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Commtouch Reports Second Quarter 2012 Results

Financial Results Conference Call

The company has scheduled a conference call later today, August 1, 2012 at 10:00 a.m. ET to review the second quarter 2012 operational and financial highlights, as well as walk through a strategic overview of the evolution of the Company's growth strategy.

To participate in the call, please dial one of the following access numbers 10 minutes prior to the start time of the call:

US Dial-in Number: 1-877-407-9210 Israel Dial-in Number: 00-800-4626-6666 International Dial-in Number: +1-201-689-8049 at: 10:00 a.m. Eastern Time, 7:00 a.m. Pacific Time, 3:00 p.m. UK Time, 5:00 p.m. Israel Time

The call will be simultaneously webcast live from a link on Commtouch's Web site 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® (CTCH) safeguards the world's leading security companies and service providers with cloud-based Internet security services. Real-time threat intelligence from Commtouch's GlobalView™ Cloud powers its Web filtering, email security and antivirus solutions, protecting thousands of organizations and hundreds of millions of users worldwide. Visit http://www.commtouch.com.

 • Blog: http://blog.commtouch.com/cafe

 • Facebook: http://www.facebook.com/commtouch

 • LinkedIn: http://www.linkedin.com/company/commtouch

 • Twitter: @Commtouch

Recurrent Pattern Detection, RPD, Zero-Hour and GlobalView are trademarks, and Commtouch is a registered trademark 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 expectations that i) new contracts will impact positively the company's revenues during the second half of 2012 and 2013,  ii) the company is on track to release its new offerings, and iii) the company will meet its business outlook 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     Six months ended
                                                    June 30               June 30
                                             --------------------  --------------------
                                                2012       2011       2012       2011
                                             ---------  ---------  ---------  ---------
                                             Unaudited  Unaudited  Unaudited  Unaudited
 
    Revenues                                   $5,671     $5,696    $11,567    $11,211
 
    Cost of revenues                            1,014        938      2,066      1,948
                                             ---------  ---------  ---------  ---------

    Gross profit                                4,657      4,758      9,501      9,263
                                             ---------  ---------  ---------  ---------
 
    Operating expenses:
 
    Research and development                    1,364      1,377      2,634      2,624
 
    Sales and marketing                         1,288      1,318      2,430      2,709
 
    General and administrative                  1,384      1,004      2,715      1,897
                                             ---------  ---------  ---------  ---------
 
    Total operating expenses                    4,036      3,699      7,779      7,230
                                             ---------  ---------  ---------  ---------
 
    Operating profit                              621      1,059      1,722      2,033
 
    Financial expenses (income), net              (64)        45        (87)        59
                                             ---------  ---------  ---------  ---------
 
    Income before taxes                           685      1,014      1,809      1,974
 
    Income taxes (tax benefit), net              (119)      (401)      (204)      (462)
                                             ---------  ---------  ---------  ---------
 
    Net income attributable to ordinary 
    and equivalently participating shareholders  $804     $1,415     $2,013     $2,436
                                             =========  =========  =========  =========
 
    Earning per share - basic                   $0.03      $0.06      $0.08      $0.10
                                             =========  =========  =========  =========
 
    Earning per share - diluted                 $0.03      $0.06      $0.08      $0.10
                                             =========  =========  =========  =========
 
    Weighted average number of
    shares outstanding:
    Basic                                      24,556     23,512     24,359     23,508
                                             =========  =========  =========  =========
 
    Diluted                                    25,219     24,554     25,054     24,653
                                             =========  =========  =========  =========
                                COMMTOUCH SOFTWARE LTD.
             RECONCILIATION OF SELECTED GAAP MEASURES TO NON GAAP MEASURES

                      (In US$ thousands, except per share amounts)
 
                                              Three months ended      Six months ended
                                                    June 30               June 30
                                             --------------------  --------------------
                                                2012       2011       2012       2011
                                             ---------  ---------  ---------  ---------
                                             Unaudited  Unaudited  Unaudited  Unaudited

    GAAP operating profit                        $621     $1,059     $1,722     $2,033
    Stock-based compensation (1)                  348        287        712        584
    Other acquisition related costs (2)           157         53        157         53
    Amortization of intangible assets (3)         101        136        202        265
                                             ---------  ---------  ---------  ---------
 
    Non-GAAP operating profit                  $1,227     $1,535     $2,793     $2,935
                                             =========  =========  =========  =========
 
    GAAP net income                              $804     $1,415     $2,013     $2,436
    Stock-based compensation (1)                  348        287        712        584
    Other acquisition related costs (2)           157         53        157         53
    Amortization of intangible assets (3)         101        136        202        265
    Adjustment to earnout obligation (4)            -         81         28         81
    Income taxes (5)                             (101)      (401)      (217)      (462)
                                             ---------  ---------  ---------  ---------
 
    Non-GAAP net income                        $1,309     $1,571     $2,895     $2,957
                                             =========  =========  =========  =========
 
    GAAP earnings per share                     $0.03      $0.06      $0.08      $0.10
    Stock-based compensation (1)                 0.01       0.01       0.03       0.02
    Other acquisition related costs (2)         0.006      0.002      0.006      0.002
    Amortization of intangible assets (3)       0.004      0.006      0.008      0.011
    Adjustment to earnout obligation (4)            -      0.003      0.001      0.003
    Income taxes (5)                           (0.004)    (0.016)    (0.009)    (0.019)
                                             ---------  ---------  ---------  ---------
 
    Non-GAAP earnings per share                 $0.05      $0.06      $0.12      $0.12
                                             =========  =========  =========  =========
 
    Numbers of shares used in computing
    Non-GAAP earnings per share (diluted)      25,219     24,554     25,054     24,653
                                             =========  =========  =========  =========
 
    (1) Stock-based compensation

        Cost of revenues                           $9         $6        $18        $12
        Research and development                   71         71        138        146 
        Sales and marketing                        78         90        166        185
        General and administrative                190        120        390        241
                                             ---------  ---------  ---------  ---------
 
                                                 $348       $287       $712       $584
                                             =========  =========  =========  =========
    (2) Other acquisition related costs

        General and administrative                157         53        157         53
                                             ---------  ---------  ---------  ---------
 
                                                 $157        $53       $157        $53
                                             =========  =========  =========  =========
    (3) Amortization of intangible assets

        Cost of revenues                          $48        $43        $96        $92
        Sales and marketing                        53         93        106        173
                                             ---------  ---------  ---------  ---------
 
                                                 $101       $136       $202       $265
                                             =========  =========  =========  =========
    (4) Adjustment to earnout obligation

        Financial expenses (income), net            -         81         28         81
                                             ---------  ---------  ---------  ---------
 
                                                    -        $81        $28        $81
                                             =========  =========  =========  =========
    (5) Income taxes

        Deferred tax asset - tax benefit         (101)      (401)      (217)      (462)
                                             ---------  ---------  ---------  ---------
 
                                                ($101)     ($401)     ($217)     ($462)
                                             =========  =========  =========  =========
                            COMMTOUCH SOFTWARE LTD.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
 
                                                       June 30     December 31
                                                     -----------   -----------
                                                         2012          2011
                                                     -----------   -----------
                                                      Unaudited      Audited

                                                          In US$ thousands
              Assets:
      Current Assets:
    Cash and cash equivalents                          $19,823       $20,868
    Trade receivables                                    3,534         2,838
    Deferred income taxes                                2,113         1,996
    Prepaid expenses and other accounts
    receivable                                             299           463
                                                     -----------   -----------
                  Total current assets                  25,769        26,165
                                                     -----------   -----------
 
    Long-term lease deposits                                51            40
    Severance pay fund                                   1,001         1,031
    Property and equipment, net                            984           885
    Deferred income taxes                                2,989         2,889
    Intangible assets, net                               3,303         3,505
    Goodwill                                             3,792         3,792
    Investment in affiliate                              1,227         1,227
                                                     -----------   -----------
                  Total assets                          39,116        39,534
                                                     -----------   -----------
 
              Liabilities and Shareholders' Equity
      Current Liabilities:
    Accounts payable                                       758           551
    Employees and payroll accruals                       1,336         1,215
    Accrued expenses and other liabilities                 773           628
    Other short term liabilities                             -         3,372
    Deferred revenues                                    2,734         3,058
                                                     -----------   -----------
                  Total current liabilities              5,601         8,824
                                                     -----------   -----------
 
    Deferred revenues                                      710           694
    Accrued severance pay                                1,165         1,192
                                                     -----------   -----------
                  Total liabilities                      1,875         1,886
                                                     -----------   -----------
 
    Shareholders' equity                                31,640        28,824
                                                     -----------   -----------
        Total liabilities and shareholders' equity     $39,116       $39,534
                                                     ===========   ===========
                                 COMMTOUCH SOFTWARE LTD.
                        CONDENSED CONSOLIDATED CASH FLOW DATA

                                   (In US$ thousands)
 
                                              Three months ended     Six months ended
                                                    June 30               June 30
                                             --------------------  --------------------
                                                2012       2011       2012       2011
                                             ---------  ---------  ---------  ---------
    Cash flow from operating activities      Unaudited  Unaudited  Unaudited  Unaudited

    Net income                                   $804     $1,415     $2,013     $2,436

    Adjustments:
    Depreciation                                  126        142        277        278
    Compensation related to options issued to 
    employees and consultants                     348        287        712        567
    Amortization of intangible assets             101        136        202        265
 
    Changes in assets and liabilities:
    (Increase) decrease in trade receivables     (161)       348       (696)       357
    Increase in deferred taxes                   (101)      (401)      (217)      (462)
    Decrease in prepaid expenses and other 
    receivables                                     7         61        164        107
    Increase (decrease) in accounts payable       334        162        151        (51)
    Increase in employees and payroll accruals, 
    accrued expenses and other liabilities        254         50        294        102
    Decrease in deferred revenues                (328)      (316)      (308)      (626)
    Increase (decrease) in accrued severance 
    pay, net                                        7        (16)         3         (3)
                                             ---------  ---------  ---------  ---------
    Net cash provided by operating activities   1,391      1,868      2,595      2,970
 
    Cash from investing activities
 
    Change in long - term lease deposits          (11)       (22)       (11)       (11)
    Consideration paid for acquisition of 
    Antivirus business                         (3,400)         -     (3,400)         -
    Purchase of property and equipment           (187)      (212)      (320)      (331)
                                             ---------  ---------  ---------  ---------
    Net cash used in investing activities      (3,598)      (234)    (3,731)      (342)
 
    Cash flows from financing activities
 
    Buyback of outstanding shares                (567)         -       (613)         -
    Proceeds from options and warrants exercised  559         12        704         12
                                             ---------  ---------  ---------  ---------
    Net cash (used in) provided by financing 
    activities                                     (8)        12         91         12
 
    Increase (decrease) in cash and cash 
    equivalents                                (2,215)     1,646     (1,045)     2,640
    Cash and cash equivalents at the 
    beginning of the period                    22,038     14,426     20,868     13,432
                                             ---------  ---------  ---------  ---------
    Cash and cash equivalents at the 
    end of the period                         $19,823    $16,072    $19,823    $16,072
                                             =========  =========  =========  =========

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 Christopher Chu Grayling Tel: (US) +1-646-284-9426   commtouch@grayling.com

Israel   Investor Relations C ontact Iris Lubitch EffectiveIR Tel: +972-3-5664007 Iris@EffectiveIR.co.il

Media Contact Matthew Zintel Zintel Public Relations Tel: (US) +1-281-444-1590 matthew.zintel@zintelpr.com

SOURCE Commtouch

Copyright 2011 PR Newswire. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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