an e-mail at markr@radcom.com and he will send it to you right away. 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, include 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. The full Safe Harbor provisions are set forth in the presentation. 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 the 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 the quarter’s earnings release. I would like to repeat the information about the presentation. If you have not downloaded it yet, you may do so through a link on the Investor section of RADCOM’s website at www.radcom.com/investor-relations. If you have any trouble, send Mark an e-mail to markr@radcom.com and he will send to you directly. Now, I would like to hand the call over to Yaron. Please go ahead.

Okay, thank you, operator and thank you all for joining us today. I hope, you have our presentation in front of you and I will begin with Slide 3. As you can see, our results for the quarter were very strong with sales up over 62% year-over-year to $7.7 million. In addition, we achieved a non-GAAP net profit of $1 million or $0.09 per share. Our focus during the third quarter was to continue executing an existing contracts, expanding with current customers, running trials with new customers and ramping up our engineering resources in anticipation of potential new projects. We will continue making significant investments in the business to support our growth strategy. We believe this is the right approach to meet market demand for our solution, despite the near term impact on profitability over the next several quarters. As we discussed last quarter, AT&T publicly disclosed that they are using our innovative MaveriQ product suite as the service assurance component of their new NFV network. We continue to move forward in the implementation and are working closely with the customers to expand functionality and integration into AT&T integrated cloud. As a reminder AT&T plans to virtualize approximately 75% of their network by 2020 and given our rollout and expansion during the past few quarters, RADCOM is a key piece of this transformation. We also continue to focus on our existing business in the rest of the world. During the quarter, we were very pleased to receive two expansion deals, the first expansion deal was in Asia Pacific based Tier 1 operator, this multimillion dollar deal expanding on our original three-year framework contract that we announced in May, 2015. We have been a long time partner of this operator who was the first customer to upgrade to MaveriQ and this latest order highlights the benefits of our solution in assuring the network and providing real time customer experience insights. Our second expansion deal was with a Latin America Tier 1 operator. This expansion to the MaveriQ deployment boost the solution capacity and functionality to assure the operator’s mobile services while they are significantly increasing their network capacity. We continue to be engaged with leading top tier carriers about their respective NFV strategies and the public endorsements from AT&T has only accelerated our efforts. As mentioned on our previous call, we are engaged with nine potential customers with several of these accelerating their proof of concept timelines. Also we are starting to see other operators who have reached the detailed planning stage of their migration to NFV and have either issued or are planning to issue a tender for pure NFV with network architectures similar to other leading operators who have already begun the transition. Our approach to NFV transformation is being received very well and creating the right excitement and traction with these customers. As I said in the past, the sale cycle for these type of deals are longer as top tier carriers are looking for comprehensive solutions for big transformation projects. As a result, they move carefully before making any commitment. That being said and given the progress we are making, we continue to remain confident that these activities will materialize into new deals and are planning accordingly. As to the state of the NFV market, carriers continue to be very interested in our MaveriQ platform since they recognize that RADCOM is the only vendor in the market that can provide a path to NFV and future proof their purchasing decision. As a result, we continue to feel strongly that our hybrid strategy of running a virtual NFV service assurance solution in a hybrid world of both physical and virtualized network elements is correct. We also continue to work to strengthen our positioning within the NFV ecosystem. We have publicly announced partnerships with Amdocs and HP in the past and with the more recent AT&T announcement, we have been working on opportunities with additional partners. As to our organization, we continue to scale up our workforce with particular focus on our engineering resources. Last quarter, we welcomed additional leaders to our management team and this quarter, we focused on expanding our engineering team to handle the unprecedented requests for field tests and our ability to scale and execute projects in parallel. Acquiring the right type of talent takes time as we only started onboarding people late in the third quarter and started the fourth quarter. We are also ramping up our presence in North America. Eyal Harari, RADCOM’s COO is relocating to our offices in New Jersey, where he will focus on building out our local presence in North America as we expect that new projects will materialize there. Looking forward, we are going to continue to invest in our engineering capabilities to maintain our product leadership in NFV and to support growth. So in summary, we’re very pleased with our progress and continue to focus on execution. Looking forward, we remain excited by our prospect given RADCOM’s strong position in the industry and with that I will stop and turn the call over to Ran Vered, our new CFO to discuss the financial results. Ran please.

Thank you, Yaron. Since you have the financial results begin on Slide 6, we will just go over the highlights. To help you understand the results, I will be referring mainly to non-GAAP numbers which exclude share based compensation. Revenues for the quarter was $7.7 million up 62% year-over-year. This is a new record for RADCOM demonstrating that we have entered in to the field of course and increases the ability based on large multi-year projects with defined income [ph]. Our gross margin for the quarter was 70% on a non-GAAP basis in line with our expectations and consistent with the second quarter of 2016. Our gross margins continue to reflect the recognitions from all the projects which are higher outlook component. In general, we expect that the gross margin will continue to fluctuate depending upon the mix of each quarter’s revenue. On a long term basis, we expect the gross margin to be at higher levels as more carriers contract with us based on the NFV software license model. As you can see on the Slide 6, our gross R&D for the quarter on a non-GAAP basis was $1.80 million up 40% from last quarter or last year. In addition, we will receive $385,000 from the Israel Innovation Authority during the period reducing net R&D for the quarter to $1.4 million. It should be noted that our R&D expense did not increase as much explained because some of our hiring took place towards the end of the quarter and in to Q4. That said, we are on track with our R&D hiring and continue to increase our capabilities to support our customers, and to widen the gap between us and our competitors. Total marketing expenses for the quarter totaled $2.3 million on a non-GAAP basis up 9% compared to the third quarter of 2015 primarily due to commissions paid to our partners. Overall, we expect this to continue to increase gradually over time as we build up the sales and marketing organization. G&A expenses for the quarter on a non-GAAP basis totaled 690,000 compared to 477,000 in the third quarter of 2015. We expect G&A expenses to increase slightly going forward as most of the large increases are behind us. Operating profit on a non-GAAP basis for the quarter was $994,000 compared to $966,000 for the third quarter of 2015. We also posted $39,000 in financial income for the quarter. Net income for the quarter on non-GAAP basis was $1 million or $0.09 per diluted share. The result included $385,000 or $0.03 per diluted share benefit related to grants on the Israel Innovation Authority. During Q3 of 2015, grants from the Israel Innovation Authority were approximately $867,000 or $0.09 per diluted shares. On a GAAP basis, they were approximately breakeven compared to net income of $561,000 or $0.06 per diluted share during the third quarter of 2015. This wave [ph] decline was primarily due to increase in stock based compensation. Turning to balance sheet as we continue slide 11, our cash and cash equivalent as of the end of the quarter was $43.2 million more than five times the level at September 30, 2015. We believe that our strong cash balance versus the company on [indiscernible] the big Tier 1 opportunities. Now, turning to guidance. We are reiterating our full year revenue guidance range of $28 to $29.5 million. In terms of profitability, while we are not providing specific EPS guidance, we do expect profitability for the fourth quarter to be below the third quarter due to expenses associated with market trials, the revenue mix and continued investment in the business. As Yaron mentioned in this remarks, we believe that our decisions make significant investments primarily in engineering resources to support our growth strategy is the right thing to do given the demand for our solution. As a reminder, we view and continue to manage our business on an annual basis because our quarter results can fluctuate due to the timing of implementation of RADCOM. With that let me turn this back to you, Yaron.

Thank you, Ran. In summary, the third quarter was one of the strongest in the company’s history. With NFV tailwinds at our back, we are fully engaged to materialize significant growth to continue and innovate, be a first mover in health carriers, unlock the full potential of NFV as we support them in assuring the successful accelerated transformation. With that, we would be happy to take your questions, operator.

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

So I guess, I got a couple of questions for you. First one, it’s pretty clear that, you know, there is pretty good relationship between you guys and the guys over Gigamon. It looks like Gigamon announced a major AT&T contract that also pulls them into support between the AT&T and AWS platforms. Is that a project that you would also be pulled into or is that, you know, something that you might get involved with down the line, can you help us understand whether that AT&T AWS relationship is relevant to you?

You know, I don’t, I need to be careful not to disclose any customer specific things, I would emphasize I think what I disclosed in the past when we disclosed the AT&T deal that the focus for the NFV transformation of what we are doing in this year and into next year is the mobile network. Now, I think you can probably do the math of what that means regarding AWS and Gigamon. It sounds to me like in a different space, so…

Okay. Second question I had probably was you obviously need to accelerate your investment, you talked about significant increases but you didn’t give us a lot of granularity on it, down sequentially off a $0.09 number is not a particularly granular guide, can you give us a little bit more detail on number of headcount at the end of the quarter where you think it might be by the end of the year, and you know, maybe a little bit more sense of how much you expect to drive that over into the first half of 2017, so that we can get a better sense of the baseline, we took a proactive stance here to give you a lot more room on that by bringing our expenses up pretty sharply in a preview note here. Are we on track with that or did we overdo it? Can you just help us out a little bit with granularity on that?

So I will give you the broader picture and Ran, I think, can talk specifically add here but first of all from a business perspective, we are seeing, you know, the demand for the trials and the continued investment that we need to do in R&D and the setup that we need to do for 2017 and 2018 in front of us. So we are going to continue to scale the R&D and the engineering resources etcetera. That being said, it’s now November. The quarter is almost over, so you are not from a number’s perspective. So Ran will touch on it. I don’t think you are going to see crazy things happen but we continue to ramp up and we can’t exactly disclose the exact number because it’s small amount of numbers, we are talking 5, 10, you know people each time that we are ramping up every quarter in the engineering side and it depends if we sign them in excuse me in November, we sign them up in December, it effects the quarter. So it’s not possible to give the exact number that will – it will affect us because of the small number and when we look into next year, you know we are doing now exactly the planning for next year. We are going to have the board sections to approve it at the end of the year, so we are going to be able to nail down the plans only towards the end of the year. So at a high level, we are going to want to manage next year in a way that we invest a lot back into the business and I think the responsible thing for us is to make sure that we can capture as many of the trials and potential order and turn them into new business and create the infrastructure in advance for that. So in general from, again without going into a specific number yet from my perspective, I think you are on track.

Just to add on that Alex, so we actually add quite large ramp up at the end of Q3 and also we continue the ramp up in the beginning of Q4. We are currently on plans on the ramp up and as Yaron said, its variation will be 5 or 10, we won’t have specific figure but that’s about that.

Well can you give us the headcount in the June quarter, headcount in the third quarter? What was the change in the head count for the already reported quarter?

I was roughly, so Alex, we are going to file the number of the resources in our full year reports. It’s going to be in the next quarter.

So no headcount I guess. Okay, going out just looking out to next year, is it reasonable to think that you know sort of a target of $6 million to $7 million kind of numbers quarterly is the right ballpark on OpEx?

OpEx?

If I put in R&D, G&A and sales and marketing all together in a bucket, you know, you did $4.4 million non-GAAP in the September quarter, is it reasonable to think that $6 million to $7 million is kind of the band for next year?

I think it’s a little bit premature to have this figure. As Yaron said, we are now in the process, in the finalization of the process to finalize our plans next year that is going to be approved by the end of the year. So we will provide more color on it in the next quarterly call.

Okay, I will see you at the quarter, thanks.

Thanks.

Thanks Alex.

I am sorry.

Thank you.

The next question is from Dmitry Netis of William Blair. Please go ahead. One moment, sorry. We are having a technical issue, one moment please, I am sorry. The next question is from Martin Kone [ph]. Please go ahead. Martin, please go ahead.

Hi good morning, or good afternoon in Israel. I notice something very interesting in your income statement and that is that you are actually putting all the profit, the gross margins back into R&D is that because you feel that there is a good reason for continuing the R&D in the present appliances so to speak, or do you feel this is new R&D something that you are moving into that you haven’t told us as yet?

Hi, thanks for the question. It’s Yaron. Basically, what we are doing is we’re everything is I would say 99% as everything is new R&D. New R&D in engineering resources that were getting the company ready to do two things deliver on our existing commitments, and we are starting to forecast the coming you know 18 months of demand for the product and getting our engineering resources ready for that, so we are creating the infrastructure for that.

Great, thank you so much.

You’re welcome.

Thank you. The next question is from Dmitry Netis of William Blair. Please go ahead. I am sorry, one moment. The next question is of Noah Steinberg of G2 Investment Partners. Please go ahead. Online with you now is Dmitry Netis of William Blair. Please go ahead.

Gentlemen, can you hear me now?

Yes.

Third time to charm.

Give you an assurance solution somewhere.

Exactly right, mobile assurance. Okay, so couple of questions just, I joined a little bit late, I apologize to those who were tackled already but couple of the clarifications and then maybe a bigger picture question. On the clarifications, what were the DSO in the quarter?

53 days, 52 days, sorry.

52, okay and that’s up from call it 18, 19 last quarter?

It was 13 last quarter.

Which we said was…

Not very unusual.

Unusual positive, right.

Okay, I think your visibility hasn’t really changed, it feel pretty solid through the end of the year, you are reiterating guidance and you feel pretty good about where we are in Q4.

Yes.

Okay but as far as the new deals then go, what have you said in terms of the total count of trials and how close are you in landing maybe yet another deal, are we looking now into 2017 timeframe early 2017, you know 2017 if you could sort of give a timeline of when you expect another deal to come through that would be really helpful, I don’t know if you have that visibility just yet but just comment on that please. And my apologies if you already did, just wanted to hear that one more time?

No issues, Dmitry. So as I mentioned also next, last quarter and I touched on it also in the script, we are engaged with nine operators. Now these nine operators are not just randomly nine operators, they are the ones that are more aggressive and if you are on this hybrid approach and have the most benefit from NFV, they are all Tier 1 operators. Now, over the course of the last I would say quarter and half almost two quarters, what’s happening is part of those nines are accelerating their trials with us. And that’s the picture now that we are facing. Now the way that Amtrends [ph] when you translate it now into an excel sheet with probabilities and pipeline management and things like that, it speaks out that it will bring deals in the second half of the year, okay. That’s when you do the math it takes you know a typical trial would be nine months, they need to go deep you know some probabilities on the win etcetera. When I look at the business, it makes sense to me and I would say that we are aiming for that, for the new deals to come in the second half of the year. Saying all of that from what I see on the ground there might be positive surprises, so you know the models are modeling to the second half of the year and you know we will see one of the carriers want move, one or two other carriers want to move faster than that, we might see a positive surprise.

Okay, understood. So, second half is what you sort of counting and if it’s something earlier you will be very happy with that.

Exactly.

What are you expecting out of AT&T for next year, are we still sort of targeting the $18 million out of AT&T next year?

It’s hard to pinpoint an exact number, it’s going to, it’s not going to be helpful, not going to be double okay but it can gravitate also to be a little bit higher than that. It depends you know on many moving parts but that’s pretty much the area of where they will gravitate around, so.

Okay. And has anything changed as far as maybe new deals, new step-up in services, step-up in new applications at AT&T, has anything changed this quarter versus last, more incrementally positive, negative, but feeling the same. How do you kind of take on the AT&T current outgoing business?

So, first of all I think, the most important thing is that the implementation is going okay. So at the end of the day it’s a multi-year agreement and you know it’s their transformation and it’s not a simple implementation and it’s a very complicated one and it’s going okay. I think, the second thing, it’s a live implementation, so the relationship is good and the scope changes and they need sometimes to contract more projects and we see that as part of the healthy relationship, so it’s going up not going down. And you know I would expect the relationship to continue to be managed okay into next year, lot of activity coming on both AT&T and our table for next year.

Okay, but incrementally there is no new revenue, no new application sort of being added here as you saw for example last quarter?

No new applications this year, but there are – this quarter we are – there are, again it’s live so there are some expansions that we are doing with them on the existing applications and the stock. And now they are using the product, what areas of the business they are using the products sometimes they need something faster that type of stuff. Well I can’t, I am not able to disclose any like specifics beyond that.

Understood, okay, that’s helpful. And then on kind of the legacy if I call it, may not necessarily be legacy but let’s call it Tier 2, Tier 3 business with some of the carriers you would…

[indiscernible]

Just in the past.

I call it emerging market, Dmitry.

I am sorry, what?

I am calling it emerging markets, the emerging markets.

Emerging markets, fair enough. What’s the run rate of that business, can you sort of, you know the Celcoms [ph] and the Globe in Philippines, so I mean, if you combine them in one bucket, what would be roughly the run rate in your expectations of kind of the revenue contribution from that group?

No, you can do the math, right. We are guiding to 28 to 29.5 and you know we said that somewhere around 18 is the number from AT&T, then everything the rest is from that. I would say that probably, you know, maybe together it accounts for 90% if you want to be accurate, 18% of it.

Okay, is that the same expectation for next year, are you expecting any sort of ramp up in that bucket next year or is that pretty much steady as we’ve seen this year?

We are working on some projects that can actually be a ramp up, so again it’s a little bit early to put the full forecast but you know, it’s not, I don’t see it going down. And there are some potential there that it’s a region where data is exploding and they need some additional solutions. Now, most of the focus of the company is on the NFV, so we are not you know, putting more sales, we are not putting more sales efforts into those regions but on the existing accounts adjacent to those existing accounts, we see positive activity.

Okay. And then maybe just a big picture here. If you look at you know the deal that you have with AT&T and the pricing there, you have this enterprise license every function, every subscriber sort of covered under this enterprise license agreement. As you move into sort of this new world where you obviously have a first mover advantage, you are working through many other trials and operate with many other operators at the moment, what should we, should we expect you to have some leverage in pricing going into those new deals, new operators which would be essentially little better than what you had with AT&T or how are you thinking about that, I mean, provided maybe they are the same size. Well they can’t be the same size unless it’s Verizon or something along the line that you know with the same number of subscribers that AT&T has but most likely it would be slightly lower than that big deal that you planned it, so was the pricing more than compensate for that, just trying to get a sense of how to think about that?

Business wise, it’s a little bit too early to say, modeling wise the way I model it in my head is that, I don’t, at this stage I am not like building a premium for the next customer so I would just say, okay, that’s a carrier you know half the size of AT&T then I am not sure it will be half the implementation but it will be lower. So you can, you know, you can, somehow model it that way but, it’s a little bit too early to say exactly how it will unveil itself business wise, you know. Business wise at the end of the day NFV is a disruptive approach to equipment and everything that we are doing is pure 100% software. So the way that we, you know, we will build the business, we did it with AT&T and we will build the business with additional customers. We will be around to help them disrupt the equipment base. Now exactly how much goes to their benefit and how much we can monetize that’s at the end of the day the scale of that. So, and there is a scale there, they can get benefits and we can get benefit but, it’s very hard to predict exactly that will unveil itself.

Understood. I was just trying to get to the sort of should we model it based on number of subscribers in the network per function, be it mobileCore or virtual CTE [ph] or anything along those lines, or should we just kind of assume what we seen here with AT&T which is the enterprise wide license agreement? That’s sort of the just….

Basically, I would say that a carrier with, you can, I would model it based on have some subscriber indicator on it even if it’s translated to an enterprise license, the enterprise license would be much bigger for a bigger network. And the subscriber indication plus you know some sort of the indication whether you know it’s North America or Europe, there might be some price differences there should be enough to model.

Okay, understood. My last question and I will leave the floor. Just again a big picture on the NFV market and sort of the TAM of that market, I don’t know if you guys had thought of, I know it’s very difficult to model sort of what the actual size of that market may look like five years out, there is some industry data out there that may support some calculation around Virtual Probes etcetera but as you look at your business guys, the Virtual Probe, you know, your entry into the load balances space maybe security down the road, I mean, that we talked to, what do you think your TAM is or will be let’s say in the next five years vis-à-vis kind of the total NFV markets and I have seen numbers anywhere in $20 billion and $30 billion but you know as you look at the sliver [ph] of the business to key [ph] delivering to the carrier, what do you think that that the size of that market is, addressable market is?

You are catching me off guard, you know a five year TAM and earnings call it’s, yes, so we talked about TAM in the past I would say that just for the pure assurance in NFV there is probably north of $100 million out there in the next five years, okay because we are talking about assurance, $1 billion market and you know, you can even probably make a claim and it’s for the next three years and that’s you know analyst have picked up on that – industry analyst have picked up on that number. Now if you start to add additional products and expand that, it will be more. So it will be in the hundreds of millions, you know some of these areas are as big as Shulance [ph], some might be even bigger. So it’s not a negligible TAM. I would also caution all of us that NFV is very hard to predict, so everybody is trying to model some sort of hockey stick at a pace of disruption and what pace will it happen, so I would expect as more carriers move to NFV in the next two years, I would expect all these models to change and this industry to be in focus.

Alright, good enough. Thank you so much. Keep up the good work gentlemen.

Thanks Dmitry.

Thanks.

The next question is from Noah Steinberg of G2 Investment Partners. Please go ahead.

Good morning, it’s Josh Goldberg, hello, how are you doing?

Hi, Josh, doing good.

Just couple of quick questions, I guess first, you know, obviously you have been here nine months and the results so far have been very strong, you know, best revenue quarter in company’s history, obviously you know good healthy financing to support the growth and specifically, your comment that you have an expanding relationship with AT&T and ongoing momentum with Tier 1 carriers globally, I think would just help people as understand, number one, when you look at all nine carriers combined roughly how much bigger is AT&T, my guess is – it’s even all of them or half it would be four to five times the size of what AT&T is providing for you. And my second question is based on your expectation obviously you are spending now, so you are seeing what’s going on in the field, can you give us a sense of the amount of your spending and how much it should correlate with possible Tier 1 wins in the next sort of 12 to 18 months?

Okay, so let me start from the second, I would say that the company is gearing itself to execute several projects in parallel, now are we going to – do we execute three projects in parallel or five project in parallel or six projects, it’s hard to predict that stage and the infrastructure investment is not so much different whether you are executing you know the low number or the higher number because a lot of it is going to R&D, in automation and how to scale the business etcetera but that’s you know, the mindset is to scale the company to execute multi Tier 1 project in parallel with the R&D associated with it and the engineering resources associated with it, understanding that it’s in, all in NFV in virtual which is very advanced tech and need to keep the product alive in order to you know as part of the implementation. So a lot of moving parts.

Well I guess, I am trying to get there before you answer that first question as if you are accelerating your investments that must mean that you are seeing better visibility from these opportunities, I just want to make sure that everyone here hears that because I think people are worried about the expenses and this and that for the next quarter or two but as you look out now for the next year or two it sounds like you feel better about your position and about the size and about the wins that you could look?

You know that’s basically why we are doing the investment because what keeps me awake at night is not that you know some people can be awake at night other companies you know if they are worried that there is a market or there is a demand for the product, what we are seeing is we are seeing a lot of interest from the market for the product. Some of it is translated into trials and we need to get the infrastructure ready for that. So that’s what’s – that’s the – and I touched on it, I think last quarter I am touching on it, again now, a lot of the focus of the companies making sure that we have the infrastructure to execute. Yes and I would be doing it if – I wouldn’t be doing it if you know I wouldn’t be seeing the demand, so you are absolutely right.

Okay. And then regards to just where you are now versus where you thought you were nine months ago, how do you feel about the company?

So, you know, we’ve done a lot in nine months. I feel good about what we’ve done. The relationship with AT&T is a good relationship not – it’s very non-trivial to get lot of superlatives in an ongoing basis from AT&T and I think that came out very well with their endorsement of us with the public PR. We’ve done a lot of scale the company, we’ve done a lot, a huge investment in the product we released many releases of the product in agile to support NFV. The company is a 100% software company. So many you know things to tick on that put a checkmark as progressing and I am happy with the progress and I think everybody, all see that the next coming quarters are going to be active quarters and continue to build everything out and making sure that the infrastructure is ready to progress with AT&T and with other clients and that’s a journey ahead of us. So, it’s a good feeling.

Last question for me, you know, obviously, AT&T is a frame agreement but how often do you receive orders from them, I mean, it seems like we haven’t seen [indiscernible] recently but obviously your confidence with some for next year seems to be pretty high, so maybe could you just help us understand how that works in terms of frame orders versus what you see out there, thanks. And by the way the 8 o’clock timeframe is a good start in sales [ph] line? Thank you.

Thanks. So, it’s a little tricky quite, because it’s a complicated agreement but basically the way to look at it, it’s not a framework agreement, okay. It’s an agreement that is holistic agreement, there is actually various agreements there and the big agreement there is maintenance agreement. We are now going to go and publish all of them. By the way there is more color on them for everyone that reads the 20F that we I think put last year and we will put another this year, so whatever we can disclose, we disclosed there and the orders are – some of the orders associated with the big agreement are just invoicing the mechanism. So we are not going to disclose each time that receive an order for an invoice and a payment and that’s the mechanism and when we do have that big expansions, we will disclose them.

The next question is a follow-up by Alex Henderson of Needham and Company. Please go ahead.

Yes, hi, I was just wondering if you can tell us, you announced that you had some new products but you are keeping them under wraps to the Street and to the broader industry, but requiring people to sign in NDAs in order to trial them. Can you give us an update on when you think you might give us some more information on what those products look like and when you plan on opening it up to the broader industry?

I can’t because, primarily because I think everybody understands that it’s a competitive edge. Like I just said that the customers that we did sign NDAs with and the nine customers and the subsets that are progressing ahead, some of them, the new areas are included and we are seeing excitement there, so we are keeping it under wraps and we will continue to do it in the near future primarily to maintain this competitive advantage.

Okay, I just thought I would check, see if there was any update, thanks.

The next question is from Mike Arnold, please go ahead.

Hi Yaron. I wanted to drill down a little bit in to the nine trials that we are currently engaged with, I think last year we had some updates throughout the year in terms of what the competitive situation look like. Sound like there was competitors that were dropping off as we went through new rounds of trials, is that sort of the same thing that’s happening with these nine or is it basically are these nine trials are as close [ph] basically given we’ve got this technology edge against the competition, just want to get your perspective on that? Thanks.

A lot of them are [indiscernible] type of trails and we have a competitive advantage in the marketplace, now it’s being validated by AT&T and the fact that it’s public, it gives comfort to these clients and some of them also in touch with AT&T and you know maybe the word how to lose rebit [ph] very sales and sounds aggressive but I would say that a lot of these customers that we are engaged with see the feedback that we are getting is that they see the cutting edge technology from what we are showing, they see why it’s differentiated, they see the validation from AT&T and primarily they are evaluating with us the technology, where they are not doing like multivendor evaluation.

Okay so there is – are there any other competitors that are trialing or is it just basically, you guys are in there with the nine carriers basically?

Again it’s, I am not going to go and break down the nine to each one but with most of them they are evaluating just our technology.

Okay, excellent. And then I am curious with AT&T, I know that they have got DIRECTV and I have seen some reports that suggest that NFV could potentially be a nice use case for cable operators and maybe even satellite operators. Is there an opportunity to expand in the DIRECTV and some opportunities within AT&T?

There is many opportunities in AT&T, I think you know, cable enterprise, there is, you know, who knows what then this next merger will bring us primarily what I see that if it goes through the Time Warner Cable just going to add more traffic to the mobile network. All of these things are positive and AT&T are just focusing with us this stage on the mobile network, so there is, our solution support more than that, so there is a lot to do with AT&T going forward.

Okay, so it sounds like your addressable market includes cable operators, satellite operators and mobile operators?

Yes, some of our existing clients as well.

Okay, alright. Thanks. That’s all I had.

The next question is a follow-up by Noah Steinberg of G2 Investment Partners. Please go ahead.

Hi Josh Goldberg here again. Just two other questions based on some other responses so far. So, could you tell us like obviously moving your COO to the Americas sounds like there is some more opportunity there. Maybe you can give us a sense of, of the nine how many you are in North America or the sense of what you are seeing here that’s getting you a little more excited and I don’t think you answered how many, if you took the entire subscribers, well now how much, how bigger is that, how much bigger is that of AT&T? Thank you.

I am not sure, I know how to calculate it like off the top of my head but I am trying to do the math but I won’t calculate it…

At least convey that it’s certainly not equal to what the deal be, significantly bigger, that’s all I need.

All of them are very formidable Tier 1 operators, you know, whether they are in Europe or in North America they are big and I think everyone can probably do some mask [ph] and modeling from the standard but you know of course if you accumulate, sometimes you accumulate two carriers they are bigger than AT&T, so but AT&T is a very big carrier seeing there. What was the question now?

About the Tier 1?

Part scaling the business, part of the strategy of scaling the business is focused and I mentioned that in the past, it’s NFV is going to happen in Western Europe and in North America probably sooner that it will happen in the emerging markets. Now again there is some in Asia Pacific, there are some carries that are not emerging markets carriers, right. There is Japanese carriers, there is Australian carriers, others like that but if we look at the, if I put Asia Pacific aside for a second, we look at Europe and North America, most of our R&D is in Israel. We have a branch of the company in India, we can support Europe with some local presence south of Israel. It’s very close, it’s three hour flight, it’s not that far. When you look at North America, and I have done a lot of work in North America in the past, you need a strong presence in North America to support the business in North America, that’s the primary reason why Eyal is relocating to the U.S. to the East Coast to Jersey and he will scale our presence there and of course it comes you know with both serving AT&T which I think you touched on the – everybody touched on the call. There is a lot of to do now. There is also a lot of potential going forward with them and also additional potential customers.

[Operator Instructions] Please stand by while we poll for more questions. There are no further questions at this time. Mr. Ravkaie, would you like to make concluding statement.

No, I just want to thank everybody. We have very interesting journey ahead of us. We feel very good about it and you know, I look forward to seeing everybody next quarter. Thank you very much.

Thank you. This concludes the RADCOM Limited third quarter 2016 results conference call. Thank you for your participation. You may go ahead and disconnect.