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Radcom Ltd (RDCM)
NASDAQ:RDCM
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Radcom
(NASDAQ:RDCM)
Rating:76Outperform
Price Target:―
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
$207.42M
Dividend YieldN/A
Average Volume (3M)47.77K
Price to Earnings (P/E)24.5
Beta (1Y)0.43
Revenue Growth18.23%
EPS Growth81.31%
CountryUS
Employees307
SectorCommunication Services
Sector Strength86
IndustryTelecommunications Services
Share Statistics
EPS (TTM)0.25
Shares Outstanding16,029,316
10 Day Avg. Volume81,277
30 Day Avg. Volume47,773
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 Cap0.90
Enterprise Value/Revenue0.81
Enterprise Value/Gross Profit4.12
Enterprise Value/Ebitda23.48
Forecast
1Y Price Target
$18.00Price Target Upside41.07% 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 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
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.85
Very Positive
Balance Sheet
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.78
Positive
Cash Flow
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.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| 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
Positive
12.76
Price Trends
11.83
Positive
12.36
Positive
11.49
Positive
Market Momentum
0.47
Negative
57.43
Neutral
43.36
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 12.76 is above the 20-day moving average (MA) of 12.41, above the 50-day MA of 11.83, and above the 200-day MA of 11.49, indicating a bullish trend. The MACD of 0.47 indicates Negative momentum. The RSI at 57.43 is Neutral, neither overbought nor oversold. The STOCH value of 43.36 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
1.
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
2.
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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $207.42M | 24.51 | 9.35% | ― | 18.23% | 81.31% | |
65 Neutral | $387.83M | ― | 0.20% | ― | 9.62% | ― | |
63 Neutral | $136.12M | ― | ― | ― | ― | ||
60 Neutral | $14.12B | 6.43 | -3.57% | 3.69% | 2.49% | -35.43% | |
58 Neutral | $619.67M | ― | -12.42% | ― | 1.91% | 15.71% | |
52 Neutral | $213.64M | ― | -5.79% | 6.74% | -5.46% | -76.33% | |
45 Neutral | $39.81M | ― | 174.77% | ― | -1.52% | 22.36% |
* Communication Services Sector Average
Performance Comparison
RDCM
Radcom
12.76
3.61
39.45%
ATNI
ATN International
14.04
-8.49
-37.68%
SIFY
Sify Technologies
5.10
-3.81
-42.76%
RBBN
Ribbon Communications
3.51
0.40
12.86%
KORE
KORE Group Holdings
2.32
-1.19
-33.90%
SNRE
Sunrise Communications AG Unsponsored ADR Class A
52.40
9.58
22.37%
Radcom Earnings Call Summary
Earnings Call Date:May 14, 2025
(Q1-2025)
| % Change Since: -0.70%|
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.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.