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Commtouch Reports Third Quarter 2012 Results

Stocks in this article: CTCH

MCLEAN, Virginia, November 6, 2012 /PRNewswire/ --

Increased New Booking Sales as well as Accelerated Execution on Next Generation Mobile and SaaS Security Solutions Highlight Strategic Advances  

New Bookings More than Double Year-to-Date versus the Prior Year, Providing an Enhanced Foundation for Growth in 2013

Closing of FRISK Acquisition and Increased Investment Strengthens Antivirus Capabilities  

Commtouch® (NASDAQ: CTCH), a leading provider of Internet security technology and cloud-based services, today announced its third quarter financial results for the period ending September 30, 2012.

     (Logo: http://photos.prnewswire.com/prnh/20120501/529254 )

Third Quarter 2012 Financial Results:

  • Revenues totaled $5.6 million compared to $5.7 million for the sequential second quarter of 2012 and $5.9 million in the third quarter of 2011.  The decline in revenue was primarily related to the low level of new bookings in the previous fiscal year and a modest decline in the level of activity among select customers who experienced a slowdown in their own underlying businesses.
  • Net income in accordance with US Generally Accepted Accounting Principles (US GAAP) was $19,000, compared to net income of $804,000 for the sequential second quarter of 2012 and $887,000 in the third quarter of 2011. The decline in net income was primarily attributable to the impact of acquisition related costs as well as the planned higher level of investment in sales, marketing and engineering expenses associated with the ongoing support of Commtouch's "Software-as-a-Service" strategy rollout and upcoming launch, among other factors.
  • GAAP earnings per diluted share were $0.00, compared to $0.03 for the sequential second quarter of 2012 and $0.04 in the third quarter of 2011.
  • Non-GAAP net income was $744,000, compared to $1.3 million for the sequential second quarter of 2012 and $1.8 million in the third quarter of 2011.
  • Non-GAAP earnings per diluted share were $0.03, compared to $0.05 for the sequential second quarter of 2012 and $0.07 in the third quarter of 2011.
  • Commtouch announced the acquisition of FRISK Software International's Antivirus business, accelerating the company's launch of an expanded range of antivirus solutions for the OEM and service provider market.  The acquisition closed on October 1, 2012 and will begin to be integrated into Commtouch's full quarterly results beginning in the fourth quarter of 2012.
  • Cash used for operating cash activities during the quarter was $1.4 million which included $1.0 million as part of a pre-payment plan to secure a long-term technological supplier agreement which is projected to yield cost effective results in terms of reducing the company's cost of revenue and increasing gross margin.
  • Cash as of September 30, 2012 was $17.3 million, compared to $19.8 million as of June 30, 2012.  Cash usage during the quarter included the aforementioned $1.0 million pre-paid supplier agreement, $828,000 related to the company's share repurchase program activity during the quarter, as well as increased capital expenditures related to the execution of the company's new SaaS strategy and higher acquisition related expenses, among other factors.

Shlomi Yanai, Commtouch's chief executive officer, stated, "Commtouch made significant progress during the third quarter of 2012 in terms of both execution and advancing our corporate strategy as we anticipate returning to sequential revenue growth beginning in the current fourth quarter of 2012.  In terms of execution, our focused sales and marketing efforts generated major success including a significant $2.2 million contract win in Latin America, a geography we've specifically targeted for growth this year.  We've also seen increased sales traction across international and U.S. based customers.  In fact, over the last two quarters we have successfully secured more new business wins than the preceding 12 months combined and our new bookings have more than doubled year-to-date. This provides, yet another proof point that our improved execution is yielding immediate results."

"This multiple-year backlog includes committed revenue and major upside for the company. Based on the positive impact of these contract wins and the nature of our long-term customer agreements, these multi-year contract wins are on track to begin more significantly contributing to our revenue growth and profitability in the coming quarters.  While our third quarter financial results are not yet reflecting the positive impact of the sharp rise in new bookings due to the nature of our subscription based revenue model and the way those contracts ramp, we are making excellent progress with regards to setting the stage growth and improved profitability in 2013."  

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