(MENAFN- ProactiveInvestors - N.America) Shares of Radcom (NASDAQ:RDCM) soared 40 percent on Wednesday after the company reported stronger-than-expected third quarter results.
The company, which provides service assurance and customer experience monitoring services for communication service providers and equipment vendors, reported third quarter revenues of about $6 million, a 26 percent year-over-year increase.
H.C. Wainwright analysts were expecting sales of $5.4 million in the latest period.
The increase in revenue is attributed to the continued acceptance of the company's flagship MaveriQ offering, H.C. analyst Amit Dayal wrote in a note Wednesday, as well as revenues from projects that were slightly delayed.
"We believe the company continues to execute on transitioning from a hardware-driven (OmniQ) model to higher margin software-driven (MaveriQ) model," noted the analyst.
"The company should be a beneficiary of the uptick in the LTE cycle as more operators across the globe transition to or adopt this standard. MaveriQ offers a simplified customer engagement solution to operators handling a complex network in LTE, helping them improve customer retention."
Radcom's stock has appreciated over 75 percent in the last year on the execution, Dayal said, as well as on the results from migrating towards a software model.
"Going forward, in our opinion, management will have to demonstrate that MaveriQ has staying power and can continue to increase its market share. If MaveriQ adoption continues, we believe stronger margins should follow," he added.
During the third quarter, gross margins were around 66 percent, in line with estimates. Management maintained its goal of achieving 75 percent or better margins as the company transitions to a software model.
Net profit during the quarter was 9 cents per share, versus a net loss of 15 cents a year ago, topping estimates for earnings of 3 cents per share.
H.C. Wainwright's Dayal maintained his buy rating, and $7.50 price target on Radcom, as the firm remained conservative with its projections for the company, deciding not to make any material changes to its expectations for the fourth quarter or 2015.
"We re-iterate the opportunity for investors to benefit from strong earnings growth potential coming into play for RDCM on the back of a positive market reception to its MaveriQ offering," he concluded.
Shares were up 40.9 percent at US$8.75 on the Nasdaq as of 3:23 pm ET on Wednesday.
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