Nearly two years ago, Radcom Ltd. (Nasdaq: RDCM) signed an especially large contract with AT&T, and it was predicted at that time that it would lead to additional contracts with major communications providers. One additional contract materialized yesterday: Radcom reported a new network functions virtualization (NFV) agreement for installing its solution at "a leading global communications provider." Radcom did not identify the customer, but the William Blair investment bank believes that it is Verizon. Radcom provides solutions for monitoring and assessing traffic on communications networks.
Several years ago, Radcom switched from the production of "boxes" - hardware as communications equipment - to software, which is more profitable. Among other things, it entered the NFV sector for ensuring and monitoring services on a network. Radcom's cloud-based solution, MaveriQ, was installed at AT&T, and is now at another provider, apparently Verizon. Radcom says that the new agreement gives the communications provider a monitoring solution for its virtual network, and constitutes a framework for additional subsequent orders.
"MaveriQ is a very advanced cloud-native probe-based service assurance solution that serves the needs of operators, as they transition their networks to NFV," said Radcom CEO Yaron Ravkaie. "This, together with our strong NFV expertise, is the value that we provide our customers, as communication service providers embark on the journey to virtualizing their networks."
More contracts expected in 2018
The contract with AT&T was for $18 million a year. Radcom did not disclose the amount of the new contract, but William Blair's economists estimate the initial order is likely to be $10 million, and revenue from it is likely to increase later - possible to more than the revenue that Radcom is receiving from AT&T. William Blair predicted that Radcom was likely to sign additional NFV contracts in 2018. Following the announcement of the contract, Radcom's share price rose 1.4% to $21.90 yesterday, close to its 17-year peak, pushing its market cap up to $257 million.
Radcom will publish its third quarter results on November 6. The company's revenue totaled $17 million in the first half of 2017, 23.4% more than in the first half of 2016. According to GAAP accounting standards the company posted a $540,000 net loss in the first half of the year, compared with a $2.7 million net profit in the corresponding period last year. Excluding various accounting items, however, Radcom had a $700,000 net profit in the first half of 2017.
Published by Globes [online], Israel Business News - www.globes-online.com - on October 10, 2017
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