Radcom Ltd. revenue decline decelerated from 8.5% in 2018 to 3.1% in 2019
02/13/2020 • About Radcom Ltd. (
$RDCM) • By InTwits
Radcom Ltd. reported 2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -17.4%
- Radcom Ltd. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2015-2019 is 1.5%. Average EBITDA Margin for the same period was -2.8%. In 2019 SBC/Revenue was even higher: 6.7%
- Radcom Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.2%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $1m in 2019, $1m in 2018, $1m in 2017, $1m in 2016, $0m in 2015
- The company has unprofitable business model: ROIC is -9.6%
- It operates with medium-size leverage: Net Debt/EBITDA is 0.0x while industry average is -0.2x
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 3.1%. Annual revenue decline showed slowdown in 19Q4 - revenue jumped on 126%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 9.1 pp from -8.3% to -17.4% in 2019. During the last 5 years EBITDA Margin topped in 2017 at 8.4% and was declining since that time.
Gross Margin decreased on 4.0 pp from 74.0% to 70.0% in 2019. SG&A as a % of Revenue decreased slightly on 0.53 pp from 43.5% to 43.0% in 2019.
Net Income margin dropped on 13.6 pp from -7.1% to -20.7% in 2019. During 2015-2019 Net Income margin topped in 2017 at 7.8% and was declining since that time.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.1% in 2019. CAPEX/Revenue decreased on 2.4 pp from 4.5% in 2016 to 2.1% in 2019. Average CAPEX/Revenue for the last three years was 2.1%.
Return on investment
The company operates at negative ROIC (-9.6%) and ROE (-9.0%). ROIC decreased on 5.1 pp from -4.5% to -9.6% in 2019. ROE decreased on 5.9 pp from -3.1% to -9.0% in 2019. During the last 5 years ROIC topped in 2016 at 4.5% and was declining since that time. During the last 5 years ROE topped in 2016 at 7.7% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.0x and Debt / EBITDA is . Debt surged while cash surged on 11.8%.
Radcom Ltd. has no short term refinancing risk: cash is higher than short term debt (5,485.4%).
Management team
The company has 20.6% shares owned by insiders.
At the end of financial year the company had 282 employees. Average revenue per employee in 2019 was
$117,057.
Financial and operational results
FY ended 12/31/2019
Radcom Ltd. ($RDCM) key annual financial indicators| mln. $ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 18.673 | 29.510 | 37.233 | 34.050 | 33.010 | -3.1% |
| Gross Profit | 14.347 | 20.528 | 26.745 | 25.184 | 23.093 | -8.3% |
| SG&A | 10.227 | 13.051 | 15.187 | 14.817 | 14.188 | -4.2% |
| EBITDA | -0.246 | 1.409 | 3.132 | -2.831 | -5.758 | |
| EBIT | | | | | -6.510 | |
| Net Income | -0.923 | 1.915 | 2.901 | -2.415 | -6.832 | |
| Stock Based Compensation | | | | | 2.228 | |
Balance Sheet
|
|---|
| Cash | 8.727 | 42.886 | 62.575 | 61.988 | 69.281 | 11.8% |
| Accounts Receivable | | | | | 11.039 | |
| Inventory | | | | | 1.356 | |
| Accounts Payable | | | | | 2.452 | |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 1.263 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 4.967 | |
Cash flow
|
|---|
| Capex | 0.097 | 1.331 | 0.790 | 0.662 | 0.699 | 5.6% |
Ratios
|
|---|
| Revenue growth | -21.0% | 58.0% | 26.2% | -8.5% | -3.1% | |
| EBITDA growth | -118.6% | -672.8% | 122.3% | -190.4% | 103.4% | |
|
|---|
| Gross Margin | 76.8% | 69.6% | 71.8% | 74.0% | 70.0% | -4.0% |
| EBITDA Margin | -1.3% | 4.8% | 8.4% | -8.3% | -17.4% | -9.1% |
| EBIT Margin | | | | | -19.7% |
| SG&A, % of revenue | 54.8% | 44.2% | 40.8% | 43.5% | 43.0% | -0.5% |
| SBC, % of revenue | | | | | 6.7% |
| Net Income Margin | -4.9% | 6.5% | 7.8% | -7.1% | -20.7% | -13.6% |
| CAPEX, % of revenue | 0.5% | 4.5% | 2.1% | 1.9% | 2.1% | 0.2% |
|
|---|
| ROIC | -3.7% | 4.5% | 4.5% | -4.5% | -9.6% | -5.1% |
| ROE | -9.2% | 7.7% | 5.0% | -3.1% | -9.0% | -5.9% |
| Net Debt/EBITDA | | -30.4x | -20.0x | | |
People
|
|---|
| Insider ownership | | | | | 20.6% | |
| Employees | | | | | 282 | |
| Revenue/Employee, th. $ | | | | | 117 | |
Radcom Ltd. ($RDCM) key quoterly financial indicators
| mln. $ | 19Q1 | 19Q2 | 19Q3 | 19Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 6 | 9 | 9 | 9 | | -45.0% | -15.4% | 5.6% | 125.6% |
| Net Income | -3 | -1 | -2 | -1 | | -1,031.7% | -232.1% | -415.5% | |
Balance Sheet
|
|---|
| Cash | 57 | 59 | 68 | 69 | | -23.5% | -17.4% | 0.6% | 11.3% |
| Short Term Debt | 1 | 1 | 1 | 1 | | | | | |
| Long Term Debt | 5 | 5 | 5 | 5 | | | | | |
Ratios
|
|---|
| Gross Margin | 70.0% | 75.0% | 65.0% | 71.0% | | -3.5% | 2.0% | -15.5% | 7.1% |
| Net Income Margin | -50.0% | -11.1% | -22.2% | -11.1% | | -53.0% | -18.2% | -29.7% | 92.4% |
Peers in Communications Equipment
Below we provide Radcom Ltd. benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| 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. ($NTIP) | 34.6% | 292.9% | -74.7% | 34.4% | |
| |
|---|
| Median (66 companies) | 1.8% | 7.3% | 5.1% | 3.5% | -7.0% |
|---|
| Radcom Ltd. ($RDCM) | | 58.0% | 26.2% | -8.5% | -3.1% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.7% | 83.1% | 83.1% | 83.3% | |
| Radware Ltd. ($RDWR) | 82.4% | 81.8% | 81.3% | 82.2% | |
| Casa Systems, Inc. ($CASA) | 70.8% | 69.1% | 73.4% | 73.4% | |
| NetScout Systems, Inc. ($NTCT) | 79.2% | 65.6% | 70.2% | 72.4% | |
| Palo Alto Networks, Inc. ($PANW) | 72.9% | 73.2% | 72.9% | 71.6% | |
| |
|---|
| Median (67 companies) | 41.3% | 43.7% | 41.0% | 40.5% | 35.4% |
|---|
| Radcom Ltd. ($RDCM) | 76.8% | 69.6% | 71.8% | 74.0% | 70.0% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 33.7% | 50.6% | 37.8% | 42.8% | |
| InterDigital, Inc. ($IDCC) | 58.1% | 73.6% | 67.3% | 41.9% | |
| EchoStar Corporation ($SATS) | 39.7% | 40.3% | 38.1% | 37.4% | |
| Ubiquiti Networks, Inc. ($UBNT) | 25.5% | 37.3% | 34.3% | 32.8% | |
| Ituran Location and Control Ltd. ($ITRN) | 30.5% | 29.9% | 29.9% | 30.4% | |
| |
|---|
| Median (65 companies) | 7.6% | 5.9% | 6.0% | 5.4% | -2.2% |
|---|
| Radcom Ltd. ($RDCM) | -1.3% | 4.8% | 8.4% | -8.3% | -17.4% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Resonant Inc. ($RESN) | | 132.5% | 124.8% | 245.2% | |
| ViaSat, Inc. ($VSAT) | 26.5% | 26.7% | 33.0% | 32.1% | |
| Applied Optoelectronics, Inc. ($AAOI) | 30.1% | 19.0% | 17.5% | 26.9% | |
| EchoStar Corporation ($SATS) | 43.8% | 39.9% | 30.9% | 26.5% | |
| Finisar Corporation ($FNSR) | 11.9% | 9.4% | 9.7% | 16.8% | |
| |
|---|
| Median (65 companies) | 2.5% | 1.9% | 1.8% | 1.6% | 1.3% |
|---|
| Radcom Ltd. ($RDCM) | 0.5% | 4.5% | 2.1% | 1.9% | 2.1% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| F5 Networks, Inc. ($FFIV) | 40.8% | 43.1% | 46.9% | 47.9% | |
| Ubiquiti Networks, Inc. ($UBNT) | 31.5% | 41.5% | 38.5% | 39.1% | |
| Motorola Solutions, Inc. ($MSI) | 18.9% | 26.4% | 39.5% | 35.3% | |
| Ituran Location and Control Ltd. ($ITRN) | 46.8% | 50.1% | 48.5% | 35.1% | |
| Casa Systems, Inc. ($CASA) | | 43.2% | 39.7% | 21.9% | |
| |
|---|
| Median (70 companies) | 2.3% | 2.2% | 2.1% | 0.7% | -3.4% |
|---|
| Radcom Ltd. ($RDCM) | -3.7% | 4.5% | 4.5% | -4.5% | -9.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Extreme Networks, Inc. ($EXTR) | | -2.2x | -1.5x | 7.1x | |
| ViaSat, Inc. ($VSAT) | 2.5x | 3.2x | 2.5x | 5.8x | |
| CommScope Holding Company, Inc. ($COMM) | 9.6x | 4.3x | 4.6x | 4.4x | |
| Inseego Corp. ($INSG) | | | | 3.9x | |
| Finisar Corporation ($FNSR) | 0.2x | -0.5x | 1.6x | 3.8x | |
| |
|---|
| Median (46 companies) | -0.6x | -0.8x | -0.6x | -0.1x | 0.0x |
|---|
