1
Reference Slides Earnings Call for Q4-15 Results
2 February 16
Safe Harbor Provision
Forward-looking statements in the conference call involve a number of risks and uncertainties, including but not limited to product demand, pricing, market acceptance, changing economic conditions, product technology development, the effect of the company’s accounting policies, and other risk factors detailed in the company’s SEC filings. The Company does not undertake to update forward-looking statements. In this conference call, management will be referring to certain non-GAAP financial measures, which are provided to enhance the user's overall understanding of the company’s financial performance. By excluding certain non-cash charges, non-GAAP results provide information that is useful in assessing RADCOM's core operating performance, and in evaluating and comparing our results of operations on a consistent basis from period to period. The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles. Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures which are included in the quarter’s earnings release.
3 February 16
Overview
• Biggest-ever win secured in late December 2015
• Entering 2016 with record backlog – visibility for 3 years of growth
• RADCOM now positioned as CLEAR LEADER of NFV SERVICE ASSURANCE
4 February 16
RADCOM’s Unique Positioning
Vetting and selection by top-tier
North American operator positions
RADCOM’s MaveriQ as the
clear leader in NFV Service Assurance
• Ideal for the transitional environment
• Robust & scalable
• Industrial strength
• Open and interoperable with multiple vendors
5 February 16
The Challenge of Service Assurance During the NFV Transition
Virtual Probe
Legacy Probe
Legacy Probe
Legacy Probe
Legacy Probe Virtual Probe
• Virtualized elements can’t be monitored effectively by legacy probes
• In transitioning networks service assurance solutions need to monitor both physical and virtual elements
6 February 16
The NFV Transformation – 10 Years
Physical
Network
Transition to NFV
(Physical + Virtual)
Next 10 yrs
NFV Dominant
10+ yrs
7 February 16
When? Not if…
Infonetics Research, 2014
Pe
rce
nt
of
Re
spo
nd
en
ts In an Infonetics
Research survey, 93% of operators said that they will be deploying NFV
8 February 16
Operators Are Beginning the Move to NFV
Kyle Malady, SVP of Global Network Operations for Verizon “SDN and NFV hold a lot of promise, and Verizon is banking on it."
“NFV has real potential as a technology, which is why we have a wider program in place to determine exactly which network functions can be virtualized.” Dr. Tim Whitley, MD of Research & Innovation for BT
“NFV is essential. It's now too expensive to run a network built in silos.” Farid Feisullin , CTO at Sprint
“We can change how we operate, reduce the total cost of operation by up to 30% and at the same time upgrade our platforms.”
Carta Blanco, Global CTO for Telefónica
9 February 16
NFV: Significant Benefits
An NFV study from ACG Research shows rapid investment payback
“…adopting a virtualized evolved packet core can reduce CAPEX by an average of 68% and OPEX by 67%; and that the deployment of virtualized network components can happen within 6 months, compared with an average of 15 months for traditional network hardware, resulting in a quicker time to market and return on investment.”
ACG Research, July 2015
10
Financials
11 February 16
Income Statement (Non-GAAP, US$ 000’s)
Q4-15 Q4-14 2015 2014 Sales 2,715 7,188 18,673 23,636 Cost of sales 963 1,823 4,123 6,881 Gross Profit 1,752 5,365 14,550 16,755
Gross margin 64.5% 74.6% 77.9% 70.9% R&D Gross 1,524 1,286 5,542 5,634 Less participation 576 358 1,582 1,664 R&D Net 948 928 3,960 3,970 Sales & Marketing 2,000 1,738 7,454 6,976 General & Administration 458 441 1,926 2,019 Operating expenses 3,406 3,107 13,340 12,965
Operating profit (1,654) 2,258
1,210
3,790
Financial income (expense) 48 (280)
(433)
(332)
Net profit (1,606) 1,978
777
3,458
Net taxes - (180)
(121)
(180)
Net profit (1,606) 1,798
656
3,278 EPS (basic) ($0.19) $0.22 $0.08 $0.40 EPS (diluted) ($0.19) $0.20 $0.07 $0.38
12 February 16
Gross Margin (Non-GAAP)
60.8% 61.5% 70.9%
77.9%
40
50
60
70
80
90
100
2012 2013 2014 20152015
13 February 16
Operating Expenses (Non GAAP, US $ 000’S)
Q4-15 Q4-14 2015 2014
R&D Gross 1,524 1,286 5,542 5,634
Less OCS participation 576 358 1,582 1,664
R&D Net 948 928 3,960 3,970
Sales & Marketing 2,000 1,738 7,454 6,976
General & Administration 458 441 1,926 2,019
Operating expenses 3,406 3,107 13,340 12,965
14 February 16
Operating Income (Non GAAP, US $ 000’S)
(1,667) (415)
42 1,280
(1,611)
442 309
627
(1,677)
(932)
1,181
957
73 273
2,255
(1,654)
-6000
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
2012 2013 2014 2015
Q4
Q3
Q2
Q1
(4,882) (632)
3,787
1,210
15 February 16
Net Income (Non GAAP, US $ 000’S)
(1859)
(512) 248
822
(1,715)
419 360
605
(1,684)
(1017)
872
835
-58
187
1795
(1,606)
-6000
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
2012 2013 2014 2015
Q4
Q3
Q2
Q1
(5,316)
(932)
3,275
656
16 February 16
Balance Sheet (US$ 000’s)
US$ ‘000s
Dec-15 Dec-14 Cash and Deposits 8,759 6,880
Trade Receivables 3,684 5,477
Inventories 1,532 2,699
Other receivables 2,087 1,411
Current assets 16,062 16,467
Assets for severance benefits 3,181 3,051
Other long-term receivables 508 600
Property & Equipment-Net 384 200
Total Assets 20,135 20,318
Trade payables 1,465 1,524
Current deferred revenues 931 599
Advances from customers 0 166
Other payables 4,023 4,116
Current Liabilities 6,419 6,405
Long-term deferred revenues 197 198
Liability For Employees 3,656 3,453
Equity 9,863 10,262
Total Liabilities & Equity 20,135 20,318
17 February 16
Current Assets vs. Current Liabilities
15.8 16.4 16
8
6.4 6.4
0
2
4
6
8
10
12
14
16
18
Q4-13 Q4-14 Q4-15
Current Assets Current Liabilities
98%
156% 150%
18 February 16
Equity to Total Assets
37%
26% 25% 23%
39% 40% 38%
42% 44%
48% 51%
54% 56% 55%
49%
0%
10%
20%
30%
40%
50%
60%Q
2-1
2
Q3
-12
Q4
-12
Q1
-13
Q2
-13
Q3
-13
Q4
-13
Q1
-14
Q2
-14
Q3
-14
Q4
-14
Q1
-15
Q2
-15
Q3
-15
Q4
-15
19
Thank You
February 16