Radcom Ltd. EBITDA dropped on 190% and EBITDA Margin dropped on 16.7 pp from 8.4% to -8.3%
02/12/2019 • About Radcom Ltd. (
$RDCM) • By InTwits
Radcom Ltd. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -8.3%
- EBITDA Margin is quite volatile: -8.3% in 2018, 8.4% in 2017, 4.8% in 2016, -1.3% in 2015, 5.6% in 2014
- Radcom Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's a lot of higher than industry average of 7.6%.
- CAPEX is quite volatile: $1m in 2018, $1m in 2017, $1m in 2016, $0m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -4.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.4x while industry average is -0.5x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 8.5%. Revenue decline showed acceleration in 18Q4 - it was 62.5% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 16.7 pp from 8.4% to -8.3% in 2018.
Gross Margin increased on 2.1 pp from 71.8% to 74.0% in 2018. SG&A as a % of Revenue increased on 2.7 pp from 40.8% to 43.5% in 2018.
Net Income margin dropped on 14.9 pp from 7.8% to -7.1% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Radcom Ltd. had CAPEX/Revenue of 1.9%. Radcom Ltd.'s CAPEX/Revenue increased slightly on 1.4 pp from 0.52% in 2015 to 1.9% in 2018. Average CAPEX/Revenue for the last three years was 2.9%. During the last 5 years CAPEX as a % of Revenue topped in 2016 at 4.5% and was declining since that time.
Return on investment
The company operates at negative ROIC (-4.5%) and ROE (-3.1%). ROIC decreased on 9.0 pp from 4.5% to -4.5% in 2018. ROE decreased on 8.1 pp from 5.0% to -3.1% in 2018.
Leverage (Debt)
The company has no debt. Cash decreased slightly on 0.94%.
Financial and operational results
FY ended 12/31/2018
Radcom Ltd. ($RDCM) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 23.636 | 18.673 | 29.510 | 37.233 | 34.050 | -8.5% |
| Gross Profit | 14.943 | 14.347 | 20.528 | 26.745 | 25.184 | -5.8% |
| SG&A | 9.557 | 10.227 | 13.051 | 15.187 | 14.817 | -2.4% |
| EBITDA | 1.325 | -0.246 | 1.409 | 3.132 | -2.831 | -190.4% |
| Net Income | 0.726 | -0.923 | 1.915 | 2.901 | -2.415 | -183.2% |
Balance Sheet
|
|---|
| Cash | 6.848 | 8.727 | 42.886 | 62.575 | 61.988 | -0.9% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.065 | 0.097 | 1.331 | 0.790 | 0.662 | -16.2% |
Ratios
|
|---|
| Revenue growth | 15.4% | -21.0% | 58.0% | 26.2% | -8.5% | |
| EBITDA growth | | -118.6% | -672.8% | 122.3% | -190.4% | |
|
|---|
| Gross Margin | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% | 2.1% |
| EBITDA Margin | 5.6% | -1.3% | 4.8% | 8.4% | -8.3% | -16.7% |
| SG&A, % of revenue | 40.4% | 54.8% | 44.2% | 40.8% | 43.5% | 2.7% |
| Net Income Margin | 3.1% | -4.9% | 6.5% | 7.8% | -7.1% | -14.9% |
| CAPEX, % of revenue | 0.3% | 0.5% | 4.5% | 2.1% | 1.9% | -0.2% |
|
|---|
| ROIC | 13.5% | -3.7% | 4.5% | 4.5% | -4.5% | -9.0% |
| ROE | 8.2% | -9.2% | 7.7% | 5.0% | -3.1% | -8.1% |
| Net Debt/EBITDA | -5.2x | | -30.4x | -20.0x | |
Radcom Ltd. ($RDCM) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 11 | 11 | 9 | 4 | | 35.6% | 19.3% | -11.7% | -62.5% |
| Net Income | 0 | 1 | 1 | -4 | | | | -46.4% | -282.8% |
Balance Sheet
|
|---|
| Cash | 75 | 71 | 68 | 62 | | 82.9% | 97.5% | 101.3% | -0.9% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 73.5% | 73.0% | 80.5% | 63.9% | | -1.4% | 2.6% | 13.3% | -11.1% |
| Net Income Margin | 3.0% | 7.1% | 7.4% | -103.5% | | 7.1% | 9.4% | -4.8% | -124.7% |
Peers in Communications Equipment
Below you can find Radcom Ltd. benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.3% | 5.1% | 3.5% |
|---|
| Radcom Ltd. ($RDCM) | | -21.0% | 58.0% | 26.2% | -8.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| Palo Alto Networks, Inc. ($PANW) | 73.3% | 72.9% | 73.2% | 72.9% | 71.6% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.0% | 40.5% |
|---|
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.3% | 6.1% | 5.9% | 6.0% | 5.4% |
|---|
| Radcom Ltd. ($RDCM) | 5.6% | -1.3% | 4.8% | 8.4% | -8.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.3% | 1.9% | 1.8% | 1.6% |
|---|
| Radcom Ltd. ($RDCM) | 0.3% | 0.5% | 4.5% | 2.1% | 1.9% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 1.2% | 2.3% | 2.2% | 2.1% | 0.7% |
|---|
| Radcom Ltd. ($RDCM) | 13.5% | -3.7% | 4.5% | 4.5% | -4.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (46 companies) | -0.7x | -0.7x | -0.8x | -0.6x | -0.1x |
|---|
