RADCOM Reports Financial Results for Q4 & Full Year 2015

February 17, 2016

–         Entering 2016 With Record Backlog, Visibility for Multiple-Year Growth โ€“

Vetting by Top-Tier Operator & Win of 1st NFV Mega-Deployment
 Positions RADCOM as Clear Leader of NFV Service Assurance Market –

TEL-AVIV, Israel โ€“ February 17, 2016 – RADCOM Ltd. (NASDAQ: RDCM) today reported its financial results for the fourth quarter and full year ended December 31, 2015.

In $ thousands20152014Q4 2015Q4 2014
Revenues$18,673$23,636$2,715$7,188
Gross margin (GAAP)76.8%63.2%58.1%50.0%
Net profit (loss) (GAAP) $(923)$726$(2,124)$(367)
Net profit (loss) (non-GAAP)$656$3,278$(1,606)$1,798
Cash & equivalents$8,727$6,848$8,727$6,848

Comments of Management

โ€œThe record booking that we achieved at the end of 2015 has created a record backlog for us as we enter 2016, giving us visibility for financial stability based on multi-year growth,โ€ commented Mr. Yaron Ravkaie, RADCOMโ€™s CEO. โ€œThrough this important win, which followed a thorough vetting of our MaveriQ by a top-tier operator, we will become the first company in the world to carry out a mega-deployment of an NFV service assurance solution. This has established RADCOM as the clear leader of this exciting emerging market, positioning us ideally to ride the NFV growth wave.โ€

Mr. Ravkaie continued, โ€œOur results for 2015 reflect the effort to secure this strategic deal, a focused, successful investment that has positioned us for even greater future achievements. Our strong balance sheet, including a high level of cash, low inventory and no debt, demonstrates our financial solidity, an important element for success in our marketing efforts with top-tier customers. 

โ€œIn general, 2016 will be a bridge year during which we expect our revenues to increase to a new level. To take full advantage of our favorable positioning, our strategy is to pursue total customer satisfaction in the current deployment, to secure additional anchor customers through direct and channel efforts, and to invest continuously to widen our technology edge, further enhancing our value proposition for our target customers. We are excited by our prospects and look forward to reporting our progress in the quarters ahead.โ€

Financial Results

Full Year 2015: RADCOMโ€™s revenues for 2015 totaled $18.7 million compared with $23.6 million in 2014, while gross margin increased to 76.8% from 63.2%. On a GAAP basis, including a $170,000 inventory write-off related to cancellation of an old project, the Company recorded a net loss of $(923,000), or $(0.11) per ordinary share (basic and diluted), compared with a net profit of $726,000, or $0.09 (basic) and $0.08 (diluted) per ordinary share, for 2014. On a non-GAAP basis, net profit for the year totaled $656,000, or $0.08 (basic) and $0.07 (diluted) per ordinary share compared with a net profit of $3.2 million, or $0.40 (basic) and $0.38 (diluted) per ordinary share, for 2014.

The Companyโ€™s cash balance as of the end of the year totaled $8.7 million, up 27% compared with $6.8 million at the end of 2014. The increase reflected the strong collections achieved throughout the year.

Fourth Quarter 2015: For the fourth quarter, RADCOMโ€™s revenues totaled $2.7 million, compared with $7.2 million in the fourth quarter of 2014, reflecting the Companyโ€™s focus on securing a transformational Tier-1 deal, as explained above. Gross margin for the quarter was 58.1%, compared with 50.0% for the fourth quarter of 2014, reflecting the $170,000 inventory write-off recorded during the period. On a GAAP basis, the Company recorded a net loss for the fourth quarter totaling $(2.1) million, or $(0.25) per ordinary share (basic and diluted), compared with $(367,000), or $(0.04) (basic and diluted) per ordinary share, for the fourth quarter of 2014. On a non-GAAP basis, net loss for the period was $(1.6) million, or $(0.19) per ordinary share (basic and diluted), compared with a net profit of $1.8 million, or $0.22 (basic) and $0.20 (diluted) per ordinary share, for 2014.

Earnings Conference Call

RADCOM’s management will hold an interactive conference call today at 9:00 AM Eastern Time (16:00 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 February 18th on RADCOM’s website.

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About RADCOM

RADCOM provides NFV-ready service assurance 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 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 as well as a non-cash write off of obsolete inventory, 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 โ€œestimate,โ€ โ€œproject,โ€ โ€œintend,โ€ โ€œexpect,โ€ โ€œ’believeโ€, “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 Companyโ€™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 Companyโ€™s business, reference is made to the Companyโ€™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.

RADCOM LTD.

Consolidated Statements of Operations

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

 Three months ended 
December 31,
 Twelve months ended 
 December 31,
 
 2015201420152014 
 (unaudited) (unaudited) (unaudited) (audited) 
Sales$2,715  $7,188 $18,673  $23,636 
Cost of sales1,137 3,624 4,326 8,693 
Gross profit1,578 3,564 14,347 14,943 
Research and development, gross1,620 1,329 6,071 5,812 
Less – royalty-bearing participation576 358 1,582 1,664 
Research and development, net1,044       971 4,489 4,148 
Sales and marketing, net2,054       1,924 7,834 7,295 
General and administrative652 576 2,393 2,262 
Total operating expenses3,750 3,471 14,716 13,705 
Operating income (loss)(2,172) 93 (369) 1,238 
Financing income (expenses), net48 (280)            (433)  (332) 
Income (loss) before taxes(2,124) (187) (802) 906 
Taxes (180)  (121) (180) 
Net profit (loss)$(2,124) $(367) $(923)   $726 
Basic net income (loss) perordinary  share $(0.25)  $(0.04)  $(0.11)  $0.09 
Diluted net income (loss) perordinary  share$(0.25) $(0.04) $(0.11) $0.08 
Weighted average number of   ordinary shares used in computing basic net income (loss) per ordinary share8,665,019 8,289,419 8,572,681 8,088,974 
Weighted average number of ordinary shares used in computing diluted net income  (loss) per ordinary share8,665,019 8,289,419 8,572,681 8,592,387 
         

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 Twelve Months Ended
December 31, December 31,
2015 2014 2015 2014
(unaudited) (unaudited) (unaudited) (audited)
        
GAAP net profit (loss)$(2,124) $(367) $(923) $726
Stock-based compensation (1)348 192 1,409 579
Inventory write off170 1,797 170 1,797
One-time commission write off 176  176
Non-GAAP net income (loss)$(1,606) $1,798 $656 $3,278
Non-GAAP net income (loss) per share (basic)$(0.19) $0.22 $0.08 $0.40
Non-GAAP net income (loss) per share (diluted)$(0.19) $0.20 $0.07 $0.38
        
Number of shares used in computing Non-GAAP earnings (loss) per share (basic)8,665,019 8,289,419 8,572,681 8,088,974
Number of shares used in computing Non-GAAP earnings (loss) per share (diluted)8,665,019 8,889,451 9,117,767 8,592,387
        
(1) Stock-based compensation:       
   Cost of sales 4 1 33 12
   Research and development 96 43 529 178
   Sales and marketing 54 13 380 146
   General and administrative 194 135 467 243
  348 192 1,409 579
RADCOM Ltd.Consolidated Balance Sheets(1000’s of U.S. dollars) 
 As ofAs of
 December 31,2015December 31,2014
 (unaudited)(audited)
Current assets   
     Cash and cash equivalents8,727 6,848
     Restricted cash32 32
     Trade receivables, net3,684 5,477
     Inventories1,532 2,699
     Other receivables2,087 1,411
Total current assets16,062 16,467
Severance pay fund3,181 3,051
Other long-term receivables508 600
Property and equipment, net384 200
Total Assets20,135 20,318
    
Liabilities and shareholders’ equity   
Current liabilities    
     Trade payables1,465 1,524
     Deferred revenue and advances from customers931 765
     Employees and payroll accruals2,533 2,377
     Other payables and accrued expenses1,490 1,739
Total current liabilities6,419 6,405
Long-term liabilities   
     Deferred revenue197 198
     Accrued severance pay       3,656 3,453
Total long-term liabilities3,853 3,651
    
Total liabilities10,272 10,056
   
Shareholders’ equity    
     Share capital 372 361
     Additional paid-in capital70,270 68,059
     Accumulated other comprehensive loss            (2,760) (1,062)
     Accumulated deficit(58,019) (57,096)
Total shareholders’ equity9,863 10,262
    
Total liabilities and shareholders’ equity20,135 20,318
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