RADCOM's Q3 2025: Contradictions Emerge on 5G Core Deployments, Growth Pipeline, and Expansion Strategies

Date of Call: November 12, 2025

Financials Results

• Revenue: $18.4M, up 16.2% YOY
• EPS: Non-GAAP: $0.29 per diluted share, up from $0.23 YOY; GAAP: $0.21 per diluted share, up from $0.14 YOY
• Gross Margin: Just over 77% (may vary by revenue mix), management expects this level to be sustained in Q4
• Operating Margin: 20.9% of revenue (non-GAAP operating income $3.8M), a record and highest since 2017

Guidance:

• Full-year 2025 revenue growth guidance: 15% to 18%.
• Management expects Q4 gross margin to remain around the current ~77% level.
• Initial revenue contributions from strategic partnerships (e.g., NVIDIA, ServiceNow) anticipated in 2026.
• Targeting double-digit revenue growth for 2026; full-year 2026 guidance to be provided with Q4 results.

Business Commentary:

• Record Revenue and Profitability:
• RADCOM achieved record revenue of $18.4 million in Q3 2025, with 16.2% year-over-year growth, alongside continued profitability and positive cash generation of $5.1 million.
• This growth was driven by deepening deployments with existing customers, increased investment in 5G stand-alone networks and AI operations, and the competitive edge of its field-proven next-generation assurance platform, RADCOM ACE.

• Partnership Expansion and Innovations:
• RADCOM strengthened its strategic partnerships with NVIDIA, ServiceNow, and system integrators, with plans for initial revenue contributions from these partnerships in 2026.
• The company completed the integration of its AIOps solutions with ServiceNow, enhancing service quality and operational performance, and launched a high-capacity user analytics solution powered by NVIDIA's BlueField-3 DPUs, reducing operational costs by up to 75%.

• Market Position and Customer Engagement:
• RADCOM is well-positioned to capitalize on strong and durable telecom spending trends, driven by the evolution of AI-native networks and operators doubling down on customer experience and operational efficiency.

• The company secured a new partnership with 1Global and secured business expansions with existing customers, reflecting its land-and-expand strategy and growth opportunities.

• Financial Performance and Cash Position:

• RADCOM reported a non-GAAP operating income of $3.8 million, representing 20.9% of revenue, and a non-GAAP net income of $4.9 million or $0.29 per diluted share.
• The company ended the quarter with a record cash balance of $106.7 million and no debt, supported by strong operating performance and strategic investments in R&D and sales marketing.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management repeatedly described Q3 as a "record quarter" with "record revenue of $18.4 million," "record non-GAAP operating income of $3.8 million (20.9% of revenue)", "positive cash flow of $5.1 million" and "cash balance of $106.7 million and no debt," emphasizing scalable profitability and momentum.

Q&A:

• Question from Arjun Bhatia (William Blair & Company L.L.C., Research Division): For the newly launched high-capacity user analytics solution, what are the early feedback from customers so far? And what are you most excited about?
  Response: Field trials show great performance; management expects the solution to materialize commercially and contribute in 2026.

• Question from Arjun Bhatia (William Blair & Company L.L.C., Research Division): In terms of expansion within existing customers, what trends are you seeing overall and specific expansion efforts in terms of adding to their existing stack?
  Response: Company sees a solid, growing pipeline and continued land-and-expand opportunities, supporting its target of double-digit growth into 2026.

• Question from Ryan Koontz (Needham & Company, LLC, Research Division): Can you give color on visibility into next year and any major renewals that could affect maintaining the current run rate into 2026?
  Response: Management remains confident and is targeting double-digit growth for 2026, driven by cloud-native and 5G SA transitions; no renewal risks were flagged.

• Question from Ryan Koontz (Needham & Company, LLC, Research Division): On earnings leverage next year, beyond planned increases in sales and marketing, any other puts and takes on leverage for 2026?
  Response: Expect incremental spending primarily in sales & marketing and R&D, which will be the main drivers of reinvestment.

• Question from Ryan Koontz (Needham & Company, LLC, Research Division): Can you validate the view on 5G core deployments and comment on geography (APAC/EMEA) momentum for 5G core stand-alone?
  Response: Management reports strong momentum for 5G core stand-alone and Open RAN across the U.S., Europe, Japan and parts of Asia, driving demand for cloud-native assurance and full-user visibility.

Contradiction Point 1

5G Core Deployments and Market Momentum

It highlights shifts in the company's perspective on the timing and scale of 5G core deployments, which could impact investment decisions and market expectations.

Can you confirm your stance on 5G core deployments and any recent updates on standalone 5G core in APAC or EMEA regions? - Ryan Koontz (Needham & Company, LLC, Research Division)

2025Q3: We see good momentum on 5G core stand-alone and Open RAN in the U.S., Europe, and some areas in Japan and Asia. It is driving a lot of the activities, moving towards cloud-native application to support troubleshooting and customer experience. - Benny Eppstein(CEO)

What percentage of your current revenue comes from 5G versus legacy networks? - Ryan Boyer Koontz (Needham & Company, LLC, Research Division)

2025Q2: The rapid transformation of traditional network architecture to cloud-native, AI-based platforms is enabling operators to introduce new services and enhance customer experience. 5G core, providing the next generation of networks, is already in the process. - Benny Eppstein(CEO)

Contradiction Point 2

Pipeline and Growth Opportunities

It addresses discrepancies in the company's outlook on the composition of growth, particularly the balance between existing customer expansion and new logo wins, which impacts strategic planning and investor expectations.

What trends are you seeing in your existing customers' expansion? What specific expansion efforts are customers making to add to their existing stack? - Arjun Bhatia (William Blair & Company L.L.C., Research Division)

2025Q3: We are seeing a solid pipeline building up through the year. We are still targeting double-digit growth and we see more and more opportunities coming up until 2026. Overall, we have a good buildup of a solid pipeline. - Benny Eppstein(CEO)

What percentage of your next 18 months' growth will come from existing customer expansion versus new logo wins? - Ryan Boyer Koontz (Needham & Company, LLC, Research Division)

2025Q2: We're thinking about around 2/3 from existing and 1/3 from new. - Benjamin Eppstein(CEO)

Contradiction Point 3

Expansion in Existing Customers and Revenue Growth Expectations

It involves differing statements about the expansion within existing customers and the expected revenue growth, which are crucial for understanding the company's growth strategy and financial outlook.

What trends in expansion among existing customers are you seeing, particularly regarding their efforts to add to their existing stack? - Arjun Bhatia (William Blair & Company L.L.C., Research Division)

2025Q3: We are seeing a solid pipeline building up through the year. We are still targeting double-digit growth and we see more and more opportunities coming up until 2026. - Benny Eppstein(CEO)

What is the expected growth in global customer count for RADCOM's 5G standalone core, and how does it relate to customer management and real-time user analytics? - Ryan Koontz (Needham & Company, LLC, Research Division)

2025Q1: We are seeing a solid pipeline building up through the year. We are still targeting double-digit growth and we see more and more opportunities coming up until the end of 2026. Overall, we have a good buildup of a solid pipeline. - Benny Eppstein(CEO)

Contradiction Point 4

5G Core Deployments and Market Opportunities

It involves differing statements about the momentum and opportunities in 5G core deployments, which are critical for assessing the company's market position and growth potential.

Can you confirm your outlook on 5G core deployments and provide an update on 5G core standalone deployments in APAC and EMEA? - Ryan Koontz (Needham & Company, LLC, Research Division)

2025Q3: We see good momentum on 5G core stand-alone and Open RAN in the U.S., Europe, and some areas in Japan and Asia. It is driving a lot of the activities, moving towards cloud-native application to support troubleshooting and customer experience. - Benny Eppstein(CEO)

What is the expected growth in global customer count for RADCOM's 5G standalone core, and how does this growth relate to customer management and real-time analytics? - Ryan Koontz (Needham & Company, LLC, Research Division)

2025Q1: We are expecting a similar trend of growth in customer count for the 5G standalone core, driven by the progression of 5G. - Benny Eppstein(CEO)

Contradiction Point 5

Sales and Market Expansion Strategy

It involves the company's approach to sales and market expansion, which is crucial for revenue growth and market penetration.

What expansion trends are you seeing among existing customers, particularly in their efforts to expand their existing tech stacks? - Arjun Bhatia (William Blair & Company L.L.C., Research Division)

2025Q3: We are seeing a solid pipeline building up through the year. We are still targeting double-digit growth and we see more and more opportunities coming up until 2026. - Benny Eppstein(CEO)

Regarding go-to-market efforts, how is the current sales capacity? Are there plans to expand? - Linda Lee (William Blair)

2024Q4: We're looking to expand. We're also looking to expand our partnerships. So as announced, ServiceNow and more partners will follow and we'll announce more in the coming weeks and we will demonstrate this also in MWC in Barcelona in couple of weeks. - Benny Eppstein(CEO)