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Commtouch Reports Fourth Quarter And Full Year 2012 Results

Stocks in this article: CTCH

"Building on Commtouch's progress in 2012, we are focused on increasing our market share in the fast growing markets for cloud-based email, Web and antivirus solutions, including the launch of our new cloud-based web security solution which is currently on track for release in third quarter of 2013. Our solutions are aimed at helping our customers quickly and easily add cloud-based offerings under their own private label brand, allowing them to maximize performance, generate new revenue streams, reduce product launch times and greatly lower their costs. Based on the strength of our expanded portfolio of cloud-based IT security solutions as well as the integration and streamlining of our recent acquisitions, we are setting a solid foundation for growth in 2013 and beyond," concluded Mr. Yanai.

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. During the fourth quarter Commtouch repurchased 105,000 shares at an aggregate cost of approximately $0.3 million. As of December 31, 2012, approximately 767,000 shares have been repurchased through the program at an aggregate cost of approximately $1.7 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."

Business Highlights:

  • Commtouch closed the previously announced acquisition of FRISK Software International's antivirus business, accelerating the deployment of an expanded range of OEM and service provider antivirus solutions, including private label solutions.
  • Commtouch announced and closed the acquisition of eleven GmbH, which has captured more than 36 percent of the Germany's market for managed email security.  eleven GmbH is currently Germany's leading provider of email based Security-as-a-Service (SecaaS) providing advanced email solutions and services to some of the largest organizations in Germany, such as BMW, SAP, Siemens and Deutsche Telekom / T-Online. The acquisition of eleven has enabled Commtouch to accelerate to early 2013 the launch of private label cloud-based security solutions designed for OEM and service provider markets, as well as extend Commtouch's global sales and marketing reach across Europe and beyond.
  • Significant investment in expanding the Company's global sales and marketing capabilities delivered sharply higher new booking activity during the fourth quarter.  As a result, overall new booking activity for the full fiscal 2012 year was approximately double the level in 2011 setting a solid foundation for future growth.  In line with Commtouch's long-term agreement model, the majority of contracts signed average approximately three years in length.  Revenue recognition for these new multi-year contracts is expected to begin ramping up and positively impacting Commtouch's top-line in the coming quarters.
  • Key new client wins during the quarter reflected our enhanced international sales and marketing penetration, including:
    • Openwave Messaging Inc., the leading global provider of innovative messaging software solutions, selected Commtouch as its preferred messaging security partner for integrating Commtouch's anti-spam and virus outbreak detection into its messaging platform for carriers and service providers.
    • i7 Networks integrated Commtouch's GlobalViewâ„¢ URL categorization technology into its i7 solutions.  India based i7 offers its corporate clients a suite of products that help manage Web content classification and bandwidth monitoring, including URL filtering based on the best of breed URL content categorization databases.
    • NSFOCUS Information Technology Co., Ltd, a China based global leader in providing enterprise-level network security solutions and services, selected Commtouch's antivirus and URL filtering solutions.

Business Outlook

Based on the current expectations, the company is announcing its financial outlook for the full year 2013.  The company anticipates full year 2013 revenue will be between $34.0 million and $35.0 million, an increase of approximately 42% to 46% compared with full year 2012. GAAP and non-GAAP net income guidance includes a higher level of sales and marketing expense versus 2012 to support a strengthened global sales platform. Full year 2013 GAAP net income is expected to be greater than $2.0 million and non-GAAP net income is expected to be greater than $3.5 million.

During the first half of 2013, the company also expects to recognize extraordinary expenses related to its previously announced acquisitions, as well as related integration and streamlining expenses, totaling approximately $0.8 million, the majority of which will be recognized in the first quarter of 2013. The impact of these charges is reflected in the aforementioned full year 2013 GAAP net income guidance. The company expects the impact of integration and streamlining activities to positively impact the financial performance of the business during the second half of 2013.

The company plans to continue to strategically invest in the build-out of its global sales and marketing efforts.  The impact of these investments is reflected in the full year 2013 GAAP net income guidance.

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