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Commtouch Reports Third Quarter 2012 Results

US Dial-in Number: 1-877-407-9210 International Dial-in Number:  +1-201-689-8049 Israel Dial-in Number: 00-800-4626-6666 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 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) is a leading provider of Internet security technology and cloud-based services for vendors and service providers, increasing the value and profitability of our customer's solutions by protecting billions of Internet transactions on a daily basis.  With six global data centers and award-winning, patented technology, Commtouch's email, web, and  antivirus capabilities easily integrate into our customers' products and solutions, keeping safe over 350 million end users.  To learn more, 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 fourth quarter 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         Nine months ended
                                           September 30              September 30
                                     ----------------------     ----------------------
                                        2012         2011          2012         2011
                                     ---------    ---------     ---------    ---------
                                     Unaudited    Unaudited     Unaudited    Unaudited
 
    Revenues                           $5,558       $5,855       $17,125      $17,066
 
    Cost of revenues                      917        1,019         2,983        2,967
                                     ---------    ---------     ---------    ---------
 
    Gross profit                        4,641        4,836        14,142       14,099
                                     ---------    ---------     ---------    ---------
 
    Operating expenses:
 
    Research and development            1,462        1,342         4,096        3,966
 
    Sales and marketing                 1,564        1,138         3,994        3,847
 
    General and administrative          1,550        1,209         4,265        3,106
                                     ---------    ---------     ---------    ---------
 
    Total operating expenses            4,576        3,689        12,355       10,919
                                     ---------    ---------     ---------    ---------
    Operating profit                       65        1,147         1,787        3,180
 
    Financial expenses (income), net      (63)         (15)         (150)          44
                                     ---------    ---------     ---------    ---------
 
    Income before taxes                   128        1,162         1,937        3,136
 
    Income taxes (tax benefit), net       109          275           (95)        (187)
                                     ---------    ---------     ---------    ---------
 
    Net income attributable to 
    ordinary and equivalently 
    participating shareholders            $19         $887        $2,032       $3,323
                                     =========    =========     =========    =========
 
    Earnings per share - basic          $0.00        $0.04         $0.08        $0.14
                                     =========    =========     =========    =========
 
    Earnings per share - diluted        $0.00        $0.04         $0.08        $0.13
                                     =========    =========     =========    =========
 
    Weighted average number of 
    shares outstanding:
    Basic                              24,355       23,605        24,358       23,541
                                     =========    =========     =========    =========
    Diluted                            24,845       24,726        24,984       24,678
                                     =========    =========     =========    =========
                                  COMMTOUCH SOFTWARE LTD.
              RECONCILIATION OF SELECTED GAAP MEASURES TO NON GAAP MEASURES
                      (In US$ thousands, except per share amounts)

                                          Three months ended          Nine months ended
                                              September 30               September 30
                                        ----------------------     -----------------------
                                           2012         2011          2012          2011
                                        ---------    ---------     ---------     ---------
                                        Unaudited    Unaudited     Unaudited     Unaudited
 
    GAAP operating profit                   $65        $1,147        $1,787        $3,180
    Stock-based compensation(1)             386           281         1,098           865
    Other acquisition related costs (2)     220             -           377            53
    Amortization of intangible assets(3)    101           110           303           375
    Adjustment to earnout obligation(4)       -           196             -           196
                                        ---------    ---------     ---------     ---------
    Non-GAAP operating profit              $772        $1,734        $3,565        $4,669
                                        =========    =========     =========     =========
 
    GAAP net income                         $19          $887        $2,032        $3,323
    Stock-based compensation(1)             386           281         1,098           865
    Other acquisition related costs(2)      220             -           377            53
    Amortization of intangible assets(3)    101           110           303           375
    Adjustment to earnout obligation(4)       -           220            28           301
    Income taxes(5)                          18           275          (199)         (187)
                                        ---------    ---------     ---------     ---------
    Non-GAAP net income                    $744        $1,773        $3,639        $4,730
                                        =========    =========     =========     =========
 
    GAAP earnings per share               $0.00         $0.04         $0.08         $0.13
    Stock-based compensation(1)            0.02          0.01          0.04          0.04
    Other acquisition related costs(2)    0.009             -         0.015         0.002
    Amortization of intangible assets(3)  0.004         0.004         0.012         0.015
    Adjustment to earnout obligation(4)       -         0.009         0.001         0.012
    Income taxes(5)                       0.001         0.011        (0.008)       (0.008)
                                        ---------    ---------     ---------     ---------
    Non-GAAP earnings per share           $0.03         $0.07         $0.15         $0.19
                                        =========    =========     =========     =========
 
    Numbers of shares used in 
    computing Non-GAAP earnings 
    per share (diluted)                  24,845        24,726        24,984        24,678
                                        =========    =========     =========     =========
 
    (1) Stock-based compensation
    Cost of revenues                         $9            $5           $27           $17
    Research and development                 84            72           222           218
    Sales and marketing                     103            87           269           272
    General and administrative              190           117           580           358
                                        ---------    ---------     ---------     ---------
                                           $386          $281        $1,098          $865
                                        =========    =========     =========     =========
    (2) Other acquisition related costs
    General and administrative              220             -           377            53
                                        ---------    ---------     ---------     ---------
                                           $220             -          $377           $53
                                        =========    =========     =========     =========
    (3) Amortization of intangible assets
    Cost of revenues                        $48           $55          $144          $147
    Sales and marketing                      53            55           159           228
                                        ---------    ---------     ---------     ---------
                                           $101          $110          $303          $375
                                        =========    =========     =========     =========
    (4) Adjustment to earnout obligation
    General and administrative                -          $196             -          $196
    Financial expenses (income), net          -            24            28           105
                                        ---------    ---------     ---------     ---------
                                              -          $220           $28          $301
                                        =========    =========     =========     =========
    (5) Income taxes
    Deferred tax asset - tax benefit         18           275          (199)         (187)
                                        ---------    ---------     ---------     ---------
                                            $18          $275         ($199)        ($187)
                                        =========    =========     =========     =========
 
                               COMMTOUCH SOFTWARE LTD.
                        CONDENSED CONSOLIDATED BALANCE SHEETS
 
                                                                     
                                                     September 30    December 31
                                                     ------------   ------------
                                                          2012           2011
                                                     ------------   ------------
                                                       Unaudited       Audited
                                                           In US$ thousands
    Assets:
    Current Assets:
    Cash and cash equivalents                           $17,334        $20,868
    Trade receivables                                     4,328          2,838
    Deferred income taxes                                 2,106          1,996
    Prepaid expenses and other accounts receivable        1,147            463
                                                     ------------   ------------
        Total current assets                             24,915         26,165
                                                     ------------   ------------
 
    Long-term lease deposits                                 45             40
    Severance pay fund                                      974          1,031
    Property and equipment, net                           1,059            885
    Deferred income taxes                                 2,978          2,889
    Intangible assets, net                                3,201          3,505
    Goodwill                                              3,792          3,792
    Investment in affiliate                               1,227          1,227
                                                     ------------   ------------
        Total assets                                     38,191         39,534
                                                     ============   ============
 
    Liabilities and Shareholders' Equity
    Current Liabilities:
    Accounts payable                                        566            551
    Employees and payroll accruals                        1,439          1,215
    Accrued expenses and other liabilities                  538            628
    Other short term liabilities                              -          3,372
    Deferred revenues                                     2,631          3,058
                                                     ------------   ------------
        Total current liabilities                         5,174          8,824
                                                     ------------   ------------
 
    Deferred revenues                                       659            694
    Accrued severance pay                                 1,112          1,192
                                                     ------------   ------------
        Total liabilities                                 1,771          1,886
                                                     ------------   ------------
 
    Shareholders' equity                                 31,246         28,824
                                                     ------------   ------------
        Total liabilities and shareholders' equity      $38,191        $39,534
                                                     ============   ============
 
                                       COMMTOUCH SOFTWARE LTD.
                                CONDENSED CONSOLIDATED CASH FLOW DATA
                                          (In US$ thousands)

                                               Three months ended      Nine months ended
                                                  September 30            September 30
                                             ---------------------   ---------------------
                                                2012        2011        2012        2011
                                             ---------   ---------   ---------   ---------
    Cash flow from operating activities      Unaudited   Unaudited   Unaudited   Unaudited
 
    Net income                                    $19        $887      $2,032      $3,323
 
    Adjustments:
    Depreciation                                  155         136         432         414
    Compensation related to options
    issued to employees and consultants           386         281       1,098         848
    Amortization of intangible assets             102         111         304         376
 
    Changes in assets and liabilities:
    Increase in trade receivables                (794)       (825)     (1,490)       (468)
    Decrease (increase) in deferred taxes          18         275        (199)       (187)
    Increase in prepaid expenses and 
    other receivables                            (848)       (241)       (684)       (134)
    (Decrease) Increase in accounts payable      (113)       (126)         38        (177)
    (Decrease) Increase in employees and 
    payroll accruals, accrued expenses and 
    other liabilities                            (132)        460         162         562
    (Decrease) Increase in deferred revenues     (154)        537        (462)        (89)
    (Decrease) Increase in accrued severance 
    pay, net                                      (26)         10         (23)          7
                                             ---------   ---------   ---------   ---------
    Net cash (used in) provided by 
    operating activities                       (1,387)      1,505       1,208       4,475
 
    Cash from investing activities
    Change in long - term lease deposits            6           9          (5)         (2)
    Consideration paid for acquisition 
    of Antivirus business                           -           -      (3,400)          -
    Purchase of property and equipment           (309)        (91)       (629)       (422)
                                             ---------   ---------   ---------   ---------
    Net cash used in investing activities        (303)        (82)     (4,034)       (424)
 
    Cash flows from financing activities
    Buyback of outstanding shares                (828)          -      (1,441)          -
    Proceeds from options and warrants
    exercised                                      29         151         733         163
                                             ---------   ---------   ---------   ---------
    Net cash (used in) provided by 
    financing activities                         (799)        151        (708)        163
 
    Increase (decrease) in cash and 
    cash equivalents                           (2,489)      1,574      (3,534)      4,214
    Cash and cash equivalents at the 
    beginning of the period                    19,823      16,072      20,868      13,432
                                             ---------   ---------   ---------   ---------
    Cash and cash equivalents at the 
    end of the period                         $17,334     $17,646     $17,334     $17,646
                                             =========   =========   =========   =========

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 Contact Iris Lubitch EffectiveIR Tel: +972-54-2528007 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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