radcom ltd (rdcm) corporate overvie · including lte, volte, ims, voip, umts/gsm and mobile...
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June 2016
RADCOM Ltd (RDCM) – Corporate Overview
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Safe Harbor Provision
Certain statements herein contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, those statements regarding expected revenues, being well positioned to capitalize on industry tailwinds and our NFV win, the market potential for NFV, expanding our direct presence in North America, Europe and Asia, investing in direct sales, our capital position, growth objectives and statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters. In some cases, forward-looking statements are identified by terminology such as "may," "will," "could," "should," "expects," "plans," "anticipates," "believes," "intends," "estimates," "predicts," "potential," "opportunity" or "continue" or the negative of these terms or other comparable terminology. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. In addition, past financial or operating performance is not necessarily a reliable indicator of future performance and you should not use our historical performance to anticipate results or future period trends. The forward-looking statements contained herein are subject to risks and uncertainties, including those described herein under "Risk Factors" and in our most recent Annual Report on Form 20-F, under Item 3.D. - "Risk Factors" and in our other filings with the SEC. You are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date on which that statement is made. We cannot guarantee future results, levels of activity, performance, achievements or that any of the events anticipated by the forward-looking statements will occur or, if any of them do, what impact they will have on our results of operations and financial condition. Except as otherwise required by law, we are under no obligation to (and expressly disclaim any such obligation to) update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date hereof.
In this presentation, management will be referring to certain non-GAAP financial measures, which are provided to enhance 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 the “Appendix” section.
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Company Overview
Leading software-based solutions for service assurance and customer experience management
First to market with software-based and network function virtualization (NFV) probes
Groundbreaking NFV win with leading North American mobile operator
Enables migration to NFV while supporting both traditional and next-generation networks
Exceptional performance with terabit scalability for mobile and fixed networks
$28 - $29.5 million revenue guidance for 2016, representing 50% to 58% growth over 2015
Founded in 1991 and publicly traded since 1997
Headquartered in Tel Aviv, Israel
The MaveriQ Solution Overview
Benefits and Use Cases
Mission-critical network and service visibility
Improve subscriber quality of experience
Reduce customer churn
Pro-actively identify and resolve network issues
Accelerate deployment of new services and migration to NFV
Increase operational efficiency and lower costs
Software-Based Highly Scalable Traditional, NFV and Hybrid
Suite of integrated applications
Unified dashboard with visibility across networks and subscribers
Service Assurance Customer Experience Management
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Highlights RADCOM is well positioned to capitalize on highly favorable industry tailwinds and its groundbreaking NFV win
>$1 Billion Market Opportunity Driven by LTE, VoLTE, IoT and NFV
Highly Scalable and Differentiated Software-Based Solution
First Mover Advantage in Software-Based and NFV
Probe Solutions
Groundbreaking NFV Win with Leading North American Mobile Operator
Compelling Growth Opportunities
Strong Revenue Growth and Highly Scalable
Operating Model
Experienced Leadership Team with Extensive Domain
Knowledge
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Heli Bennun, Chairwoman of the Board of Directors
• 25+ years industry experience
• Over 4 years as a consultant to RADCOM
Miki Schilinger
VP, Operations
Ronen Hovav VP, Sales
Hilik Itman VP, R&D
Ruti Lavi VP, Global Human
Resources
Omer Mor
General Counsel
Keren Rubanenko VP, Professional
Services
Joined RADCOM
1999 2000 1997 2014 2012 2016
Industry Experience
Experienced Leadership Team RADCOM is led by a group of industry veterans with significant domain expertise
Yaron Ravkaie CEO
Eyal Harari COO
Uri Birenberg CFO
Harel Givon CBO
• 25+ years industry experience
• Prior leadership roles at Amdocs and RRMedia
• MBA, University of Beersheba
• 15+ years experience at RADCOM
• MBA, Tel Aviv University
• LLM, Bar Ilan University
• 15+ years industry experience
• Prior finance roles at Sungard, HP and E&Y
• MBA, College of Management in Israel
• 15+ years industry experience
• Prior sales and leadership roles at Amdocs
• MBA, Tel Aviv University
Management Team
Zohar Zisapel, Director
• 35+ years industry experience
• Co-Founded RADCOM
Irit Hillel, Director
• 15+ years industry experience
• Co-Founder of HP Tech Ventures
Uri Har, Director
• 35+ years industry experience
• Served as a director since 2007
Matty Karp, Director
• 25+ years industry experience
• Co-Founded Concord Ventures
Board of Directors
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>$1 Billion Market Opportunity for Probe Solutions RADCOM delivers software-based probe solutions for service assurance and customer experience management
Key Market Drivers
Data acquisition
and big data analytics
Customer experience
management
Revenue uplift from reduced
customer churn
Rapid increase in
mobile data
LTE, VoLTE, IoT, M2M, and
LTE-A
Increase operational
efficiency and lower costs
Market Challenges for Probe Solutions
Alternative probe solutions historically based on purpose-built hardware
Physical probes costly to deploy and maintain
Proprietary ASIC designs slow to develop
Difficult to scale for next-generation services
No migration path for NFV networks
RADCOM Solution
Software-based solution running on standard hardware
Easy to deploy and manage
Accelerates software product design lifecycle
Highly scalable for next-generation services
Enables migration to NFV while supporting traditional networks
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$0.3 $1.7
$2.3 $3.3
$5.2
$6.9 $8.3
2013 2014 2015 2016P 2017P 2018P 2019P
CSPs Need Software-Based Solutions To Transition to NFV RADCOM has been a first mover in offering software-based and NFV solutions for service assurance
Global NFV and SDN Market(1) Benefits of Software and Virtualization
(1) Software Defined Networking and Network Function Virtualization market, Gartner (March 2016).
Accelerate time to market for new services
Increase agility and flexibility for network design
Increase scalability and lower operating costs through NFV automation
Reduce CapEx by replacing proprietary hardware with commodity hardware
Virtual Probes Required For NFV and Hybrid Environments
NFV creates new complexity for service assurance
Large CSPs first to deploy NFV and many will operate hybrid networks
Most probes solutions do not support NFV and hybrid networks
Virtualized software appliances
Fragmented, purpose-built hardware appliances with hardware and/or software-based probes
High volume standard servers, storage and switches
Virtual Probes
NFV and Hybrid Networks
Legacy traditional network (Hybrid)
($ in billions)
DPI
Traditional Network
Router
Probe Probe
Probe Probe
Firewall
BRAS
SGSN/GGSN
SBC
Large CSPs Evaluating / Deploying NFV
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Current Solutions
RADCOM Offers Advanced Software-Based Solutions RADCOM has fully advanced from proprietary hardware to software-based solutions
Software-based Service Assurance for LTE and VoLTE
NFV-based Service Assurance For LTE and VoLTE
Propriety Hardware Software-Based Solution NFV Solution
Software-based solutions with standard hardware
Software development lifecycle
Faster to deploy and easier to maintain
Hardware-based designs such as custom ASICs
Longer product lifecycle
Higher cost to deploy and maintain
Software-based solutions running as Virtual Network Functions (VNFs) on standard hardware
Exceptional scalability and automation
Supports NFV and hybrid networks
Launched Feb. 2014 Launched Jul. 2015
Prior Solutions
Prior to MaveriQ
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A Leading North American Mobile Operator Has Selected RADCOM for its NFV Solution
RADCOM’s transformational win with a leading North American mobile operator
Leading North American Mobile Operator
RADCOM announced the selection of its MaveriQ solution for deployment by a leading North American mobile operator in January 2016
The $18 million initial order was within the framework of a multi-year sales agreement for a virtual-probe-based monitoring solution for the operator's mobile network
Result of nine-months of intensive trials during which RADCOM’s virtual probe solution was selected over competitors' offerings
Recognition by one of the industry's leading CSPs positions RADCOM as the leader for NFV probe-based monitoring solutions
Strong confirmation of RADCOM's multi-year strategy for its transformation to software-based solutions
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The MaveriQ Solution for Service Assurance and Customer Experience Management Software-based solution for 3G, LTE, VoLTE and NFV networks
Highlights
Manages next-generation mobile and fixed networks, including LTE, VoLTE, IMS, VoIP, UMTS/GSM and mobile broadband
Multi-technology solution monitors multiple networks and services simultaneously
Highly scalable, carrier grade architecture supporting terabit networks
Best processing capacity / footprint ratio in the industry
Suite of pre-integrated software applications
Advanced real-time visibility for big data analytics
Cost-effective solution for any network size
Customer Care
Quality of Experience
Performance Analysis
SLA Management
KPI Alarms Network Monitoring
Roaming QoS
Inter-connection Quality
Analytics
MaveriQ Subscriber Dashboard
Software-Based Highly Scalable Traditional, NFV and Hybrid
Suite of Integrated Applications
Unified dashboards with visibility across networks and subscribers
Service Assurance Customer Experience Management
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Packet Switch Core
E-UTRAN Evolved Packet Core
(EPC)
MaveriQ enables CSPs to Accelerate Migration to NFV Highly scalable, software-based solution supporting traditional, hybrid and NFV networks
Future Proof for NFV Migration Visibility Across 3G, LTE and IMS Networks
Interfaces Monitored by MaveriQ
PCRF
SGSN GGSN
MME MME
Serving Gateway PDN GW
Internet
PSTN
IP Multimedia Subsystem (IMS)
eNB
AS HSS
P-CSCF S-CSCF
BGCF
UTRAN
eNB
OCS HSS
Virtual EPC
Virtual IMS
Virtualized Network Functions (VNFs)
NFV Infrastructure (NFVI)
NFV Management and Orchestration
Orchestrator
VNF Manager
Virtualization Layer
Virtual Computing
Virtual Network
Virtualized Infrastructure
Managers
Virtual Storage
…they will need to upgrade or replace their service assurance and probe solutions
As CSPs migrate all or parts of their networks to NFV…
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Generating Growth and Go-to-Market Strategy RADCOM plans to expand its direct presence in North America, Europe, and Asia
Developing and Expanding Strategic Partnerships
RADCOM has partnered with solution integrators, such as Amdocs and HP, as well as technology partners, such as Intel, to unlock further
opportunities in the sales channel Network Cloud Ecosystem OpenNFV Program
Asia Pacific Direct Sales
Latin America Direct Sales
North America Direct Sales and Partnerships
Europe Direct Sales and Partnerships
Network Builders Program
Expand presence in North America, Europe and Asia
Invest in direct salesforce and technical support to drive future large wins and scale deployments
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Growth Opportunities RADCOM has attractive growth opportunities
Opportunity to launch complementary new applications (cybersecurity, IoT, M2M, LBS)
Upsell software-based solutions to existing install base
Target other large CSPs deploying LTE, VoLTE and NFV
Invest in direct sales organization and strategic partnerships
Deploy MaveriQ with leading North American Mobile Operator
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Financial Highlights
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Financial Highlights
Strong Bookings Growth
Strong Revenue Growth and Record Backlog
Gross Margin Expansion
Profitable(1)
(1) In Q1 2016.
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$20.5 $23.6
$18.7
$28.0 - $29.5
2013 2014 2015 2016 Guidance
Revenue
Record Backlog and Visibility for Multiple Years of Growth
Launched software-based and NFV solutions in 2014 and 2015
Announced NFV win in January 2016 with leading North American mobile operator
$18 million initial order – similar to all of 2015 revenue
Order part of a framework for a multi-year sales agreement
Entered 2016 with record backlog
Growing pipeline of software-based and NFV opportunities
Revenue guidance of $28.0 to $29.5 million for 2016, representing 50% to 58% growth over 2015
Highlights NFV Win Driving Step Function in Growth
$18.7M $18.0M
($ in millions)
($ in millions)
2015 Revenue Initial booking with leading
North American mobile operator
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Shift to Software Driving Gross Margin Expansion
Gross Margin (Non-GAAP) Drivers
Successfully transitioned products from proprietary hardware to pure software and NFV architectures
Increased repeat sales with shorter deployment period
Gross margins (non-GAAP) have increased from 61.5% to 77.9% over last 2 years
61.5% 70.9%
77.9%
2013 2014 2015
Launched MaveriQ NFV probe-based software solution
Software with Proprietary Hardware
Completed full virtualization of
MaveriQ solution
2014 2015 2013
Product Milestones
Note: Non-GAAP financial data excluding non-cash stock-based compensation and non-cash write off of obsolete inventory and related costs in 2014 and 2015. See reconciliation of Non-GAAP financials in the appendix.
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Highly Scalable Operating Model
2013 2014 2015 Long Term
Target Range
Gross Margin (Non-GAAP) 61.5% 70.9% 77.9% 80%
Research & Development, Net 19.3% 16.8% 21.2%
Sales and Marketing 36.7% 29.5% 39.9%
General & Administrative 8.6% 8.5% 10.3%
Operating Margin (Non-GAAP) (3.1%) 16.0% 6.5% 22%
Note: Non-GAAP financial data excluding non-cash stock-based compensation and non-cash write off of obsolete inventory and related costs in 2014 and 2015. See reconciliation of Non-GAAP financials in the appendix.
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Summary
• >$1 Billion Market Opportunity Driven by LTE, VoLTE, IoT and NFV
• Highly Scalable and Differentiated Software-Based Solution
• Groundbreaking NFV Win with Leading North American Mobile Operator
• First Mover Advantage in Software-Based and NFV Probe Solutions
• Product Advantage to Increase via Deployment Hardening
• Compelling Growth Engines
• Strong Revenue Growth and Highly Scalable Operating Model
• Experienced Leadership Team with Extensive Domain Knowledge
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