Commtouch Reports Financial Results for the Third Quarter of 2008.SUNNYVALE, Calif. -- Commtouch[R] (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CTCH CTCH Common Traffic Channel ), a leading email and web defense technology provider, today announced its third quarter results for the period ending September 30, 2008. Third Quarter 2008 Highlights: * Revenues for the third quarter of 2008 increased by 24% to $3,622 thousand compared to $2,930 thousand in the third quarter of 2007. * Net income in accordance with US Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) for the third quarter of 2008 was $644 thousand compared to net income of $639 thousand in the third quarter of last year. GAAP net income for the third quarter of 2008 included $363 thousand of stock-based compensation expenses (FAS123R), compared to $250 thousand of these expenses in the third quarter of 2007. * Non-GAAP net income for the third quarter of 2008 was $1,007 thousand compared to a net income of $889 thousand in the third quarter of 2007, representing an increase of 13%. * Deferred Revenues (long-term and short-term) as of September 30, 2008 amounted to $2,818 thousand, compared to deferred revenues as of December 31, 2007 of $3,435 thousand. * Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. in the third quarter of 2008 was $671 thousand, compared to $759 thousand in the third quarter of 2007. Operating cash flow for the first nine months of 2008 was $2,358 thousand, compared to $2,140 thousand in the same period last year. * Cash, short term cash deposits and short and long-term marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has as of September 30, 2008 amounted to $16,939 thousand, compared to $14,407 thousand as of December 31, 2007. The increase is due mostly to the above-mentioned positive operating cash flow and the receipt of $844 thousand, representing proceeds from the exercise of warrants and options. * During the quarter, the company began to execute its share buy-back program. As of September 30, 2008, the company had expended ex·pend tr.v. ex·pend·ed, ex·pend·ing, ex·pends 1. To lay out; spend: expending tax revenues on government operations. See Synonyms at spend. 2. $90 thousand for the repurchase of 36 thousand outstanding shares. As of the date of this press release, the company has repurchased a total of 339,595 shares at an average price of $2.02, investing a total of $686 thousand out of the full buy-back program of $4 million. * The company signed seven new OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and licensing agreements during the third quarter of 2008. The company's global OEM partner count was 106 as of September 30, 2008. Gideon Mantel, chief executive officer and chairman of the board of Commtouch said: "I am optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op , yet, given the current environment - I'm also very cautious. Commtouch is in an excellent position, with a stable and growing group of OEM licensees, continuing profitability, no debt and a strong cash level. This allows us the flexibility to weather the difficult economic environment, and enables us to take advantage of opportunities and invest in our future. "In 2009, based on our current strong pipeline, I expect that we will continue to see overall growth in our email business. We will also be adding the initial sales of our very recently released web security product, which should become more significant as we progress through the year. While we look forward to attaining these goals, we will also be maintaining tight control over expenses. At the same time, we expect to continue taking advantage of the strong leverage in our successful business model, which will enable us to improve our profitability, grow our EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. and ultimately increase shareholder value." Business Outlook Given the general negative economic climate and its effect on third quarter results, the company is taking a more conservative outlook and adjusting its 2008 guidance. Full year 2008 revenues are expected to be between $14.2 million and $14.4 million, compared to the previously published guidance of between $15 million and $16 million. Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the year are expected to be between $0.15 and $0.16 based on non-GAAP net income. Prior guidance was for earnings per diluted share of $0.16 to $0.19. 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 Commtouch's non-GAAP net income differs from results reported under U.S. GAAP due to non-cash items; since it is too early to determine the impact of stock-based compensation expense for the rest of the 2008 year, Commtouch is not providing guidance on GAAP net income. Stock-based compensation expense has a negative impact on net income. This press release includes financial measures for net income (loss), basic and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of that exclude stock-based compensation expenses and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance that enhances management's and investors' ability to evaluate the company's net income or loss and earnings or loss per share and to compare it with historical net income or loss and earnings or loss per share. 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, Monday, November 3, 2008 at 10 a.m. ET. [TABLE OMITTED] 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 Investor relations The process by which the corporation communicates with its investors. section of Commtouch's website, at: http://www.commtouch.com/ir. About Commtouch Commtouch[R] (Nasdaq:CTCH) is the source of proven messaging and web security technology for scores of security companies and service providers, founded on a unique datacenter-based approach. Commtouch's expertise in building efficient, massive-scale security services Security services are state institutions for the provision of intelligence, primarily of a strategic nature, but also including protective security intelligence. Examples include the Security Service (MI5) and the Secret Intelligence Service (MI6) in the United Kingdom, and the has resulted in its patented technology being used to mitigate Internet threats for thousands of organizations and hundreds of millions of users in over 100 countries. Commtouch's Data Centers automatically analyze billions of transactions in real-time to identify new spam E-mail that is not requested. Also known as "unsolicited commercial e-mail" (UCE), "unsolicited bulk e-mail" (UBE), "gray mail" and just plain "junk mail," the term is both a noun (the e-mail message) and a verb (to send it). , malware (MALicious softWARE) Software designed to destroy, aggravate and otherwise make life unhappy. See crimeware, virus, worm, logic bomb, macro virus and Trojan. and zombie A computer that has been covertly taken over in order to perform some nefarious task. It is estimated that millions of PCs around the world have been compromised and, under the control of a third party, routinely transmit messages unbeknownst to the user. outbreaks as they are initiated. Commtouch's unmatched suite of security offerings - anti-spam, virus detection, reputation and zombie intelligence services - work together in a comprehensive feedback loop. Commtouch was founded in 1991, is headquartered in Netanya, Israel, and has a subsidiary in Sunnyvale, Calif. For more information and real-time statistics and trends, see: http://www.commtouch.com the Commtouch Cafe blog at http://blog.commtouch.com/cafe. Recurrent Pattern Detection, RPD RPD Rapid RPD Radiation Protection Dosimetry RPD Rapid Product Development RPD Rochester Police Department RPD Recurrent Pattern Detection (Commtouch anti-spam engine) RPD Relative Percent Difference RPD Removable Partial Denture , Zero-Hour and GlobalView are trademarks, and Commtouch is a registered trademark, of Commtouch Software Ltd. U.S. Patent No. 6,330,590 is owned by Commtouch. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , 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 future tense n. A verb tense expressing future time. Noun 1. future tense - a verb tense that expresses actions or states in the future future , 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 de·te·ri·o·ra·tion n. The process or condition of becoming worse. 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. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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