Radcom (RDCM) AI Stock Analysis

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Radcom

(NASDAQ:RDCM)

Rating:76Outperform

Price Target:―

Radcom's overall stock score reflects its strong financial performance, with robust revenue growth and improved profitability. The technical analysis indicates potential short-term challenges, but the company's strategic initiatives and partnerships offer promising growth opportunities. Valuation appears reasonable given the earnings growth potential, though the lack of dividends may deter some investors. Overall, Radcom is well-positioned for continued success, provided it can address cash flow management.

Positive Factors

Earnings

Radcom reported a record first quarter, with revenue up 17.5% year-over-year, above consensus expectations by 3.4%.

Product Development

Radcom introduced productization of RADCOM ACE into flexible packages to meet the needs of operators of all sizes.

Strategic Partnerships

The multiyear deal with Norlys highlights the growing value of GenAI capabilities within intelligence assurance and progress in geographic expansion.

Negative Factors

Expansion Strategy

Radcom will broaden its sales strategy and go-to-market to increase its focus on midtier operators, particularly in the European market.

Market Challenges

Radcom is not seeing any impact from macro uncertainties related to tariffs, which makes sense as it is a few steps removed from being directly affected.

Revenue Guidance

Full-year revenue guidance for 2025 of $68.3 million-$70.2 million, reflecting over 13% growth, was roughly $2 million ahead of consensus at the midpoint.

Radcom (RDCM) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$210.95M

Dividend YieldN/A

Average Volume (3M)48.38K

Price to Earnings (P/E)25.4

Beta (1Y)0.45

Revenue Growth18.23%

EPS Growth81.31%

CountryUS

Employees307

SectorCommunication Services

Sector Strength88

IndustryTelecommunications Services

Share Statistics

EPS (TTM)0.25

Shares Outstanding16,029,316

10 Day Avg. Volume79,686

30 Day Avg. Volume48,383

Financial Highlights & Ratios

PEG Ratio-4.50

Price to Book (P/B)2.09

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.88

Enterprise Value/Revenue0.81

Enterprise Value/Gross Profit4.12

Enterprise Value/Ebitda23.48

Forecast

1Y Price Target

$18.00

Price Target Upside34.03% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Radcom Business Overview & Revenue Model

Company DescriptionRADCOM Ltd. provides 5G ready cloud-native network intelligence and service assurance solutions for telecom operators or communication service providers (CSPs). It offers RADCOM ACE, including RADCOM Service Assurance, a cloud-native, 5G-ready, and virtualized service assurance solutions, which allows telecom operators to gain end-to-end network visibility and customer experience insights across all networks; RADCOM Network Visibility, a cloud-native network packet broker and filtering solution that allows CSPs to manage network traffic at scale across multiple cloud environments, and control the visibility layer to perform analysis of select datasets; and RADCOM Network Insights, a business intelligence solution that offers insights for multiple use cases enabled by data captured and correlated through RADCOM Network Visibility and RADCOM Service Assurance. The company also provides solutions for mobile and fixed networks, such as 5G, long term evolution, voice over LTE, voice over Wifi, IP multimedia subsystem, voice over IP, and universal mobile telecommunication service. It sells its products directly, as well as through a network of distributors and resellers in North America, Asia, Latin America, Europe, the Middle East, and Africa. The company was formerly known as Big Blue Catalogue Ltd. and changed its name to RADCOM Ltd. in 1989. RADCOM Ltd. was incorporated in 1985 and is headquartered in Tel Aviv, Israel.

How the Company Makes MoneyRadcom makes money primarily through the sale of its software solutions and related services to telecommunications operators. The company's revenue model is based on software licensing, where telecom operators pay for the right to use Radcom's network intelligence solutions. Additionally, Radcom offers maintenance and support services, which provide a recurring revenue stream. The company may also engage in strategic partnerships and collaborations with major telecom companies, enhancing its market reach and customer base. These partnerships often contribute significantly to its earnings, especially as global demand for advanced network monitoring solutions continues to grow with the rollout of new technologies like 5G.

Radcom Earnings Call Summary

Earnings Call Date:May 14, 2025

(Q1-2025)

% Change Since: 4.51%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Positive

RADCOM showed strong performance with record-breaking revenue, strategic partnerships, and raised revenue guidance. However, there were some concerns such as decreased grants and increased expenses. Overall, the positive aspects significantly outweighed the negatives.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

RADCOM achieved a record company revenue for the first quarter of 2025, reflecting a 17.5% year-over-year growth with substantial profitability improvement and cash generation. Operating margins increased by more than 6.5% year-over-year, with $4.4 million positive cash flow.

Strategic Partnerships and AI Integration

RADCOM announced important partnerships with ServiceNow and Nvidia, leveraging AIOps and agentic AI. They integrated with ServiceNow's AI Agent Fabric for seamless workflows and plan to evaluate their high-capacity user analytics solution in Nvidia's labs.

Raising Full-Year Revenue Guidance

RADCOM raised its full-year 2025 revenue growth outlook from 12%-15% year-over-year, to 15% to 18% year-over-year, with a midpoint of $71.1 million, representing a 16.5% increase compared to 2024.

Expansion in the Telecom Market

RADCOM extended and expanded a renewal of a tier-one, multi-year contract in North America, reflecting confidence in their solution. They also reported growth in the telecom sector, driven by 5G standalone networks and AI technologies.

Negative Updates

Decrease in Israel Innovation Authority Grant

RADCOM received a grant of $25,000 from the Israel Innovation Authority during the quarter, compared to $209,000 in the same quarter last year.

Increase in R&D and Sales Expenses

Non-GAAP gross R&D expenses for the first quarter of 2025 were $4.3 million, up 5.8% year-over-year. Sales and marketing expenses increased by $461,000 from the first quarter of 2024.

Company Guidance

During the RADCOM Limited first quarter 2025 earnings call, the company provided several key metrics and guidance for the fiscal year. RADCOM achieved a record revenue of $16.6 million, reflecting a 17.5% year-over-year growth, with an operating margin increase of over 6.5%. The company reported a positive cash flow of $4.4 million, with cash and cash equivalents reaching $99.1 million as of March 31, 2025. Non-GAAP operating income for the quarter was $3.1 million, or 19% of revenue, up $1.4 million from the same period last year. The non-GAAP gross margin stood at 76.3%. RADCOM raised its full-year 2025 revenue growth outlook to between 15% and 18%, with a midpoint of $71.1 million, representing a 16.5% increase compared to 2024. The company emphasized its strategic focus on AI-driven solutions, including agentic AI, and highlighted partnerships with industry leaders such as ServiceNow and Nvidia to expand its market presence.

Radcom Financial Statement Overview

Summary

Radcom demonstrates solid financial health with strong revenue growth and improving profitability margins. The balance sheet is sturdy with low leverage and increasing equity, although recent cash flow performance indicates a need for improved cash management strategies. Overall, the company is well-positioned but must address cash flow challenges to sustain growth.

Income Statement

Very Positive

Radcom has shown strong revenue growth over the years, with a significant increase from $33.01M in 2019 to $61.01M in 2024. The gross profit margin improved to 74.2% in 2024 from 69.9% in 2019, indicating effective cost management. Net profit margin also turned positive, reaching 11.42% in 2024, showcasing improved profitability. EBIT and EBITDA margins have turned positive, further signifying enhanced operational efficiency.

Balance Sheet

Positive

The company's balance sheet is robust with a low debt-to-equity ratio of 0.04 in 2024, indicating low financial leverage. The equity ratio stands at 73.3%, reflecting a strong capital structure. Return on equity improved significantly to 7.28% in 2024, showing better utilization of equity to generate profits. The steady increase in stockholders' equity over the years adds to financial stability.

Cash Flow

Neutral

Radcom's cash flow statement shows some volatility with free cash flow falling to zero in 2024 after positive figures in previous years. Operating cash flow was also zero in 2024, a decline from $4.71M in 2023. Despite past positive free cash flow growth, the recent decline suggests challenges in cash generation that need attention.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
61.01M	51.60M	46.05M	40.28M	37.56M
	Gross Profit
45.26M	37.83M	33.34M	28.86M	26.80M
	EBIT
3.09M	-662.00K	-4.11M	-5.49M	-4.58M
	EBITDA
3.71M	16.00K	-3.64M	-4.95M	-3.88M
	Net Income Common Stockholders
6.97M	3.71M	-2.26M	-5.26M	-3.99M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
94.67M	82.17M	77.66M	70.57M	68.96M
	Total Assets
130.57M	107.53M	101.00M	91.66M	93.64M
	Total Debt
3.40M	1.62M	2.48M	1.94M	3.04M
	Net Debt
-15.84M	-9.27M	-7.05M	-10.01M	-10.51M
	Total Liabilities
34.90M	25.04M	28.22M	21.51M	21.62M
	Stockholders Equity
95.68M	82.49M	72.78M	70.15M	72.02M
Cash Flow		Free Cash Flow
10.96M	4.47M	5.87M	1.56M	-477.00K
	Operating Cash Flow
11.39M	4.71M	6.02M	2.00M	-50.00K
	Investing Cash Flow
-2.74M	-3.59M	-8.43M	-3.50M	7.60M
	Financing Cash Flow
0.00	0.00	0.00	0.00	0.00

Radcom Technical Analysis

Technical Analysis Sentiment

Positive

Last Price13.43

Price Trends

50DMA

11.91

Positive

100DMA

12.39

Positive

200DMA

11.54

Positive

Market Momentum

MACD

0.43

Negative

RSI

61.91

Neutral

STOCH

46.05

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDCM, the sentiment is Positive. The current price of 13.43 is above the 20-day moving average (MA) of 12.72, above the 50-day MA of 11.91, and above the 200-day MA of 11.54, indicating a bullish trend. The MACD of 0.43 indicates Negative momentum. The RSI at 61.91 is Neutral, neither overbought nor oversold. The STOCH value of 46.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RDCM.

Radcom Risk Analysis

Radcom disclosed 45 risk factors in its most recent earnings report. Radcom reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 2 New Risks

Our use of AI, GenAI, ML, data analytics and similar tools and technologies, or, collectively, AI and Related Tools, as well as applications, features, and functionality that we may introduce in the future, may result in difficulties, including with product development and integration and accuracy of the results and may otherwise not prove efficient or profitable, may not be widely or timely accepted by our customers or the market, may enhance intellectual property, cybersecurity, operational and technological risks, or may otherwise adversely impact our business or operations, or subject us to possible litigation. Q4, 2023

Our business may be affected by sanctions, export controls and similar measures targeting Russia and other countries and territories in connection with the military conflict between Russia and Ukraine. Q4, 2023

Radcom Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RDCM	76 Outperform	$210.95M	25.44	9.35%	―	18.23%	81.31%
SIFY	65 Neutral	$369.05M	―	0.20%	―	9.62%	―
SNRE	63 Neutral	$136.64M	―		―	―	―
Sector *	61 Neutral	$14.31B	5.82	-4.20%	3.66%	2.74%	-36.46%
RBBN	58 Neutral	$630.26M	―	-12.42%	―	1.91%	15.71%
ATNI	52 Neutral	$222.31M	―	-5.79%	6.57%	-5.46%	-76.33%
KORE	51 Neutral	$40.67M	―	174.77%	―	-1.52%	22.36%

* Communication Services Sector Average

Performance Comparison

RDCM

Radcom

13.43

4.38

48.40%

ATNI

ATN International

14.45

-8.21

-36.23%

SIFY

Sify Technologies

5.00

-5.08

-50.40%

RBBN

Ribbon Communications

3.49

0.33

10.44%

KORE

KORE Group Holdings

2.46

-0.74

-23.13%

SNRE

Sunrise Communications AG Unsponsored ADR Class A

51.45

8.63

20.15%

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.