- 4th Straight Profitable Quarter; Record Net Income & Net Margin; RADCOM Positioned For Further Growth in Q4 and 2015 - 

 

 TEL-AVIV, Israel – October 29, 2014-- RADCOM Ltd. (NASDAQ: RDCM), a leading provider of customer experience management (CEM) solutions, today reported its financial results for the third quarter and nine months ended September 30, 2014.

 

In $ thousands 

Q3 2014

Q3 2013 

Q1-Q3 2014 

Q1-Q3 2013

Revenues 

$6,007

$4,758 

$16,448

$14,775

Gross margin 

66.0%

50.4% 

69.2%

61.6%

Net profit (loss) (GAAP)

$776

$(1,148)

$1,093

$(1,537)

Net profit (loss) (non-GAAP)

$872

$(1,017)

$1,480

$(1,108)

Cash & equivalents (at end of period)

$4,509

$1,393

$4,509

$1,393

Collections

$4,820

$3,477

$17,761

$11,572

 

Financial Results

 

Third Quarter: RADCOM’s revenues for the third quarter totaled $6.0 million, up 26% compared with Q3 2013 and 21% compared with Q2 2014. Gross margin for the quarter increased to 66.0% from 50.4% in Q3 2013. The significant rise in gross margin reflected the Company’s continued transition to a software-driven business model together with the sales of MaveriQ, its NFV-ready software-based solution, countered partially by the lower margins of some older projects not yet completed.

Net income for the quarter totaled $776,000, or $0.10 per basic ordinary share ($0.09 per diluted ordinary share) compared with a net loss of $(1,148,000), or $(0.15) per ordinary share (basic and diluted), for the third quarter of 2013. This is more than triple the $207,000 net profit reported in Q2 2014, representing a record net margin of 12.9%.

On a non-GAAP basis, net income totaled $872,000, or $0.11 (basic) and $.010 (diluted) per ordinary share, compared with a net loss of $(1,017,000), or $(0.13) per ordinary share (basic and diluted), for the third quarter of 2013. This represented a record non-GAAP net margin of 14.5%.

Collections during the period totaled $4.8 million, raising the Company’s cash balance to $4.5 million at the end of the quarter, up 17% compared with the second quarter and 280% compared with the end of 2013.

First Nine Months of 2014: For the first nine months of 2014, RADCOM’s revenues increased by 11% to $16.4 million from $14.8 million in the first nine months of 2013. Gross margin for the period increased to 69.2% from 61.6% in the prior-year period, reflecting the Company’s ongoing transition to a software company, as mentioned above.

Net income for the first nine months totaled $1.1 million, or $0.14 (basic) and $0.13 (diluted) per ordinary share, compared with the net loss of $(1.5) million, or $(0.22) per ordinary share (basic and diluted), recorded in the first nine months of 2013. On a non-GAAP basis, net income for the period totaled $1.5 million, or $0.18 (basic) and $0.17 (diluted) per ordinary share, compared with the non-GAAP net loss of $(1,100,000), or $(0.16) per ordinary share (basic and diluted) reported in the first nine months of 2013.

Comments of Management

“We are very pleased to report another strong quarter that is moving RADCOM to new levels of revenues, profits and margins,” commented Mr. David Ripstein, RADCOM’s President and CEO. “With revenues above $6 million and growing sales of software-based products, our gross margin continues to climb towards our long-term target of above 75%. This has enabled us to deliver our fourth straight profitable quarter and third straight quarter of positive cash flow, achieving an all-time record for our operating and net profit with a 14.5% net margin (non-GAAP). And we believe the best is still ahead.”

 

Mr. Ripstein continued, “These outstanding results derive from the market’s exceedingly strong reception of MaverIQ, our unique software-based CEM solution, whose superior ‘anti-churn’ capabilities are being recognized by Tier I & Tier II 4G/LTE/Data service providers throughout the world. This capability has given us entry into more and larger tenders than ever before, and we are enjoying a strong win rate. We feel well positioned to grow in step with the LTE build-out, a trend we believe has the power to continue driving our results throughout 2015.”

 

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 30th 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 visitwww.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.

 

 

.

RADCOM LTD.

Consolidated Statements of Operations

 

 

Three months ended 
 September 30,

 

Nine months ended 
 September 30,

 

 

2014

 

2013

 

2014

 

2013

 

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

Sales

 $6,007

 

 $4,758

 

 $  16,448

 

 $14,775

 

Cost of sales

2,044

 

2,361

 

5,069

 

5,678

 

Gross profit

3,963

 

2,397

 

11,379

 

9,097

 

Research and development, gross

1,397

 

1,264

 

4,483

 

4,135

 

Less - royalty-bearing participation

719

 

271

 

1,306

 

940

 

Research and development, net

678

 

993

 

3,177

 

3,195

 

Sales and marketing

1,650

 

1,920

 

5,371

 

5,710

 

General and administrative

550

 

547

 

1,686

 

1,525

 

Total operating expenses

2,878

 

3,460

 

10,234

 

10,430

 

Operating income (loss)

           1,085

 

           (1,063)

 

1,145

 

 (1,333)

 

Financing expenses, net

(309)

 

(85)

 

 (52)

 

(204)

 

Income (loss) before taxes

776

 

(1,148)

 

1,093

 

(1,537)

 

Taxes

 -

 

 -

 

-

 

-

 

Net Income (loss)

$ 776

 

$ (1,148)

 

  $ 1,093

 

  $(1,537)

 

 

Basic net income (loss) per ordinary  share

 $ 0.10

 

 $(0.15)

 

 $0.14

 

 $( 0.22)

 

Diluted net income (loss) per ordinary  share

$ 0.09

 

$(0.15)

 

$ 0.13

 

$( 0.22)

 

 

Weighted average number of ordinary shares used in     computing basic net income (loss) per ordinary share

8,073,268

 

7,814,034

 

8,021,425

 

7,138,946

 

 

Weighted average number of ordinary shares used in     computing diluted net income  (loss) per ordinary share

8,515,158

 

7,814,034

 

8,493,472

 

7,138,946

 

 

 

 

 

 

 

 

 

 

 

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,

 

2014

 

2013

 

2014

 

2013

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

 

 

 

 

 

 

 

GAAP net income (loss)

$776

 

$(1,148)

 

$1,093

 

$(1,537)

Stock-based compensation (1)

96

 

131

 

387

 

429

Non-GAAP net income (loss)

$872

 

$(1,017)

 

$1,480

 

$(1,108)

Non-GAAP net income (loss) per share (basic)

$0.11

 

$(0.13)

 

$0.18

 

$(0.16)

Non-GAAP net income (loss) per share (diluted)

$0.10

 

$(0.13)

 

$0.17

 

$(0.16)

 

 

 

 

 

 

 

 

Number of shares used in computing Non-GAAP earnings (loss) per share (basic)

8,073,268

 

7,814,034

 

8,021,425

 

7,138,946

Number of shares used in computing Non-GAAP earnings (loss) per share (diluted)

8,515,158

 

7,814,034

 

8,493,472

 

7,138,946

 

 

 

 

 

 

 

 

(1) Stock-based compensation:

 

 

 

 

 

 

 

Cost of sales

2

 

1

 

11

 

7

Research and development

34

 

20

 

135

 

107

Selling and marketing

29

 

14

 

133

 

75

General and administrative

31

 

96

 

108

 

240

 

96

 

131

 

387

 

429

 

 

RADCOM Ltd. 

Consolidated Balance Sheets 

(1000's of U.S. dollars)  

 

As of 

 

As of 

 

September 30,

2014

 

December 31,

2013

 

unaudited

 

(audited)

Current assets

 

 

 

     Cash and cash equivalents

4,509

 

1,185

     Restricted cash

-

 

1,505

     Trade receivables, net

5,430

 

5,723

     Inventories

3,340

 

4,352

     Other receivables

2,824

 

3,092

Total current assets

16,103

 

15,857

Severance pay fund

3,306

 

3,535

Property and equipment, net

212

 

253

Total Assets 

19,621

 

19,645

 

 

 

 

Liabilities and shareholders' equity 

 

 

 

Current liabilities  

 

 

 

     Short term bank credit

-

 

629

     Trade payables

1,184

 

2,257

     Deferred revenue and advances from customers

1,050

 

1,305

     Employees and payroll accruals

1,949

 

2,109

     Other payables and accrued expenses

1,773

 

1,795

Total current liabilities

5,956

 

8,095

Long-term liabilities

 

 

 

     Deferred revenue

515

 

107

     Accrued severance pay       

3,712

 

3,944

Total long-term liabilities

4,227

 

4,051

 

 

 

 

Total liabilities

10,183

 

12,146

 

 

 

 

Shareholders' equity  

 

 

 

     Share capital  

345

 

335

     Additional paid-in capital

66,728

 

65,791

     Accumulated other comprehensive loss

(906)

 

(805)

     Accumulated deficit

(56,729)

 

(57,822)

Total shareholders' equity

9,438

 

7,499

 

 

 

 

Total liabilities and shareholders' equity

19,621

 

19,645