RADCOM Reports Second Quarter 2017 Financial Results

Q2 Revenues up 24% Year-Over-Year to $8.9 million

Cash and Cash Equivalents of $36.2 million and No Debt as of June 30, 2017

TEL-AVIV, Israel – August 7, 2017-- RADCOM Ltd. (NASDAQ: RDCM) today reported its financial results for the second quarter ended June 30, 2017.

“Our strong second quarter results were driven by our relationship with AT&T, an expansion of our relationship with one of our strategic accounts in APAC, as well as ongoing momentum with other Tier 1 service providers globally,” commented Mr. Yaron Ravkaie, RADCOM’s CEO. “During the quarter, we finalized an NFV trial with a top-tier service provider, which we expect to result in a new NFV project for the company. Given the ongoing momentum, we are reiterating our 2017 revenue guidance of $36-$39 million.”

Second Quarter 2017 Financial Highlights

Revenues: Total revenues for the second quarter were $8.9 million, up 24% compared to $7.2 million in the second quarter of 2016.

Net Income/(Loss): GAAP net loss for the period was $(0.2) million, or a loss of $(0.02) per diluted share, compared to net income of $1.7 million, or $0.17 per diluted share for the second quarter of 2016.

Non-GAAP Net Income: Non-GAAP net income for the period was $0.4 million, or $0.03 per diluted share, compared to net income of $2.0 million, or $0.20 per diluted share for the second quarter of 2016.

Both GAAP and non-GAAP results for the second quarter of 2017 included a $312,000, or $0.03 per diluted share, benefit related to grants from the Israel Innovation Authority (formerly Office of the Chief Scientist) compared to $756,000, or $0.07 per diluted share, in the second quarter of 2016.

Balance sheet: As of June 30, 2017, the Company had cash and cash equivalents of $36.2 million and no debt.

Earnings Conference Call
RADCOM's management will hold an interactive conference call today at 8:00 AM 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: +972-3-918-0610

For those unable to listen to the call at the time, a replay will be available from August 8^th on RADCOM's website.

About RADCOM

RADCOM (NASDAQ: RDCM) is a first-mover and leading provider of NFV-ready service assurance and customer experience management solutions for Communications Service Providers (CSPs). RADCOM’s software - MaveriQ - continuously monitors network performance and quality of services, to optimize user experience for CSPs’ subscribers. RADCOM specializes in solutions for next-generation mobile and fixed networks, including LTE, VoLTE, IMS and others. MaveriQ enables CSPs to smoothly migrate their networks to NFV by assuring physical, NFV-based and hybrid networks. For more information, please visit 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 the Company’s financial performance. By excluding non-cash stock-based compensation that has been expensed in accordance with ASC Topic 718, the Company’s non-GAAP results provide information to both management and investors that is useful in assessing the Company’s core operating performance and in evaluating and comparing the Company’s 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 and other securities laws. For example, when the Company discusses its revenue guidance for 2017 and expected new projects for the Company it is using foward-looking statements. 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 U.S. Securities and Exchange Commission. The Company does not undertake to revise or update any forward-looking statements for any reason.

RADCOM Ltd. Consolidated Statement of Operations
(thousands of U.S. dollars, except share and per share data)

	Three months ended June 30,					Six months ended June 30,
	2017			2016		2017			2016
	(unaudited)			(unaudited)		(unaudited)			(unaudited)
Revenues	$	8,917		$	7,200	$	16,957		$	13,747
Cost of revenues		2,643			2,136		4,665			3,829
Gross profit		6,274			5,064		12,292			9,918
Research and development, gross		2,739			1,632		5,227			3,468
Less - royalty-bearing participation		312			756		312			756
Research and development, net		2,427			876		4,915			2,712
Sales and marketing, net		2,989			1,732		5,886			3,259
General and administrative		1,098			1,156		2,158			2,027
Total operating expenses		6,514			3,764		12,959			7,998
Operating (loss) income		(240	)		1,300		(667	)		1,920
Financial income, net		41			447		150			736

(Loss) income before taxes		(199	)		1,747		(517	)		2,656
Taxes		(5	)		-		(23	)		(6	)

Net (loss) income	$	(204	)	$	1,747	$	(540	)	$	2,650

Basic net (loss) income per ordinary share	$	(0.02	)	$	0.18	$	(0.05	)	$	0.28
Diluted net (loss) income per ordinary share	$	(0.02	)	$	0.17	$	(0.05	)	$	0.27
Weighted average number of ordinary shares used in computing basic net (loss) income per ordinary share		11,695,750			9,875,268		11,673,240			9,322,930
Weighted average number of ordinary shares used in computing diluted net (loss) income per ordinary share		11,695,750			10,117,835		11,673,240			9,733,037

RADCOM LTD.

Reconciliation of GAAP to Non-GAAP Financial Information

(thousands of U.S. dollars, except share and per share data)

	Three months ended June 30,					Six months ended June 30,
	2017			2016		2017			2016
GAAP gross profit		6,274			5,064		12,292			9,918
Stock-based compensation		20			27		67			42
Non-GAAP gross profit		6,294			5,091		12,359			9,960

GAAP Research and development, net		2,427			876		4,915			2,712
Stock-based compensation		133			69		242			239
Non-GAAP Research and development, net		2,294			807		4,673			2,473

GAAP sales and marketing, net		2,989			1,732		5,886			3,259
Stock-based compensation		144			31		272			51
Non-GAAP sales and marketing, net		2,845			1,701		5,614			3,208

GAAP general and administrative		1,098			1,156		2,158			2,027
Stock-based compensation		323			123		659			355
Non-GAAP general and administrative		775			1,033		1,499			1,672

GAAP total operating expenses		6,514			3,764		12,959			7,998
Stock-based compensation		600			223		1,173			645
Non-GAAP total operating expenses		5,914			3,541		11,786			7,353

GAAP operating (loss) income		(240	)		1,300		(667	)		1,920
Stock-based compensation		620			250		1,240			687
Non-GAAP operating income		380			1,550		573			2,607

GAAP (loss) income before taxes		(199	)		1,747		(517	)		2,656
Stock-based compensation		620			250		1,240			687
Non-GAAP income before taxes		421			1,997		723			3,343

GAAP net (loss) income		(204	)		1,747		(540	)		2,650
Stock-based compensation		620			250		1,240			687
Non-GAAP net income		416			1,997		700			3,337

GAAP Net (loss) income per diluted share		(0.02	)		0.17		(0.05	)		0.27
Stock-based compensation		0.05			0.03		0.11			0.07
Non-GAAP Net income per diluted share		0.03			0.20		0.06			0.34

Weighted average number of shares used to compute diluted net income per share		12,032,429			10,117,835		11,992,539			9,733,037

RADCOM Ltd.

Consolidated Balance Sheets

(thousands of U.S. dollars)

	As of			As of
	June 30, 2017			December 31, 2016
	(unaudited)
Current Assets
Cash and cash equivalents		36,164			42,886
Restricted bank deposits		36			32
Trade receivables, net		10,674			4,388
Inventories		468			623
Other receivables		1,429			1,960

Total Current Assets		48,771			49,889

Severance pay fund		3,077			2,788

Other long-term receivables		361			375

Property and equipment, net		1,697			1,516

Total Assets		53,906			54,568

Liabilities and Shareholders' Equity
Current Liabilities
Trade payables		2,008			2,820
Deferred revenue and advances from customers		805			2,593
Employee and payroll accruals		3,515			3,541
Other payables and accrued expenses		2,357			2,081

Total Current Liabilities		8,685			11,035
Long-Term Liabilities
Deferred revenue		127			123
Accrued severance pay		3,608			3,267

Total Long-Term Liabilities		3,735			3,390

Total Liabilities		12,420			14,425

Shareholders' Equity
Share capital		530			523
Additional paid-in capital		100,163			98,283
Accumulated other comprehensive loss		(2,563	)		(2,559	)
Accumulated deficit		(56,644	)		(56,104	)

Total Shareholders' Equity		41,486			40,143

Total Liabilities and Shareholders' Equity		53,906			54,568