Commtouch Reports 27% Revenue Increase for Full Year 2011
Operating Cash Flow for the Fourth Quarter 2011 Reached $2.2 Million; Year End Total Cash Balance Reached $20.9 Million
SUNNYVALE, California, February 14, 2012 /PRNewswire/ --
Commtouch® (NASDAQ: CTCH), a leading cloud-based Internet security provider, today announced its fourth quarter and full year results, for the period ending December 31, 2011.
(Logo: http://www.newscom.com/cgi-bin/prnh/20110906/478788 )
Fourth Quarter and Full Year 2011 Financial Highlights:
- Revenues for 2011 increased by 27% to $23.0 million, compared to $18.2 million in 2010. Revenues for the fourth quarter of 2011 increased by 11% to $6.0 million, compared to $5.4 million in the fourth quarter of 2010.
- Net income for 2011 in accordance with US Generally Accepted Accounting Principles (US GAAP) was $4.6 million, compared to net income of $4.4 million in 2010. For the fourth quarter of 2011, US GAAP net income was $1.3 million compared to net income of $1.7 million in the fourth quarter of 2010. GAAP net income in the fourth quarter of 2011 included a tax benefit of $1.2 million stemming from an increase in the deferred tax asset, compared to a tax benefit of $1.0 million in the fourth quarter of 2010.
- GAAP earnings per diluted share for 2011 were $0.19, compared to $0.18 for 2010. GAAP earnings per diluted share for the quarter were $0.05, compared to $0.07 in the fourth quarter of 2010.
- Non-GAAP net income for 2011 increased by 18% to $6.4 million, compared to $5.4 million in 2010. Non-GAAP net income for the fourth quarter of 2011 increased by 16% to $1.7 million, compared to $1.4 million for the fourth quarter of 2010.
- Non-GAAP earnings per diluted share for 2011 were $0.26, an increase of 18% percent, compared to $0.22 for 2010. Non-GAAP earnings per diluted share for the quarter were $0.07, an increase of 17%, compared to $0.06 for the fourth quarter of 2010.
- Deferred Revenues (long-term and short-term) as of December 31, 2011 were $3.8 million compared to $4.1 million in deferred revenues as of September 30, 2011.
- Cash as of December 31, 2011 was $20.9 million, compared to $13.4 million as of December 31, 2010.
- Operating cash flow for 2011 was $6.7 million, compared to operating cash flow of $4.3 million in 2010. In the fourth quarter of 2011, operating cash flow was $2.2 million, compared to $0.8 million in the fourth quarter of 2010. During the fourth quarter of 2011, options were exercised for approximately $1.1 million.
"We are pleased with our results and performance in 2011," said Shlomi Yanai, Commtouch's chief executive officer. "We continue to see growth in our top and bottom lines and a significant increase in cash. Our strong financial position will enable us to expand and accelerate our future plans."
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."
2011 Business Highlights:
Business highlights for 2011 include:
- Integration of Command Antivirus® into Commtouch's current business, and ramping up of antivirus sales to the company's existing and new customers.
- Growth in service provider demand for Commtouch's solutions, with a focus on Outbound Spam Protection and antivirus. New deals signed globally include those with Cox, Hostway, Superb Internet and one of the top three European hosting providers.
- Launch of new products, including version eight of Commtouch's technology, which simplifies management of its security solutions; a new URL filtering solution for mobile, which provides real-time protection for mobile device users browsing the Web; and the industry's first unified engine combining email security, Web filtering and antivirus, which enhances performance, reduces integration time and increases customers' ROI.
- Continued investment in the company's worldwide cloud infrastructure to enable superior detection services for Commtouch's customers.
During the fourth quarter of 2011, Shlomi Yanai was appointed as the Company's CEO, and Todd Thomson was appointed to the board of directors. In December 2011, Amir Lev completed his service to the board of directors, and during 2012, he will be winding down his activities as CTO and President of the company. In addition, James Hamilton was appointed to the board of directors this week.
"We see growing demand for Internet security solutions based on Commtouch's offerings," Mr. Yanai continued. "The leading growth drivers include the increasing usage of mobile devices in the enterprise and escalating cyber security threats.
"In the three months since I joined the company, I have gained more extensive knowledge of Commtouch's significant technological and business assets. These include a robust cloud infrastructure that is the basis for our services, and a market-leading customer base. Given market demand and our in-house capabilities, we expect to continue our double-digit revenue growth in 2012."
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 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, February 14, 2010, 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: 1-888-668-9141
Israel Dial-in Number: 03-918-0609
International Dial-in Number: +972-3-918-0609
at:
10 a.m. Eastern Time, 7 a.m. Pacific Time, 3 p.m. UK Time, 5p.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) safeguards the world's leading security companies and service providers with cloud-based Internet security services. Real-time threat intelligence from Commtouch's GlobalView™ Cloud powers its Web filtering, email 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 company's expectation of double digit growth 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 Twelve months ended
December 31 December 31
------------------ -------------------
2011 2010 2011 2010
------ ------ ------ ------
Unaudited Unaudited Unaudited Audited
Revenues $5,950 $5,377 $23,016 $18,161
Cost of revenues 1,124 904 4,091 2,918
------ ------ ------ ------
Gross profit 4,826 4,473 18,925 15,243
------ ------ ------ ------
Operating
expenses:
Research and
development 1,444 1,202 5,410 3,397
Sales and
marketing 1,639 1,389 5,486 4,575
General and
administrative 1,615 1,192 4,721 3,911
------ ------ ------ ------
Total operating
expenses 4,698 3,783 15,617 11,883
------ ------ ------ ------
Operating profit 128 690 3,308 3,360
Financial expenses
, net 23 52 27 55
------ ------ ------ ------
Income before
taxes 105 638 3,281 3,305
Income taxes , net (1,170) (1,029) (1,317) (1,098)
------ ------ ------ ------
Net income
attributable to
ordinary and
equivalently
participating
shareholders
$1,275 $1,667 $4,598 $4,403
======= ======= ======= =======
Earning per share-
basic $0.05 $0.07 $0.19 $0.19
======= ======= ======= =======
Earning per share-
diluted $0.05 $0.07 $0.19 $0.18
======= ======= ======= =======
Weighted average
number of shares
outstanding:
Basic 23,854 23,565 23,620 23,575
======= ======= ======= =======
Diluted 24,828 24,767 24,654 24,874
======= ======= ======= =======
COMMTOUCH SOFTWARE LTD.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON GAAP MEASURES
(In US$ thousands, except per share amounts)
Three months ended Twelve months ended
December 31 December 31
------------------ -------------------
2011 2010 2011 2010
------ ------ ------ ------
Unaudited Unaudited Unaudited Unaudited
GAAP operating
profit $128 $690 $3,308 $3,360
Stock-based
compensation (1) 365 470 1,230 1,468
Other
acquisition
related costs
(2) - 30 53 301
Amortization and
impairment of
intangible
assets (3) 628 119 1,003 158
Executive
terminations (4) 343 173 343 173
Adjustment to
earnout
obligation (5) 200 - 396 -
------- ------- ------- -------
Non-GAAP
operating profit $1,664 $1,482 $6,333 $5,460
======== ======= ======= =======
GAAP net income $1,275 $1,667 $4,598 $4,403
Stock-based
compensation (1) 365 470 1,230 1,468
Other
acquisition
related costs
(2) - 30 53 301
Amortization and
impairment of
intangible
assets (3) 628 119 1,003 158
Executive
terminations (4) 343 173 343 173
Adjustment to
earnout
obligation (5) 240 - 541 -
Income taxes (6) (1,198) (1,029) (1,385) (1,098)
------- ------- ------- -------
Non-GAAP net
income $1,653 $1,430 $6,383 $5,405
======== ======= ======= =======
GAAP earnings
per share $0.05 $0.07 $0.19 $0.18
Stock-based
compensation (1) 0.01 0.02 0.05 0.06
Other
acquisition
related costs
(2) - 0.001 0.002 0.01
Amortization and
impairment of
intangible
assets (3) 0.025 0.005 0.041 0.01
Executive
terminations (4) 0.01 0.01 0.01 0.01
Adjustment to
earnout
obligation (5) 0.01 - 0.02 -
Income taxes (6) (0.048) (0.042) (0.056) (0.04)
------- ------- ------- -------
Non-GAAP
earnings per
share $0.07 $0.06 $0.26 $0.22
======== ======= ======= =======
Numbers of
shares used in
computing
Non-GAAP
earnings per
share (diluted) 24,828 24,767 24,654 24,874
======== ======= ======= =======
(1) Stock-based
compensation
Cost of revenues $7 $9 $24 $38
Research and
development 76 85 294 316
Sales and
marketing 83 91 355 373
General and
administrative 199 285 557 741
------- ------- ------- -------
$365 $470 $1,230 $1,468
======== ======= ======= =======
(2) Other
acquisition
related costs
Cost of sales - - - $271
General and
administrative - 30 53 30
------- ------- ------- -------
- $30 $53 $301
======== ======= ======= =======
(3) Amortization
and impairment
of intangible
assets
Cost of revenues $48 $47 $195 $62
Sales and
marketing 580 72 808 96
------- ------- ------- -------
$628 $119 $1,003 $158
======== ======= ======= =======
(4) Executive
terminations
Research and
development $82 - $82 -
General and
administrative 261 173 261 173
------- ------- ------- -------
$343 $173 $343 $173
======== ======= ======= =======
(5) Adjustment
to earnout
obligation
Financial
expenses
(income), net $40 - $145 -
General and
administrative 200 - 396 -
------- ------- ------- -------
$240 - $541 -
======== ======= ======= =======
(6) Income taxes
Deferred tax
asset - tax
benefit (1,198) (1,029) (1,385) (1,098)
------- ------- ------- -------
($1,198) ($1,029) ($1,385) ($1,098)
======== ======= ======= =======
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31 December 31
----------- -----------
2011 2010
----------- -----------
Unaudited Audited
In US$ thousands
Assets:
Current Assets:
Cash and cash equivalents $20,868 $13,432
Trade receivables 2,838 2,968
Deferred income taxes 1,996 1,940
Prepaid expenses and other accounts
receivable 463 384
----------- -----------
Total current assets 26,165 18,724
----------- -----------
Long-term lease deposits 40 41
Severance pay fund 1,031 1,208
Property and equipment, net 885 920
Deferred income taxes 2,889 1,560
Intangible assets, net 3,505 4,510
Goodwill 3,792 3,792
Investment in affiliate 1,227 1,227
----------- -----------
Total assets 39,534 31,982
=========== ===========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable 551 550
Employees and payroll accruals 1,215 1,073
Accrued expenses and other liabilities 628 330
Other short term liabilities 3,372 -
Deferred revenues 3,058 3,178
----------- -----------
Total current liabilities 8,824 5,131
----------- -----------
Deferred revenues 694 964
Other long term liabilities - 2,831
Accrued severance pay 1,192 1,303
----------- -----------
Total liabilities 1,886 5,098
----------- -----------
Shareholders' equity 28,824 21,753
----------- -----------
Total liabilities and shareholders'
equity $39,534 $31,982
=========== ===========
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA
(In US$ thousands)
Three months ended Twelve months ended
December 31 December 31
------------ ------------
2011 2010 2011 2010
------ ----- ------ ------
Cash flow from operating
activities Unaudited Unaudited Unaudited Audited
Net income $1,275 $1,667 $4,598 $4,403
Adjustments:
Depreciation 131 153 545 520
Compensation related to
options issued to employees 365 477 1,213 1,496
Amortization amd impairment
of intangible assets 629 119 1,005 158
Capital gain from sale of
fixed assets - - - (9)
Changes in assets and liabilities:
Decrease (increase) in trade
receivables 598 (388) 130 (1,036)
Decrease in deferred taxes (1,198) (1,027) (1,385) (1,096)
Decrease (Increase) in prepaid
expenses and other receivables 55 109 (79) 287
Increase (decrease) in accounts
payable 194 (17) 17 138
Increase in employees and payroll
accruals, accrued expenses
and other liabilities 419 33 981 163
Decrease in deferred revenues (301) (315) (390) (697)
Increase (decrease) in accrued
severance pay, net 59 (9) 66 (10)
------ ----- ------ ------
Net cash provided by operating
activities 2,226 802 6,701 4,317
Cash from investing activities
Change in long - term lease
deposits 3 8 1 22
Proceeds from sale of fixed assets - - - 9
Investment in affiliate - - - (4,600)
Purchase of property and
equipment (104) (158) (526) (568)
------ ----- ------ ------
Net cash used in investing
activities (101) (150) (525) (5,137)
Cash flows from financing activities
Buyback of outstanding shares - (497) - (3,820)
Proceeds from options and
warrants exercised 1,097 768 1,260 797
------ ----- ------ ------
Net cash provided by (used in)
financing activities 1,097 271 1,260 (3,023)
Increase (decrease) in cash and
cash equivalents 3,222 923 7,436 (3,843)
Cash and cash equivalents at the
beginning of the period 17,646 12,509 13,432 17,275
------ ----- ------ ------
Cash and cash equivalents at the
end of the period $20,868 $13,432 $20,868 $13,432
======= ======= ======= =======
Company Contact
Ron Ela
Chief Financial Officer
Tel: (US) +1-650-864-2291
(Int'l) +972-9-8636813
[email protected]
US Investor Relations Contact
Ehud Helft / Kenny Green
CCG Investor Relations
Tel: (US) +1-646-201-9246
(Int'l) +972-3-607-4717
[email protected]
Israel Investor Relations contact
Iris Lubitch
EffectiveIR
Tel: +972-3-5664007
[email protected]
SOURCE Commtouch
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