Ladies and gentlemen, thank you for standing by. Welcome to the Radcom Ltd. Results Conference Call for the Q1 of 2020. All participants are present in a listen only mode. Following management's formal presentation, instructions will be given for the question and answer session.
As a reminder, this conference is being recorded and will be available for replay from the company's website at www.radcom.com later today. On the call are Yal Harari, Radcom's CEO and Amir Hai, 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 notice a link on the Investors section of Radcom's website at www.radcom.com/investorrelations. Before we begin, I would like to review the Safe Harbor provisions.
Forward looking statements in the conference call involve several risks and uncertainties, including, but not limited to, the company's statements about its investment in technology and R and D, the expected transition to and rollout of 5 gs networks and customer level and investments in their networks the company's market position and leadership the company's execution of its commitment to existing and future customers and resiliency of the telecom market company's expectations to be well positioned to handle uncertainties and other impacts due to COVID-nineteen, its revenue guidance and anticipated gross margins. 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 the presentation 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 GAAP stock based compensation expenses, non GAAP results provide information that is useful in assessing MatComm's core operating performance and in evaluating and comparing our 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 reconciliations of GAAP to non GAAP financial measures, which are included in the quarter's earnings release, which is available on our website. I would like to repeat the information about the presentation. If you have not downloaded it yet, you may do it through the link on the Investors section of Radcom's website at www.radcom.com/investor relations. Now I'd like to turn over the call to Eyal.
Please go ahead.
Thank you, operator, and thank you all for joining us today. Earlier this morning, we issued a press release stating our Q1 results for 2020. We are pleased with our continued progress this quarter as we advance our virtualized technology and deliver on our customer commitments. We played an important role in Rakuten Mobile commercial launch of its greenfield fully virtualized network in Japan last month despite the spread of COVID-nineteen. As you may have seen, total revenue was $8,300,000 for the Q1 of 2020, which was in line with our expectations with little impact from COVID-nineteen.
The global pandemic has highlighted the importance of telecom networks in today's world for maintaining mission critical communication services for first responders to keeping business running through video conferencing. We expect the telecom industry to show resilience throughout the pandemic. We are continuing to deliver to existing customers, continuing to market to potential customers and continue to be well positioned with a competitive 5 gs product offering. There is uncertainty due to COVID-nineteen and the economic situation, which could affect sales cycles. However, we believe that we are in a good position given our strong balance sheet and multiyear contracts with industry leading customers.
We continue to see a flow of new RFP activities and our ability to pursue this new business has not been significantly interrupted. Based on our current visibility and the current expectations regarding COVID-nineteen impact, we reaffirm our 2020 revenue guidance of $35,000,000 to $38,000,000 In these challenging times, our top priority has been the health and welfare of our employees. We agreed to the local and regional guidelines on safe distancing policies and provided our entire global workforce the ability to work from home with minimal interruption to our activities, suspended all work related travel and moved all customer interactions to virtual communication. 3 steps already taken, we have completed the transition to social distancing and are well equipped to continue our product development and to support our customers without interruption. I would like to express my gratitude to all Radcom employees for their ability to meet head on the challenges that COVID-nineteen has presented as well as the extra efforts that demonstrate your commitment to the company and in supporting our customers throughout these trying times.
With higher network traffic volumes and usage, our customers are aligned on our solutions to ensure end to end service performance. For social distancing and remote walking, connectivity has become even more critical and operators are playing an even more recessionary role in enabling this connectivity. For businesses that now rely on latency sensitive video conferencing applications, such as Zoom and WebEx to run the company, operators need to monitor and optimize these services. With network traffic increases, the service quality can suffer. And so using the Shure solution has become even more essential to pinpoint and resolve issues to ensure an excellent customer experience.
During this quarter, we worked closely with Rakuten Mobile to help prepare them for their commercial launch by pinpointing any network or service issues. For a greenfield network deploying a new innovative cloud native technology using our virtualized solution has been essential in ironing out issues before launch. We continue to support Rakuten Mobile as they launch the world's first fully virtualized mobile network in April that adopted a 5 gs architecture from the start. They are now the 4th largest mobile operator in Japan. We're proud of the significant role we played in Rakuten Mobile's commercial launch.
This is a strong vote of confidence in our technology and further cement our position as the leading most advanced virtualized assurance vendor for operators building new virtualized platforms for the launch of 5 gs. Our virtualized solutions and expertise will be more important as more and more operators transition to 5 gs. Brascom's virtualization expertise, timely support and innovative offering helps Rakuten Mobile launch this new virtualized network and ensures that the delivery of superior customer experience, we believe our continued work with them is a statement to our market leadership and advanced solutions. Rakuten Mobile's cost saving network architecture allows for a substantial reduction in capital investment, which enables them to pass on bill savings to customers through a simple and affordable service plan. They aim to offer customers comprehensive communication services, combining FlexiDerm service plans and cutting edge technology.
Rakuten plans to perfect its cloud connectivity platform in Japan and then take the same platform to other markets worldwide. Our customers continue investing in the advancement of their networks. AT and T stated in the last earnings call that it would continue investing in critical growth area and expects nationwide 5 gs coverage this summer. Our cutting edge software and support play an important role as AT and T continues to move forward with its network virtualization to prepare for their expected nationwide rollout of 5 gs. Although there is a higher degree of uncertainty on the global scale, we are encouraged by our customers' continued investments toward the network enhancements and virtualization.
Turning to our activities during the quarter, we continue to execute according to our plans. We remain focused on enhancing our 5 gs solutions by investing in research and development and continued to work closely with customers to innovate and meet current needs. We still believe that the 5 gs revolution has begun as more operators start to launch commercial 5 gs services, and we are continuing to position Radcom firmly to benefit from this technological transformation. We are engaged in multiple opportunities for 5 gs and have already released software that supports assuring standalone 5 gs networks. Standalone 5 gs will require operators to deploy an entirely new network core.
This means operator will need a new service assurance solution to monitor mission critical services using a dynamic cloud native network, which creates a unique opportunity for Redfin. We have significantly invested in our cloud native solution and continue to deepen our expertise to offer operators a seamless transition to 5 gs. So far, 73 operators in 41 countries have launched 5 gs services, which have increased by 10 operators over the last month or so. Although the next stage of 5 gs standard has been postponed for 3 months until June 2020 due to COVID-nineteen, most operators are moving forward with the network road map as planned. Looking at the rest of 2020, we still expect a growth year.
We plan to continue to invest in R and D to support our customers' needs as they transition to 5 gs, and we expect the rollout of 5 gs to spur the adoption of our innovative solutions. With that, I would like to turn the call over to Amir Hai, our CFO, who will discuss the financial results in detail. Amir, please go ahead.
Thank you, Eyal, and good morning, everyone. Now please turn to Slide 6 for our financial highlights. To help you understand the results, I will be referring mainly to non GAAP numbers, which exclude share based compensation. We ended the Q1 of 2020 with revenues of $8,300,000 an increase from $6,000,000 in the Q1 of 2019. Our gross margin of 63% was impacted by increased level of hardware purchase related to multiyear contract with one of our customers.
We expect full year gross margin level to be similar to the previous year. Operating expenses for the Q1 of 2020 on a non GAAP basis were $7,800,000 compared to $7,100,000 for the Q1 of 2019, which resulted in an operating loss of $2,500,000 on a non GAAP basis. Our gross R and D expenses for the Q1 of 2020 on a non GAAP basis were $4,600,000 expense increased compared to $4,500,000 in the Q1 of 2019. Additionally, we did not receive any grant from the Israeli Innovation Authority during the period. So our net R and D expenses for the quarter was the same as the gross amount.
We want to point out that in the Q2 of 2020, the Israeli Innovation Authority approved an annual grant of approximately $1,300,000 Sales and marketing expenses for the Q1 of 2020 were $2,300,000 on an under basis, the same as the Q1 of 2019. G and A expenses for the Q1 of 2020 on a non GAAP basis were $838,000 compared to $710,000 in the Q1 of 2019. Operating loss on a non GAAP basis for the Q1 of 2020 was $2,500,000 compared to an operating loss of $2,800,000 in the Q1 of 2019. Net loss for the Q1 of 2020 on a non GAAP basis was $2,400,000 or a net loss of $0.17 per diluted share compared to a net loss of $2,700,000 or a net loss of $0.20 per diluted share for the Q1 of 2019. On a GAAP basis, as you can see on Slide 5, we reported a net loss for the Q1 of 2020 of $2,900,000 or a net loss of $0.21 per diluted share compared to $3,100,000 or a net loss of $0.23 per diluted share in the Q1 of 2019.
At the end of the Q1 of 2020, our headcount was 264. Turning to the balance sheet. As you can see on Slide 9, our cash, cash equivalents and short term bank deposits at the end of the Q1 of 2020 was $63,300,000 We believe that our strong balance sheet provides us solid footing to execute the opportunities ahead of us and overcome the current global uncertainty. That's end our prepared remarks. I will now turn the call back to the operator for your questions.
Thank you. The first question is from Alex Henderson of Needham and Company. Please go ahead.
Thanks. Just a couple of questions. So just to be clear, you're not expecting any additional hardware in the upcoming quarters? It's a little unusual to see that kind of hardware hits in the quarter on the GMs.
I would say, Alex, good morning.
Good morning.
So, we are this hardware expense is always a natural fluctuation of the product mix. As you recall, we discussed this in the previous quarters. In some projects, we are providing the servers for the project, which is creating an initial cost mainly on the 3rd stage of the project, whether we deploy the infrastructure. While there is our main focus is always and it's to be our software and our virtualized offering, we are sometimes required to provide also the infrastructure for the operators in order for them to get an integrated solution. So this is we see those in previous quarters that from time to time we have that.
But looking forward, we continue as before to be expecting to be in a similar gross margin level on a yearly level and continue with mainly software revenue.
Great. On the NRE, obviously, it's an important item for quarterly forecasting and it's very difficult to understand the timing of it. Not all that concerned about 1Q, but could you give us some sense of whether you think it's going to be very heavily back half loaded or do you think you'll be taking that 1.3 over the course of the year relatively evenly or what's going on in the June quarter relative to that piece?
It's typically you see the spread along the year previously, it's typically quite evenly. Although, because of the later approval this year, there might be higher on the Q2. Overall, this is a support on our R and D, which is a part of the all year investment that we do. You can take a look on our previous years that happened to us before that I approved the grant only in the Q2. And then it creates some higher number typically on of participation on that quarter, we then even spread of the rest.
I see. Can you remind us what you do relative to FX? And obviously the shekel has been all over the map because of COVID. It plunged dramatically, but then it recovered most of that plunge. So were you able to take advantage of that short window when it was under that much pressure?
Or was that just too short a period to be down there and therefore no real impact?
I can take it. Yes, yes, I can take it. Basically, you're right. The fluctuation from the growth where the shekels was in the very short term, we put some hedging and it will be effective in Q2. So we're taking advantage, but not the full year, it will be effectively not in Q2.
I see. Okay. Going back to Rakuten, obviously, a major deployment there. It was a little later than expected. Can you talk a little bit about how you expect that company's deployment to unfold and whether you think there's potential for add on there over the short term or whether it's really a much of a longer term scenario?
What's the status there?
So I would start with stating that Rakuten is, 1st of all, a demonstration to our industry, our telecom industry of the power and maturity of the virtualized network technology. While maybe some question the maturity and ability to execute their very ambitious plan, you can definitely admire they're being able to launch on April during the COVID-nineteen peak and still leverage the benefit of the virtual technology. I think this is the most important as a company that is big delivery in the cloud native and believes that the telecom is older. And above our relationship with them, I think it's an important pivotal milestone to the industry. More and more operators globally are getting confident from this successful launch to bet more on this mainly when we look on the book to 5 gs.
Now with regard to us, our focus is a long term relationship with Rakuten. As you recall, we have a multiyear contract with them, and we continue to support them in Japan. We hear now Rakuten publicly announce more vocally, it's not a big surprise that they are continuing full speed ahead to 5 gs, which can create an opportunity in the midterm, I would say. It's not for next quarter or so. But it's definitely something that we are looking to partner with them moving forward.
As we talked in the previous quarter, there is also a longer term opportunity as Rakuten are now being very vocal on that, trying to take their software stacks and their expertise as they build virtual network into additional carriers globally. As we are the provider in Japan, this will position us to be able to replicate that into additional countries as they manage to implement their stack. But this is obviously a bit longer term and dependent on, 1st of all, on their success to be able to replicate this globally or decide to open additional greenfield operators on the in another country. So I would say there is definitely opportunity around the 5 gs that we are excitingly looking for with Rakuten. And there is a longer term opportunity once Rakuten be able to replicate the successful Japan to other countries.
If I could, have the inclusion in the Rakuten architecture resulted in incoming calls from other vendors, other service providers that see that as a architecture for an open RAN future. Does that is that causing an influx of additional interest?
So it's if you follow the news, you see more and more operators are are being more going public with the announcement of backing of virtual technology. I think the latest announcement from Dish in the U. S. That they selected the Mavenir for a virtual ramp. I think this is a second greenfield operator that is betting on virtual rent.
We see other legacy operators also starting to increase the investment on virtual rent. So this all eventually is part of a global trend of the industry that we see for the last few years that we all come together with the 5 gs. I think that 5 gs is a consensus to be cloud native technology. I personally didn't hear anyone that is looking 5 gs on the long run to be on a client base. Everyone is both the vendor community and the operators are focusing on cloud native architectures.
And all those success and case studies are gaining more confidence that this is the right direction. I don't think it's now a question of if it's more a question of when and the when is when 5 gs are starting to be implemented.
Yes. Well, clearly, that's the case. I guess the question is, has it translated into activity, a pickup in activity is really what I was getting at?
So we don't share our pipeline of activity, but what I can say is that the level of interest in general in the industry on cloud native technology is increasing. And the 5 gs and the interest on 5 gs and the requirement for 5 gs solutions is increasing.
Ladies and gentlemen, it seems the caller has disconnected. We'll move on to the next question. The next question is from Matt Stottler of William Blair. Please go ahead.
Hi, guys. Thanks for taking my questions. Congratulations on solid results. Good to see that and obviously the guidance reiteration is really encouraging here. I would love to, I guess, first touch on you mentioned some positive obviously to see Rakuten Sam come out and launch their network commercially amid this challenging environment.
You also mentioned some really positive commentary out of AT and T. Would love to just dig into the broader conversations that you're having with customers and the spending behaviors, both with existing customers and when you look at your pipeline and kind of the trends that you're seeing there in the current environment.
Good morning, Matt. So this is a question we are being asked, obviously. The COVID-nineteen added the uncertainty on the global level. And I would say that we feel privileged to be part of the telecom industry that today more than ever becoming critical to allow this remote connectivity. We hear there is increased usage of networks and traffic peaks is getting to new highs, number of calls is getting to new records.
And I must admit as part of the telecom industry, I feel proud of how telecom industry serve the world due to during this COVID-nineteen, while overall service is in good quality. We believe that solutions like ours is exactly the reason why they can maintain their network while the traffic behavior change and the traffic capacity increase. Now there was a lot of question even before about the pace of 5 gs and whether COVID-nineteen will affect the investment in 5 gs. While there is definitely uncertainty that is still not clear of the overall effect, What we see and what we read is that the investment on 5 gs continues. I think this is very encouraging.
We saw the PR from AT and T. We saw PR from Ericsson seeing also demand for 5 gs. And while there might be some short term fluctuations, I see the industry sees the need and the need for additional capacity and we'll continue to spend and advance 5 gs. This is what we see as of today, while again, this is not in yet full effect of the COVID-nineteen. We are still in progress.
So we monitor that closely and making sure that there is no short term fluctuations that we need to adjust. But on the long run, we are still being delivered on the 5 gs. And we as Radcom continue to invest in our product and solution towards that technology evolution. So overall, I would say that the demand is still there. And there is no slowdown that we see so far due to the COVID-nineteen.
This is why we reaffirmed our guidance to the year.
Right. Yes, it's very, very encouraging to see. And I guess the next question would be to kind of dig into that guidance a little bit. Like you said, reiterated the original range, obviously came in a little bit maybe a little bit better on Q1. When you look at that full year guidance, how much of that is based on revenue coming from existing customers versus the expectation of revenue coming in from new customers or, I guess, incremental expansions within the installed base as well?
And have you done any scenario analysis around the potential impacts for COVID and what that could look like, obviously, in the context of still having a lot of uncertainty and having to deal with that?
Yes. So majority of our revenue is coming from our existing customers. As we stated before, we are working with the top tier customers on the multiyear contract. During the quarter, we also secured additional orders from some of them, which increased our visibility for the year, which gave us the confidence to reiterate the guidance even though the COVID-nineteen situation. So as usually, we are mainly counting on existing customers and existing projects, which we have good visibility.
There is some level that we also based on winning new accounts. We are also looking for and market our solution to new customers. And this is definitely continuing in full pace as we speak. So while there is very good visibility from the existing customers and very good demand for our technology, we can definitely say that the 35 to the 38 guidance that we gave is something that is achievable as we see today after the effect of the COVID-nineteen as we see now. Everyone is trying to get what is the level of certainty.
We all understand that the COVID-nineteen is not fully clear. So we assess it the best as we can as of today. And overall, we are positive and see that the demand is still there and our existing customers that are telcos Tier 1s with multiyear contracts are giving us confidence. Our strong balance sheet is also very important in these days. It's allow us to keep the investment.
But I think the most important return on cost as we stated is the long run with 5 gs that we believe that would increase the demand more and more to our cloud native technology. So the long term story, even if there will be some fluctuations or some slowdowns in some area, we still believe that the long term story is still the same and the industry is continuing to invest in 5 gs. I think this is the most important part.
Right. Absolutely. Yes, that's helpful. And to your point, trying to we're all trying to gauge the near term impact here, but the longer term themes are obviously still very much strong drivers going forward and especially on the other side of this. So any impact on this is understanding the temporary.
Maybe next we could just touch on any renewals that are in the pipeline for 2020. Obviously, a lot of the kind of large customers that you've discussed, I mean, we talked about several large contracts that you've closed in the past year or 2, obviously, the recent relatively recent renewal of AT and T. So your point on the contract side, there's a lot of really strong multiyear contracts that you have with customers that account for a substantial amount of revenue. But any renewals in the pipeline for 2020 that we should be thinking about?
Well, again, we don't reveal specifics on specific customers. But obviously, we are always engaged with our customers to both upsells and renewals and along the near, this is true to all of our customers. And while we have our relationship, we always believe that the most important part is to continue and support them and make sure they are satisfied from the service, from the solution, from the software. And this is the only way to guarantee a long term relationship. We have customers that are working with us for many years now.
You mentioned AT and T, I think we are working with them already 5 years. So we are building our relationship on the long run. And in any given time, we are always in discussions with them on renewals and expansions. But we don't share any specifics for obvious reasons on the exact status on each of the accounts.
Right. Okay. Maybe changing gears a little bit. You mentioned the continued commitment in investing in R and D, just given that the long term drivers here remain intact. I'd love
to just double click on that a little bit and
how you think about your investment priorities and kind of thoughts on overall spending in the uncertain environment, areas where you continue to kind of push forward, areas where maybe you're pulling back a little bit, obviously, saving an area of travel. I would love to maybe just maybe talk a little bit deeper about the puts and takes there.
Yes. So when everything started, we had our internal discussion to see whether we really believe in our vision and plans and we continue full steam ahead or should we now try to stop a bit and look on the short term saving. On the our decision is to continue and invest as stated primarily in R and D and in order to progress the technology. I believe that hesitation in this stage will hurt us on the long term because we are in the next few years, 3 to 5 years, there's going to be a revolution around the 5 gs. And we want to make sure that our technology is kept in the cutting edge and we provide the best solutions to our customers and potential customers.
Our market is typically choosing the best technology and we need to make sure we are there. Obviously, there are costs that are being saved primarily on travel and office expense. This is due to banning international travel and mainly working from home. So this creates some savings on those areas. But on the long run, we are still pushing.
The fact that we can still reaffirm our guidance allow us the confidence to continue with our investment. We see that many companies are unable to reaffirm or need to fix their guidance. We are still in a very good position. And as stated, our balance sheet allow us also a great deal of confidence to keep this investment.
Right. Absolutely. Just a couple more from me. One, I think it was something that Alex was touching on, but maybe you would like to dig into a little bit more with the opportunity with Rakuten. Just obviously, the network is still pretty fresh, launched last month.
How do you think about kind of the overall opportunity with that customer specifically as they look to expand into more geographies? How repeatable that is and kind of how you think about that overall opportunity for the business?
So yes, I think that the interesting view is how Rakuten go global. And then it becomes from a specific country opportunity, this could go into a much bigger opportunity. This requires, as I stated, applicants being able to replicate the software stack into their traditional carriers in other countries. They are being very vocal on this. They are trying to market their solution into multiple countries.
And I think that this was mentioned before that their launch is a pivotal event that everyone designed and want to make sure that they are being successful. The more confidence they will gain in Japan, they will be able to get more credibility and more likely to be able to replicate that. Now they might replicate it by opening new operations by themselves in some countries or trying to just offer it as a service. So as I mentioned before, this becomes like a channel for us because as we are integral part of the software stack, any operators that they'll be able to sell the offering, it's a potential for us to also include our software stack in this implementation. So you can imagine that this could be a channel for multiple additional opportunities, then it depends on the specific country and scale of the network in order to estimate the size of the deal.
So in the long run, this creates a very interesting opportunity.
Right. Absolutely. It's a very helpful way to think about it. And then last one, just one more question on the gross margin. Obviously, we've seen this the hardware impact before we saw in Q3 of last year.
So it's not necessarily shocking to see that. Just any visibility, you made it very clear that for the full year gross margin should be relatively similar to 2019. But on a quarterly basis, looking at the linearity of that line item, do you have any visibility into other hardware expenses falling in subsequent quarters here?
Not something specific that we have today, but we always market and continue and this customer showing requirement for hardware, we are not hesitating to offer that as part of our promotion of the software deals that we do. So we are still promoting multiple deals and multiple RFPs, and some of them potentially may include an ARVO component. But I think it's important that the model of the company didn't change, and the overall numbers should be the same on the early level. It's very hard to predict on a specific quarter. Obviously, if you look at previous years, it's typically coming in specific quarters.
It's not that every quarter we have such a high number, but the fluctuation can happen.
Right, right. That's helpful. Congrats again. Thank you for taking my questions.
Sure. Thank you, Ned.
The next question is from David Kreindberg of Globus Capital. Please go ahead.
Hi, good morning. Congratulations on the Good morning, David. Hi. Just had a question. You've mentioned a few times on the call about the long term drivers remaining intact with 5 gs and the like.
And any time people, investors hear about long term drivers remaining intact and the company is talking about that, it is sometimes a concern that there's a problem in the short term. Yet you're one of the few companies out there that's able to reiterate their guidance in this environment. So I just want to clarify, when you talk about long term drivers remaining intact, you were not seeing any problems in the short run. Is that correct? Definitely.
We are aware that many of the companies are not be able to reiterate, and we do it carefully. And we do have a caveat because of this. There is some level of uncertainty that we are not aware of in the scale. The COVID-nineteen is not something we're used to. But the visibility we have for the year is high and majority of the year revenue is already in our backlog.
It's in our hands to execute. So this allowed us to be reiterating the guidance for the year. So we don't see any major impact so far. Obviously, things are being a bit harder this time because of working from remote and customers on the long run might look on slower sales cycle and decisions may be taken more carefully. But this is still on the long run, we believe that the 5 gs trend will be much bigger impact because any operators that move to 5 gs is requiring to change, innovate or replace its current service assurance solution.
So this potential is still ahead of us, which is important. And the mix of be able to have good visibility for the year and see that the long run driver is still there and operators and vendors still see 5 gs moving forward in similar pace is very encouraging.
And on the 5 gs opportunity, do you see that mostly with your current customers? Or do you see that also an opportunity for you to penetrate new customers?
Definitely, our existing customers is the 1st opportunity this through to any vendor in the industry. We are working closely with our customers. And as I mentioned, we look our customers long term relationship. We invest a lot in their satisfaction and making sure they are getting our cutting edge technology. But Radcom is also looking to grow into new carriers.
We believe that we are, as I mentioned before, a big opportunity of 5 gs that everyone will need to replace their insurance. So we are definitely looking after more accounts that we need to replace. Some of them are using absolute technology that is good for the 4 gs because the 4 gs in any operator still physical appliances and implementation, and they can continue and stay with their 4 gs legacy assurance solution. But when it comes to 5 gs, they will need to change. And this is something we are going after and trying to market to all of those that are progressing with the 5 gs in order to win new logos.
So it's a mix of continuing working very close with our existing customers, which is our base. This is what we have the visibility for the short term. But on the long term, we believe that additional growth will come from new customers.
Okay, great. Thank you. Keep up the good work. Thank you, David.
Thank you. There are no further questions at this time. This concludes the Radcom's LPD Q1 2020 results conference call. Thank you for your participation. You may go ahead and disconnect.