Commtouch Reports 27 Percent Increase in Revenue in Third Quarter 2011 Results
Non-GAAP Net Income Increased to $1.8 Million, $0.07 per share
SUNNYVALE, California, November 2, 2011 /PRNewswire/ --
Commtouch® (NASDAQ: CTCH), a leading cloud-based Internet security provider, today announced its third quarter 2011 results, ended September 30, 2011.
(Logo: http://www.newscom.com/cgi-bin/prnh/20110906/478788 )
Third Quarter 2011 Financial Highlights:
- Revenues for the third quarter of 2011 increased by 27% to $5.9 million compared to $4.6 million in the third quarter of 2010.
- Net income in accordance with US Generally Accepted Accounting Principles (US GAAP) for the third quarter of 2011 decreased by 16% to $887 thousand, as compared with $1.1 million in the third quarter of 2010.
- GAAP earnings per diluted share for the third quarter of 2011 were $0.04, compared to $0.04 in the third quarter of 2010.
- Non-GAAP net income for the third quarter of 2011 increased by 13% to $1.8 million, as compared with non-GAAP net income of $1.6 million for the third quarter of 2010.
- Non-GAAP earnings per diluted share for the third quarter of 2011 were $0.07, an increase of 12 percent, compared to $0.06 for the third quarter of 2010.
- Deferred Revenues (long-term and short-term) as of September 30, 2011 amounted to $4.1 million compared to $3.5 million in deferred revenues as of June 30, 2011.
- Operating cash flow for the third quarter of 2011 was $1.5 million, compared to $1.6 million in the third quarter of 2010.
- Cash as of September 30, 2011 amounted to $17.6 million, compared to $16.1 million as of June 30, 2011.
For information regarding the non-GAAP financial measures discussed in this release, please see below "Use of Non-GAAP Measures" and "Reconciliation of Selected GAAP Measures to Non-GAAP Measures."
"I am happy to report another strong quarter with consistent revenue growth and improvement of our operating and net margins that led to higher profitability," said Ron Ela, Commtouch's chief financial officer. "This steady financial growth remains a solid basis from which to implement our future plans."
Third Quarter 2011 Business Highlights:
- The company saw growing demand for its products, including the signing of a new agreement with a global communications leader, which selected Commtouch's antivirus solution for its new mobile venture.
- The company continued expanding contracts with existing customers, including a noteworthy deal with one of its leading email security customers that will be implementing Commtouch's GlobalView™ URL Filtering across all of its product lines.
- The company launched version eight of its email and Web security solution platform, reinforcing its cloud security leadership. The new version includes improvements in performance and in the underlying Commtouch cloud technology, expanded Web security capabilities, enhanced email security offerings, and a new unified engine for email security, Web security and antivirus.
On October 24, the board of directors appointed Shlomi Yanai as chief executive officer of Commtouch. Mr. Yanai brings deep industry expertise and a strong performance track record of several decades in the security market, most recently as an executive at SafeNet.
"I am excited to be joining Commtouch, a company with an impressive set of assets including healthy financials, a strong global customer base, a unique cloud-based security platform, and an exceptional team," Mr. Yanai said. "My goal is to build upon this strong foundation, and steer the company toward capitalizing on the significant market opportunity ahead."
Business Outlook
Management reaffirmed its guidance for 2011 full year results and expects revenues and net income to be in the mid-range of their respective guidance.
The previously provided guidance was: full year 2011 revenues of between $22.5 million and $23.5 million, and net income of between $6.2 million and $6.7 million on a non-GAAP basis.
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 of acquired intangible assets, deferred taxes and acquisition related costs. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. Our 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 our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our 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. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our 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 2, 2011, at 10 a.m. ET.
To participate in the call, please dial one of the following numbers ten minutes prior to the start time of the call:
US Dial-in Number: 1-888-407-2553
Israel Dial-in Number: 03-918-0610
International Dial-in Number: +972-3-918-0610
at:
10 a.m. Eastern Time, 7 a.m. Pacific Time, 2 p.m. UK Time, 4 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 the day after the call in the investor relations section of Commtouch's website, at: http://www.commtouch.com/ir.
About Commtouch
Commtouch® (NASDAQ: CTCH) safeguards the world's leading security companies and service providers with cloud-based Internet security services. A cloud-security pioneer, Commtouch's real-time threat intelligence from its GlobalView™ Network powers Web security, messaging security and antivirus solutions, protecting thousands of organizations and hundreds of millions of users worldwide. Information about Commtouch can be found at http://www.commtouch.com or by writing to [email protected].
Recurrent Pattern Detection, RPD, Zero-Hour and GlobalView are trademarks, and Commtouch, Authentium, Command Antivirus and Command Anti-malware are registered trademarks, 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 optimistic business outlook for 2011, 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
-------------------------- --------------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Unaudited Unaudited Unaudited Unaudited
Revenues $5,855 $4,601 $17,066 $12,784
Cost of revenues 1,019 753 2,967 2,014
--------- --------- --------- ---------
Gross profit 4,836 3,848 14,099 10,770
--------- --------- --------- ---------
Operating expenses:
Research and
development 1,342 824 3,966 2,195
Sales and marketing 1,138 1,100 3,847 3,186
General and
administrative 1,209 1,054 3,106 2,719
--------- --------- --------- ---------
Total operating
expenses 3,689 2,978 10,919 8,100
--------- --------- --------- ---------
Operating profit 1,147 870 3,180 2,670
Financial expenses
(income), net (15) (59) 44 3
--------- --------- --------- ---------
Income before taxes 1,162 929 3,136 2,667
Income taxes (tax
benefit), net 275 (128) (187) (69)
--------- --------- --------- ---------
Net income
attributable to
ordinary and
equivalently
participating
shareholders $887 $1,057 $3,323 $2,736
--------- --------- --------- ---------
--------- --------- --------- ---------
Earning per share-
basic $0.04 $0.05 $0.14 $0.12
--------- --------- --------- ---------
--------- --------- --------- ---------
Earning per share-
diluted $0.04 $0.04 $0.13 $0.11
--------- --------- --------- ---------
--------- --------- --------- ---------
Weighted average
number of shares
outstanding:
Basic 23,605 23,301 23,541 23,578
--------- --------- --------- ---------
--------- --------- --------- ---------
Diluted 24,726 24,581 24,678 24,909
--------- --------- --------- ---------
--------- --------- --------- ---------
COMMTOUCH SOFTWARE LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON GAAP MEASURES
(In US$ thousands, except per share amounts)
Three months ended Nine months ended
September 30 September 30
-------------------------- --------------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Unaudited Unaudited Unaudited Unaudited
GAAP operating
profit $1,147 $870 $3,180 $2,670
Stock-based
compensation (1) 281 329 865 998
Other acquisition
related costs (2) - 271 53 271
Amortization of
intangible assets
(3) 110 39 375 39
Adjustment to
earnout obligation
(4) 196 - 196 -
--------- --------- --------- ---------
Non-GAAP operating
profit $1,734 $1,509 $4,669 $3,978
--------- --------- --------- ---------
--------- --------- --------- ---------
GAAP net income $887 $1,057 $3,323 $2,736
Stock-based
compensation (1) 281 329 865 998
Other acquisition
related costs (2) - 271 53 271
Amortization of
intangible assets
(3) 110 39 375 39
Adjustment to
earnout obligation
(4) 220 - 301 -
Income taxes (5) 275 (128) (187) (69)
--------- --------- --------- ---------
Non-GAAP net
income $1,773 $1,568 $4,730 $3,975
--------- --------- --------- ---------
--------- --------- --------- ---------
GAAP earnings per
share $0.04 $0.04 $0.13 $0.11
Stock-based
compensation (1) 0.01 0.01 0.04 0.04
Other acquisition
related costs (2) - 0.01 0.002 0.01
Amortization of
intangible assets
(3) 0.004 0.002 0.015 0.002
Adjustment to
earnout obligation
(4) 0.009 - 0.012 -
Income taxes (5) 0.011 (0.005) (0.008) (0.003)
--------- --------- --------- ---------
Non-GAAP earnings
per share $0.07 $0.06 $0.19 $0.16
--------- --------- --------- ---------
--------- --------- --------- ---------
Numbers of shares
used in computing
Non-GAAP earnings
per share
(diluted) 24,726 24,581 24,678 24,909
--------- --------- --------- ---------
(1) Stock-based
compensation
Cost of revenues $5 $10 $17 $29
Research and
development 72 78 218 231
Sales and
marketing 87 92 272 282
General and
administrative 117 149 358 456
--------- --------- --------- ---------
$281 $329 $865 $998
--------- --------- --------- ---------
--------- --------- --------- ---------
(2) Other
acquisition
related costs
General and
administrative - 271 53 271
--------- --------- --------- ---------
- $271 $53 $271
--------- --------- --------- ---------
--------- --------- --------- ---------
(3) Amortization
of intangible
assets
Cost of revenues $55 15 $147 15
Sales and
marketing 55 24 228 24
--------- --------- --------- ---------
$110 $39 $375 $39
--------- --------- --------- ---------
--------- --------- --------- ---------
(4) Adjustment to
earnout obligation
Financial expenses
(income), net $24 - $105 -
General and
administrative 196 - 196 -
--------- --------- --------- ---------
$220 - $301 -
--------- --------- --------- ---------
--------- --------- --------- ---------
(5) Income taxes
Deferred tax asset
- tax benefit 275 (128) (187) (69)
--------- --------- --------- ---------
$275 (128) ($187) (69)
--------- --------- --------- ---------
--------- --------- --------- ---------
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
2011 2010
------------ -----------
Unaudited Audited
In US$ thousands
Assets:
Current Assets:
Cash and cash
equivalents $17,646 $13,432
Trade receivables 3,436 2,968
Deferred income taxes 2,082 1,940
Prepaid expenses and
other accounts
receivable 518 384
------------ -----------
Total current assets 23,682 18,724
------------ -----------
Long-term lease
deposits 43 41
Severance pay fund 1,260 1,208
Property and equipment,
net 860 920
Deferred income taxes 1,605 1,560
Intangible assets, net 4,134 4,510
Goodwill 3,792 3,792
Investment in affiliate 1,227 1,227
------------ -----------
Total assets 36,603 31,982
------------ -----------
------------ -----------
Liabilities and
Shareholders' Equity
Current Liabilities:
Accounts payable 305 550
Employees and payroll
accruals 1,063 1,073
Accrued expenses and
other liabilities 601 330
Other short term
liabilities 3,132 -
Deferred revenues 3,501 3,178
------------ -----------
Total current
liabilities 8,602 5,131
------------ -----------
Deferred revenues 552 964
Other long term
liabilities - 2,831
Accrued severance pay 1,362 1,303
------------ -----------
Total liabilities 1,914 5,098
------------ -----------
Shareholders' equity 26,087 21,753
------------ -----------
Total liabilities and
shareholders' equity $36,603 $31,982
------------ -----------
------------ -----------
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA
(In US$ thousands)
Three months ended Nine months ended
September 30 September 30
--------------------- -----------------------
2011 2010 2011 2010
---------- --------- --------- ----------
Cash flow from
operating activities Unaudited Unaudited Unaudited Unaudited
Net income $887 $1,057 $3,323 $2,736
Adjustments:
Depreciation 136 128 414 367
Compensation related
to options issued to
employees and consultants 281 341 848 1,019
Amortization of
intangible assets 111 39 376 39
Changes in assets
and liabilities:
Increase in trade
receivables (825) (628) (468) (648)
(Decrease) Increase in
deferred taxes 275 (128) (187) (69)
(Increase) decrease in
prepaid expenses and other
receivables (241) 288 (134) 178
(Decrease) increase in
accounts payable (126) 217 (177) 155
Increase in employees and
payroll accruals, accrued
expenses
and other liabilities 460 147 562 130
Increase (decrease) in
deferred revenues 537 199 (89) (382)
Capital gain from sale of
fixed assets - - - (9)
Increase (decrease) in
accrued severance pay, net 10 (23) 7 (1)
---------- --------- --------- ----------
Net cash provided by
operating activities 1,505 1,637 4,475 3,515
Cash from investing
activities
Change in long - term lease
deposits 9 4 (2) 14
Proceeds from sale of fixed
assets - - - 9
Investment in affiliate - (4,600) - (4,600)
Purchase of property and
equipment (91) (76) (422) (410)
---------- --------- --------- ----------
Net cash used in investing
activities (82) (4,672) (424) (4,987)
Cash flows from financing
activities
Buyback of outstanding
shares - (496) - (3,323)
Proceeds from options and
warrants exercised 151 4 163 29
---------- --------- --------- ----------
Net cash provided by (used in)
financing activities 151 (492) 163 (3,294)
Increase (decrease) in cash
and cash equivalents 1,574 (3,527) 4,214 (4,766)
Cash and cash equivalents
at the beginning of the
period 16,072 16,036 13,432 17,275
---------- --------- --------- ----------
Cash and cash equivalents
at the end of the period $17,646 $12,509 $17,646 $12,509
---------- --------- --------- ----------
---------- --------- --------- ----------
US Investor Relations Contact
Ehud Helft / Kenny Green
CCG Investor Relations
Tel: (US) +1-646-201-9246
(Int'l) +972-3-607-4717
Israel Investor Relations contact
Iris Lubitch
EffectiveIR
Tel: +972-3-5664007
SOURCE Commtouch
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