RADCOM Reports Third Quarter 2018 Financial Results

November 7, 2018

โ€ข Cash, Cash Equivalents and Short-Term Bank Deposit of $67.6 million and No Debt 
โ€ข Reiterating 2018 revenue guidance of $33-$35 million 

TEL AVIV, Israel โ€“ November 7, 2018 โˆ’ RADCOM Ltd. (NASDAQ: RDCM), today reported its financial results for the third quarter ended September 30, 2018.

โ€œRADCOM continues to be a leading player in Network Function Virtualization. We are delivering successfully on our project commitments and operators continue to benefit from our advanced cloud-native technologyโ€ commented Mr. Yaron Ravkaie, RADCOMโ€™s CEO. โ€œThe Company continues to support its existing customers, advance its R&D activities, and focus its sales efforts on top-tier operators.  Our strong balance sheet enables our continued investment in innovative technology designed to meet the needs of our leading clients and the forthcoming transition to NFV and 5G.โ€

Third Quarter 2018 Financial Highlights:

โ€ข Revenues: Total revenues for the third quarter were $8.5 million, down 12% compared to $9.6 million in the third quarter of 2017

โ€ข Net Income: GAAP net income for the period was $0.6 million, or $0.05 per diluted share, compared to GAAP net income of $1.2 million, or $0.10 per diluted share for the third quarter of 2017

โ€ข Non-GAAP Net Income: Non-GAAP net income for the period was $1.0 million, or $0.07 per diluted share, compared to non-GAAP net income of $1.7 million, or $0.14 per diluted share for the third quarter of 2017

Both GAAP and non-GAAP results for the third quarter of 2018 included a $528,000, or $0.04 per diluted share, benefit related to grants from the Israel Innovation Authority compared to $155,000, or $0.01 per diluted share, in the third quarter of 2017

โ€ข Balance sheet: As of September 30, 2018, the Company had cash, cash equivalents and short-term bank deposit of $67.6 million and no debt

Earnings Conference Call
RADCOMโ€™s management will hold an interactive conference call today at 8:00 AM Eastern Time (3:00 PM Israel Standard 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): +1-866-229-7198

From other locations: +972-3-918-0687

For those unable to listen to the call at the time, a replay will be available from November 8th on RADCOM’s website.

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About RADCOM
RADCOM (NASDAQ: RDCM) is the leading expert in cloud-native Network Intelligence for telecom operators transitioning to SDN/NFV. Providing a critical first step in an operator’s NFV transformation, RADCOM’s Network Intelligence delivers end-to-end network visibility from virtual tapping point to network insights. Comprised of RADCOM Service Assurance, RADCOM Network Visibility and RADCOM Network Insights, RADCOM’s Network Intelligence portfolio provides operators with complete visibility across their virtual and hybrid networks. RADCOM Network Intelligence is automated, cost-efficient, and provides on-demand functionality that is specifically designed for the needs of telecom operators. RADCOM specializes in assuring next-generation, high capacity networks, including LTE, Advanced-LTE, 5G, IMS, SDN/NFV and others. For more information on how to RADCOMize your network, today, please visitย www.radcom.com, the content of which does not form a part of this press release.

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, 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€, โ€mayโ€œ, โ€mightโ€, โ€œpredictโ€, โ€potentialโ€, โ€œanticipateโ€, โ€œplanโ€ 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 2018, continued investment in technology to meet the needs of its clients and transition to NFV as well as success in focusing on sales to top-tier operators, 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 Statement of Operations

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

 Three months ended
September 30,
 Nine months ended
September 30,
 2018 2017 2018 2017
 (unaudited) (unaudited) (unaudited) (unaudited)
Revenues$8,519 $9,645 $30,061 $26,602
Cost of revenues1,660 3,163 7,427 7,828
Gross profit6,859 6,482 22,634 18,774
        
Research and development, gross3,933 2,280 11,429 7,507
Less – royalty-bearing participation528 155 1,282 467
Research and development, net3,405 2,125 10,147 7,040
        
Sales and marketing, net2,401 2,333 8,725 8,219
General and administrative657 991 2,647 3,149
Total operating expenses6,463 5,449 21,519 18,408
Operating income396 1,033 1,115 366
Financial income, net282 175 655 325
Income before taxes on income678 1,208 1,770 691
Taxes on income(44) (25) (57) (48)
        
Net income$634 $1,183 $1,713 $643
        
Basic net income per ordinary share$0.05 $0.10 $0.13 $0.05
Diluted net income per ordinary share$0.05 $0.10 $0.12 $0.05
 Weighted average number of ordinary shares usedin computing basic net income per ordinary share13,701,844 11,747,443 13,600,849 11,698,246
 Weighted average number of ordinary shares usedin computing diluted net income per ordinary share13,916,306 12,070,080 13,851,324 12,018,658

RADCOM LTD.
Reconciliation of GAAP to Non-GAAP Financial Information
Unaudited

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

  Three months ended  Nine months ended 
September 30, September 30,
 2018 2017 2018 2017
GAAP gross profit                   $6,859 $6,482 $22,634 $18,774
Stock-based compensation25 67 102 134
Non-GAAP gross profit$6,884 $6,549 $22,736 $18,908
GAAP research and development, net$3,405 $2,125 $10,147 $7,040
Stock-based compensation210 97 621 339
Non-GAAP research and development, net$3,195 $2,028 $9,526 $6,701
GAAP sales and marketing, net$2,401 $2,333 $8,725 $8,219
Stock-based compensation121 122 583 394
Non-GAAP sales and marketing, net$2,280 $2,211 $8,142 $7,825
GAAP general and administrative$657 $991 $2,647 $3,149
Stock-based compensation10 200 402 859
Non-GAAP general and administrative$647 $791 $2,245 $2,290
GAAP total operating expenses$6,463 $5,449 $21,519 $18,408
Stock-based compensation341 419 1,606 1,592
Non-GAAP total operating expenses$6,122 $5,030 $19,913 $16,816
GAAP operating income$396 $1,033 $1,115 $366
Stock-based compensation366 486 1,708 1,726
Non-GAAP operating income$762 $1,519 $2,823 $2,092
GAAP income before taxes on income$678 $1,208 $1,770 $691
Stock-based compensation366 486 1,708 1,726
Non-GAAP income before taxes on income$1,044 $1,694 $3,478 $2,417
GAAP net income$634 $1,183 $1,713 $643
Stock-based compensation366 486 1,708 1,726
Non-GAAP net income$1,000 $1,669 $3,421 $2,369
GAAP net income per diluted share$0.05 $0.10 $0.12 $0.05
Stock-based compensation0.02 0.04 0.12 0.15
Non-GAAP net income per diluted share$0.07 $0.14 $0.24 $0.20
Weighted average number of shares used to compute diluted net income per share13,916,306 12,070,080 13,851,324 12,018,658

RADCOM Ltd.
Consolidated Balance Sheets

(thousands of U.S. dollars) 

 As of As of
 September 30,2018 December 31,2017
 (unaudited)  
Current Assets   
Cash and cash equivalents$27,576 $22,575
Restricted bank deposit 36
Short-term bank deposit40,000 40,000
Trade receivables, net18,485 20,266
Inventories350 1,199
Other receivables1,733 2,685
Total Current Assets88,144 86,761
Severance pay fund3,103 3,052
Other long-term receivables302 172
Property and equipment, net1,841 1,924
    
Total Assets$93,390 $91,909
    
Liabilities and Shareholders’ Equity   
Current Liabilities   
Trade payables$1,539 $1,828
Deferred revenues811 2,601
Employee and payroll accruals3,403 4,062
Other payables and accrued expenses1,796 3,428
Total Current Liabilities7,549 11,919
Long-Term Liabilities   
Deferred revenues100 21
Accrued severance pay       3,600 3,573
Total Long-Term Liabilities3,700 3,594
    
Total Liabilities$11,249 $15,513
    
Shareholders’ Equity   
Share capital$642 $628
Additional paid-in capital135,274 131,491
Accumulated other comprehensive loss(2,622) (2,520)
Accumulated deficit(51,153) (53,203)
    
Total Shareholders’ Equity82,141 76,396
Total Liabilities and Shareholders’ Equity$93,390 

For all investor enquiries, please contact:

Investor Relations:
Miri Segal
MS-IR LLC
917-607-8654
msegal@ms-ir.com


Company Contact:
Amir Hai 
CFO
+972-77-774-5011
amir.hai@radcom.com

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