Radcom Ltd. revenue returned to growth in FY2020: increased 13.8% vs. 3.1% decline a year earliner
02/17/2021 • About Radcom Ltd. (
$RDCM) • By InTwits
Radcom Ltd. reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Radcom Ltd. is a fast growth stock: FY2020 revenue growth was 13.8%, 5 year revenue CAGR was 15.0% at FY2020 ROIC -5.9%
- EBITDA Margin is declining: in FY2020 vs. -17.4% in FY2019 vs. 4.8% in FY2016
- Radcom Ltd. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for FY2016-FY2020 is 1.3%. Average EBITDA Margin for the same period was -2.4%
- The company has unprofitable business model: ROIC is -5.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 13.8%. Revenue growth showed acceleration in FY20Q4 - it increased 13.8% YoY. During the last 5 years Revenue growth bottomed in FY2018 at -8.5% and was accelerating since that time.
Gross Margin increased slightly on 1.4 pp from 70.0% to 71.4% in FY2020. SG&A as a % of Revenue decreased on 6.9 pp from 43.0% to 36.1% in FY2020.
Net Income margin surged on 10.1 pp from -20.7% to -10.6% in FY2020.
Return on investment
The company operates at negative ROIC (-5.9%) and ROE (-5.5%). ROIC increased on 3.7 pp from -9.6% to -5.9% in FY2020. ROE increased on 3.5 pp from -9.0% to -5.5% in FY2020. During FY2016-FY2020 ROIC bottomed in FY2019 at -9.6%. ROE declined at -4.0 pp per annum in the last 5 years.
Leverage (Debt)
Debt dropped on 51.3% while cash showed almost no change in FY2020.
Radcom Ltd. has no short term refinancing risk: cash is higher than short term debt (6,708.3%).
Financial and operational results
Radcom Ltd. ($RDCM) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 29.510 | 37.233 | 34.050 | 33.010 | 37.562 | 13.8% |
| Gross Profit | 20.528 | 26.745 | 25.184 | 23.093 | 26.804 | 16.1% |
| SG&A | 13.051 | 15.187 | 14.817 | 14.188 | 13.545 | -4.5% |
| EBITDA | 1.409 | 3.132 | -2.831 | -5.758 | | |
| EBIT | | | | -6.510 | | |
| Net Income | 1.915 | 2.901 | -2.415 | -6.832 | -3.992 | |
| Stock Based Compensation | | | | 2.228 | | |
Balance Sheet
|
|---|
| Cash | 42.886 | 62.575 | 61.988 | 69.281 | 68.961 | -0.5% |
| Accounts Receivable | | | | 11.039 | | |
| Inventory | | | | 1.356 | | |
| Accounts Payable | | | | 2.452 | | |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 1.263 | 1.028 | -18.6% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 4.967 | 2.008 | -59.6% |
Cash flow
|
|---|
| Capex | 1.331 | 0.790 | 0.662 | 0.699 | | |
Ratios
|
|---|
| Revenue growth | 58.0% | 26.2% | -8.5% | -3.1% | 13.8% | |
| EBITDA growth | -672.8% | 122.3% | -190.4% | 103.4% | | |
|
|---|
| Gross Margin | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% | 1.4% |
| EBITDA Margin | 4.8% | 8.4% | -8.3% | -17.4% | |
| EBIT Margin | | | | -19.7% | |
| SG&A, % of revenue | 44.2% | 40.8% | 43.5% | 43.0% | 36.1% | -6.9% |
| SBC, % of revenue | | | | 6.7% | |
| Net Income Margin | 6.5% | 7.8% | -7.1% | -20.7% | -10.6% | 10.1% |
| CAPEX, % of revenue | 4.5% | 2.1% | 1.9% | 2.1% | | |
|
|---|
| ROIC | 4.5% | 4.5% | -4.5% | -9.6% | -5.9% | 3.7% |
| ROE | 7.7% | 5.0% | -3.1% | -9.0% | -5.5% | 3.5% |
| 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. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 8 | 9 | 10 | 10 | | 38.8% | 1.8% | 9.2% | 13.8% |
| Net Income | -3 | -0 | -0 | -0 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 63 | 66 | 65 | 69 | | 11.0% | 11.9% | -4.6% | -0.1% |
| Short Term Debt | 1 | 1 | 1 | 1 | | 18.2% | 17.3% | 17.2% | 2.8% |
| Long Term Debt | 4 | 4 | 4 | 2 | | -10.9% | -15.7% | -19.4% | -59.8% |
Ratios
|
|---|
| Gross Margin | 62.7% | 76.6% | 75.7% | 69.6% | | -7.3% | 1.6% | 10.7% | -1.4% |
| Net Income Margin | -34.9% | -2.0% | -4.5% | -4.5% | | 15.1% | 9.1% | 17.7% | 6.6% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| |
|---|
| Median (35 companies) | 7.5% | 5.1% | 3.5% | 3.7% | 2.1% |
|---|
| Radcom Ltd. ($RDCM) | - | 26.2% | -8.5% | -3.1% | 13.8% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| EchoStar Corporation ($SATS) | 59.9% | 59.8% | 62.7% | 58.3% | 60.6% |
| |
|---|
| Median (33 companies) | 43.7% | 41.0% | 40.5% | 43.2% | 44.9% |
|---|
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (33 companies) | 5.9% | 6.0% | 5.4% | 5.0% | 9.2% |
|---|
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (33 companies) | 1.9% | 1.8% | 1.6% | 2.5% | 2.1% |
|---|
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.7% | 1.2% | 2.3% |
|---|
| Radcom Ltd. ($RDCM) | 4.5% | 4.5% | -4.5% | -9.6% | -5.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (25 companies) | -0.8x | -0.6x | -0.1x | -0.3x | -0.4x |
|---|
