RADCOM delivered the bounce investors were looking for after its second-quarter reset, though the year-over-year picture remains weak. The company reported third-quarter non-GAAP earnings of $0.11 per share on revenue of $14.04 million. That topped the $0.06 consensus by 37.5% and cleared the $0.08 Earnings Whisper number. Revenue beat the $13.1 million consensus by 7.2%. The comparison with last year is still harsh: earnings fell 50.0% and revenue declined 23.6%. The central tension is that RADCOM has stabilized from a very poor second quarter, but the expectations it beat were reset sharply lower only three months ago.

The sequential improvement is real. Revenue rose 19.4% from $11.8 million in the second quarter. Non-GAAP operating income swung to $0.7 million from a $2.2 million loss, and non-GAAP net income moved to $1.9 million from a $1.5 million loss.

The quality of the beat still deserves scrutiny:

• **GAAP operating loss:** On a GAAP basis, RADCOM posted a $0.9 million operating loss. The $0.03 of GAAP EPS depended on $1.5 million of financial income from its cash pile.
• **Margin compression:** The 4.9% non-GAAP operating margin compares with 20.9% a year ago and 23% in the fourth quarter of 2025.
• **Gross margin slippage:** Gross margin also slipped to 73.8% from 76.3% in the second quarter and 77.6% two quarters before that.
• **Cost discipline is uneven:** Sales and marketing spending fell year over year, but research and development rose as the company kept investing in RADCOM ACE and its agentic AI roadmap.

This is a business that has protected its cost base while waiting for revenue to return, and margins will stay thin until that happens.

The conference call was more constructive than the numbers alone. Management's tone shifted from calling the second quarter "disappointing" to describing a "solid quarter." The CEO pointed to tangible commercial progress:

• **Two competitive wins closed:** Both wins flagged on the prior call closed, and both displaced incumbent vendors.
• CETIN Networks in Slovakia signed a multi-year end-to-end assurance contract and is already in acceptance testing.
• VNPT, a Vietnamese Tier 1 operator with more than 30 million subscribers, selected RADCOM for roaming assurance, with a network-wide expansion under discussion.
• **Orders for delayed projects:** Management said it has received orders tied to previously delayed deployments.
• **Pipeline:** The company has a high-single-digit number of proofs of concept and field trials across North America and Europe.
• **2027 outlook:** Management reiterated its expectation of double-digit growth in 2027.

Those are credible building blocks for a recovery narrative.

Timing, however, is the risk bears will focus on. Management confirmed that the delayed upgrades will land in early 2027, not the fourth quarter as the second-quarter call had left open. Server infrastructure costs remain the main factor driving customer deployment timing, which leaves part of the schedule outside RADCOM's control. The reaffirmed full-year outlook of $57 million to $63 million implies a fourth quarter only modestly above the third at the midpoint. It also leaves the year roughly 16% below 2025 at the midpoint, a long way from the 8% to 12% growth originally guided. Even the buyback was a small disappointment: it was sized at $20 million, the low end of the $20 million to $25 million range discussed in the second quarter.

The balance sheet is the strongest part of the setup:

• **Cash and debt:** Cash rose to $111.4 million on $1.7 million of quarterly cash flow, with no debt.
• **Valuation support:** That is roughly two-thirds of the company's market value at recent prices, which limits downside and funds both the buyback and any targeted acquisitions management said it is open to.
• **Buyback timing:** The repurchase program has cleared its Israeli creditor objection period and is expected to begin once the blackout ends.

Investor sentiment swung meaningfully into the report. It improved from -0.50 after the August release to +0.22, a shift from clearly negative to modestly positive. The stock has not followed. Shares closed at $10.12 the day before the release, down 1.6% from the open after the prior report. That leaves them 16.3% below the $12.09 200-day moving average and just 4% above the inter-earnings low of $9.73, well off the September high of $11.26. The Earnings Whispers trend signals reflect the same split: sequential growth has turned positive while momentum and AVWAP readings remain negative. Improving expectations have not yet translated into price strength.

The bottom line is that RADCOM's third quarter showed the second-quarter collapse was not the start of a deeper slide. Revenue rebounded, non-GAAP profitability returned, new competitive wins closed, and orders for delayed projects are in hand. But the beat came against reset expectations. Margins remain a fraction of last year's levels, and the recovery management is pointing to now sits in 2027 rather than this year. Investors are being asked to look through another soft quarter, with a large cash cushion and an impending buyback making that wait easier to tolerate.