Jeffrey Hopson

Jeff Hopson of Needham & Company inquired about the expected timelines and revenue contributions from Silicom's three new growth opportunities (AI inference, PQC, white label switching), comparing their near-term potential and sales cycle expectations to the company's historical business. He also asked about potential changes or additional investments in the sales process for these new ventures.

Answer

President and CEO Liron Eizenman clarified that all three opportunities are in early stages, not expected to contribute significantly to revenue in Q4 2025 or 2026, with the core business remaining strong. He noted that leveraging existing IP and expertise should lead to faster sales cycles and design wins compared to historical patterns. Eizenman confirmed that Silicom's current R&D, operations, and sales teams are adequately structured and equipped to support these new growth initiatives without immediate plans for significant additional investments.

Jeff Hopson, on behalf of Ryan Koontz, inquired about the typical contract length for design wins, Silicom's underlying competitive advantages, and anticipated R&D spending for 2025. He also asked about gross margin variability across opportunity segments and the maturity of AI technology at the network edge.

Answer

Executive Eran Gilad stated that design win contracts typically last 4-5 years. He highlighted Silicom's competitive edge, stemming from being first-to-market with new technologies, providing full software and supply chain solutions, and offering an integrated product portfolio. He also noted that no dramatic increases in R&D spending are expected. Executive Liron Eizenman added that while individual product margins vary, the overall company gross margin is expected to remain in the 27% to 32% range. He also characterized AI at the edge as being at a proof-of-concept stage, with current AI-related revenue coming indirectly through data center customers.

Jeffrey Hopson asked about Arista's market opportunity split between new network buildouts and refreshing/upgrading existing networks, particularly in the context of recent hyperscaler and AI model company deals.

Answer

Jayshree Ullal, CEO and Chairperson, clarified that the primary opportunity lies in newly constructed AI buildouts, often at gigawatt scale, rather than traditional CPU or storage-driven cloud buildouts or refreshes, which are currently receiving less attention.

Jeffrey Hopson asked about Arista Networks' opportunity with new network buildouts versus refreshing or upgrading existing networks, particularly in the context of hyperscaler and AI model company deals.

Answer

Jayshree Ullal, Arista Networks' CEO and Chairperson, confirmed that the primary opportunity lies in newly constructed AI buildouts (gigawatt-scale) rather than traditional CPU or storage-driven cloud buildouts or refreshes, which are currently receiving less attention.

Jeffrey Hopson, on for Mike Zikos of Needham & Company, asked for insights into the impressive growth of Charlotte AI, questioning which specific features are driving adoption and what hurdles might be preventing some organizations from adopting it.

Answer

Founder & CEO George Kurtz explained that Charlotte AI's success stems from its architecture as an orchestration layer deeply wired into all modules and workflows, not just a simple chatbot. He provided examples of its value, such as reducing investigation tasks from days to an hour and autonomously acting as a tier-one analyst. Kurtz stated that customers are seeing increasing value with each release as the GenAI product matures, which is powering the adoption of the next-gen SOC.

Jeffrey Hopson, on for Mike Zikos, asked if deal slippage from Q2 could push more business into Q4 and requested an update on the investment timeline for the new SOC in India.

Answer

CEO Corey Thomas acknowledged that deal timing can fluctuate, especially with larger deals, which is why the company provides a full-year outlook. He noted Q2 was healthy and the company's baseline assumption is that deals will move around. Regarding the India SOC, he confirmed it is currently ramping. CFO Tim Adams added that the associated investment spending will increase in the second half of the year, which is reflected in the Q3 operating income guidance.

Jeffrey Hopson, on for Mike Cikos, asked if sales cycles for AI companies are shorter and inquired about the methodology for potential future price increases on the B2 service.

Answer

CEO Gleb Budman confirmed that AI companies are moving very quickly, citing the rapid signing of a six-figure B2 OverDrive deal. He stated there are no current plans for a broad B2 price increase, as the company prefers to add value and monetize through premium offerings like B2 OverDrive, which has a starting price 250% higher than the standard service, as noted by CFO Marc Suidan.

John Jeffrey Hopson of Needham & Company asked about RADCOM's approach to balancing continued investment in R&D and sales against driving further operating leverage. He also inquired about the company's M&A strategy given its record cash balance and which market segments might be of interest. Finally, he asked about the new CEO's initial focus for driving continued growth.

Answer

CEO Benny Eppstein explained that the strategy is to maintain the current high level of operational profitability while simultaneously investing in R&D, Gen AI, and partnerships. On M&A, he stated that while RADCOM is carefully evaluating options to expand its addressable market, it is not in a hurry. His primary focus for growth is leveraging major partnerships, like with ServiceNow, to expand into new domains such as customer care and to enhance customer experience using RADCOM's unique dataset.