RADCOM'S Q3 Sales Rise 54% YOY TO $4.8M, Yielding $0.07 EPS
4th Straight Quarter of Positive Operating Income
TEL-AVIV, Israel, October 25, 2010 /PRNewswire-FirstCall/ -- RADCOM Ltd. (RADCOM) (NASDAQ: RDCM), a leading network Service Assurance provider, today announced its unaudited financial results for the third quarter ended September 30, 2010.
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Financial Results for the Third Quarter of 2010
Revenues for the third quarter of 2010 were $4.8 million, up 54% compared with $3.1 million for the third quarter of 2009 and up 6% compared with $4.6 million for the second quarter of 2010. Gross margin for the period rose to 67.3% compared with 66.5% in the third quarter of 2009 and 66.9% in the second quarter of 2010.
According to U.S. generally accepted accounting principles (GAAP), net income for the third quarter was $361,000, or $0.07 per ordinary share (basic) and $0.06 per ordinary share (diluted), compared with a net loss of $394,000, or $0.08 per ordinary share (basic and diluted), for the third quarter of 2009, and net income of $80,000, or $0.02 per ordinary share (basic) and $0.01 per ordinary share (diluted), for the second quarter of 2010.
To provide investors with insight into the Company's underlying operating results, we are also presenting our financial results on a non-GAAP basis excluding share-based compensation expenses and change in fair value of warrants from all periods. According to this non-GAAP basis, net income for the quarter was $387,000, or $0.07 per diluted share, compared with a net loss of $219,000 or $0.04 per diluted share, for the third quarter of 2009, and net income of $487,000, or $0.09 per diluted share, for the second quarter of 2010.
Comments of Management
Commenting on the results, Mr. David Ripstein, RADCOM's President and CEO, said, "We are proud to report another period of rising sales and margins, an achievement that has enabled us to deliver four straight quarters of positive operating income since our turnaround in mid-2009. This continual improvement demonstrates the strong market need for our service quality management solutions, which are proving to be a solution-of-choice for NGN network operators plagued with difficult network performance challenges.
"In fact, operators throughout the world continue to struggle to overcome the slow data throughput, dropped calls and poor voice quality which have accompanied the increased usage of iPhones, Blackberrys and other 'smart' phones. As a result, interest in our products is high and growing, both from Tier I and other operators around the globe, all of whom need a solution for maintaining customer satisfaction and protecting existing revenues."
Mr. Ripstein continued, "As our Company moves on to a new level, we are taking steps to strengthen our financial platform. Earlier this month, we signed a definitive agreement for a $5.5 million private placement transaction (PIPE), a cash infusion which we will use to increase our working capital and flexibility."
"Taken as a whole, with favorable markets driving interest in our solutions, a stable financial platform and a motivated team, we feel well positioned, and continue pursuing our strategy to build our business momentum even further", concluded Mr. Ripstein.
Financial Results for the First Nine Months of 2010
Revenues for the first nine months of 2010 were $13.8 million, an increase of 78% compared with $7.7 million in the first nine months of 2009. Gross profit for the period rose to 66.8% compared with 62.7% in the first nine months of 2009.
According to U.S. generally accepted accounting principles (GAAP), operating income for the first nine months of 2010 was $1.3 million, compared to an operating loss of $2.6 million for the first nine months of 2009. Net income for the nine months of 2010 was $0.5 million, or $0.10 per ordinary share (basic) and $0.09 per ordinary share (diluted). This compared with a net loss of $2.8 million, or $0.54 per ordinary share (basic and diluted), for the first nine months of 2009.
To provide investors with insight into the Company's underlying operating results, financial results are also being presented on a non-GAAP basis excluding share-based compensation expenses and change in fair value of warrants from all periods. According to this non-GAAP basis, net income for the first nine months of 2010 was $1.2 million, or $0.21 per diluted share, compared with a net loss of $2.4 million, or $0.47 per ordinary share (basic and diluted) for the first nine months of 2009.
About RADCOM
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 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.
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 equity based compensation that has been expensed in accordance with ASC Topic 718 and change in fair value of warrants that has been expensed in accordance with ASC 815-40, 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 the words "estimate," "project," "intend," "expect," "'believe" and 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 per share data)
Three months ended
September 30,
2010 2009
(unaudited) (unaudited)
Sales $ 4,812 $ 3,115
Cost of sales 1,573 1,045
Gross profit 3,239 2,070
Research and development, gross 1,114 1,046
Less - royalty-bearing participation 380 480
Research and development, net 734 566
Sales and marketing 1,827 1,370
General and administrative (1) 358 413
Total operating expenses 2,919 2,349
Operating income (loss) 320 (279)
Financing income (loss), net 41 (115)
Net income (loss) 361 (394)
Basic net income (loss) per ordinary share $ 0.07 $ (0.08)
Diluted net income (loss) per ordinary share $ 0.06 $ (0.08)
Weighted average number of
ordinary shares used in
computing basic net income
(loss) per ordinary share 5,218,847 5,081,707
Weighted average number of
ordinary shares used in
computing diluted net income
(loss) per ordinary share 5,837,570 5,081,707
Cont.
Nine months ended
September 30,
2010 2009
(unaudited) (unaudited)
Sales $ 13,810 $ 7,741
Cost of sales 4,585 2,887
Gross profit 9,225 4,854
Research and development, gross 3,199 3,156
Less - royalty-bearing participation 1,141 1,265
Research and development, net 2,058 1,891
Sales and marketing 4,923 4,312
General and administrative (1) 991 1,245
Total operating expenses 7,972 7,448
Operating income (loss) 1,253 (2,594)
Financing income (loss), net (761) (157)
Net income (loss) 492 (2,751)
Basic net income (loss) per ordinary share $ 0.10 $ (0.54)
Diluted net income (loss) per ordinary share $ 0.09 $ (0.54)
Weighted average number of
ordinary shares used in
computing basic net income
(loss) per ordinary share 5,145,651 5,081,521
Weighted average number of
ordinary shares used in
computing diluted net income
(loss) per ordinary share 5,594,547 5,081,521
(1) Includes a decrease of $120,000 in allowance for doubtful accounts for the three month period ended September 30, 2010, and a decrease of $326,000 in allowance for doubtful accounts for the nine month period ended September 30, 2010.
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,
2010 2009 2010 2009
(unaudited) (unaudited) (unaudited) (unaudited)
GAAP net
income (loss) $361 $(394) $492 $(2,751)
Stock-based
compensation(1) 34 77 142 237
Change in fair
value of warrants (8) 98 524 107
Non-GAAP net
income (loss) $387 $(219) $1,158 $(2,407)
Non-GAAP earnings
(losses) per share
(diluted) $0.07 $(0.04) $0.21 $(0.47)
Number of shares
used in computing
Non-GAAP earnings
(losses) per share
(diluted) 5,837,570 5,081,707 5,594,547 5,081,521
(1)Stock-based
compensation:
Cost of sales 2 3 6 9
Research and
development 6 17 15 60
Selling and
marketing 4 26 39 81
General and
administrative 22 31 82 87
34 77 142 237
RADCOM Ltd.
Consolidated Balance Sheets
(1000's of U.S. dollars)
As of As of
September 30, December 31,
2010 2009
(unaudited) (unaudited)
Current Assets
Cash and cash equivalents 3,065 3,274
Trade receivables, net 3,624 3,610
Inventories 2,853 2,879
Other receivables 889 607
Total Current Assets 10,431 10,370
Severance pay fund 2,693 2,495
Property and equipment, net 375 575
Total Assets 13,499 13,440
Liabilities and Shareholders' Equity
Current Liabilities
Trade payables 1,523 1,117
Deferred revenue 646 478
Current maturities of long-term loan - 1,022
Other payables and accrued expenses 3,111 4,781
Total Current Liabilities 5,280 7,398
Long-Term Liabilities
Deferred revenue 246 85
Long term loan, net of current maturities - 170
Warrants related to long term loan - 248
Accrued severance pay 3,079 2,899
Total Long-Term Liabilities 3,325 3,402
Total Liabilities 8,605 10,800
Shareholders' Equity
Share capital 196 177
Additional paid-in capital 53,287 51,544
Accumulated deficit (48,589) (49,081)
Total Shareholders' Equity 4,894 2,640
Total Liabilities and Shareholders'
Equity 13,499 13,440
Contact:
Jonathan Burgin
CFO
+972-3-645-5004
[email protected]
SOURCE RADCOM Ltd
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