RADCOM Reports Third Quarter 2017 Financial Results

November 6, 2017

Q3 Revenues up 25% Year-Over-Year to $9.6 million

Highest Quarterly Revenues in the Company’s History

Cash and Cash Equivalents of $33.6 million and No Debt

TEL AVIV, Israel, Nov. 6, 2017 /PRNewswire/ — RADCOM Ltd. (NASDAQ: RDCM), today reported its financial results for the third quarter ended September 30, 2017.

“We are very pleased with our third quarter execution which resulted in record-high quarterly revenues driven by our work with AT&T and other top-tier operators,” commented Mr. Yaron Ravkaie, RADCOM’s CEO.  “During this quarter, we announced a new win with a world leading top-tier operator and are now executing on the deployment of this contract. Also, subsequent to the quarter, we signed a three-year contract extension with Globe Telecom – the leading operator in the Philippines, with over 60 million customers – to provide service assurance for their mobile network, and to ensure their future transformation to NFV (Network Functions Virtualization). Given the ongoing momentum we see in the market, we also executed during October a successful public equity offering that significantly strengthens our balance sheet and allows us to continue executing on the company’s growth strategy. With our current visibility we are updating our 2017 revenue guidance to $36.6-$37.8 million.”

Third Quarter 2017 Financial Highlights:

  • Revenues: Total revenues for the third quarter were $9.6 million, up 25% compared to $7.7 million in the third quarter of 2016.  
  • Net Income: GAAP net income for the period was $1.2 million, or $0.10 per diluted share, compared to approximately breakeven for the third quarter of 2016. 
  • Non-GAAP Net Income:  Non-GAAP net income for the period was $1.7 million, or $0.14 per diluted share, compared to non-GAAP net income of $1.0 million, or $0.09 per diluted share, for the third quarter of 2016.

    Both GAAP and non-GAAP results for the third quarter of 2017 included a $155,000, or $0.01 per diluted share, benefit related to grants from the Israel Innovation Authority (formerly Office of the Chief Scientist) compared to $385,000, or $0.03 per diluted share, in the third quarter of 2016.
  • Balance sheet: As of September 30, 2017, the Company had cash and cash equivalents of $33.6 million and no debt.   Subsequent to the quarter, RADCOM closed an underwritten public offering of 1,661,536 ordinary shares which generated net proceeds of approximately $30.2 million.

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: +972-3-918-0610

For those unable to listen to the call at the time, a replay will be available from November 7th on RADCOM’s website.

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). RADCOM’s software – MaveriQ – continuously monitors network performance and quality of services, to optimize user experience for CSPs’ 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 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 the Company’s financial performance. By excluding non-cash stock-based compensation that has been expensed in accordance with ASC Topic 718, the Company’s non-GAAP results provide information to both management and investors that is useful in assessing the Company’s core operating performance and in evaluating and comparing the Company’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 “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 and other securities laws. For example, when the Company discusses its revenue guidance for 2017 and expected new projects for the Company 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 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 U.S. Securities and Exchange Commission. The Company does not undertake to revise or update any forward-looking statements for any reason.

Consolidated Statement of Operations
(thousands of U.S. dollars, except share and per share data)
 Three months ended  Nine months ended 
September 30,September 30,
 2017 2016 2017 2016
 (unaudited) (unaudited) (unaudited) (unaudited)
Revenues$9,645 $7,726 $26,602 $21,473
Cost of revenues3,163 2,357 7,828 6,186
Gross profit6,482 5,369 18,774 15,287
Research and development, gross2,280 1,985 7,507 5,453
Less – royalty-bearing participation155 385 467 1,141
Research and development, net2,125 1,600 7,040 4,312
Sales and marketing, net2,333 2,352 8,219 5,611
General and administrative991 1,436 3,149 3,463
Total operating expenses5,449 5,388 18,408 13,386
Operating income (loss)1,033 -19 366 1,901
Financial income, net175 39 325 775
Income before taxes1,208 20 691 2,676
Taxes-25 -18 -48 -24
Net income$1,183 $2 $643 $2,652
Basic net income per$0.10 $0.00 $0.05 $0.26
ordinary share
Diluted net income per $0.10 $0.00 $0.05 $0.26
ordinary share
Weighted average number of 11,747,443 11,410,105 11,698,246 10,023,733
ordinary shares used in 
computing basic net income
per ordinary share
Weighted average number of 12,070,080 11,708,030 12,018,658 10,396,446
ordinary shares used in 
computing diluted net income
per ordinary share
Reconciliation of GAAP to Non-GAAP Financial Information
 (thousands of U.S. dollars, except share and per share data)
 Three months ended  September 30,               Nine months ended
September 30,           
 2017 2016 2017 2016
GAAP gross profit$6,482 $5,369 $18,774 $15,287
Stock-based compensation67 39 134 81
Non-GAAP gross profit$6,549 $5,408 $18,908 $15,368
GAAP research and development, net$2,125 $1,600 $7,040 $4,312
Stock-based compensation97 155 339 394
Non-GAAP research and development, net$2,028 $1,445 $6,701 $3,918
GAAP sales and marketing, net$2,333 $2,352 $8,219 $5,611
Stock-based compensation122 73 394 124
Non-GAAP sales and marketing, net$2,211 $2,279 $7,825 $5,487
GAAP general and administrative$ 991 $1,436 $3,149 $3,463
Stock-based compensation200 746 859 1,101
Non-GAAP general and administrative$  791 $690 $2,290 $2,362
GAAP total operating expenses$5,449 $5,388 $18,408 $13,386
Stock-based compensation419 974 1,592 1,619
Non-GAAP total operating expenses$5,030 $4,414 $16,816 $11,767
GAAP operating income (loss)$1,033 ($19) $366 $1,901
Stock-based compensation486 1,013 1,726 1,700
Non-GAAP operating income$1,519 $994 $2,092 $3,601
GAAP income before taxes$1,208 $20 $691 $2,676
Stock-based compensation486 1,013 1,726 1,700
Non-GAAP income before taxes$1,694 $1,033 $2,417 $4,376
GAAP net income$1,183 $  2 $643 $2,652
Stock-based compensation486 1,013 1,726 1,700
Non-GAAP net income$1,669 $1,015 $2,369 $4,352
GAAP Net income per diluted share$0.10 $  0.00 $0.05 $0.26
Stock-based compensation0.04 0.09 0.15 0.16
Non-GAAP net income per diluted share$  0.14 $  0.09 $0.20 $0.42
Weighted average number of 12,070,080 11,708,030 12,018,658 10,396,446
shares used to compute diluted 
net income per share
Consolidated Balance Sheets
(thousands of U.S. dollars)
 As of As of
September 30,December 31,
Current Assets   
     Cash and cash equivalents$               33,563 $              42,886
     Restricted bank deposits35 32
     Trade receivables, net13,835 4,388
     Inventories275 623
     Other receivables1,599 1,960
Total Current Assets49,307 49,889
Severance pay fund3,065 2,788
Other long-term receivables335 375
Property and equipment, net1,855 1,516
Total Assets$               54,562 $            54,568
Liabilities and Shareholders’ Equity   
Current Liabilities   
       Trade payables1,336 2,820
    Deferred revenue583 2,593
       Employee and payroll accruals3,691 3,541
    Other payables and accrued expenses2,018 2,081
Total Current Liabilities7,628 11,035
Long-Term Liabilities   
    Deferred revenue48 123
    Accrued severance pay       3,603 3,267
Total Long-Term Liabilities3,651 3,390
Total Liabilities$               11,279 $              14,425
Shareholders’ Equity   
     Share capital531 523
     Additional paid-in capital100,681 98,283
        Accumulated other comprehensive loss-2,468 -2,559
     Accumulated deficit-55,461 -56,104
Total Shareholders’ Equity43,283 40,143
Total Liabilities and Shareholders’ Equity$               54,562 $              54,568

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