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Commtouch Reports Second Quarter 2012 Results

"During the quarter we strengthened our management team, increased our focus on our customers' evolving security needs, renewed our investments in research and development, as well as reinvigorated our sales and marketing activities. Our success on these fronts puts us on track with regard to our timeline for the launch of new offerings, including enhanced mobile antivirus support, a new advanced persistent threat offering later this year, and our next generation cloud-based 'security as a service' offerings targeted for rollout in early 2013. Overall, I am confident we are taking the right steps to strategically position Commtouch in some of the fastest growing segments of the global IT security solutions market, while remaining focused on profitability and renewed long-term growth," stated Shlomi Yanai, Commtouch's chief executive officer.

Announced in May of 2012, Commtouch's Board of Directors authorized the initiation of a stock repurchase program of the company's ordinary shares in the open market, in an amount in cash of up to $2.5 million. As of June 30, 2012, approximately 198,000 shares have been repurchased through the program at an aggregate cost of approximately $0.6 million.

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."

Second Quarter 2012 Business Highlights:
  • Commtouch's strengthened global sales team delivered the strongest quarter of new business wins in more than two years.  These new multi-year contracts consist of new customers as well as up sell contracts with current Commtouch customers. The combined value of these second quarter contract signings is forecasted to represent approximately 5% annual revenue growth based on full year 2011 revenues. These contracts are expected to begin coming online and positively impacting the Company's revenue growth as they ramp throughout the second half of 2012 and 2013.
  • Key new client wins during the quarter reflected our enhanced international sales and marketing penetration, including: the sale of our antivirus and anti-spam offerings to a large service provider in the Asia Pacific region; the sale of our antivirus service to a leading network equipment vendor based in the United States for its data storage product line; and the sale of our GlobalViewâ„¢ Web filtering to a leading antivirus provider serving end users in Europe and Latin America.
  • As part of Commtouch's long-term strategy and evolution from a cutting edge technology provider to a world class solutions provider, management recruited key professionals to further strengthen the Company's leadership. Second quarter appointments included Pete Shah as Senior Vice President of Worldwide Sales and Sidra Berman as Vice President of Marketing.

Business Outlook

Based on the Company's first half revenues, current outlook for the second half of 2012, and the anticipated ramp of recent contract wins, the company is updating its full year guidance accordingly. Full year 2012 revenue is now expected to increase between 2% and 6% over full year 2011 levels. The Company continues to focus on internal cost efficiency measures while simultaneously executing on its previously announced strategy of making a higher level of investment in the areas of research and development, sales, and marketing to support the development and deployment of Commtouch's next generation solutions. As a result, Commtouch continues to expect non-GAAP net income for the full year 2012 to be at, or above, $5.0 million.

The aforementioned business outlook includes a minimal contribution from the pending acquisition of the antivirus business of FRISK, announced today, which is currently anticipated to close in the third quarter of 2012.    

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