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Commtouch Reports 27% Revenue Increase For Full Year 2011

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 GlobalViewâ„¢ 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 info@commtouch.com.

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 ron.ela@commtouch.com US Investor Relations Contact Ehud Helft / Kenny Green CCG Investor Relations Tel: (US) +1-646-201-9246          (Int'l) +972-3-607-4717     commtouch@ccgisrael.com Israel   Investor Relations contact Iris Lubitch EffectiveIR Tel: +972-3-5664007 Iris@EffectiveIR.co.il

 

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