Radcom lowered its full year guidance from the $43 million to $47 million range to the $33 million to $35 million range in a business update conference call this morning. The Israel-based service assurance firm also said that it expects its third quarter revenue to be between $8 and $8.5 million.
This is lowered from its previous expectations for Q3. In its second quarter 2018 earnings call with investors, Radcom said it expected Q3 to be flat with Q2 at $10.6 million. It also gave new guidance for the fourth quarter, which is expected to be between $3 million and $6.5 million.
It has been a rough couple of months for Radcom. It recently lost two C-level executives, and in today’s call it said that its vice president of professional services Karen Rubaneko is set to leave the company and will be replaced from within the company. This follows the departure its Chief Revenue Officer Ran Vered and its Chief Business Officer Harel Givon, who both left in September.
Following Givon’s departure, Radcom CEO Yaron Ravkaie said that the company would undergo a sales reorganization. According to the release announcing the restructuring, the company felt that in order to adapt to the evolving NFV market it would be better served by a regional sales model. Ravkaie will supervise the new regional sales organization.
While today’s call gave no specific updates on the restructuring, according to SeekingAlpha, Radcom did acknowledge that it was dealing with the challenges of a lengthening sales cycle for its NFV technology. Ravkaie also said that some of its service provider customers were choosing Ericsson or Nokia for their NFV needs, although he didn’t note any lost deals to competition.
One of Radcom’s largest customers is AT&T. In August 2016, AT&T selected Radcom’s virtual probe (vProbe) software to replace legacy network probes from Netscout. The contract with AT&T is up for extension in Q4 2018. Any change to the contract or to AT&T’s deployment schedule could have a large impact on Radcom’s bottom line.
Radcom noted that this relationship, along with its multi-year contract with Globe Telecom and another unnamed Tier 1 provider remain strong heading forward. According to SeekingAlpha analyst Mike Arnold, the immaturity of the NFV ecosystem serves as a greater threat to Radcom’s business.
In the last quarter Radcom stock has been a bit of a roller coaster. It plummeted 29 percent following the Super Typhoon Mangkhut, which hit the Philippines in early September. Globe Telecom, which comprises 34 percent of Radcom’s revenue, is based in the region, and the impact of the typhoon on the business was unclear at first. Radcom later said that it saw no impact from the natural disaster.
While the stock did rebound slightly from the event, it has yet to fully recover. Currently, Radcom stock is trading around $10 per share.