RADCOM Reports Fourth Quarter and Full Year 2016 Financial Results

February 14, 2017

Q4 Revenues up 196% Year-Over-Year to $8.0 million

Full Year 2016 Revenues up 58% Year-Over-Year to $29.5 million

Cash and Cash Equivalents of $42.9 million and No Debt as of December 31, 2016

TEL-AVIV, Israel โ€“ February 14, 2017– RADCOM Ltd. (NASDAQ: RDCM) today reported its financial results for the fourth quarter and fiscal year ended December 31, 2016.

โ€œThe fourth quarter marked a strong end to a great year for the Company, highlighted by our ability to reach the high-end of our guidance range,โ€ commented Mr. Yaron Ravkaie, RADCOMโ€™s CEO.  โ€œIn 2016, we made great progress with our top-tier customer deployments, continued our engagement with other leading global carriers, and focused on preparing the company for future growth by boosting our senior management team and ramping up our engineering capabilities.  We believe we have laid a solid foundation during 2016 to continue our momentum, as evidenced by our initial 2017 revenue guidance range of $36-$39 million.โ€

Fourth Quarter 2016 Financial Highlights

  • Revenues: Total revenues for the fourth quarter were $8.0 million, up 196% compared to $2.7 million in the fourth quarter of 2015.  
  • Net Loss: GAAP net loss for the period was approximately $0.7 million, or $0.06 loss per diluted share, compared to a loss of $2.1 million, or $0.25 loss per diluted share for the fourth quarter of 2015.
  • Non-GAAP Net Income/(Loss):  Non-GAAP net income for the period was approximately $0.4 million, or $0.04 per diluted share, compared to a loss of $(1.6) million, or $(0.19) per diluted share for the fourth quarter of 2015.

Both GAAP and non-GAAP results for the fourth quarter of 2016 included a $552,000, or $0.05 per diluted share, benefit related to grants from the Israel Innovation Authority (formerly Office of the Chief Scientist) compared to $576,000, or $0.07 per diluted share, in the fourth quarter of 2015.

  • Balance sheet: As of December 31, 2016, the Company had cash and cash equivalents of $42.9 million and no debt.   

Full Year 2016 Financial Highlights

  • Revenues: Total revenues for the full year 2016 were $29.5 million, up 58% compared to $18.7 million in the full year 2015.  
  • Net Income/(Loss): GAAP net income for the full year 2016 was approximately $1.9 million, or $0.18 per diluted share, compared to a loss of $(923,000), or $(0.11) per diluted share for the full year 2015.
  • Non-GAAP Net Income:  Non-GAAP net income for the period was approximately $4.8 million or $0.44 per diluted share, for the full year 2016, compared to $656,000, or $0.07 per diluted share for the full year 2015.

Both GAAP and non-GAAP results for the full year 2016 included a $1.7 million, or $0.16 per diluted share, benefit related to grants from the Israel Innovation Authority compared to $1.6 million, or $0.18 per diluted share, in 2015.

Earnings Conference Call
RADCOM’s management will hold an interactive conference call today at 8:00 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 February 15th on RADCOM’s website.

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About RADCOM

RADCOM (NASDAQ: RDCM) is a first-mover and leading provider of NFV-ready service assurance and customer experience management solutions for Communications Service Providers (CSPs). RADCOMโ€™s software – MaveriQ – continuously monitors network performance and quality of services, to optimize user experience for CSPsโ€™ subscribers. RADCOM specializes in solutions for next-generation mobile and fixed networks, including LTE, VoLTE, IMS and others. MaveriQ enables CSPs to smoothly migrate their networks to NFV by assuring physical, NFV-based and hybrid networks. For more information, please visitย 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 the Companyโ€™s financial performance. By excluding non-cash stock-based compensation that has been expensed in accordance with ASC Topic 718, inventory write-off and  non-cash write-off of importation taxes, the Companyโ€™s non-GAAP results provide information to both management and investors that is useful in assessing the Companyโ€™s core operating performance and in evaluating and comparing the Companyโ€™s 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 and other securities laws. For example, when the Company discusses its momentum and revenue guidance for 2017 it is using foward-looking statements. 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 U.S. 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    
                                            (thousands of U.S. dollars, except share and per share data)  
        
Three months ended Twelve months ended
 December 31,  December 31,
 2016 2015 2016 2015
Sales $8,037 $2,715 $29,510 $18,673
Cost of sales2,796 1,137 8,982 4,326
Gross profit 5,241 1,578 20,528 14,347
Research and development, gross2,594 1,620 8,047 6,071
Less – royalty-bearing participation552 576 1,693 1,582
Research and development, net2,042 1,044 6,354 4,489
Sales and marketing, net2,917 2,054 8,528 7,834
General and administrative 1,060 652 4,523 2,393
Total operating expenses6,019 3,750 19,405 14,716
Operating income (loss)-778 -2,172 1,123 -369
Financial income (expense), net41 48 816 -433
Income (loss) before taxes-737 -2,124 1,939 -802
Taxes on income  -24 -121
Net income (loss)($737) ($2,124) $1,915 ($923)
 ($0.06) ($0.25) $0.18 ($0.11)
Basic net income (loss) per  ordinary share 
 
Diluted net income (loss) per  ordinary share($0.06) ($0.25) $0.18 ($0.11)
 
 11,548,059 8,665,019 10,406,897 8,572,681
Weighted average number of  
ordinary shares used in
computing basic net income (loss)  per ordinary share
 11,548,059 8,665,019 10,779,547 8,572,681
Weighted average number of  
ordinary shares used in
computing diluted net income  (loss) per ordinary share

RADCOM LTD.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(thousands of U.S. dollars, except share and per share data)

 Three months ended   Twelve months ended
December 31,               December 31,               
 2016 2015 2016 2015
GAAP gross profit                                                                                                                                            5,241 1,578 20,528 14,347
Stock-based compensation37 4 118 33
Importation tax write-off388  388 
Inventory write-off 170  170
Non-GAAP gross profit5,666 1,752 21,034 14,550
 2,042 1,044 6,354 4,489
GAAP Research and development, net
Stock-based compensation231 96 625 529
Non-GAAP Research and development, net1,811 948 5,729 3,960
 2,917 2,054 8,528 7,834
GAAP sales and marketing, net
Stock-based compensation75 54 199 380
Non-GAAP sales and marketing, net2,842 2,000 8,329 7,454
 1,060 652 4,523 2,393
GAAP general and administrative
Stock-based compensation428 194 1,529 467
Non-GAAP general and administrative632 458 2,994 1,926
 6,019 3,750 19,405 14,716
GAAP total operating expenses
Stock-based compensation734 344 2,353 1,376
Non-GAAP total operating expenses5,285 3,406 17,052 13,340
 -778 -2,172 1,123 -369
GAAP operating income (loss)
Stock-based compensation771 348 2,471 1,409
Importation tax write-off388  388  
Inventory write-off 170  170
Non-GAAP operating income (loss) 381 -1,654 3,982 1,210
 -737 -2,124 1,939 -802
GAAP income (loss) before taxes on income
Stock-based compensation771 348 2,471 1,409
Importation tax write-off388  388  
Inventory write-off 170  170
Non-GAAP income (loss) before taxes on income422 -1,606 4,798 777
 -737 -2,124 1,915 -923
GAAP net income (loss)
Stock-based compensation771 348 2,471 1,409
Importation tax write-off388  388  
Inventory write-off 170  170
Non-GAAP net income422 -1,606 4,774 656
 -0.06 -0.25 0.18 -0.11
GAAP Net income per diluted share
Stock-based compensation0.07 0.04 0.22 0.16
Importation tax write-off0.03  0.04 
Inventory write-off 0.02  0.02
Non-GAAP Net income per diluted share0.04 -0.19 0.44 0.07
Weighted average number of shares used to compute diluted net income (loss) per share       
      
11,920,5218,665,019 10,779,547 9,117,767
RADCOM Ltd.Consolidated Balance Sheets

(thousands of U.S. dollars)

 As of As of
 December 31, December 31,
20162015
Current Assets   
     Cash and cash equivalents42,886 8,727
     Restricted bank deposits32 32
     Trade receivables, net4,388 3,684
     Inventories 623 1,532
     Other receivables1,960 2,087
    
Total Current Assets49,88916,062
Severance pay fund   
2,7883,181
Other long-term receivables   
375508
Property and equipment, net   
1,516384
Total Assets   
54,56820,135
                              
Liabilities and Shareholders’ Equity   
Current Liabilities    
      Trade payables 2,820 1,465
    Deferred revenue and advances from customers2,593 931
       Employee and payroll accruals 3,541 2,533
    Other payables and accrued expenses 2,081 1,490
    
Total Current Liabilities11,0356,419
Long-Term Liabilities    
    Deferred revenue123 197
    Accrued severance pay        3,267 3,656
    
Total Long-Term Liabilities3,3903,853
    
Total Liabilities14,425 10,272
    
Shareholders’ Equity    
Share capital 523 372
Additional paid-in capital98,283 70,270
Accumulated other comprehensive loss-2,559 -2,760
Accumulated deficit-56,104 -58,019
Total Shareholders’ Equity   
40,1439,863
 54,568 20,135
 
Total Liabilities and Shareholders’ Equity
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