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Radcom Ltd (RDCM)
NASDAQ:RDCM
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Radcom
(NASDAQ:RDCM)
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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
Revenue Growth
Radcom's significant revenue growth reflects strong market demand for its solutions, indicating robust business expansion and increased market penetration, which is crucial for sustaining long-term growth.
Strategic Partnerships
The partnership with ServiceNow enhances Radcom's product offerings and market reach, fostering innovation and competitive advantage in network intelligence solutions, crucial for long-term success.
Balance Sheet Health
A strong balance sheet with low leverage provides Radcom with financial stability and flexibility to invest in growth opportunities, ensuring resilience against economic fluctuations.
Negative Factors
Cash Flow Challenges
The decline in free cash flow suggests potential challenges in cash generation, which could impact Radcom's ability to fund operations and growth initiatives without external financing.
Higher Operating Expenses
Rising operating expenses may pressure profit margins and require careful management to ensure that increased spending translates into proportional revenue growth.
Steady Net Income
Despite revenue growth, stagnant net income indicates potential inefficiencies or cost pressures that could hinder profitability improvements, requiring strategic adjustments.
Radcom (RDCM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$213.99M
Dividend YieldN/A
Average Volume (3M)55.12K
Price to Earnings (P/E)23.5
Beta (1Y)0.57
Revenue Growth18.18%
EPS Growth89.73%
CountryUS
Employees307
SectorCommunication Services
Sector Strength97
IndustryTelecommunications Services
Share Statistics
EPS (TTM)0.25
Shares Outstanding16,029,316
10 Day Avg. Volume52,040
30 Day Avg. Volume55,122
Financial Highlights & Ratios
PEG Ratio0.40
Price to Book (P/B)2.09
Price to Sales (P/S)3.28
P/FCF Ratio18.27
Enterprise Value/Market Cap0.60
Enterprise Value/Revenue1.95
Enterprise Value/Gross Profit2.60
Enterprise Value/Ebitda21.40
Forecast
1Y Price Target
$18.00Price Target Upside30.43% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Radcom Business Overview & Revenue Model
Company DescriptionRadcom Ltd. (RDCM) is a technology company that specializes in providing network intelligence solutions for telecommunications operators. The company develops, manufactures, and markets innovative software solutions that enable telecom operators to monitor and optimize their networks. Radcom's core products include performance management and service assurance solutions designed to ensure high-quality service delivery across complex network environments, including 5G, LTE, and VoLTE.
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:Aug 13, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Positive
RADCOM's earnings call reflected strong financial performance with record revenue growth, improved profitability, and a solid cash position. Strategic partnerships and positive market trends in 5G and AI are promising for future growth. However, challenges such as lack of R&D grant, currency impact on expenses, and uncertainties in new customer acquisition slightly temper the positive outlook.Q2-2025 Updates
Positive Updates
Record Revenue Growth
RADCOM achieved a new revenue record of $17.7 million in Q2 2025, reflecting a 19.3% year-over-year growth.
Strong Financial Position
The company ended Q2 with over $100 million in cash and no debt, marking the highest cash position in company history.
Improved Profitability
Non-GAAP operating income increased by more than 50% compared to Q2 last year, with an operating margin of nearly 20% of revenue.
Strategic Partnerships and Innovation
Collaborations with NVIDIA and ServiceNow are progressing well, contributing to innovation and market expansion.
Positive Market Trends
The telecom industry's convergence of 5G and AI provides growth opportunities, with RADCOM positioned to lead in this area.
Negative Updates
R&D Grant Absence
No grant was received from the Israel Innovation Authority in Q2 2025, unlike the previous year.
Currency Impact on Expenses
60% of operating expenses are in shekels, which are affected by the dollar weakening against the shekel, although not currently hedged.
Uncertain New Customer Acquisition
While there are several RFPs globally, the outcome and timing of new Tier 1 customer acquisitions are uncertain.
Company Guidance
During RADCOM's Second Quarter 2025 earnings call, the company reported a robust 19.3% year-over-year revenue growth, achieving a new revenue record of $17.7 million. The call highlighted the company's solid profitability and cash generation, ending the quarter with over $100 million in cash and no debt. Non-GAAP operating income increased by over 50% compared to the previous year, reaching $3.4 million, which represents 19.5% of quarterly revenues. RADCOM's non-GAAP gross margin stood at 76.2%, reflecting its strong position as a software company. The company remains focused on its strategic goals, including leveraging AI technologies and expanding its customer base, with a full-year revenue growth guidance of 15% to 18%. Throughout the call, RADCOM emphasized its commitment to innovation, strategic partnerships, and maintaining a competitive edge in the rapidly evolving telecom industry.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 | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 66.33M | 61.01M | 51.60M | 46.05M | 40.28M | 37.56M |
| Gross Profit | 49.67M | 45.26M | 37.83M | 33.34M | 28.86M | 26.80M |
| EBITDA | 6.03M | 3.77M | 16.00K | -3.64M | -4.95M | -3.88M |
| Net Income | 9.38M | 6.97M | 3.71M | -2.26M | -5.26M | -3.99M |
Balance Sheet | ||||||
| Total Assets | 136.38M | 130.57M | 107.53M | 101.00M | 91.66M | 93.64M |
| Cash, Cash Equivalents and Short-Term Investments | 101.63M | 94.67M | 82.17M | 73.66M | 70.57M | 68.96M |
| Total Debt | 3.55M | 3.40M | 1.62M | 2.48M | 1.94M | 3.04M |
| Total Liabilities | 32.30M | 34.90M | 25.04M | 28.22M | 21.51M | 21.62M |
| Stockholders Equity | 104.08M | 95.68M | 82.49M | 72.78M | 70.15M | 72.02M |
Cash Flow | ||||||
| Free Cash Flow | 0.00 | 10.96M | 4.47M | 5.87M | 1.56M | -477.00K |
| Operating Cash Flow | 0.00 | 11.39M | 4.71M | 6.02M | 2.00M | -50.00K |
| Investing Cash Flow | 0.00 | -2.74M | -3.59M | -8.43M | -3.50M | 7.60M |
| Financing Cash Flow | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
Radcom Technical Analysis
Negative
13.80
Price Trends
13.78
Negative
13.52
Negative
12.95
Positive
Market Momentum
-0.06
Positive
42.10
Neutral
24.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RDCM, the sentiment is Negative. The current price of 13.8 is below the 20-day moving average (MA) of 14.13, above the 50-day MA of 13.78, and above the 200-day MA of 12.95, indicating a neutral trend. The MACD of -0.06 indicates Positive momentum. The RSI at 42.10 is Neutral, neither overbought nor oversold. The STOCH value of 24.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 0 New Risks
Radcom Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $213.99M | 23.54 | 9.74% | ― | 18.18% | 89.73% | |
69 Neutral | $184.94M | 61.12 | 5.74% | ― | 13.10% | 1.03% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
55 Neutral | $301.12M | ― | -1.78% | ― | 5.42% | 69.88% | |
52 Neutral | $674.68M | ― | -11.45% | ― | 7.68% | 18.65% | |
51 Neutral | $700.49M | ― | -3.93% | 0.78% | 16.73% | -237.78% | |
48 Neutral | $226.42M | ― | -9.15% | 6.94% | -5.33% | -334.05% |
* Communication Services Sector Average
RDCM
Radcom
13.80
2.90
26.61%
ATNI
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14.99
-15.01
-50.03%
CXDO
Crexendo
6.13
0.25
4.25%
SHEN
Shenandoah Telecommunications Co
12.76
-0.85
-6.25%
RBBN
Ribbon Communications
3.93
0.53
15.59%
OOMA
Ooma
11.15
-1.02
-8.38%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.