MCLEAN, Va., May 16, 2013 /PRNewswire/ -- Commtouch®
(NASDAQ: CTCH), a leading provider of Internet security
technology and cloud-based services, today announced its first
quarter 2013 financial results for the period ending March 31, 2013.
First Quarter 2013 Financial Highlights:
- Revenues in accordance with US Generally Accepted Accounting
Principles (US GAAP) totaled $7.9
million for the first quarter of 2013 compared to
$6.8 million for the sequential
fourth quarter of 2012 and $5.9
million in the first quarter of 2012.
- Non-GAAP revenues totaled $8.1
million for the first quarter of 2013 compared to
$7.0 million for the sequential
fourth quarter of 2012 and $5.9
million in the first quarter of 2012. The difference between
non-GAAP and GAAP revenue is derived from the fact that deferred
revenues consolidated from acquired companies are recorded based on
fair value rather than book value for GAAP purposes.
- During the first quarter, the company recognized expenses
related to its previously announced acquisitions, as well as
related integration, severance and streamlining expenses, totaling
approximately $0.3 million. First
quarter 2013 GAAP net income (loss) and earnings per diluted share
data include the impact of these costs.
- GAAP net loss for the first quarter was $1.3 million compared to net loss of $0.5 million for the sequential fourth quarter of
2012 and net income of $1.2 million
in the first quarter of 2012. First quarter 2013 and fourth quarter
2012 data includes the aforementioned acquisition related
expenses.
- GAAP net loss per diluted share for the first quarter was
$0.05, compared to a net loss of
$0.02 for the sequential fourth
quarter of 2012 and GAAP earnings per share of $0.05 in the first quarter of 2012. First quarter
2013 and fourth quarter 2012 data includes the aforementioned
acquisition related expenses.
- Non-GAAP net income for the first quarter 2013 was $0.1 million compared to $0.3 million for the sequential fourth quarter of
2012 and $1.6 million in the first
quarter of
2012.
- Non-GAAP earnings per diluted share for the first quarter 2013
were $0.00, compared to $0.01 for the sequential fourth quarter of 2012
and $0.06 in the first quarter of
2012.
- Cash used for operating cash activities during the quarter was
$0.2 million.
- Cash as of March 31, 2013 was
$4.9 million, compared to
$5.1 million as of December 31, 2012. Cash usage during the quarter
included integration and severance costs associated with the two
acquisitions completed during the fourth quarter of 2012.
"We achieved a major milestone in the evolution of the company
with the launch of our first new cloud-based offering in the
quarter," said Shlomi Yanai, chief
executive officer at Commtouch. "The introduction of our private
label Email Security-as-a-Service solution marks the first step in
the long-term strategic plan we outlined 12 months ago. Moreover,
we initiated a major effort to integrate the two acquisitions we
closed in the fourth quarter and completed two key elements of this
process with the creation of one global sales and marketing
organization and one world-wide engineering team. Through this
initiative we eliminated redundancies and achieved a 15 percent
headcount reduction since December 31,
2012. These actions put us on track to meet the
profitability targets we outlined at the beginning of this
year."
"I am delighted by the traction that our new products have
garnered in the market among new and existing customers," Mr. Yanai
added. "Our broadened product portfolio is enabling Commtouch to
increase our footprint within existing customers as well as expand
our reach to new customers, including resellers, distributors,
hosting providers and mobile application developers. Our global
sales and marketing organization has developed a channel initiative
to focus on these opportunities."
"The integration of our Q4 2012 acquisitions is proceeding
smoothly and we expect this process to be largely complete in the
third quarter," said Brian Briggs,
chief financial officer at Commtouch. "While we continue to invest
in our global sales capability, we have turned our focus to
streamlining the organization and improving our cost structure. As
a result of these efforts, we remain on track to generate cost
synergies and a return to profitability in the second half of 2013.
In addition, we bolstered our balance sheet with the addition of a
line of credit with two large Israeli banks after the close of the
first quarter."
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."
Business Highlights:
- Commtouch introduced three new products during the quarter,
including:
- Private label Email Security-as-a-Service, the first major
release in a series of planned cloud-based product introductions,
which combines premium protection against email-based threats such
as spam, phishing and malware, with maximum cost-efficiency and
minimum time to market. The Commtouch platform delivers
market-leading detection at a competitive price point, streamlines
resource utilization, and delivers Quality of Service (QoS), which
leads to increased customer satisfaction, reduced churn, and helps
service providers and security vendors grow revenue and market
share.
- On-Premise Email Security for the service provider market, a
cloud-based service that augments the company's market-leading
messaging security suite of cloud-assisted Anti-Spam, Virus
Outbreak Detection, IP Reputation, and Antivirus services with
on-premise technology components that integrate easily into service
provider environments. The new solution enables customers to
improve email QoS while reducing the cost of delivery.
- Mobile Security Service for Android, which represents the first
to market cloud-assisted antivirus and Web security services
created exclusively for partner delivery with a single, easy to
integrate client SDK. Importantly, this service uses very little
memory, bandwidth, and battery time, and will therefore not impact
device performance or the user experience.
- The company remains on track to launch its new cloud-based Web
security solutions and Advanced Persistent Threat (APT) Detection
Service in the second half of 2013.
- Commtouch continued to invest in its global sales and marketing
capabilities during the first quarter and began to develop its
channel strategy aimed at expanding the company's customer
footprint to include distributors, resellers, hosting providers and
mobile application developers. The company signed new long-term
agreements for its recently introduced cloud-based Email
Security-as-a-Service offering, including its first private label
hosting provider win.
- Key new client wins announced during the quarter reflected the
company's enhanced international sales and marketing penetration,
including:
- Return Path, a leading provider of email intelligence
solutions, which integrated Commtouch's URL filtering into Return
Path's email intelligence solutions for both enterprises as well as
mailbox providers to detect and prevent piracy of email senders'
platforms.
- NetCologne, one of the leading regional Internet and
telecommunication service providers in Germany, which integrated Commtouch's
On-Premise Email Security into its existing email infrastructure to
protect against spam, malware, and phishing.
- NETGEAR, a global networking company that delivers innovative
products to consumers, businesses, and service providers,
integrated Commtouch's Antivirus solution into its Network Attached
Storage products for small and medium businesses as well as
enterprises.
- In February, Commtouch's product portfolio was recognized by
Info Security Products Guide, the industry's leading information
security research and advisory guide, with top honors throughout
Commtouch's product categories. The company's GlobalView URL
Filtering solution was named the gold winner of the 2013 Global
Excellence Award for Best Social Media, Web Filtering, and Content
Security Solution. Commtouch was also named silver winner in the
Best Email Security and Management category, as well as bronze
winner in three categories: Best Overall Security Company of the
Year, Best Anti-Malware, Anti-Spam, or Antivirus and Tomorrow's
Technology Today. These prestigious global awards recognize
security and IT vendors with advanced, ground-breaking products and
solutions that are helping set the bar higher for others in all
areas of information security.
Business Outlook
Based on current expectations, the company is reiterating its
financial outlook for the full year 2013. The company continues to
anticipate full year 2013 revenue between $34.0 million and $35.0 million, an increase of
approximately 42% to 46% compared with full year 2012. GAAP and
non-GAAP net income guidance includes a higher level of sales and
marketing expense versus 2012 to support a strengthened global
sales platform. Full year 2013 GAAP net income is expected to be
greater than $2.0 million and
non-GAAP net income is expected to be greater than $3.5 million.
During the second quarter of 2013, the company expects to
recognize additional expenses related to its previously announced
acquisitions, as well as related integration, severance and
streamlining expenses. The impact of these charges is reflected in
the aforementioned full year 2013 GAAP net income guidance. The
company expects the impact of these integration and streamlining
activities to positively impact the financial performance of the
business during the second half of 2013.
The company plans to continue to strategically invest in the
build-out of its global sales and marketing efforts. The impact of
these investments is reflected in the full year 2013 GAAP net
income guidance.
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: stock based compensation expenses,
amortization and impairment of acquired intangible assets,
executive termination costs, deferred taxes, acquisition related
costs and adjustments to earn-out obligations. 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,
May 16, 2013 at 10:00 a.m. ET to review the first quarter 2013
highlights, as well as walk through a strategic overview of the
evolution of the company's growth strategy.
To participate, please call one of the following
teleconferencing numbers by dialing in at least 10 minutes before
the conference call commences. If you are unable to connect using
the toll-free numbers, please try the international dial-in
number.
US Dial-in Number: 1-877-407-8289
Israel Dial-in Number: 00-800-2246-2666
International Dial-in Number: 201-689-8341
at:
10:00 a.m.
Eastern Time, 5:00 p.m. Israel
Time
The call will be simultaneously webcast live from a link on
Commtouch's Web site at www.commtouch.com.
For those unable to listen to the live call, a webcast replay of
the call will be available from the day after the call in the
investor relations section of Commtouch's corporate Web site.
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
customers' solutions by protecting billions of Internet
transactions on a daily basis. With twelve global data centers and
renowned technology, Commtouch's email, Web, and antivirus
capabilities easily integrate into customers' products and
solutions, keeping more than 350 million end users safe. 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) it will meet its 2013 revenue and
profit forecasts, ii) its new service offerings will impact those
forecasts in the positive manner indicated, and iii) the result of
integration and efficiency activities will be to positively impact
the financial performance of the business during the second half of
2013, 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:
|
Israel
Investor Relations Contact:
|
Brian
Briggs, Chief Financial Officer
|
Iris
Lubitch
|
Commtouch
|
EffectiveIR
|
+1.703.760.3444
|
+972.54.252.8007
|
brian.briggs@commtouch.com
|
Iris@EffectiveIR.co.il
|
|
|
U.S.Investor Contact:
|
Commtouch Media Contact:
|
Monica
Gould
|
Matthew
Zintel
|
The
Blueshirt Group
|
Zintel
Public Relations
|
+1.212.871.3927
|
+1.281.444.1590
|
monica@blueshirtgroup.com
|
matthew.zintel@zintelpr.com
|
COMMTOUCH SOFTWARE LTD.
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
(In US$
thousands, except per share amounts)
|
|
|
|
|
|
|
Three
months ended
|
|
March
31
|
|
|
2013
|
|
2012
|
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|
|
Revenues
|
$7,925
|
|
$5,896
|
|
|
|
|
|
|
Cost
of revenues
|
1,778
|
|
1,052
|
|
|
|
|
|
|
Gross
profit
|
6,147
|
|
4,844
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
2,264
|
|
1,270
|
|
|
|
|
|
|
Sales and marketing
|
2,765
|
|
1,142
|
|
|
|
|
|
|
General and administrative
|
2,215
|
|
1,331
|
|
|
|
|
|
|
Total operating expenses
|
7,244
|
|
3,743
|
|
|
|
|
|
|
Operating
profit (loss)
|
(1,097)
|
|
1,101
|
|
|
|
|
|
|
Financial
income (expenses) , net
|
(185)
|
|
23
|
|
|
|
|
|
|
Income
(loss) before taxes
|
(1,282)
|
|
1,124
|
|
|
|
|
|
|
Income
taxes , net
|
23
|
|
85
|
|
|
|
|
|
|
Net income
(loss) attributable to ordinary and equivalently participating
shareholders
|
|
|
|
|
($1,259)
|
|
$1,209
|
|
|
|
|
|
|
Earning
(loss) per share- basic
|
($0.05)
|
|
$0.05
|
|
|
|
|
|
|
Earning
(loss) per share- diluted
|
($0.05)
|
|
$0.05
|
|
|
|
|
|
|
Weighted
average number of shares outstanding:
|
|
|
|
|
Basic
|
25,934
|
|
24,163
|
|
|
|
|
|
|
Diluted
|
25,934
|
|
24,889
|
|
COMMTOUCH SOFTWARE LTD.
|
|
|
|
|
|
RECONCILIATION OF SELECTED GAAP MEASURES TO NON
GAAP MEASURES
|
|
|
|
|
|
(In US$
thousands, except per share amounts)
|
|
|
|
|
|
|
Three
months ended
|
|
March
31
|
|
|
2013
|
|
2012
|
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|
|
GAAP
operating profit (loss)
|
($1,097)
|
|
$1,101
|
|
Stock-based compensation (1)
|
314
|
|
364
|
|
Other
acquisition related costs (2)
|
142
|
|
-
|
|
Amortization of intangible assets (3)
|
436
|
|
101
|
|
Executive
terminations (4)
|
165
|
|
-
|
|
Adjustment
to deferred revenues (5)
|
196
|
|
-
|
|
Adjustment
to earnout obligation (6)
|
(3)
|
|
-
|
|
|
|
|
|
|
Non-GAAP
operating profit
|
$153
|
|
$1,566
|
|
|
|
|
|
|
GAAP net
income (loss)
|
($1,259)
|
|
$1,209
|
|
Stock-based compensation (1)
|
314
|
|
364
|
|
Other
acquisition related costs (2)
|
142
|
|
-
|
|
Amortization of intangible assets (3)
|
436
|
|
101
|
|
Executive
terminations (4)
|
165
|
|
-
|
|
Adjustment
to deferred revenues (5)
|
196
|
|
-
|
|
Adjustment
to earnout obligation (6)
|
170
|
|
28
|
|
Income
taxes (7)
|
(92)
|
|
(116)
|
|
|
|
|
|
|
Non-GAAP
net income
|
$72
|
|
$1,586
|
|
|
|
|
|
|
GAAP
earnings (loss) per share
|
($0.05)
|
|
$0.05
|
|
Stock-based compensation (1)
|
0.01
|
|
0.01
|
|
Other
acquisition related costs (2)
|
0.01
|
|
-
|
|
Amortization of intangible assets (3)
|
0.02
|
|
0.004
|
|
Executive
terminations (4)
|
0.01
|
|
-
|
|
Adjustment
to earnout obligation (5)
|
0.007
|
|
0.001
|
|
Income
taxes (6)
|
(0.004)
|
|
(0.005)
|
|
|
|
|
|
|
Non-GAAP
earnings per share
|
$0.00
|
|
$0.06
|
|
|
|
|
|
|
Numbers of
shares used in computing Non-GAAP earnings per share
(diluted)
|
25,934
|
|
24,889
|
|
|
|
|
|
|
(1)
Stock-based compensation
|
|
|
|
|
Cost
of revenues
|
$12
|
|
$9
|
|
Research and development
|
58
|
|
67
|
|
Sales and marketing
|
59
|
|
88
|
|
General and administrative
|
185
|
|
200
|
|
|
|
|
|
|
|
$314
|
|
$364
|
|
(2)
Other acquisition related costs
|
|
|
|
|
General
and administrative
|
142
|
|
-
|
|
|
|
|
|
|
|
$142
|
|
$0
|
|
(3)
Amortization of intangible assets
|
|
|
|
|
Cost
of revenues
|
$188
|
|
$48
|
|
Sales and marketing
|
248
|
|
53
|
|
|
|
|
|
|
|
$436
|
|
$101
|
|
(4)
Executive terminations
|
|
|
|
|
General
and administrative
|
165
|
|
-
|
|
|
|
|
|
|
|
$165
|
|
$0
|
|
(5)
Adjustment to deferred revenues
|
|
|
|
|
Revenues
|
196
|
|
-
|
|
|
|
|
|
|
|
$196
|
|
$0
|
|
(6)
Adjustment to earnout obligation
|
|
|
|
|
General and administrative
|
($3)
|
|
$0
|
|
Financial
expenses (income), net
|
173
|
|
28
|
|
|
|
|
|
|
|
170
|
|
28
|
|
|
|
|
|
|
(7)
Income taxes
|
|
|
|
|
Deferred
tax asset - tax benefit
|
(92)
|
|
(116)
|
|
|
|
|
|
|
|
($92)
|
|
($116)
|
|
COMMTOUCH SOFTWARE LTD.
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
|
|
|
|
March
31
|
|
December 31
|
|
2013
|
|
2012
|
|
Unaudited
|
|
Audited
|
|
In US$
thousands
|
|
|
|
|
Assets:
|
|
|
|
Current Assets:
|
|
|
|
Cash and
cash equivalents
|
$4,873
|
|
$5,137
|
Trade
receivables
|
6,335
|
|
5,996
|
Deferred
income taxes
|
2,276
|
|
2,239
|
Prepaid
expenses and other accounts receivable
|
2,286
|
|
1,503
|
Total current assets
|
15,770
|
|
14,875
|
|
|
|
|
Long-term
lease deposits
|
55
|
|
57
|
Severance
pay fund
|
698
|
|
756
|
Property
and equipment, net
|
1,971
|
|
1,608
|
Deferred
income taxes
|
3,403
|
|
3,348
|
Intangible
assets, net
|
35,956
|
|
37,086
|
Investment
in affiliate
|
1,403
|
|
1,403
|
Total
assets
|
59,256
|
|
59,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
Current Liabilities:
|
|
|
|
Accounts
payable
|
575
|
|
958
|
Employees
and payroll accruals
|
2,019
|
|
2,280
|
Accrued
expenses and other liabilities
|
1,239
|
|
1,587
|
Short-term
Earn-out consideration
|
5,601
|
|
4,048
|
Deferred
revenues
|
5,122
|
|
4,535
|
Total current liabilities
|
14,556
|
|
13,408
|
|
|
|
|
Long term
deferred revenues
|
2,152
|
|
492
|
Long term
deferred tax
|
3,096
|
|
3,187
|
Long term
earn-out consideration
|
4,710
|
|
6,409
|
Accrued
severance pay
|
870
|
|
915
|
Total
long-term liabilities
|
10,828
|
|
11,003
|
|
|
|
|
Shareholders' equity
|
33,872
|
|
34,722
|
Total
liabilities and shareholders' equity
|
$59,256
|
|
$59,133
|
COMMTOUCH SOFTWARE LTD.
|
|
|
|
|
|
CONDENSED CONSOLIDATED CASH FLOW
DATA
|
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(In US$
thousands)
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|
Three
months ended
|
|
|
March
31
|
|
|
2013
|
|
2012
|
|
Cash
flow from operating activities
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|
|
Net income
(loss)
|
(1,259)
|
|
$1,209
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Depreciation
|
219
|
|
151
|
|
Compensation related to options issued to
employees
|
330
|
|
364
|
|
Amortization of intangible assets
|
389
|
|
101
|
|
|
|
|
|
|
Changes in
assets and liabilities:
|
|
|
|
|
Increase
in trade receivables
|
(383)
|
|
(535)
|
|
Increase
in deferred taxes
|
(92)
|
|
(116)
|
|
(Increase)
Decrease in prepaid expenses and other receivables
|
(853)
|
|
157
|
|
Decrease in accounts payable
|
(386)
|
|
(183)
|
|
Increase
(decrease) in employees and payroll accruals, accrued expenses and
other liabilities
|
(408)
|
|
40
|
|
Increase
in deferred revenues
|
2,279
|
|
20
|
|
(Decrease)
increase in accrued severance pay, net
|
13
|
|
(4)
|
|
Net
cash (used in) provided by operating activities
|
(151)
|
|
1,204
|
|
|
|
|
|
|
Cash
from investing activities
|
|
|
|
|
|
|
|
|
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Change in
long - term lease deposits
|
2
|
|
-
|
|
Purchase
of property and equipment
|
(581)
|
|
(133)
|
|
Net
cash used in investing activities
|
(579)
|
|
(133)
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds
from options exercises and Issuance shares
|
486
|
|
99
|
|
Net
cash provided by financing activities
|
486
|
|
99
|
|
Effect of
exchange rate changes on cash
|
(20)
|
|
|
|
Increase (decrease) in cash and cash
equivalents
|
(244)
|
|
1,170
|
|
Cash
and cash equivalents at the beginning of the period
|
5,137
|
|
20,868
|
|
Cash
and cash equivalents at the end of the period
|
$4,873
|
|
$22,038
|
|
SOURCE Commtouch