Ladies and gentlemen, thank you for standing by.

Welcome to the RADCOM Limited Results Conference Call for the second quarter of 2026. All participants are present in a listen-only mode. Following management's formal presentation, instruction will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded and will be available for replay on the company's website at www.radcom.com later today. On the call are Benny Epstein, Radcom's CEO, and Hod Cohen, Radcom's CFO. Please note that management has prepared a presentation for your reference that will be used during the call. If you have not downloaded it yet, you may do so through the link in the Investors section of RADCOM's website at www.radcom.com slash investor hyphen relations dot. Before we begin, I would like to review the Safe Harbor provision. This conference call will contain forward-looking statements. Forward-looking statements in the conference call involve known and unknown risks and uncertainties. including but not limited to the company's statements about its momentum, strategic direction and goals, market position and trajectory, future execution and delivery of value to customers and stakeholders, expansion within its existing customer base and broader footprint, development and enhancement of strategic partnerships and the expected benefits and revenues from collaborations, the success and expected benefits of new technologies, including AI, RADCOM ACE, RADCOM Neura, RADCOM ADM, and RADCOM Race, including to enhance automation opportunities and customer engagements and the timing thereof, demand for its product and solutions, and the ability to address new customer segments and expand its market reach. Trends in the telecom market, including the expected growth of 5G, AI, cloud native deployments, network automation, and autonomous networks, the timing, scope, and sequencing of customer deployment programs, the effects of server infrastructure costs and supply constraints, and the timing and extent to which deferred deployments may move forward or return to a normalized cadence, customer relationships, competitive position, sales pipeline, commercial discussions, conversation of opportunities and expansion within existing accounts, the anticipated scope, timing, implementation, benefits, customer transition and expansion potential of the company's contract with a European operator, expectations with respect to gross margins, research and development, sales and marketing expenses, cash flow, non-GAAP profitability, free cash flow positivity, full year 2026 revenue outlook, future growth, including double-digit percentage revenue growth in 2027, the impact of foreign exchange rates and hedging, resilience, long-term commitment, and continued investments, and the establishment, size, timing, initiation, and implementation of the intended share repurchase program and the company's ability to return capital to shareholders while continuing to invest in its platform and AI roadmap. The company does not undertake to update forward-looking statements. The full safe harbor provisions, including risks that could cause actual results to differ from these forward-looking statements, are outlined in today's press release and the company's SEC filings. In this conference call, management will refer to certain non-GAAP financial measures which are provided to enhance the user's overall understanding of the company's financial performance by excluding non-cash stock-based compensation that has been expensed in accordance with ASC Topic 718 financial income expenses and amortization of intangible assets related to acquisitions, non-GAAP results provide information helpful in assessing RATCOM's core operating performance and evaluating and comparing the results of operations consistently 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 reconciliation of GAAP to non-GAAP financial measures included in the quarter's earnings release available on our website www.radcom.com. Now I would like to turn over the call to Benny. Please go ahead.

Thank you operator and thank you all for joining us today to review RATCOM's results for the second quarter of 2026. Please turn to slide 7. On July 13, we announced our preliminary second quarter revenue expectations and revised our full year 2026 outlook. I would like to provide more specific context on what has changed within several customer deployment programs and why we remain confident in the underlying opportunities. The affected projects are primarily planned expansion phases with limited number of existing Tier 1 customers. These customers continue to use RATCOM solution in their production networks and the projects remain part of the longer term deployment roadmap we have developed with them. The delays do not reflect any weakening of our customer relationship, unhappiness with RATCOM solutions or pricing, project cancellation or business loss to competitors. The main issue is cost. Across the industry, the price of server infrastructure needed for private cloud and on-premise deployment has risen sharply. In some cases, comparable server configurations now cost multiple of their previous levels, and this increase has occurred over several months, not several years. A large deployment may require dozens of servers across multiple sites, so this increase can add up to substantial infrastructure commitment for the customer. As a result, some customers are rethinking the timing, scope, and order of their infrastructure investments. They may need to rebalance budget, prepare additional sites, or move portion of the expansion into later budget period before approving the next deployment phase. RATCOM does not manufacture these servers. Our strategic value and profitability are derived from our software analytics and automated assurance capabilities. Still, our software must be deployed within an operating environment that is ready to support it. A project cannot move forward until the customer's infrastructure is prepared for installation. We have taken steps to reduce the risks within our control. For certain anticipated deployments, we have already secured hardware so that RATCOM can begin execution once the customer gives us the green light and the site is ready. Any further delay simply reflects the time customers need to prepare their infrastructure before they can install our product. These effects primarily concentrated in private cloud and on-premises deployment. Public cloud projects are less dependent on purchase, shipment and installation of physical infrastructure and therefore have been less affected. Based on our current customer discussions and project roadmaps, we believe that the first quarter of 2027 is the first period in which deployment activity could begin returning to a more normal pace. One or more projects could potentially begin moving forward sooner, including during the fourth quarter of 2026. Some customers are also working through their 2027 budgeting processes, which should provide greater clarity on the timing and order of these projects. We have already secured hardware to support part of this activity, so RADCOM will be ready to execute as soon as customers finish their infrastructure planning and give us the go-ahead. The key point is that so far these projects have been delayed, not displaced. They remain associated with active customer relationships and established expansion roadmaps. However, customers must first fund and establish the underlying network and computing infrastructure on which our software will operate. Our customer relationships remain strong, our competitive position remains intact, and we are not seeing customers move away from our solutions. As customers finish their infrastructure preparation and authorize these expansion phases, we believe deferred deployment activities should return. Together, with long-term demand for AI-driven assurance, 5G visibility, and network automation, we believe we will return to a stronger growth in 2027. Furthermore, our sales pipeline and our medium to long term customer deployment plans remain unchanged. In fact, the pipeline continues to improve in quality and a number of opportunities are now advancing to commercial discussions. We believe Radcom will remain profitable on a non-GAAP basis in 2026. We also expect to return to double digit growth in 2027. Please turn to slide 8, our financial highlights. Total revenue of the second quarter of 2026 were $11.8 million. That is down 33.4% year-over-year from $17.7 million a year ago. Please turn to slide 9, our recent wins. A few weeks after the quarter ended, we secured three new contracts. Two were new customers and the third was a renewal at an existing customer. First, as announced yesterday, we expanded our European presence by winning multi-year contract with new customer, SETI Networks in Slovakia. Satin Network selected RATCOM to deploy end-to-end AI-driven assurance across its mobile network. From the radio access network to the core, Satin is replacing its incumbent assurance provider with a single subscriber-aware platform built on RATCOM ACE. We were selected following a competitive multi-vendor RFP. We believe that this selection is evidence of our technology's strength and the growing preference for our platform among European operators. Satin is part of Satin International and a wider E&PPF telecom group. Together, they serve more than 12 million customers across four countries, which gives us a foundation to potentially expand across the broader group over time. Second, in Asia Pacific, we won a new customer through a competitive tender with a Tier 1 operator and replaced the long-term incumbent. The deal is small, but it is an important reference win. It's put us in a strong position to compete for a much larger network-wide project with this operator. Third, we renewed the contract with an existing European customer for RATCOM network visibility. All these deals closed only few weeks after the quarter ended. This shows the pattern behind the second quarter results. With operators, deal timing can shift. Demand for our solution and our competitive position do not. Please turn to slide 10, our strategy. Our priorities remain unchanged, expanding our T1 footprint, deepening our installed base and advancing AI native assurance for autonomous network. And we will do all of this while keeping the operating discipline to support our profitability. Our partner-led model works alongside NVIDIA, ServiceNow, AWS and leading system integrators. It efficiently extends our reach and meet operators whenever they are in their AI and cloud journey. A key advantage for us is the significant reduction in total cost of ownership or TCO that we offer. Our platform is fully cloud native and highly efficient, so it delivers far lower TCO than legacy solutions. That means lower capex and opex than our competitors. Also, our software can run on incumbent hardware and deliver much more efficient performance per watt. This means it can deploy it on a very same hardware an operator already uses with the incumbent assurance vendor. Reusing the same infrastructure means an easier migration with no costly rip and replace. It delivers real savings and better performance. Combine this with our TCO advantage and data that Telco AI depends on, and we believe we are well positioned for long-term profitable growth. We also remain financially strong, with solid cash position and no debt, enabling continuing investment in our differentiated agentic AI capabilities and in expansion of our strategic partnership throughout this period. Please turn to slide 11, the telecom market. Operators continue to transition to 5G standalone and cloud native deployments. At the same time, they are embedding AI deeper into their networks to automate operation, enhance the subscriber experience and reduce operating costs. All of this is happening while data volume and network complexity keeping growing. Yet, a gap remains between AI ambition and AI readiness. Most operators still lack the reliable subscriber-level data that these AI use cases depend on. We saw a shift in operator spending this quarter, as some adjusted the timing and mix of their investment, which impacted our results, but near-term spending patterns can fluctuate without changing the market's underlying direction. The direction still points to what we provide. The data operators need to automate their network and run there more efficiently. The gap is exactly where RATCOM adds value. As operators shift from proof-of-concept commercial AI deployments, they demand unified end-to-end intelligence. This trend only increased the need for cloud-native AI-enabled service assurance solutions such as RATCOM-ACE and RATCOM-Neura. We believe our position as leading assurance provider for 5G will continue to drive positive returns. Please turn to slide 12, our installed base. Alongside new opportunities, our installed base remains an important validation of our strategy and the durability of our technology in live, large-scale networks. Work with One Global continues to progress as RATCOM ACE is deployed to monitor its 4G and 5G services. We continue to support key accounts, including AT&T and Rakuten Mobile, where our assurance solutions remain embedded in production networks serving millions of subscribers. Taken together, these deployments indicate that demand among our existing customers remains strong and that expansion opportunities are progressing. and that is true even as operators work through longer infrastructure lead times across the market. Please turn to slide 13, the launch of Radcom ADM. During the quarter, we also launched Radcom ADM, the analytics designer module, a new addition to the Radcom ACE platform. It puts operators in control of their own analytics. What was once a month long request to a vendor is now something their teams can do themselves in real time. As network become more automated, that speed become essential and delivering it at scale requires engineering expertise that is hard to copy. ADM also strengthen our AI strategy. It feeds real-time data directly into RATCOM Neura, our agentic AI layer, making those agents more accurate and reliable. ADM will be generally available to existing and new customer later this quarter. And we see it as a clear path to expand within existing accounts through new use cases and higher value tiers. Please turn to slide 14, some more recent industry recognition. In February, we released RATCOM Neura, our suite of AI agent designed to work within the AI agent ecosystem. I'm pleased to share that RATCOM Neura has since earned industry recognition. RATCOM is a finalist in the 2026 Light Reading Leading Lights Award for most innovative telco AI ML product. As operators embrace AI to manage increasingly complex networks, we are proud that RADCOM Neura has been recognized for helping transform real-time network intelligence into smarter, more proactive operations. That recognition extended to our collaborative work across the ecosystem. At Digital Transformation World, or DTW Ignite, in Copenhagen, we were proud to be part of the winning team at the Catalyst Award. Our catalyst was named Outstanding Catalyst in the AI and Automation category. It showed that multi-vendor AI agents can collaborate to accelerate fault resolution, improve the customer experience, and advance Level 4 autonomous networks. RATCOM contributed AI-driven assurance agents that rank issue by real customer impact. We also contributed RATCOM governance, our framework for managing how agents interact and for building trust through policy-based oversight. Please turn to slide 15, our go-to-market activity. From a go-to-market perspective, we also remained highly active throughout the quarter. We participated in DTW Ignite in Copenhagen, FutureNet World in London, and NetworkX in Americas in Dallas, where we showcased our AI native assurance solutions and AI agent capabilities. Our executives also took the stage at these events, sharing our perspective on how operators can use AI, automation and network data to build demand-driven networks. They also spoke to the opportunity that agentic AI now presents. Customer and partner responses to our AI agent capabilities and AI native assurance solutions were very encouraging. We also held productive meetings with operators and ecosystem partners that we believe could translate into additional sales opportunities over time. Please turn to slide 16, our pipeline. As I mentioned, we are actively engaged across healthy set of opportunities, several of which advanced during the quarter from technical evaluation and proof of concept to commercial discussions. The pipeline is steady, healthy and progressing. We remain confident in our ability to convert this pipeline into both new business and continuing expansion within our existing customer base. Please turn to slide 17, my closing summary. To summarize, while our second quarter results and our revised full-year guidance were disappointing, our long-term fundamentals remain solid and our strategy is unchanged. We offer a lower cost of ownership and operators can run our software and hardware they already own in a tighter spending environment that makes us an easier decision. Our customer relationships are strong and our pipeline is broad and progressing. Several opportunities advance to commercial discussions during the quarter. A few weeks after the quarter ended, we won three new deals. We also launched Radcom ADM and earned industry recognition for Radcom Neura. Financially, we remain debt-free and we expect to remain profitable on a non-GAAP basis in 2026. We also continue to invest in the AI capabilities operators need to run their network efficiently. Please turn to slide 18 before I hand over to Hod a word on capital allocation. We remain confident in the company's long-term prospects and believe that repurchasing our shares represents a compelling use of capital at the current valuation levels. So the board and management have decided to move forward. We will take required steps to establish a share repurchase program of $20 to $25 million. We have already started this process and plan to finish it as fast as applicable rules allow. Once the required steps are done, we will start the buyback. With that, I'll now turn the call over to our CFO, Hod Cohen, to review the financial results in detail.

Thank you Benny and good morning everyone. As a reminder, unless otherwise noted, I will refer to non-GAAP results. Reconciliations between GAAP and non-GAAP measures are provided in our press release and presentation. All comparisons are ear over ear. Please turn to slide 20, our quarterly financial highlights. Revenue for the second quarter were $11.8 million, down 33.4% year-over-year from $17.7 million. Gross margin in the second quarter was 76.3%. We recorded an operating loss of $2.2 million or negative 18.5% of revenue. Net loss was $1.5 million or $0.09 per diluted share. That compares with net income of $4.2 million or $0.25 per diluted share in the same quarter last year. The decline was driven primarily by lower revenue in the second quarter of 2026. In the first half of 2026, operating income was $1.6 million or 5.1% of revenue and we expect to remain profitable on a non-GAAP basis for the full year. Please turn to slide 21. Our net R&D expenses for the second quarter totaled $5.3 million, up 15.9% year-over-year. This growth reflects two things. First, our continued investment in R&D to drive innovation and expand our product portfolio. Second, currency headwinds from the shekel dollar exchange rate. To reduce currency exposure, RATCOM initiated short-term hedging program of shekel expenses through the end of 2026. We plan to continue our strategic R&D investments to deliver advanced intelligent solutions. The focus is on agent-to-agent and multi-model workflows while supporting our strategic partnership and bringing new features to market. Sales and marketing expenses for the second quarter totaled $4.7 million, an 8.8 year-over-year increase mainly due to FX AdWords. We continue to invest in our sales capability to support pipeline growth and expansion in high-value regions. On a gap basis, as shown on slide 22, our net loss for the second quarter of 2026 was $3.1 million, compared with net income of $2.4 million in the same quarter last year. Gap loss per diluted share was $0.18, compared with earnings of 15 cents per diluted share a year ago. The year-over-year move from gap net income to a gap net loss is driven by the lower revenue in the quarter. It also reflects our continued investment in R&D and in sales and marketing. We ended the second quarter of 2026 with 331 employees. Please turn to slide 25, our balance sheet. We close the quarter with $109.7 million in cash, cash equivalent and short-term bank deposit, reflecting positive cash flow of $1.3 million for the quarter. For the second half of 2026 as a whole, we aim to remain free cash flow positive. As Benny mentioned, we are confident in RATCOM's long-term outlook. So we view a buyback at current level as an attractive use of capital through a share repurchase program of $20 to $25 million. That process is already underway and we expect to complete it as quickly as the applicable rules permit. Once the required steps are done, we will start the buyback. We are reaffirming our revised full-year 2026 revenue outlook of $57 to $63 million with a midpoint of $60 million as announced on July 30, 2026. That concludes our prepared remark. Thank you. We will now end the callback to the operator for your questions.

Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you are connected by Zoom, please use the raise hand button located at the bottom of your screen. Please state your name and company name before the question.

Hello?

Hello, can you hear me? I can't hear anything if you can hear me.

I can hear I can hear something now.

Okay, that's great. Okay. Well, thank you for the new style of call being able to say something by zoom. And thank you for taking my questions. I've got two of them. Well, first of all, the bad results of second quarter, they came quite surprising and we had no clue after the Q1 call. So probably it came quite surprising for you as well. I'd just like to know, is there more visibility for third and fourth quarter or might that happen again? Oh I can't hear you again. Well, if you can hear me, I just try to tell my other question so you get them on record. So I'd like to know more about the share buyback process. Will you buy them at a stock exchange? What stock exchange might that be? or will you make a direct offer because it's going to be quite hard to buy that many shares, won't it be? So how do you think about that process? That would be my second question. Unfortunately, I still can't hear anything but me. I've been told that other people experience the same issue, so it would be great if you find a solution. Maybe people can hear us by phone, I don't know, but not via Zoom.