RADCOM Ltd. (RDCM) Q4 2017 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to RADCOM Ltd. Fourth Quarter 2017 Results Conference Call. All participants are at currently 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, and will be available for reply on the company's website at www.radcom.com from February 14, 2018. On the call today is Yaron Ravkaie, RADCOM's CEO; and Ran Vered, RADCOM's CFO. By now, we assume you have all 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/investors-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'd 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 the Company's statement about its 2018 revenue and other performance guidance, momentum, sufficiency of capital resources and plans to extend the Company's workforce, strategy, launching new products and potential sales of such products, market share growth and extension of its leadership position, potential pipeline and opportunities, as well as success in trials, AT&Ts continuance as an important customer and key reference and its plan to virtualize approximately 75% of their network over the longer-term, industry trends, and projected sales cycle, orders, engagements and expanding relationships with top-tier carriers and entering into new contracts including with a Tier-1 multi-carrier operator. The Company does not undertake to update forward-looking statements. The full Safe Harbor provisions including risks that can cause actual results to differ from these forward-looking statements are outlined in the presentation and in the Company's SEC filings. 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 stock-based compensation expenses, and non-GAAP write-offs of importation taxes, 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 which is available on our website. I'd 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/investors-relations. If you have any trouble, send Mark an e-mail at markr@radcom.com and he will send it to you directly. Now, I'd like to turn over the call to Yaron. Please go ahead.

Thank you, operator, and thank you all for joining us today. We're very pleased with our fourth quarter results which mark a strong end to the year for RADCOM. For the full year 2017 we delivered revenue growth of 26% and maintained a healthy level of profitability while investing for future growth. A year ago we highlighted the momentum in our business as we were actively engaged with 9 major carriers and were executing network proof-of-concept trial deployments with four of them. During 2017, we continue to execute on these comprehensive trials demonstrating significant technology leadership in NFV. At the same time we continue delivering to our current customers and expanding our business with them. We are very excited to share that one of these major NFV trials has come to fruition and resulted in RADCOM being selected by a Tier-1 multi-carrier operator. We expect this to result in a formal contract during the first half of 2018 and we're making preparations for project execution. As for our contract with the new top tier operator that we announced in the fourth quarter of 2017, we are now in advanced stages of execution and are progressing with a healthy strategic relationship with this operator. Our focus continues to be on the finalization of more NFV trials in our pipeline and we feel confident about the progress made. We see more NVF returned [ph] and potential customers are eager to learn from our telco virtualization expertise and gain our insights and how to integrate cloud native assurance into the network. Additionally, our relationship with AT&T remains strong and as the leader in the network virtualization, AT&T continues to highlight NFV importance to their operational efficiencies. In particular, AT&T stated in its most recent earnings call that it exceeded its goal by virtualizing 55% of their network as of the end of 2017 and reiterated its long-term goal of 75% or more. As a result, we continue to expect AT&T to remain a significant customer and key reference for the Company as we continue to play a major part in their network virtualization strategy over the coming years. During Q4 we also continued to expand with our existing MaveriQ customers. In particular, we signed a multi-million dollar expansion order with a Tier-1 operator in Latin America. This expansion order is another example of our hybrid approach of enabling a path to NFV and future proofing-purchasing decisions as these operators now assuring both, wireline and wireless services with us. The industry has also progressed with some new announcements gravitating around OpenStack as the operating system for cloud networks, as well as the ONAP being the open source standard for advanced service and network orchestration. Specifically, we've view Verizon's recent announcement to join ONAP as a platinum member, very favorably given their leadership in the North America market. ONAP is now driving the underlying NFV architecture and requirements and RADCOM is a major part of this ecosystem. We will continue to follow these very favorable industry trends closely and we believe that as additional operator's transition to NFV, the technology maturity and standardization with ONAP will drive them to transform their networks. Our product leadership coupled with a very advanced cloud-native product has generated significant interest among leading operators, and we continue to execute lab trials and workshops that demonstrate our in-depth network expertise, virtualization know-how and product leadership. On the product side, we plan to launch at Mobile World Congress at the end of the month a new product that builds on our virtualization expertise and products leadership to help operators gain full network visibility for their NFV transformation. We expect this product to enhance our cloud native portfolio and be invaluable for operators migrating their networks to NFV. These network visibility products is addressing a new significant total addressable market, TAM, and we expect to show differentiated offering focused on NFV and adding a further disruptive dimension to our NFV assurance leadership. As we execute on all these fronts, we expect to use additional engagements with more operators in 2018, as well as upsell to our existing installed base. Given our strong and growing pipeline of opportunities, our new tough year [ph] contract and our recent selection by Tier-1 multi-carrier operator would scale the company in Q4 focusing on engineers in R&D and professional services. We are confident that our investment in infrastructure will continue to pay-off allowing us to capture additional opportunities. Also, our strong balance sheet will allow us to executive on our strategy of facilitating engagements and delivering major projects through multiple top tier operators. Now moving onto to the results of the fourth quarter. We are very pleased with our fourth quarter results and as you can see on Slide 5 revenues for the quarter increased by 32% year-over-year to $10.6 million. Our GAAP net income was $2.3 million or $0.17 per share. We achieved a non-GAAP net income of $2.7 million or $0.21 per diluted share. Similar to the past few quarters we are focused on continuing a very close relationship with AT&T, executing on the newly won top-tier contract, expansions with current customers, and converting trials into new customers; all this while investing in our engineering resources as we move to a new phase of the company's development and prepare for more top-tier customers. The ongoing progress during the fourth quarter and full year ended 2017 highlights the advantage of being the first mover in this space and participating in the most aggressive transformation to-date. Our approach to demonstrating a very advanced cloud-native platform coupled with our in-depth knowledge is resonating with customers and we expect the momentum to continue during the remainder of the year and beyond. So to summarize, we were very pleased with our execution during the fourth quarter given that RADCOM remains the go-to-NFV vendor for virtual probe-based service assurance and customer experience management. We are well positioned to maintain the momentum. With that, I'll stop and turn the call over to Ran Vered, our CFO, to discuss the financial results. Ran, please.

Thank you, Yaron. Please turn to Slide 6 for financial highlights. To help you understand the results, I will be referring mainly to non-GAAP numbers, which excludes share-based compensation. Revenues for the quarter was $10.6 million, up 32% year-over-year. Our gross margin for the quarter was 75% on a non-GAAP basis, in line with our expectations. Gross margin was held by better mix of high margin revenue in Q4. As a reminder, we expect gross margin to continue to continue to fluctuate depending upon the mix of each quarter's revenue. Our gross R&D for the quarter on a non-GAAP basis increased to $2.9 million from $2.4 million in the fourth quarter of 2016. Also during the fourth quarter we received $1.5 million from the Israel Innovation Authority compared to $552,000 in the fourth quarter of last year. As a result, our net R&D for the quarter was $1.8 million, same as in the comparative period last year. Sales and marketing expenses for the quarter were $2.7 million on a non-GAAP basis compared to $2.8 million in the fourth quarter of 2016. G&A expenses for the quarter on a non-GAAP basis totaled $846,000 compared to $672,000 in the fourth quarter of 2016. Operating income on a non-GAAP basis for the quarter was $2.7 million, compared with $381,000 for the fourth quarter of 2016. Net income for the quarter on a non-GAAP basis was $2.7 million or $0.20 per diluted share. On a GAAP basis, as you can see on Slide 5, we reported net income for the quarter of $2.3 million or $0.17 per diluted share. As we now highlight our results for the full year 2017. Total revenue was $37.2 million, an increase of 26% compared to full year 2016 and in line with our expectations. During this AT&T accounted for above 60% of total revenue. During the full 2017, the non-GAAP gross margin was 72% and non-GAAP operating income was $4.8 million and non-GAAP EPS was $0.41 for the year based on $12.4 million diluted shares. At the end of 2017, our headcount was 214 employees. Turning to balance sheet as you can see on Slide 9, our cash and cash equivalents and short-term bank deposits at the end of the quarter were $62.6 million, we believe that our strong cash balance places the Company on strong footing to execute on the opportunities in front of us. Now turning to guidance, we entered the year with good momentum and believe that we are in position to grow our market share given our disruptive offering and ongoing strong pipeline of opportunities globally. As a result, we believe we can achieve fiscal 2018 revenue in the range of $43 million to $47 million. We view this as a solid starting point for the year given the high growth rate delivered in 2017. This guidance also assumes ongoing traction with AT&T of our new tip -- our new top tier operator, as well as the addition of new customers from strong pipeline including the new Tier 1 multi-carrier operator. With good visibility into our revenue guidance and similar to [indiscernible], we expect growth to be higher in the second half of 2018 as we close some of the opportunities in the pipeline. Also, while we don't tend to provide quarterly guidance I want to point out our expectations that first quarter revenues in 2018 may be slightly below first quarter of 2017. This is due to seasonality or those might change due to potential lumpiness in our revenue coupled with customer driven projects that are not always under our control. Regarding profitability, while we don't tend to provide specific EPS guidance similar to past deals, we tend to continue to invest in our infrastructure to support growth while remaining profitable on a non-GAAP basis. We do expect non-GAAP profitability for the first quarter of 2018 to be below the fourth quarter of 2017 due to the timing of anticipated grants on the Israel Innovation Authority. As a reminder, we view and continue to manage our business on an annual basis because our quarterly results can fluctuate due to the timing of implementation milestones. That ends our prepared remarks. Yaron and I will turn the call back to the operator, so we can take questions.

Thank you. [Operator Instructions] The first question is from Dmitry Netis of William Blair. Please go ahead.

Let me touch on the guidance first. As you kind of laid out pretty much in line guide there and looking for second half acceleration; how should we think about the first quarter? Is it going to be down as sort of typical in the industry or are you not -- you have plenty of orders to kind of fill with continued sequential growth; just give us a little bit of idea of what Q1 -- March quarter would do?

As I stated in prepared remarks, it maybe -- our first quarter maybe in terms of revenue less than the fourth quarter because it's mainly depend on achieving some milestones in projects that's not sometimes in our control. But generally speaking, we do expect that the second half of the year will be stronger than the first half and in Q1 it maybe -- the revenue maybe reduced from Q4, mainly because of milestones and some seasonality's.

And you did very well on the gross margin side, jumped quite substantially. Can you unpack that and tell us exactly what drove that? And while you do that, maybe you can mention what the AT&T contribution was in the quarter?

So AT&T for the quarter was above 75%, we had very strong quarter with AT&T and compared to previous quarters we have some -- in some of the quarters we have revenue that has some mix of hard work because of our existing installed base and with quarters with a mix was more softer than we show much better gross margin. I can say that on an annual basis we're still -- and this is how we managed the business, we do still want to maintain above 70% gross margin annually.

How should we think about the 2018 then, above 70% but somewhere in the range between 70% and 75% or closer to 70% -- what should be sort of the run rate we should be assuming for 2018?

It should be relatively the same as 2017 or slightly above. Any range between 70% to 75% is good enough. We ended the year with 72% so this is the range that we're also expecting in 2018.

And then back to AT&T, obviously very strong quarter. Last quarter of September was also quite strong, I think you did 78% contribution of the total revenue from AT&T then; yet the margins were lower so there is something else going on as far as additional software that came in, if at all I read this right?

We had almost zero -- wait [ph] from other customers that's -- were zero on debt except AT&T and this was the main contribution to this side, it was not in this quarter.

And then there was no -- I suppose there is no contribution from the second major customers that you announced middle of last year; is that correct? That's all 2018 event, and as you talk to that customer can you give us a sense of you're getting any more visibility out of that customer beyond the initial -- I think you said $5 million order or more than $5 million that you received. So that's in 2018, just verify that that's the case and whether there is additional visibility of more orders or more revenues supposedly coming in as you build out that network?

I would say that we have a healthy progress with them but it's still a little early to give a number on that but everything is moving positively. So, we're building additional plans with them but we're going to need to wait a little bit until we've put a number on it.

Yaron, if you could talk to this new win, this new multi-carrier operator; where is it based geographically? What exactly are you doing? Is it similar to AT&T? Is it -- what type of network -- is it wireless, is it fixed line, is it IoT, something else? If you could just describe a little more of what you're doing with them it would be very helpful. And is that for probe or is that for your new product that you announced? I think that color would help as well.

I'm going to give partial color because we need to be sensitive that we're exactly in this contract stage. Now things change and exactly how they want to roll out and at what capacity, I would say that the day that we will be able to unveil exactly the logo, this is a very formidable strategic customer, I'm not going to mention the geography because of sensitivity and people can do the math and stuff to figure it out which we don't want out of the sensitivity here. We said in the prepared remarks, it's a multi-operator carrier, I call it -- you heard me say before, Galaxy Operator; this is exactly in-line with our strategy of going after these huge Tier-1's; in this case, it's a Tier-1 Galaxy Operator that has many up-cause and the strategic relationship that we can start the project this year and continue to grow into next year and beyond. So it's a very nice win for us. I think -- also, maybe one last thing; we believe that they choose us, it was a competitive situation, they choose us because of our leadership in NFV.

And this is virtual probe, not the active broker, is that correct?

Yes.

The next question is from Alex Henderson of Needham & Company. Please go ahead.

Can you tell us what the ending share count was, obviously having done the transaction it moves around a little bit versus the average.

Yes, so we told 13.5 million, this was the ending share count. And the other for the year was, you can see 12.4 million.

Going back to the large Tier-1 multi-operator, if you were to scale out the business there is that going to take -- I assume that's going to take some time to get through the initial design and other elements of the preset that therefore it's more of a CY19 kind of ramp in the same way that your second Tier-1 North American customer is lagged, roughly a year from the time that contract was signed before it shows up as meaningful revenue. Is that the right way to think about sort of the way that feathers in?

I think the way that we're looking -- now you're thinking about it too conservatively. We expect already this multi-operator carrier to impact 2018 and it's build based in already into our plans and into our guidance.

And will you be able to discuss when you will the sub-operators within that hunting field? I assume this is a more of a license to hunt than a hard PO in that context?

I would say first of all to your comment, some of these multi-Galaxy Operators behave in a way that they put you on their price list and then you have a license to earn; this is not the case. It is a multi-company operator, a Galaxy Operator, that is doing a lot of their stuff in a centralized way and they are walking with us in concrete plan in a centralized way of what they want to do at this stage in 2018. In 2019 and beyond, this will be work based on what we do this year but everything is already being discussed and on the table; so this is why we're optimistic that we can impact already this year.

Going back to the pipeline for a second because obviously new wins is a primary driver of your outlook; clearly ONAP is now consolidated into the fact of standard, OpenStack is to the fact of standard, you are the major piece of both of those architectures. How is that showing up in your pipeline of leads and the quality of the conversations with the people in that pipeline? Is it now moving to a more articulated, more rapid process where we start to see accelerated flow of transactions overtime? Can you talk about that a little bit more qualitatively, obviously you can't be too detailed but the more you can give us, the better.

There is a couple of things; first of all from the industry perspective we see more movement towards NFV in the last several months than we saw let's say a year ago. So the industry is moving towards the right direction, we're doing many, many meetings including -- at many levels, including C-levels with many of these large Topco [ph]. Things what we get from them is, they are the ones that moved like AT&T and that's an additional Top Tier carrier that we won. The other ones that are putting plans in place and are starting to move and they are the ones that will put the plans in place and moving 2018 towards 2019. We see more awareness now that's -- there is a need to invest in the assurance for this [ph], we see also now a trend of some of these carriers understand that it makes sense to invest in the assurance as one of the early virtual network functions that is another very positive trend for us. These are beginning of trends, so I don't want to say it's like a sweeping trend but it's a very, very good sign and the signs weren't there a year ago, we -- a lot of this I think is due to the work that is being done across the Board in the industry and the work that we do and the work that AT&T does and now all the other participants in ONAP. I think the fact that ONAP now has AT&T, has Verizon in it, has the Chinese operators in it, and Vodafone of course, which we also follow them; that's -- if you recall during the day. It's a critical math, this is -- at the end of the day helpful for us because I think everybody is learning from it, and we -- I would make an educated guess, it's not I don't have a crystal ball but I would make an educated guess that we will see during the year more carriers join. So, as all these things comes together their maturity into putting NFV plans, the fact that we're spending time with them, the fact that they are seeing more and more carriers also together with us make these selections and putting a very nice priority on NFV assurance is very good momentum for us.

Can you talk about whether any competitor is making any inroads at all in terms of penetrating into ONAP, becoming part of that architecture, being perceived as a viable competitor to your virtualized product?

I would say that we see some -- when I look at the competitive landscape, we see some of our competition talk about NFV. From the discussions that we're having with the customers and we're having in-depth workshops with many of them. The feedback that we're getting from the customers is that they are not seeing anything even remotely similar to what we're showing them from any other competitors. So I think the good news is that we're the market leader in this, it's a market that's starting to happen and we're guessing a copied if I would say that were at least under slide side from some of the competitors we choose very good validations that this market is going to continue to offer [ph]. And I would say that we maintain if not increase the level of competitive advantage that we have -- just this year we produced I think 8 very significant releases in the cloud native space, so it's going to be very hard for competitors to catch on.

About a year ago I think it was -- you guys announced a feature that you refuse to discuss what was -- and I assume you're still selling that feature and so have been announced from what I can tell. So this mystery feature, has that become a meaningful portion of revenues, is it getting good uptake? Can you give us at least some traction even if you won't tell us what it is?

We're going to say exactly much more what it is at Mobile World Congress. This is what I mentioned in the prepared remarks that we are going to launch it in a very structured way, it's going to be disruptive technology in the realm of a visibility solutions, it's going to -- it's based on technology that we have rolled out in production, doing a lot of work there and we've started to create some pipeline on it but the entire idea is now to launch it very publicly that the company created the right investment in R&D and professional services and we've executed in this investment that we can execute large-scale implementations on it. So everything is -- that I mentioned with this product is baked into our guidance, of course there could be potential upside as this -- as we roll this out because we did take at the end of the day some conservative approach around this product because it's new but we have our expectations because we believe that we came out with -- or coming out with something differentiated with a lot of focus on virtual that will give us an advantage in the marketplace and would strengthen -- also with synergies with MaveriQ and our poll-based assurance will also strengthen the pipeline there; so it will be synergetic to what we do.

Where are you guys in terms of adopting 606? And the second question is, your inventory popped up in the quarter to over $1 million which is little bit surprising given your virtualized product offering; I assume that that's related to some of the older products that go into some of the smaller accounts. Can you talk a little bit about that inventory increase and why that occurred and what you're doing with 606?

So for 606 actually -- we did all the preparation to implement, it's going to actually be a little bit in our favor because it's allowed us to do a better allocations between elements to do -- we couldn't have been done in the previous accounting but in reality, the impact receipt if at all will be negligence. So we'll come on more details probably on the first quarter but based on the analysis that we made, the impact is really going to be negligence. So the inventories; so your comment was right, actually it was the inventory that we buy to some of our existing customers that are going to deliver some projects in the first half of 2018. So all of that is going to deliver to our existing customers. Yaron just mentioned in his prepared remarks that we signed a significant expansion deal with one of our major customers in Latin America for bulk of this inventory is for this customer and the other is for our other existing customers. Our inventory that is not related to customer is still in a very, very low as it was in the end of Q3.

You guys do not hedge and therefore you're fully absorbed all of the pressures from currency swings over the course of '17, lot of companies that have been following have been surprising people with our year-end hedges ran out and all of a sudden we've got an adjustment. Just to be clear, you guys don't hedge, correct?

You are 100% correct, Alex and the impact of it on our annual 2017 was roughly negative $1 million.

The next question is from Mike Arnold [ph]. Please go ahead.

Had a quick question on this Galaxy operator; was it a direct sale or did you go to market with a partner?

Direct.

Are you still seeing engagements where customers are trying to run open source MANO [ph] or mostly engagements that you're looking at ONAP based customers?

Open sourced MANO [ph] is primarily driven by the telephonic group and they are still trying to push it and they work with the industry, that's what we're seeing. And I'm not seeing it pick up those, so there are other operators that participated in it. I would -- again, from my point of view, it's my opinion it looks like more of a short process than an actual tool to deploy, so it's dealing with more problems that will be the futuristic problems. So I wouldn't be surprised if we'd see that roll-out in -- that roll-in into ONAP, I don't know at what timeframe, I don't have any other information but I'm making an educated guess that it might happen.

There has been also a lot of noise around 5G, especially the U.S. carriers; I've read AT&T and Verizon considered NFV as a building block for 5G. Is 5G another functionality carriers we need a license for in the future? Does it roll in the back of NFV, how does that work?

I think there is a clear understanding in the industry that the way to implement 5G is on top of an NFV infrastructure and no [indiscernible] and we see the same thing from AT&T and Verizon and wouldn't be surprised if we see the other mobile operators there T-Mobile and Sprint make the investments in 5G. If in the beginning we start to see investments would be made and implementations would be made in 2020, I think we're going to see some beginning implementations in 2019 which means that we'll see these carriers doing lab and trials in 2018. Now this is going to have a positive effect in NFV and primarily because some of the architecture in these networks change, there is a need to go and a desire I would say to go and part of this architecture to do something called H-computing which is the entire idea around -- a major idea around 5G is to reduce the latency, so to use it in the future for things like connected cars and autonomous cars that will require very low latency from the network. At the end of the day you need to assure these types of networks, there is no significant changes that come in these networks. So from our standpoint we believe that it will be some additional good wind in our sales.

You guys have any new partnerships that can lead to more deals or improve your competitive positioning; there is a light reading article that came out last week on the Company and that mentioned the former relationship with Red Hat and it sounds like you're embedded with their OpenStack products. I guess is that true and is that something you guys are seeking as more partnerships with companies like that?

We have a partnership with Red Hat, I'm disclosing it now which is okay and you will see some more come on in a bit during Mobile World Congress, it's not a secret it's a signed relationship, and we've been agreed to reference. We have -- and we will continue to develop -- read the season [indiscernible] ecosystem partners, they provide implementation services to customers that start implementing their NFV infrastructure, what's called in the industry NFVI. We see a lot of operators discuss whether -- again, this move to NFV is happening so some carriers -- I would make an educated guess that prediction to some of these carriers that will move into 2018-2019 and create NFVI platforms. From what I hear from their decision making they would use Red Hat which again is good for us because we worked very closely with Red Hat on how to implement the assurance for this, so it gives an advantage. Beyond that you need to be patient and see what additional ones we bake but we're all the time in touch with the industry and we're not sitting idle.

[Operator Instructions] The next question is from George Maremo [ph]. Please go ahead.

Yaron, can you commented all about your offerings geared towards enterprise market?

Yes, we're not entering the enterprise market at this stage. We're very focused on the communication service provider market and at our size, our growth that we're demonstrating, there is a lot of work for us to capitalize in that market, it's a market that is investing a lot in a way -- you need different -- normally, I would say dump down versions of the product if you want to tackle the enterprise market and it's not something that we want to do now. We also believe that a major advantage for us is that we specialized -- that the entire company specializes in communication service provider; allowing us to be agile to fit our platform based solution to these communication service provider.

Can you give me a little bit about your roadmap for future creation of new VNFs, both that you develop internally or you may acquire?

So one major new one is the visibility product that you will get more information on it if you will be patient for in a couple of weeks as we unveil it with more technical information; that's a major one that we can talk about. Other than that, I can't talk about anything else.

But you do have more planned out for the rest of '18, '19?

We have plans there to expand the portfolio and to expand our offering but it's highly competitive and we -- I think you will see when we roll out now this visibility product that we put a lot of thinking on it, it's a differentiated product, it takes -- encapsulate in it a disruptive approach, so this is why we wait and make sure that we're ready to launch it and we keep it very secret, then it's all. Then you will see more stuff come out of RADCOM at the right timing.

And on this new top tier-1 thing disclosed today; is this going to be a similar flavor contractually as the one you announced the other tier-1 global carrier in the fall of last year or more of AT&T style contract or what sort of style of contract will this look like?

We just got awarded the tender basically, so we're working now on the contract, so you need to be a little patient. There is not going to be anything crazy on it, it will look like an implementation contract with a license and some services associated with it that we start to recognize as we do these projects for the different elements of this operator but there is not so much color that I can give beyond that.

There are no further questions at this time. This concludes the RADCOM's Ltd fourth quarter 2017 results conference call. Thank you for your participation. You may go ahead and disconnect.