MCLEAN, Virginia, November 6, 2012 /PRNewswire/ --
Increased New Booking Sales as well as Accelerated Execution on
Next Generation Mobile and SaaS Security Solutions Highlight
Strategic Advances
New
Bookings More than Double Year-to-Date versus the Prior Year,
Providing an Enhanced Foundation for Growth in 2013
Closing
of FRISK Acquisition and Increased Investment Strengthens Antivirus
Capabilities
Commtouch® (NASDAQ: CTCH), a leading provider of Internet
security technology and cloud-based services, today announced its
third quarter financial results for the period ending September 30, 2012.
(Logo:
http://photos.prnewswire.com/prnh/20120501/529254 )
Third Quarter 2012 Financial Results:
- Revenues totaled $5.6 million
compared to $5.7 million for the
sequential second quarter of 2012 and $5.9
million in the third quarter of 2011. The decline in
revenue was primarily related to the low level of new bookings in
the previous fiscal year and a modest decline in the level of
activity among select customers who experienced a slowdown in their
own underlying businesses.
- Net income in accordance with US Generally Accepted Accounting
Principles (US GAAP) was $19,000,
compared to net income of $804,000
for the sequential second quarter of 2012 and $887,000 in the third quarter of 2011. The
decline in net income was primarily attributable to the impact of
acquisition related costs as well as the planned higher level of
investment in sales, marketing and engineering expenses associated
with the ongoing support of Commtouch's "Software-as-a-Service"
strategy rollout and upcoming launch, among other factors.
- GAAP earnings per diluted share were $0.00, compared to $0.03 for the sequential second quarter of 2012
and $0.04 in the third quarter of
2011.
- Non-GAAP net income was $744,000,
compared to $1.3 million for the
sequential second quarter of 2012 and $1.8
million in the third quarter of 2011.
- Non-GAAP earnings per diluted share were $0.03, compared to $0.05 for the sequential second quarter of 2012
and $0.07 in the third quarter of
2011.
- Commtouch announced the acquisition of FRISK Software
International's Antivirus business, accelerating the company's
launch of an expanded range of antivirus solutions for the OEM and
service provider market. The acquisition closed on
October 1, 2012 and will begin to be
integrated into Commtouch's full quarterly results beginning in the
fourth quarter of 2012.
- Cash used for operating cash activities during the quarter was
$1.4 million which included
$1.0 million as part of a pre-payment
plan to secure a long-term technological supplier agreement which
is projected to yield cost effective results in terms of reducing
the company's cost of revenue and increasing gross margin.
- Cash as of September 30, 2012 was
$17.3 million, compared to
$19.8 million as of June 30, 2012. Cash usage during the
quarter included the aforementioned $1.0
million pre-paid supplier agreement, $828,000 related to the company's share
repurchase program activity during the quarter, as well as
increased capital expenditures related to the execution of the
company's new SaaS strategy and higher acquisition related
expenses, among other factors.
Shlomi Yanai, Commtouch's chief
executive officer, stated, "Commtouch made significant progress
during the third quarter of 2012 in terms of both execution and
advancing our corporate strategy as we anticipate returning to
sequential revenue growth beginning in the current fourth quarter
of 2012. In terms of execution, our focused sales and
marketing efforts generated major success including a significant
$2.2 million contract win in
Latin America, a geography we've
specifically targeted for growth this year. We've also seen
increased sales traction across international and U.S. based
customers. In fact, over the last two quarters we have
successfully secured more new business wins than the preceding 12
months combined and our new bookings have more than doubled
year-to-date. This provides, yet another proof point that our
improved execution is yielding immediate results."
"This multiple-year backlog includes committed revenue and major
upside for the company. Based on the positive impact of these
contract wins and the nature of our long-term customer agreements,
these multi-year contract wins are on track to begin more
significantly contributing to our revenue growth and profitability
in the coming quarters. While our third quarter financial
results are not yet reflecting the positive impact of the sharp
rise in new bookings due to the nature of our subscription based
revenue model and the way those contracts ramp, we are making
excellent progress with regards to setting the stage growth and
improved profitability in 2013."
"In addition to enhanced execution and posting a sharp increase
in new bookings activity compared to the year ago, Commtouch made
significant progress towards our strategic evolution into a
cloud-driven 'security as a service' solutions provider. We
remain on track with the planned rollout of Commtouch's new Mobile
Security SDK product for Android devices in the current quarter as
well as our next generation cloud-based 'security as a service'
offerings for web and email which are targeted for release in the
first half of 2013. Our progress to date in the development of
these new growth engines, and our continued success in
significantly increasing Commtouch's new business bookings, are
combining to provide us increased confidence in our strategy and a
solid foundation for future growth," concluded Mr. Yanai.
Today the company also announced that Mr. Ron Ela has indicated
his intention to transition out of his current role as Chief
Financial Officer by December 31,
2012. The company has initiated a comprehensive executive
search process and intends to appoint the new incoming Chief
Financial Officer by year end.
Announced in May of 2012, Commtouch's Board of Directors
authorized the initiation of a stock repurchase program of the
company's ordinary shares in the open market, in an amount in cash
of up to $2.5 million. During the
third quarter Commtouch repurchased 297,000 shares at an aggregate
cost of approximately $828,000. As of
September 30, 2012, approximately
495,000 shares have been repurchased through the program at an
aggregate cost of approximately $1.4
million.
For information regarding the non-GAAP financial measures
discussed in this release, please see "Use of Non-GAAP Financial
Information" and "Reconciliation of Non-GAAP to GAAP Financial
Information."
Third Quarter 2012 Business Highlights:
- Commtouch announced the acquisition of FRISK Software
International's Antivirus business, helping accelerate the
company's strategy to deploy an expanded range of antivirus
solutions for the OEM and service provider market, including
private label solutions.
- Commtouch's enhanced global sales and marketing team continued
to deliver sharply higher new booking activity during the third
quarter. Overall, new booking activity over the last six
months has already exceeded total new booking activity in the
preceding twelve month period. Under Commtouch's long-term
agreement model, the majority of contracts signed average
approximately three years in length. These new multi-year
contracts are expected to begin coming online and positively
impacting Commtouch's revenue growth as they ramp in the coming
quarters.
- Key new client wins during the quarter reflected our enhanced
international sales and marketing penetration, including:
- Highlighting penetration into Latin
America, a new managed service provider customer
headquartered in Brazil awarded
Commtouch a three year contract valued at $2.2 million for Internet security solutions
supporting their customers throughout Brazil and Latin
America.
- AVG Technologies, a leading vendor of security software, and
Commtouch announced a strategic long-term partnership during the
quarter. AVG has deployed Commtouch's GlobalView Web URL technology
into AVG Family Safety and AVG CloudCare™ underscoring Commtouch's
uniquely innovative approach to protection.
- One of the world's leading Internet search engine and web
portal companies selected Commtouch to provide targeted URL
filtering data services.
- Commtouch was selected by a French provider information
security offerings and Unified Threat Management solutions to
provide its GlobalView URL Classification Technology in a three
year contract.
- In Germany, a provider of
custom solutions for optimized security and workflow added
Commtouch's Command antivirus solution to their suite of Commtouch
solutions.
- Customer renewal activity during the quarter was strong with
more than 95% of eligible customers renewing.
Business Outlook
Based on the company's nine month year-to-date results and the
projected influence of the acquisition of FRISK Software
International's Antivirus business which was announced late in the
third quarter and closed on October 1,
2012, as well as current expectations for the remainder of
2012, the company is updating its current outlook for 2012.
The company now anticipates full year 2012 revenue will be
approximately $23.0 million, in line
with the prior full year 2011. Commtouch expects to return to
sequential revenue growth beginning in the current fourth quarter
of 2012. Full year 2012 non-GAAP net income is expected to be
greater than $4.0 million as the
company accounts for the initial ramp of the FRISK business as well
as higher costs associated with the company's investment and
integration around FRISK within Commtouch, among other factors.
The above outlook is as of the date of this release, and the
company undertakes no obligation to update its estimates in the
future.
Use of Non-GAAP Measures
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude: share based compensation expenses,
amortization and impairment of acquired intangible assets, deferred
taxes, acquisition related costs and adjustments to earnout
obligation related to the Command antivirus acquisition. The
purpose of such adjustments is to give an indication of the
company's performance exclusive of non-cash charges and other items
that are considered by management to be outside of the company's
core operating results. The company's non-GAAP financial measures
are not meant to be considered in isolation or as a substitute for
comparable GAAP measures, and should be read only in conjunction
with the company's consolidated financial statements prepared in
accordance with GAAP. Company management regularly uses
supplemental non-GAAP financial measures internally to understand,
manage and evaluate our business and make operating decisions.
These non-GAAP measures are among the primary factors management
uses in planning for and forecasting future periods. The company
believes this adjustment is useful to investors as a measure of the
ongoing performance of our business. The company believes these
non-GAAP financial measures provide consistent and comparable
measures to help investors understand the company's current and
future operating cash flow performance. These non-GAAP financial
measures may differ materially from the non-GAAP financial measures
used by other companies. Reconciliation between results on a GAAP
and non-GAAP basis is provided in a table immediately following the
Consolidated Statements of Income. 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.
Financial Results Conference Call
The company has scheduled a conference call later today,
November 6, 2012 at 10:00 a.m. ET to review the third quarter 2012
operational and financial highlights, as well as walk through a
strategic overview of the evolution of the company's growth
strategy.
To participate in the call, please dial one of the following
access numbers ten minutes prior to the start time of the call:
US Dial-in Number: 1-877-407-9210
International Dial-in Number: +1-201-689-8049
Israel Dial-in Number: 00-800-4626-6666
at:
10:00 a.m. Eastern Time, 7:00 a.m. Pacific Time,
3:00 p.m. UK Time, 5:00 p.m. Israel Time
The call will be simultaneously webcast live from a link on
Commtouch's website at http://www.commtouch.com.
For those unable to listen to the live call, a replay of the
call will be available from the day after the call in the investor
relations section of Commtouch's website.
About Commtouch
Commtouch® (NASDAQ: CTCH) is a leading provider of Internet
security technology and cloud-based services for vendors and
service providers, increasing the value and profitability of our
customer's solutions by protecting billions of Internet
transactions on a daily basis. With six global data centers
and award-winning, patented technology, Commtouch's email, web, and
antivirus capabilities easily integrate into our customers'
products and solutions, keeping safe over 350 million end users.
To learn more, visit http://www.commtouch.com.
• Blog: http://blog.commtouch.com/cafe
• Facebook: http://www.facebook.com/commtouch
• LinkedIn: http://www.linkedin.com/company/commtouch
• Twitter: @Commtouch
Recurrent Pattern Detection, RPD,
Zero-Hour and GlobalView are trademarks, and Commtouch is a
registered trademark of Commtouch. U.S. Patent No. 6,330,590 is
owned by Commtouch. All other trademarks are the property of
their respective owners.
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, including the
company's expectations that i) new contracts will impact positively
the company's revenues during the fourth quarter of 2012 and 2013,
ii) the company is on track to release its new offerings, and
iii) the company will meet its business outlook for 2012, 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 http://www.sec.gov.
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In US$ thousands, except per share amounts)
Three months ended Nine months ended
September 30 September 30
---------------------- ----------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Unaudited Unaudited Unaudited Unaudited
Revenues $5,558 $5,855 $17,125 $17,066
Cost of revenues 917 1,019 2,983 2,967
--------- --------- --------- ---------
Gross profit 4,641 4,836 14,142 14,099
--------- --------- --------- ---------
Operating expenses:
Research and development 1,462 1,342 4,096 3,966
Sales and marketing 1,564 1,138 3,994 3,847
General and administrative 1,550 1,209 4,265 3,106
--------- --------- --------- ---------
Total operating expenses 4,576 3,689 12,355 10,919
--------- --------- --------- ---------
Operating profit 65 1,147 1,787 3,180
Financial expenses (income), net (63) (15) (150) 44
--------- --------- --------- ---------
Income before taxes 128 1,162 1,937 3,136
Income taxes (tax benefit), net 109 275 (95) (187)
--------- --------- --------- ---------
Net income attributable to
ordinary and equivalently
participating shareholders $19 $887 $2,032 $3,323
========= ========= ========= =========
Earnings per share - basic $0.00 $0.04 $0.08 $0.14
========= ========= ========= =========
Earnings per share - diluted $0.00 $0.04 $0.08 $0.13
========= ========= ========= =========
Weighted average number of
shares outstanding:
Basic 24,355 23,605 24,358 23,541
========= ========= ========= =========
Diluted 24,845 24,726 24,984 24,678
========= ========= ========= =========
COMMTOUCH SOFTWARE LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON GAAP MEASURES
(In US$ thousands, except per share amounts)
Three months ended Nine months ended
September 30 September 30
---------------------- -----------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Unaudited Unaudited Unaudited Unaudited
GAAP operating profit $65 $1,147 $1,787 $3,180
Stock-based compensation(1) 386 281 1,098 865
Other acquisition related costs (2) 220 - 377 53
Amortization of intangible assets(3) 101 110 303 375
Adjustment to earnout obligation(4) - 196 - 196
--------- --------- --------- ---------
Non-GAAP operating profit $772 $1,734 $3,565 $4,669
========= ========= ========= =========
GAAP net income $19 $887 $2,032 $3,323
Stock-based compensation(1) 386 281 1,098 865
Other acquisition related costs(2) 220 - 377 53
Amortization of intangible assets(3) 101 110 303 375
Adjustment to earnout obligation(4) - 220 28 301
Income taxes(5) 18 275 (199) (187)
--------- --------- --------- ---------
Non-GAAP net income $744 $1,773 $3,639 $4,730
========= ========= ========= =========
GAAP earnings per share $0.00 $0.04 $0.08 $0.13
Stock-based compensation(1) 0.02 0.01 0.04 0.04
Other acquisition related costs(2) 0.009 - 0.015 0.002
Amortization of intangible assets(3) 0.004 0.004 0.012 0.015
Adjustment to earnout obligation(4) - 0.009 0.001 0.012
Income taxes(5) 0.001 0.011 (0.008) (0.008)
--------- --------- --------- ---------
Non-GAAP earnings per share $0.03 $0.07 $0.15 $0.19
========= ========= ========= =========
Numbers of shares used in
computing Non-GAAP earnings
per share (diluted) 24,845 24,726 24,984 24,678
========= ========= ========= =========
(1) Stock-based compensation
Cost of revenues $9 $5 $27 $17
Research and development 84 72 222 218
Sales and marketing 103 87 269 272
General and administrative 190 117 580 358
--------- --------- --------- ---------
$386 $281 $1,098 $865
========= ========= ========= =========
(2) Other acquisition related costs
General and administrative 220 - 377 53
--------- --------- --------- ---------
$220 - $377 $53
========= ========= ========= =========
(3) Amortization of intangible assets
Cost of revenues $48 $55 $144 $147
Sales and marketing 53 55 159 228
--------- --------- --------- ---------
$101 $110 $303 $375
========= ========= ========= =========
(4) Adjustment to earnout obligation
General and administrative - $196 - $196
Financial expenses (income), net - 24 28 105
--------- --------- --------- ---------
- $220 $28 $301
========= ========= ========= =========
(5) Income taxes
Deferred tax asset - tax benefit 18 275 (199) (187)
--------- --------- --------- ---------
$18 $275 ($199) ($187)
========= ========= ========= =========
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
------------ ------------
2012 2011
------------ ------------
Unaudited Audited
In US$ thousands
Assets:
Current Assets:
Cash and cash equivalents $17,334 $20,868
Trade receivables 4,328 2,838
Deferred income taxes 2,106 1,996
Prepaid expenses and other accounts receivable 1,147 463
------------ ------------
Total current assets 24,915 26,165
------------ ------------
Long-term lease deposits 45 40
Severance pay fund 974 1,031
Property and equipment, net 1,059 885
Deferred income taxes 2,978 2,889
Intangible assets, net 3,201 3,505
Goodwill 3,792 3,792
Investment in affiliate 1,227 1,227
------------ ------------
Total assets 38,191 39,534
============ ============
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable 566 551
Employees and payroll accruals 1,439 1,215
Accrued expenses and other liabilities 538 628
Other short term liabilities - 3,372
Deferred revenues 2,631 3,058
------------ ------------
Total current liabilities 5,174 8,824
------------ ------------
Deferred revenues 659 694
Accrued severance pay 1,112 1,192
------------ ------------
Total liabilities 1,771 1,886
------------ ------------
Shareholders' equity 31,246 28,824
------------ ------------
Total liabilities and shareholders' equity $38,191 $39,534
============ ============
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA
(In US$ thousands)
Three months ended Nine months ended
September 30 September 30
--------------------- ---------------------
2012 2011 2012 2011
--------- --------- --------- ---------
Cash flow from operating activities Unaudited Unaudited Unaudited Unaudited
Net income $19 $887 $2,032 $3,323
Adjustments:
Depreciation 155 136 432 414
Compensation related to options
issued to employees and consultants 386 281 1,098 848
Amortization of intangible assets 102 111 304 376
Changes in assets and liabilities:
Increase in trade receivables (794) (825) (1,490) (468)
Decrease (increase) in deferred taxes 18 275 (199) (187)
Increase in prepaid expenses and
other receivables (848) (241) (684) (134)
(Decrease) Increase in accounts payable (113) (126) 38 (177)
(Decrease) Increase in employees and
payroll accruals, accrued expenses and
other liabilities (132) 460 162 562
(Decrease) Increase in deferred revenues (154) 537 (462) (89)
(Decrease) Increase in accrued severance
pay, net (26) 10 (23) 7
--------- --------- --------- ---------
Net cash (used in) provided by
operating activities (1,387) 1,505 1,208 4,475
Cash from investing activities
Change in long - term lease deposits 6 9 (5) (2)
Consideration paid for acquisition
of Antivirus business - - (3,400) -
Purchase of property and equipment (309) (91) (629) (422)
--------- --------- --------- ---------
Net cash used in investing activities (303) (82) (4,034) (424)
Cash flows from financing activities
Buyback of outstanding shares (828) - (1,441) -
Proceeds from options and warrants
exercised 29 151 733 163
--------- --------- --------- ---------
Net cash (used in) provided by
financing activities (799) 151 (708) 163
Increase (decrease) in cash and
cash equivalents (2,489) 1,574 (3,534) 4,214
Cash and cash equivalents at the
beginning of the period 19,823 16,072 20,868 13,432
--------- --------- --------- ---------
Cash and cash equivalents at the
end of the period $17,334 $17,646 $17,334 $17,646
========= ========= ========= =========
Company Contact
Ron Ela
Chief Financial Officer
Tel: (US) +1-650-864-2291
(Int'l) +972-9-8636813
ron.ela@commtouch.com
US Investor Relations Contact
Christopher Chu
Grayling
Tel: (US) +1-646-284-9426
commtouch@grayling.com
IsraelInvestor
Relations Contact
Iris Lubitch
EffectiveIR
Tel: +972-54-2528007
Iris@EffectiveIR.co.il
Media Contact
Matthew Zintel
Zintel Public Relations
Tel: (US) +1-281-444-1590
matthew.zintel@zintelpr.com
SOURCE Commtouch