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RADCOM Ltd.: Initiation of Research Coverage

Monday, June 13, 2016

CHICAGO, June 13, 2016—William Blair & Company initiated research coverage of Radcom Ltd. (RDCM $11.76). Radcom develops software-based passive network and service monitoring probes that are leading the market in carrier network transformation to network functions virtualization (NFV).

Analyst Dmitry Netis estimates the company will generate earnings per share of $0.37 in 2016 and $0.45 in 2017. Over the next several years, he anticipates a 30%-plus revenue CAGR.

Netis said, “We believe Radcom’s virtual probe technology, MaveriQ, is ripe for the emerging NFV market opportunity and is ahead of the competition by about two years. An end-to-end interoperable solution—physical and virtual—and a first-mover advantage are important economic moats that we believe Radcom can sustain and build on in this winner-take-most market. We further believe that new management, comprising the CEO and chief business officer—both hailing from Amdocs—ought to leverage their relationships to close additional NFV opportunities and/or improve wallet share with existing accounts. Radcom has developed a strong partnership with Amdocs, which is a leading supplier of next-generation OSS/BSS for NFV projects.

“Moreover, a multiyear, $50 million win at a North American tier-1 service provider earlier this year supports strong near-term visibility and should result in additional carrier wins,” Netis continued. “Five additional opportunities are in or entering the trial phase. We anticipate this should drive Radcom’s growth into the 30% range on average over the next three years. With an improved balance sheet, which now stands at $45 million in cash, following the tier-1 win and its follow-on equity offering, we believe the company is well equipped to make investments in R&D, business development, and direct sales in support of its opportunity pipeline.”

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William Blair or an affiliate does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as a single factor in making an investment decision.

William Blair or an affiliate was a manager or co-manager of a public offering of equity securities of RADCOM Ltd. within the prior 12 months.

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William Blair or an affiliate expects to receive or intends to seek compensation for investment banking services from RADCOM Ltd. within the next three months.

William Blair or an affiliate received compensation for investment banking services from RADCOM Ltd. within the last 12 months. RADCOM Ltd. is or was, within the last 12 months, an investment banking client of William Blair and/or one or more of its affiliates.

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