Commtouch Reports Financial Results for the First Quarter of 2007
May 03 2007 - 6:00AM
Business Wire
Commtouch� (NASDAQ:CTCH), the leading OEM provider of real time
email defense technology, today announced its first quarter results
for the period ending March 31, 2007. First Quarter 2007
Highlights: Revenues for the first quarter of 2007 increased by 63%
to $2,405 thousand compared to $1,473 thousand in the first quarter
of 2006. Net income in accordance with US Generally Accepted
Accounting Principles (US GAAP) for the first quarter of 2007 was
$267 thousand compared to a loss of $378 thousand in the first
quarter of last year. Non-GAAP net income for the first quarter of
2007, excluding $243 thousand of stock-based compensation expenses
in connection with the company's adoption of Financial Accounting
Standards No. 123R, was $510 thousand compared to a loss of $214
thousand in the first quarter of 2006. Deferred Revenues (long term
and short term) as of March 31, 2007 amounted to $2,808 thousand,
an increase of 9% over deferred revenues as of December 31, 2006.
Operating cash flow in the first quarter of 2007 was $953 thousand,
compared to $348 thousand in the first quarter of 2006. Cash and
marketable securities as of March 31, 2007 amounted to $11,518
thousand compared to $10,004 thousand as of December 31, 2006. The
increase is due to the above-mentioned positive operating cash flow
and receipt of proceeds from the exercise of warrants and options
in the amount of $830 thousand. The Company signed 11 new OEM
licensing agreements during the quarter, bringing the Company�s
global OEM partner count to 66 at the end of the quarter. �This has
been a strong quarter for us,� commented Gideon Mantel, Commtouch�s
CEO and chairman of the board. �Again, we achieved good financial
results with increasing revenues and profitability. To cap it off,
we generated almost one million dollars in positive operating cash
flow and signed a record eleven new licensing deals during the
quarter. �The majority of our revenues is derived from our
anti-spam product,� Mr. Mantel continued. �We are now just starting
to see the demand and revenue growth in our Zero-Hour virus
outbreak protection product line, which we launched in 2005. Most
recently, we rolled out our new Reputation Service at the end of
last year, and we expect to see the benefits from this product
starting in several quarters. It has been quite an accomplishment
to continue developing leading edge security solutions while at the
same time increasing our profitability.� Use of Non-GAAP Measures
This press release includes financial measures for net income
(loss), basic and diluted earnings per share that exclude
stock-based compensation expense 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, Thursday, May 3rd, 2007 at 11 a.m.
EDT. To participate in the call, please dial one of the following
numbers ten minutes prior to the start time of the call: U.S.:
1-888-668-9141; UK: 0-800-917-9141; ISRAEL: 03-918-0609;
INTERNATIONAL: +972-3-918-0609 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 Software
Ltd. (NASDAQ:CTCH) is dedicated to protecting and preserving the
integrity of the world's most important communications tool --
e-mail. Commtouch has over 16 years of experience developing
messaging software and is a global developer and provider of
proprietary anti-spam, Zero-Hour� virus protection and Reputation
Service solutions. Using core technologies including RPD (Recurrent
Pattern Detection�), the Commtouch Detection Center analyzes
billions of email messages per month to identify new spam and
malware outbreaks within minutes of their introduction into the
Internet. Integrated by more scores of OEM partners, Commtouch
technology protects thousands of organizations, with over 50
million users in over 100 countries. Commtouch is headquartered in
Netanya, Israel, and has a subsidiary in Sunnyvale, Calif. For more
information, see: www.commtouch.com. The site includes�the
Commtouch online lab detailing spam statistics and charts. 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; 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 for expansion; 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. Recurrent Pattern
Detection, RPD and Zero-Hour are trademarks, and Commtouch is a
registered trademark, of Commtouch Software Ltd. U.S. Patent No.
6,330,590 is owned by Commtouch. � COMMTOUCH SOFTWARE LTD. �
CONDENSED CONSOLIDATED BALANCE SHEETS � March 31 December 31 2007�
2006� Unaudited Unaudited In US$ thousands � Assets: Current
Assets: Cash and cash equivalents $9,018� $8,004� Marketable
securities 2,500� 2,000� Trade receivables 682� 570� Prepaid
expenses and other accounts receivable 210� 196� Total current
assets 12,410� 10,770� � Long-term lease deposits 9� 13� Severance
pay fund 643� 607� Property and equipment, net 821� 609� Total
assets 13,883� 11,999� � � � Liabilities and Shareholders� Equity
Current Liabilities: Accounts payable 479� 344� Employees and
payroll accruals 582� 503� Accrued expenses and other liabilities
416� 379� Short-term deferred revenue 2,212� 2,032� Total current
liabilities 3,689� 3,258� � Long-term deferred revenue 596� 542�
Accrued severance pay 753� 706� Total liabilities 1,349� 1,248� �
Shareholders� equity 8,845� 7,493� Total liabilities and
shareholders� equity $13,883� $11,999� � COMMTOUCH SOFTWARE LTD. �
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS � (In US$
thousands, except per share amounts) � � Three months ended March
31 2007� 2006� Unaudited Unaudited � Revenues $2,405� $1,473� �
Cost of revenues 286� 224� � Gross profit 2,119� 1,249� � �
Operating expenses: � Research and development 456� 417� � Sales
and marketing 826� 730� � General and administrative 661� 510� �
Total operating expenses 1,943� 1,657� � � Operating profit (loss)
176� (408) � Interest and other expense, net 91� 64� � Equity -
loss of affiliate � (34) � Net income (loss) attributable to
ordinary and equivalently participating shareholders $267� ($378) �
� � Earning (loss) per share- basic $0.00� ($0.01) � Earning (loss)
per share- diluted $0.00� ($0.01) � Weighted average number of
shares outstanding: Basic 72,999� 58,171� � Diluted 80,494� 58,171�
� Supplementary Financial Information � Unaudited Reconciliation of
GAAP Financial Information to NON-GAAP � (In US$ thousands) � Three
months ended March 31 � GAAP FAS123R Non GAAP GAAP FAS123R Non GAAP
2007� Adjustments 2007� 2006� Adjustments 2006� Unaudited �
Revenues $2,405� $2,405� $1,473� $1,473� � Cost of revenues 286� 7�
279� 224� 9� 215� � Gross profit 2,119� (7) 2,126� 1,249� (9)
1,258� � � Operating expenses: � Research and development 456� 59�
397� 417� 62� 355� � Sales and marketing 826� 46� 780� 730� 62�
668� � General and administrative 661� 131� 530� 510� 31� 479� �
Total operating expenses 1,943� 236� 1,707� 1,657� 155� 1,502� � �
� � � � � Operating profit (loss) 176� 243� 419� (408) 164� (244) �
Interest and other expense, net 91� 91� 64� 64� � Equity - loss of
affiliate -� -� (34) (34) � Net income (loss) $267� $510� ($378)
($214) � � � Earning (loss) per share- basic $0.00� $0.01� ($0.01)
($0.00) � Earning (loss) per share- diluted $0.00� $0.01� ($0.01)
($0.00) � Weighted average number of shares outstanding: Basic
72,999� 72,999� 58,171� 58,171� � Diluted 80,494� 80,494� 58,171�
58,171� � COMMTOUCH SOFTWARE LTD. � CONDENSED CONSOLIDATED CASH
FLOW DATA � (In US$ thousands) � � Three months ended March 31
2007� 2006� Cash flow from operating activities Unaudited Unaudited
� Net income (loss) $267� ($378) � Adjustments: Depreciation 82�
43� Compensations related to options issued to employees and
consultants 255� 204� Equity in losses of affiliate -� 34� �
Changes in assets and liabilities: (Increase) decrease in trade
receivables (112) 53� Increase in prepaid expenses and other
receivables (14) (40) Increase (decrease) in accounts payable 116�
(24) Increase in employees and payroll accruals, accrued expenses
and other liabilities 85� 27� Increase in deferred revenues 265�
430� Increase in accrued severance pay, net 11� 2� Other (2) (3)
Net cash provided by operating activities 953� 348� � Cash from
investing activities � Purchase of marketable securities (500) -�
Decrease in long - term lease deposits 4� 6� Proceeds from sale of
Fixed Assets 2� -� Purchase of property and equipment (275) (92)
Net cash used in investing activities (769) (86) � Cash flows from
financing activities � Proceeds from options and warrants exercises
830� 950� Net cash provided by financing activities 830� 950� �
Increase in cash and cash equivalents 1,014� 1,212� Cash and cash
equivalents at the beginning of the period 8,004� 3,986� Cash and
cash equivalents at the end of the period $9,018� $5,198�
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