RADCOM Announces Financial Results for Third Quarter and First Nine Months of 2012 Bookings in Q3 almost doubled compared to Q2 and $18.5 Million of Backlog reinforces path to growth and profitability
TEL AVIV, Israel, October 23, 2012 /PRNewswire/ --
RADCOM Ltd. (RDCM), a leading service assurance provider, today announced its financial results for the third quarter and first nine months of 2012.
Discussion of Financial Results
Third Quarter of 2012: Revenues for the quarter ended September 30, 2012 totaled $3.0 million, a 12% decrease compared to $3.4 million for the third quarter of 2011, the result of multiple projects which have been booked, but not fully completed and are expected to be completed and recognized in the coming quarters. Gross margin for the quarter was 57%, compared to 60% for the third quarter of 2011.
Net loss for the quarter ended September 30, 2012 was $(1.8) million or $(0.28) per ordinary share (basic and diluted), compared to a loss of ($2.2M), or $(0.34) per ordinary share (basic and diluted) for the third quarter of 2011. The decrease in the loss is mainly a result of cost cutting measures taken by the company.
Excluding non-cash stock-based compensation expenses for all periods, the Company's non-GAAP net loss for the quarter ended September 30, 2012 was $(1.7) million, or $(0.26) per ordinary share (basic and diluted), compared to net loss of $(2.0) million or $(0.31) per ordinary share (basic and diluted) for the third quarter of 2011.
First 9 Months of 2012: Revenues for the first nine months of 2012 were $12.0 million, a 19% decrease compared to $15.0 million for the first nine months of 2011. Gross profit for the period was 62%, compared to 69% during the first nine months of 2011. The decrease in the gross profit is mainly a result of the lower sales. Net loss for the period was $(4.4) million or $(0.69) per ordinary share (basic and diluted), compared to a net loss of $(2.0) million or $(0.31) per ordinary share (basic and diluted) for the first nine months of 2011. Excluding non-cash stock-based compensation expenses for all periods, the Company's non-GAAP net loss for the first nine months of 2012 was $(4.0) million, or $(0.63) per ordinary share (basic and diluted), compared to a loss of $(1.3) million or $(0.21) per ordinary share (basic and diluted) for the first nine months of 2011.
Comments of Management
"We are emerging from the slowdown that has impacted the telecom industry. This is evidenced in our Q3 bookings which have almost doubled compared to the previous quarter," commented David Ripstein, RADCOM's chief executive officer "however, our product mix has been weighted more heavily towards larger contracts with longer completion cycles and that has delayed revenue recognition. We were unable to recognize the recently announced, $3 million Tier-1 contract in Q3, due to revenue recognition accounting guidelines. This recognition would have significantly improved the quarter results, and also inhibits our goal of being operationally profitable for the second half of this year, however, it will be recognized in the coming quarters. The improved trends in the telecom industry witnessed in the last few months has led to a higher bookings rate. Our customers satisfaction with our products also result in a higher volume of repeat orders from our install base. This will help us attain our goal of moving to profitability, complete work more rapidly and hopefully experience less fluctuation. Our backlog continued to grow, now at $18.5 million, and we are encouraged that we'll deliver a better Q4 to close the year."
Earnings conference call
RADCOM's management will hold an interactive conference call today at 9:00 a.m. 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 24th on RADCOM's website.
RADCOM provides innovative service assurance solutions for communications service providers and equipment vendors. RADCOM specializes in solutions for next-generation networks, both wireless and wireline. RADCOM's comprehensive, carrier-strength solutions are used to prevent service provider revenue leakage and to enable management of customer care. RADCOM's products facilitate fault management, network service performance analysis, troubleshooting and pre-mediation with an OSS/BSS. RADCOM's shares are listed on the NASDAQ Capital Market under the symbol RDCM. For more information, please visit http://www.RADCOM.com.
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 (1000's of U.S. dollars, except share and per share data) Three months ended Nine months ended September 30, September 30, 2012 2011 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) Sales $ 3,030 $ 3,449 $ 12,068 $ 14,983 Cost of sales 1,303 1,366 4,566 4,570 Gross profit 1,727 2,083 7,502 10,413 Research and development, gross 1,539 1,457 4,602 4,332 Less - royalty-bearing participation 411 257 1,141 1,006 Research and development, net 1,128 1,200 3,461 3,326 Sales and marketing 1,964 2,346 6,734 7,246 General and administrative 438 520 1,449 1,721 Total operating expenses 3,530 4,066 11,644 12,293 Operating loss (1,803) (1,983) (4,142) (1,880) Financing expenses, net (7) (186) (184) (88) Loss before taxes (1,810) (2,169) (4,326) (1,968) Taxes - - (120) - Net loss (1,810) (2,169) $ (4,446) (1,968) Basic and Diluted net loss per ordinary share $ (0.28) $ (0.34) $ ( 0.69) $ (0.31) Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share 6,450,465 6,373,675 6,439,478 6,357,003
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, 2012 2011 2012 2011 (unaudited) (unaudited) (unaudited) (unaudited) GAAP net loss $(1,810) $(2,169) $(4,446) $(1,968) Stock-based compensation(1) 126 195 397 620 Non-GAAP net loss $(1,684) $(1,974) $(4,049) $(1,348) Non-GAAP loss per share (diluted) $(0.26) $(0.31) $(0.63) $(0.21) Number of shares used in computing Non-GAAP loss per share (diluted) 6,450,465 6,373,675 6,439,478 6,357,003 (1)Stock-based compensation: Cost of sales 3 6 12 23 Research and development 46 70 144 177 Selling and marketing 41 52 133 197 General and administrative 36 67 108 223 126 195 397 620
RADCOM Ltd. Consolidated Balance Sheets (1000's of U.S. dollars) As of As of September 30, December 31, 2012 2011 (unaudited) Current Assets Cash and cash equivalents $ 1,076 $ 2,901 Restricted cash 724 - Trade receivables, net 5,035 5,389 Inventories 6,555 6,590 Other receivables 3,858 3,490 Total Current Assets 17,248 18,370 Severance pay fund 2,885 2,674 Property and equipment, net 272 301 Total Assets 20,405 21,345 Liabilities and Shareholders' Equity Short term loan and bank credit 847 - Trade payables 2,676 2,703 Deferred revenue 817 623 Other payables and accrued expenses 6,396 4,374 Total Current Liabilities 10,736 7,700 Long-Term Liabilities Deferred revenue 74 161 Accrued severance pay 3,303 3,092 Total Long-Term Liabilities 3,377 3,253 Total Liabilities 14,113 10,953 Shareholders' Equity Share capital 251 250 Additional paid-in capital 61,195 60,754 Accumulated other comprehensive loss (293) (197) Accumulated deficit (54,861) (50,415) Total Shareholders' Equity 6,292 10,392 Total Liabilities and Shareholders' Equity $ 20,405 $ 21,345
James Carbonara, Regional Vice President
SOURCE RADCOM Ltd