Commtouch Provides Business Updates.

Business Editors/High-Tech Writers

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Feb. 20, 2004

Commtouch (Nasdaq:CTCH), a global developer and provider of proprietary anti-spam solutions, today issued the following list of business updates relating to its operations and the anti-spam market:

1. Commtouch was pleased to see an increase in new contracts during the fourth quarter of 2003 -- only the second full quarter of sales activity since the release of Commtouch's proprietary, patent pending anti-spam solution. New contracts during the quarter totaled approximately $0.5 million, up from approximately $150K during the third quarter of 2003.

2. Key accounts were secured from healthcare, financial and legal enterprises. While sales were mainly concentrated in North America, the company also saw its first customers from Europe and Israel, and is actively engaged in growing its international customer base. Commtouch's proprietary, patent-pending anti-spam solution has proven to be unique in approach and highly effective, and has received many plaudits from analysts, channel partners and customers alike.

3. During 2003, Commtouch focused on its Exchange gateway compatible solution for enterprises; during 2004 the company is planning to release the following anti-spam products:

-- Internet Service Provider (ISP) compatible solution

(during first quarter 2004).

-- Commtouch's gateway for Lotus Notes (during second quarter

of 2004).

The launch of these two products will open new markets for Commtouch, significantly increasing Commtouch's potential distribution channels for its group of anti-spam products.

4. During the first half of 2004, the company will earmark additional resources for its business in international markets.

5. Commtouch has allied with strategic business partners, and expects to form new, revenue generating alliances during 2004.

6. The company is optimistic about the possibilities for 2004, but notes that it is still developing its distribution channels and is currently dependent on a relatively small number of its global channel partners to close the majority of sales transactions. Investors are encouraged to review the company's published risk factors at the SEC's website referenced at the end of this release.

About Commtouch

Commtouch Software Ltd. is a global developer and provider of proprietary anti-spam solutions. Its mission is to protect and preserve the integrity of the world's most important communications tool -- email. The company's core technologies reflect its 13 years of experience as a leading vendor of email software applications and provider of global messaging services. Commtouch's patent-pending technologies are employed in solutions that are sold through channels and resellers and also sold directly to enterprises. In addition, Commtouch anti-spam technologies are incorporated in software applications of security and messaging OEMs. Commtouch is headquartered in Netanya, Israel and its subsidiary, Commtouch Inc., is based in Mountain View, Calif. The company was founded in 1991 and has been publicly traded since 1999 (Nasdaq:CTCH). To learn more about Commtouch visit www.commtouch.com.

Note: Commtouch(R) is a registered trademark of Commtouch Software Ltd. Other terms and product names in this document may be trademarks of others.

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; availability of qualified staff for expansion; and technological difficulties and resource constraints encountered in developing new products as well as those risks described in the company's Annual Reports on Form 20-F and reports on Form 6-K, which are available through www.sec.gov.