Radcom (RDCM) Net Margin Improvement Challenges Cautious Earnings Slowdown Narrative

RADCOM (RDCM) has put up another solid set of numbers for FY 2025 so far, with Q3 revenue at US$18.4 million and basic EPS of US$0.21, backed by trailing 12 month EPS of US$0.66 on revenue of US$68.9 million. The company has seen quarterly revenue move from US$14.8 million in Q2 2024 to US$18.4 million in Q3 2025, while basic EPS has shifted from US$0.11 to US$0.21 over the same span, alongside trailing 12 month net income of US$10.6 million. With a 15.4% net margin over the last year and earnings up 44.9%, the release points to tighter execution on profitability that many investors are likely to watch closely.

See our full analysis for RADCOM.

With the headline numbers on the table, the next step is to see how this earnings run rate lines up against the key narratives investors have been using to frame RADCOM, and where those stories might need a reset.

Curious how numbers become stories that shape markets? Explore Community Narratives

15.4% net margin shows earnings quality holding up

• Over the last 12 months, RADCOM booked US$10.6 million in net income on US$68.9 million in revenue, which lines up with the 15.4% net margin you are seeing and gives some context for how much profit is dropping through from the top line.
• What stands out for a more bullish interpretation is that earnings grew 44.9% over the past year while the five year annual pace is cited at 74%. This means:
  • Supporters can point to the combination of a 15.4% margin and 44.9% earnings growth as evidence that recent profitability is not just a single quarter story but present across the trailing 12 months.
  • At the same time, the gap between the latest 44.9% growth and the higher five year rate can temper the bullish claim that past very fast growth automatically repeats, so it is useful to treat the current margin level as the concrete anchor.

Investors watching RADCOM’s profit profile often ask how durable this improvement looks when you put the latest 15.4% net margin next to the past few years of earnings, and this is where a closer read of the full story can really help you stress test your own view. 📊 Read the full RADCOM Consensus Narrative.

Trailing P/E of 18.4x versus higher software peers

• RADCOM’s trailing 12 month P/E sits at 18.4x, compared with 28.7x for the broader US Software group and 63.6x for peers. This frames the current US$11.86 share price against both its own earnings and the multiples investors are paying elsewhere in the sector.
• Supporters of a more bullish angle often focus on this gap in multiples, and the current figures give them a few talking points:
  • With earnings of US$10.6 million over the last year and a 15.4% net margin, a lower P/E than sector averages can be read as the market giving less credit to those profits than it gives to other software names with higher multiples.
  • The stock also sat about 5.4% under a DCF fair value of US$12.54, which some investors combine with the lower P/E to argue that the current price leaves room for sentiment to catch up with the earnings record.

44.9% earnings growth versus 74% five year pace

• Over the past 12 months, earnings grew 44.9%, compared with a five year annual growth rate of 74%. This sets up a clear comparison between the most recent year and the longer term run rate that many investors keep in mind.
• Critics who lean more cautious often focus on this slowdown relative to the five year figure, and the numbers provide some context for that view:
  • The 44.9% trailing earnings growth still sits alongside rising net income to US$10.6 million and revenue of US$68.9 million, so the business is adding profit in absolute terms even if the pace is lower than the earlier 74% average.
  • When you pair that with a 15.4% net margin and an 18.4x P/E, the cautious angle becomes less about any single weak metric and more about whether investors should expect the very rapid five year growth rate to persist in the same way.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on RADCOM's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

While RADCOM’s earnings and margin figures look solid, the 44.9% earnings growth sitting below the cited 74% five year pace may concern you.

If that slowdown makes you want more comfort around consistency and downside protection, check out our 85 resilient stocks with low risk scores to quickly spot companies with profiles built around resilience.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com