Radcom to raise $30m on Nasdaq

Technology company Radcom Ltd. (Nasdaq: RDCM) is embarking on a lightning financing round aimed at raising $20-30 million in a Nasdaq secondary offering. Radcom's share price is up 13.8% this year, pushing its market cap up to $237 million.

Following the company's announcement of the financing round yesterday, its share price dropped 3.5% in late trading. Radcom published two financial figures from its third quarter results, which will be published in full in early November. The company said that its third quarter revenue would amount to $9.6 million, 24% more than in the corresponding quarter last year, and above the market forecasts. Radcom added that it had $33.6 million in cash and cash equivalents at the end of the third quarter.

Managed by CEO Yaron Ravkaie, Radcom provides solutions for monitoring and testing traffic on communications networks. The company says that it will use the proceeds from the offering for its general business needs. It is believed that the purpose of the financing round is mainly to reinforce its balance sheet in an attempt to obtain more large customers. Radcom already has two large US customers: communications provider AT&T, with which Radcom signed a contract in early 2016, and a large unnamed customer, believed to be Verizon, with which it recently signed a contract. Radcom now has more potential contracts in the pipeline, and is apparently seeking to boost its balance sheet, so that large customers will not be deterred from working with it.

In its revised prospectus for its offering, Radcom provided additional particulars about its new contract, writing that it estimates that the first stage of the contract will contribute $5 million to its revenue in 2018, and is likely to make a bigger contribution later. The company adds that it is in "the final stages of signing a contract for three more years with a large communications provider in the Asian Pacific region" amounting to $15 million.

Advocate Shy Baranov from the Zysman, Aharoni, Gayer & Co. law firm is representing Radcom in the offering, and the underwriters are investment banks William Blair and Needham. After the offering is completed, the underwriters will receive a one-month option to buy shares amounting to up to 15% of the offering. The same lawyer and underwriters were used in Radcom's most recent financing round on Nasdaq in May 2016, in which the company raised $20 million at $11 a share. The company's share price at the close of yesterday's trading was over $20.

Before the current offering, the largest shareholders in Radcom were company founder Zohar Zisapel with 25.7% of the company shares, currently worth $60 million, and the Yelin Lapidot investment house with 10%, worth $24 million. Radcom is part of the Rad group controlled by Zisapel and his brother, Yehuda Zisapel, a director in Radcom.

Published by Globes [online], Israel Business News - www.globes-online.com - on October 18, 2017