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PRESS RELEASES

RADCOM REPORTS FINANCIAL RESULTS FOR Q3 AND 1st 9 MONTHS OF 2015

October 27, 2015

Record 82.5% Gross Margin With $0.1 EPS (Basic, Non-GAAP) –

 Continued Progress in Penetrating Top-Tier NFV Markets: Discussions Move Forward With Tier-1 Service Providers in the U.S. 

TEL-AVIV, Israel – October 27, 2015– RADCOM Ltd. (NASDAQ: RDCM), a leading provider of Customer Experience Management (CEM) solutions, today reported its financial results for the third quarter and first nine months ended September 30, 2015.

In $ thousandsQ1-Q3 2015Q1-Q3 2014Q3 2015Q3 2014
Revenues$15,958$16,448$4,767$6,007
Gross margin80.0%69.2%82.5%66.0%
Net profit (loss) (GAAP) $1,201$1,093$561$776
Net profit (non-GAAP)$2,261$1,480$835$872
Cash & equivalents$7,978$4,509$7,978$4,509

Financial Results

 First Nine Months of 2015: RADCOM’s revenues for the nine-month period totaled $16.0 million compared with $16.4 million in the first nine months of 2014, while gross margin increased to 80.0% from 69.2%. The strong gross margin is in line with the new target margin announced last quarter, reflecting the Company’s successful transition from hardware to software-based products.

Net income for the first nine months totaled $1.2 million, or $0.14 (basic) and $0.13 (diluted) per ordinary share, up 10% compared with $1.1 million, or $0.14 (basic) and $0.13 (diluted) per ordinary share in the first nine months of 2014. On a non-GAAP basis, net income for the period totaled $2.3 million, or $0.26 (basic) and $0.25 (diluted) per ordinary share, a 53% increase compared with $1.5 million, or $0.18 (basic) and $0.17 (diluted) per ordinary share, for the first nine months of 2014.

The Company’s cash balance as of the end of the period totaled $8.0 million, up 78% compared with $4.5 million at the end of Q3 2014. The increase reflected the strong collections and high customer satisfaction achieved throughout the year.

Third Quarter: For the third quarter, RADCOM’s revenues totaled $4.8 million, unchanged from the second quarter of 2015 but down from $6.0 million in the third quarter of 2014. For the past two quarters, sales have been affected by the Company’s focus on high-potential Tier-1 deals in the U.S. and other regions, each with long decision-cycles.

Gross margin for the quarter was 82.5%, an all-time record for the Company. This compared with 66.0% for the third quarter of 2014.

Net income for the third quarter totaled $561,000, or $0.07 (basic) and $0.06 (diluted) per ordinary share, compared with $776,000, or $0.10 (basic) and $0.o9 (diluted) per ordinary share, for the third quarter of 2014. On a non-GAAP basis, net profit for the period was $835,000, or $0.10 (basic) and $0.09 (diluted) per ordinary share, compared with $872,000, or $0.11 (basic) and $0.10 (diluted) per ordinary share for the third quarter of 2014.

Comments of Management

“During the past several quarters, we have been fully focused on a number of transformative opportunities with top-tier service providers in the U.S. and other regions, with recent developments making us very excited,” commented Mr. David Ripstein, RADCOM’s President and CEO. “Addressing these opportunities has required a massive R&D and marketing effort which has naturally affected our execution of other projects. However, our Q3 bookings set a new quarterly record for us, demonstrating the continued health of our business from existing customers. We believe our Tier-1 investment will prove itself in the quarters ahead, taking our business to a new level while positioning us as the premier CEM provider for virtualized/NFV networks.

“We are pleased that our record margin has partially compensated for the quarter’s weaker revenues, enabling us to post our eighth straight profitable quarter and demonstrating just how far we have come in a relatively short time. Building from a strong and healthy platform, we are poised to enter the exciting NFV market at the beginning of its growth curve, and believe that we are on the cusp of a breakthrough.”

Earnings Conference Call


RADCOM’s management will hold an interactive conference call today at 9:00 AM Eastern Time (15:00 Israel Time) to discuss the results and to answer participants’ questions. To join the call, please call one of the following numbers approximately five minutes before the call is scheduled to begin:

From the US (toll-free): + 1-888-668-9141

From other locations: +972-3-918-0609

For those unable to listen to the call at the time, a replay will be available from October 28th on RADCOM’s website.

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About RADCOM

RADCOM provides innovative service assurance and customer experience management solutions for leading telecom operators and communications service providers. RADCOM specializes in solutions for next-generation mobile and fixed networks, including LTE, VoLTE, IMS, VoIP, UMTS/GSM and mobile broadband. RADCOM’s comprehensive, carrier-grade solutions are designed for big data analytics on terabit networks, and are used to prevent service provider revenue leakage and to enhance customer care management. RADCOM’s products interact with policy management to provide self-optimizing network solutions. RADCOM’s shares are listed on the NASDAQ Capital Market under the symbol RDCM. For more information, please visit www.RADCOM.com.

Non-GAAP Information

Certain non-GAAP financial measures are included in this press release. These non-GAAP financial measures are provided to enhance the reader’s overall understanding of our financial performance. By excluding non-cash stock-based compensation that has been expensed in accordance with ASC Topic 718, our non-GAAP results provide information to both management and investors that is useful in assessing our core operating performance and in evaluating and comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to evaluate financial results and to plan and forecast future periods.  The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with GAAP.


Risks Regarding Forward-Looking Statements

Certain statements made herein that use words such as “estimate,” “project,” “intend,” “expect,” “’believe”, “may”, “might”, “predict”, “potential”, “anticipate”, “plan” or similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties that could cause the actual results, performance or achievements of the Company to be materially different from those that may be expressed or implied by such statements, including, among others, changes in general economic and business conditions and specifically, decline in the demand for the Company’s products, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on prices resulting from competition. For additional information regarding these and other risks and uncertainties associated with the Company’s business, reference is made to the Company’s reports filed from time to time with the United States Securities and Exchange Commission. The Company does not undertake to revise or update any forward-looking statements for any reason.

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RADCOM LTD.Consolidated Statements of Operations                                            (1000’s of U.S. dollars, except share and per share data)
 Three months ended 
 September 30,
 Nine months ended 
 September 30,
 
 2015201420152014 
 (unaudited) (unaudited) (unaudited) (unaudited) 
Sales $     4,767  $     6,007  $    15,958  $    16,448 
Cost of sales835 2,044 3,189 5,069 
Gross profit3,932 3,963 12,769 11,379 
Research and development, gross1,389 1,397 4,452 4,483 
Less – royalty-bearing participation867 719 1,007 1,306 
Research and development, net      522       678 3,445 3,177 
Sales and marketing, net      2,194       1,650 5,781 5,371 
General and administrative534 550 1,740 1,686 
Total operating expenses3,250 2,878 10,966 10,234 
Operating income682 1,085 1,803 1,145 
Financing expense, net(107) (309)  (481)  (52) 
Income before taxes575 776 1,322 1,093 
Taxes(14)  – (121)  
Net profit$   561 $   776   $   1,201   $   1,093 
 Basic net income perordinary  share $    0.07  $    0.10  $    0.14  $    0.14 
Diluted net income perordinary  share$    0.06 $    0.09 $    0.13 $    0.13 
 Weighted average number of 
    ordinary shares used in 
    computing basic net income  per ordinary share
8,622,196 8,073,268 8,541,563 8,021,425 
 Weighted average number of 
    ordinary shares used in 
    computing diluted net income  per ordinary share
9,141,928 8,515,158 9,091,721 8,493,472 
         

RADCOM LTD.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(1000’s of U.S. dollars, except share and per share data)

Three Months Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
(unaudited) (unaudited) (unaudited) (unaudited)
        
GAAP net income$561 $776 $1,201 $1,093
Stock-based compensation (1)274 96 1,060 387
Non-GAAP net income$835 $872 $2,261 $1,480
Non-GAAP net income per share (basic)$0.10 $0.11 $0.26 $0.18
Non-GAAP net income per share (diluted)$0.09 $0.10 $0.25 $0.17
        
Number of shares used in computing Non-GAAP earnings per share (basic)8,622,196 8,073,268 8,541,563 8,021,425
Number of shares used in computing Non-GAAP earnings per share (diluted)9,141,928 8,515,158 9,091,721 8,493,472
        
(1) Stock-based compensation:       
   Cost of sales7 2 29 11
   Research and development108 34 433 135
   Selling and marketing102 29 326 133
   General and administrative57 31 272 108
 274 96 1,060 387
RADCOM Ltd.Consolidated Balance Sheets(1000’s of U.S. dollars) 
 As ofAs of
 September 30,2015December 31,2014
 (unaudited)(audited)
Current Assets   
     Cash and cash equivalents7,946 6,848
     Restricted cash deposits32 32
     Trade receivables5,527 5,477
     Inventories1,709 2,699
     Other receivables1,928 1,411
Total Current Assets17,142 16,467
Severance pay fund3,130 3,051
Other long-term receivables464 600
Property and equipment, net316 200
Total Assets21,052 20,318
    
Liabilities and Shareholders’ Equity   
Current Liabilities   
      Trade payables1,013 1,524
    Deferred revenue and advances from customers799 765
       Employee and payroll accruals2,000 2,377
    Other payables and accrued expenses1,850 1,739
Total Current Liabilities5,662 6,405
Long-Term Liabilities    
    Deferred revenue318 198
    Accrued severance pay        3,573 3,453
Total Long-Term Liabilities3,891 3,651
   
Total Liabilities9,553 10,056
   
Shareholders’ Equity    
     Share capital371 361
     Additional paid-in capital69,866 68,059
       Accumulated other comprehensive loss(2,843) (1,062)
     Accumulated deficit(55,895) (57,096)
Total Shareholders’ Equity11,499 10,262
  21,052 20,318
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