Sunnyvale, Calif. – May 5, 2008 – Commtouch® (NASDAQ: CTCH), a leading email and web defense technology provider, today announced its first quarter results for the period ending March 31, 2008.
First Quarter 2008 Highlights:
Gideon Mantel, chief executive officer and chairman of the board of Commtouch said:
“Our business remains strong and healthy. Our solution suite is a leader in combating the ever-growing spam problem. A number of the large accounts that we recently signed are now starting to generate business, and we have a healthy pipeline of potential new OEM license agreements. To top it off, we have been able to continue our strong growth, profitability and cash generation while investing in a new product line. We expect the new web security line to have a positive impact on our financials in 2009.”
Based on current business activities and general economic conditions, Commtouch's management reiterates its full year 2008 guidance which it issued last quarter: 2008 revenues are expected to be in the range of $15 million to $16 million with annual non-GAAP earnings in the range of 16 to 19 cents per diluted share.
Based on the Company’s past experience, quarterly growth rates will likely fluctuate from quarter to quarter based on seasonality and specific customer launch dates. Traditionally, the second half of the year is seasonally stronger from a revenue standpoint than the first half.
The above outlook is as of the date of this release, and the company undertakes no obligation to update its estimates in the future.
Commtouch’s non-GAAP net income differs from results reported under U.S. GAAP due to non-cash items; since it is too early to determine the impact of stock-based compensation expense for the rest of the 2008 year, Commtouch is not providing guidance on GAAP net income. Stock-based compensation expense has a negative impact on net income.
This press release includes financial measures for net income (loss), basic and diluted earnings per share that exclude stock-based compensation expenses and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance that enhances management's and investors' ability to evaluate the company's net income or loss and earnings or loss per share and to compare it with historical net income or loss and earnings or loss per share.
The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management uses both GAAP and non-GAAP measures when evaluating the business internally and therefore felt it important to make these non-GAAP adjustments available to investors.
The company has scheduled a conference call later today, Monday, May 5, 2008 at 11 a.m. EST.
To participate in the call, please dial one of the following numbers ten minutes prior to the start time of the call:
U.S.: 1-888-642-5032
UK: 0-800-051-8913
ISRAEL: 03-918-0687
INTERNATIONAL: +972-3-918-0687
For those unable to listen to the live call, a replay of the call will be available the day after the call in the investor relations section of Commtouch’s website, at: http://www.commtouch.com/ir.
| COMMTOUCH SOFTWARE LTD. | ||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
| March 31 | December 31 | |||
| 2008 | 2007 | |||
| Unaudited | Audited | |||
| In US$ thousands | ||||
| Assets: | ||||
| Current Assets: | ||||
| Cash and cash equivalents | $13,317 | $10,807 | ||
| Short term cash deposit | 300 | $1,600 | ||
| Marketable securities | - | 2,000 | ||
| Trade receivables | 1,066 | 1,110 | ||
| Prepaid expenses and other accounts receivable | 268 | 303 | ||
| Total current assets | 14,951 | 15,820 | ||
| Long-term Marketable securities | 1,913 | - | ||
| Long-term lease deposits | 43 | 33 | ||
| Severance pay fund | 649 | 821 | ||
| Property and equipment, net | 804 | 786 | ||
| Investment in affiliate | 750 | 750 | ||
| Total assets | 19,110 | 18,210 | ||
| Liabilities and Shareholders’ Equity | ||||
| Current Liabilities: | ||||
| Accounts payable | 333 | 335 | ||
| Employees and payroll accruals | 926 | 746 | ||
| Accrued expenses and other liabilities | 417 | 415 | ||
| Short-term deferred revenue | 2,411 | 2,534 | ||
| Total current liabilities | 4,087 | 4,030 | ||
| Long-term deferred revenue | 819 | 901 | ||
| Accrued severance pay | 771 | 931 | ||
| Total liabilities | 1,590 | 1,832 | ||
| Shareholders’ equity | 13,433 | 12,348 | ||
| Total liabilities and shareholders’ equity | $19,110 | $18,210 | ||
| COMMTOUCH SOFTWARE LTD. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (In US$ thousands, except per share amounts) | ||||
| Three months ended | ||||
| March 31 | ||||
| 2008 | 2007 | |||
| Unaudited | Unaudited | |||
| Revenues | $3,401 | $2,405 | ||
| Cost of revenues | 449 | 286 | ||
| Gross profit | 2,952 | 2,119 | ||
| Operating expenses: | ||||
| Research and development | 781 | 456 | ||
| Sales and marketing | 1,015 | 826 | ||
| General and administrative | 869 | 661 | ||
| Total operating expenses | 2,665 | 1,943 | ||
| Operating profit | 287 | 176 | ||
| Interest and other expense, net | 120 | 91 | ||
| Income before taxes | 407 | 267 | ||
| Taxes on income | 7 | - | ||
|
Net income attributable to ordinary and equivalently participating shareholders |
400 | $267 | ||
|
Earning per share - basic |
$0.02 | $0.01 | ||
|
Earning per share - diluted |
$0.01 | $0.01 | ||
| Weighted average number of shares outstanding: | ||||
| Basic | 25,396 | 24,333 | ||
| Diluted | 27,131 | 26,831 | ||
| Supplementary Financial Information | ||||||||||||
| Unaudited Reconciliation of GAAP Financial Information to NON-GAAP | ||||||||||||
| (In US$ thousands) | ||||||||||||
| Three months ended | ||||||||||||
| March 31 | ||||||||||||
| GAAP | FAS123R | Non GAAP | GAAP | FAS123R | Non GAAP | |||||||
| 2008 | Adjustments | 2008 | 2007 | Adjustments | 2007 | |||||||
| Unaudited | ||||||||||||
| Revenues | $3,401 | $3,401 | $2,405 | $2,405 | ||||||||
| Cost of revenues | 449 | 12 | 437 | 286 | 7 | 279 | ||||||
| Gross profit | 2,952 | (12) | 2,964 | 2,119 | (7) | 2,126 | ||||||
| Operating expenses: | ||||||||||||
| Research and development | 781 | 115 | 666 | 456 | 59 | 397 | ||||||
| Sales and marketing | 1,015 | 81 | 934 | 826 | 46 | 780 | ||||||
| General and administrative | 869 | 326 | 543 | 661 | 131 | 530 | ||||||
| Total operating expenses | 2,665 | 522 | 2,143 | 1,943 | 236 | 1,707 | ||||||
| Operating profit | 287 | 534 | 821 | 176 | 243 | 419 | ||||||
| Interest and other expense, net | 120 | 120 | 91 | 91 | ||||||||
| Income before taxes | 407 | 941 | 267 | 510 | ||||||||
| Taxes on income | 7 | 7 | - | - | ||||||||
| Net income | $400 | $934 | $267 | $510 | ||||||||
| Earning per share- basic | $0.02 | $0.04 | $0.01 | $0.02 | ||||||||
| Earning per share- diluted | $0.01 | $0.03 | $0.01 | $0.02 | ||||||||
| Weighted average number of shares outstanding: | ||||||||||||
| Basic | 25,396 | 25,396 | 24,333 | 24,333 | ||||||||
| Diluted | 27,131 | 27,131 | 26,831 | 26,831 | ||||||||
| COMMTOUCH SOFTWARE LTD. | ||||
| CONDENSED CONSOLIDATED CASH FLOW DATA | ||||
| (In US$ thousands) | ||||
| Three months ended | ||||
| March 31 | ||||
| 2008 | 2007 | |||
| Cash flow from operating activities | Unaudited | Unaudited | ||
| Net income | $400 | $267 | ||
|
Adjustments: |
||||
| Depreciation | 106 | 82 | ||
| Compensations related to options issued to employees and consultants | 549 | 255 | ||
|
Changes in assets and liabilities: |
||||
| Decrease (increase) in trade receivables | 44 | (112) | ||
| Decrease (increase) in prepaid expenses and other receivables | 35 | (14) | ||
| (Decrease) increase in accounts payable | (27) | 116 | ||
| Increase in employees and payroll accruals, accrued expenses and other liabilities | 182 | 85 | ||
| (Decrease) increase in deferred revenues | (205) | 265 | ||
| Increase in accrued severance pay, net | 12 | 11 | ||
| Other | - | (2) | ||
| Net cash provided by operating activities | 1,096 | 953 | ||
| Cash from investing activities | ||||
| Change in short term cash deposit | 1,300 | - | ||
| Purchase of marketable securities | - | (500) | ||
| (Increase) decrease in long - term lease deposits | (10) | 4 | ||
| Proceeds from sale of Fixed Assets | - | 2 | ||
| Purchase of property and equipment | (99) | (275) | ||
| Net cash provided by (used in) investing activities | 1,191 | (769) | ||
| Cash flows from financing activities | ||||
| Proceeds from options and warrants exercises | 223 | 830 | ||
| Net cash provided by financing activities | 223 | 830 | ||
| Increase in cash and cash equivalents | 2,510 | 1,014 | ||
| Cash and cash equivalents at the beginning of the period | 10,807 | 8,004 | ||
| Cash and cash equivalents at the end of the period | $13,317 | $9,018 | ||
About Commtouch
Commtouch Software Ltd. (NASDAQ: CTCH) is the source of proven messaging and web security technology for scores of security companies and service providers, founded on a unique datacenter-based approach. Commtouch's expertise in building efficient, massive-scale security services has resulted in its patented technology being used to mitigate Internet threats for thousands of organizations and hundreds and millions of users in over 100 countries. Commtouch's Data Centers automatically analyze billions of transactions in real-time to identify new spam, malware and zombie outbreaks as they are initiated. Commtouch's unmatched suite of security offerings - anti-spam, virus detection, reputation and zombie intelligence services - work together in a comprehensive feedback loop. Commtouch was founded in 1991, is headquartered in Netanya, Israel, and has a subsidiary in Sunnyvale, Calif. For more information and real-time statistics and trends, see: http://www.commtouch.com and the Commtouch Café blog at: http://blog.commtouch.com/cafe.
Recurrent Pattern Detection, RPD, Zero-Hour and GlobalView are trademarks, and Commtouch is a registered trademark, of Commtouch Software Ltd. U.S. Patent No. 6,330,590 is owned by Commtouch.
This press release contains forward-looking statements, including projections about our business, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, and statements including words such as "expect," "plan," "estimate," "anticipate," or "believe" are forward-looking statements. These statements are based on information available to us at the time of the release; we assume no obligation to update any of them. The statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors, including business conditions and growth or deterioration in the Internet market, commerce and the general economy, both domestic as well as international; fewer than expected new-partner relationships; competitive factors, including pricing pressures; technological developments, and products offered by competitors; the ability of our OEM partners to successfully penetrate markets with products integrated with Commtouch technology; a slower than expected acceptance rate for our newer product offerings; availability of qualified staff; and technological difficulties and resource constraints encountered in developing new products, as well as those risks described in the text of this press release and the company's Annual Reports on Form 20-F and reports on Form 6-K, which are available through www.sec.gov.
Company Contact:
Ron Ela
Chief Financial Officer
Tel: (US) 650-864-2291
(Int’l) +972-9-8636813
ron.ela@commtouch.com
Investor Relations Contact
Ehud Helft / Kenny Green
GK Investor Relations
Tel: (US) 646-201-9246
(Int’l) +97...
info@gkir.com
