IncrediMail Reports Record $8.7 Million Revenues And $3.2 Million Net Income For First Quarter Of 2011

IncrediMail Ltd. (NASDAQ: MAIL), a digital media company that builds downloadable consumer products, today announced that:
  • Revenues increased 24% year-over-year to a record $8.7 million in the first quarter of 2011;
  • EBITDA was a record $3.7 million in the first quarter of 2011, or 43% of revenues, compared to $3.1 million in the first quarter of 2010;
  • Net income in the first quarter of 2011 was $3.2 million, or $0.32 per diluted share, compared to $2.1 million, or $0.22 per diluted share, in the first quarter of 2010, and;
  • Cash flow from operations in the first quarter of 2011 was $2.1 million, compared to $0.7 million in the first quarter of 2010

Commenting on the quarter, Josef Mandelbaum, IncrediMail’s CEO, said, “We are extremely pleased with our strong first quarter performance, which is a direct result of our execution on several key fronts: financially, our new deal with Google yielded positive year over year results; operationally, our renewed focus on non-search growth activities and reallocation of resources, led to a significant increase in non-search revenues without added expense; and strategically, our focus on our consumer’s needs helped increase customer engagement. The combined result of these efforts led to our record quarter.”

In the first quarter of 2011 gross profits reached $8.3 million, or 96% of sales, an increase of 25%, compared to the first quarter of 2010.

Research and Development expenses in the first quarter of 2011 were $1.9 million, increasing $0.2 million, compared to the first quarter of 2010. However, as a percentage of sales, R&D expenses decreased to 22% in the first quarter of 2011 from 23% in the first quarter of 2010.

Sales and Marketing expenses in the first quarter of 2011 were $1.5 million, increasing $0.2 million, compared to the first quarter of 2010. The increase was primarily attributable to the increased investment in customer acquisition costs which were $0.7 million, compared to $0.5 million in the first quarter of 2010.

Mandelbaum continued, “We completed, on schedule, the back-end system needed to measure and track media buying and have begun to test new customer acquisition channels. We expect to see a significant increase in our media spend in the third and fourth quarter, as acquiring new customers is a key ingredient driving future growth.”

General and Administrative expenses increased to $1.6 million in the first quarter of 2011, compared to $0.9 million in the first quarter of 2010. G&A expenses were similar to those in the prior quarter, reflecting our ongoing efforts to enhance and broaden the management of the Company over the latter part of 2010.

Income taxes in the first quarter of 2011 included a non-recurring income tax credit of $0.6 million attributable to the Company’s decision not to distribute dividends from 2011 earnings and beyond.

“We are making good progress on our product diversification efforts and expect to have more to report next quarter. Overall we still have much to do, but we are very excited about our strong start to the year and expect to build on this positive momentum throughout the rest of the year,” Mandelbaum concluded.

Conference Call

IncrediMail will host a conference call to discuss the results today, May 12 th at 10:00 AM EDT (17:00 PM Israel Time). We invite all those interested in participating in the call to dial 1-(866)-744-5399. Callers from Israel may access the call by dialing (03) 918-0865. Participants may also access a live webcast of the conference call through the Investor Relations section of IncrediMail's website at www.incredimail-corp.com. The webcast will be archived on the company’s website for seven days.

About IncrediMail Ltd.

IncrediMail Ltd. (NASDAQ: MAIL) is a digital media company that builds, acquires and enhances downloadable consumer applications. The company’s award winning e-mail client product, IncrediMail Premium, is sold in over 100 countries in 10 different languages. Other products include, HiYo a graphic add-on to instant messaging software and Magentic, a wallpaper and screensaver software.

Non-GAAP measures

Use of Non-GAAP Financial Information - In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, IncrediMail uses non-GAAP measures of net income and earnings per share, which are adjustments from results based on GAAP to exclude reorganization expenses, one-time expenses and benefits, hand-over expenses and non-cash stock-based compensation expenses. IncrediMail also uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income; interest, taxes, stock-based compensation and depreciation and amortization. IncrediMail's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of IncrediMail’s on-going core operations and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information as presented in this press release in evaluating and operating business internally and as such deemed it important to provide all this information to investors. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in tables immediately following IncrediMail's Statement of Operations in this press release.

Forward Looking Statements

This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of the Company. The words “believe,” “expect,” “intend,” “plan,” “should” and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in the markets in which the Company operates and in general economic and business conditions, loss of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to update these forward-looking statements.
       
INCREDIMAIL LTD.
CONDENSED BALANCE SHEETS
U.S. dollars in thousands (except share data)
 
March 31 December 31,
2011 2010
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,246 $ 16,055
Marketable securities 20,726 14,973
Trade receivables 3,117 2,795
Deferred taxes 329 -
Other receivables and prepaid expenses   5,581   4,485
Total current assets   41,999   38,308
LONG-TERM ASSETS:
Severance pay fund 845 877
Deferred taxes 117 102
Other long-term assets 485 478
Property and equipment, net 1,293 1,381
Other intangible assets, net   183   202
Total long-term assets   2,923   3,040
Total assets $ 44,922 $ 41,348
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 1,313 $ 1,831
Dividend Payable 3,885 -
Deferred revenues 2,265 2,204
Accrued expenses and other liabilities   6,718   6,206
Total current liabilities   14,181   10,241
LONG-TERM LIABILITIES:
Deferred revenues 1,545 1,576
Accrued severance pay   1,421   1,379
Total long-term liabilities   2,966   2,955
 
SHAREHOLDERS' EQUITY

Shares authorized: 15,000,000 and 40,000,000 and Shares issued and outstanding: 9,718,432 and 9,701,750 as of March 31, 2011 and December 31, 2010, respectively
  27,775   28,152
Total liabilities and shareholders' equity $ 44,922 $ 41,348
 
INCREDIMAIL LTD.
CONDENSED STATEMENTS OF INCOME
U.S. dollars and number of shares in thousands (except per share data), unaudited
 
Quarter ended March 31,
2011     2010
Revenues $ 8,687 $ 6,995
Cost of revenues   384     375  
Gross profit   8,303     6,620  
Operating expenses:
Research and development 1,876 1,638
Selling and marketing 1,514 1,344
General and administrative   1,635     867  
Total operating expenses   5,025     3,849  
Operating income 3,278 2,771
Financial income, net   77     152  
Income before taxes on income 3,355 2,923
Taxes on income   113     788  
Net income $ 3,242   $ 2,135  
 
Net earnings per Ordinary share:
Basic $ 0.33   $ 0.22  
Diluted $ 0.32   $ 0.22  
Diluted weighted number of shares (in thousands)   10,014     9,870  
RECONCILIATION OF GAAP TO NON-GAAP RESULTS:
GAAP Net income $ 3,242 $ 2,135
Non-recurring income tax credit (594 ) -
Stock based compensation   281     143  
Non-GAAP net income $ 2,929   $ 2,278  
Non-GAAP net earnings per share :
Basic $ 0.30   $ 0.24  
Diluted $ 0.29   $ 0.23  
GAAP net income: $ 3,242 $ 2,135
Income tax expense 113 788
Financial income, net (77 ) (152 )
Depreciation, Amortization and Stock-based Compensation   461     335  
EBITDA $ 3,739   $ 3,106  
 
   
INCREDIMAIL LTD.
CONDENSED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands, unaudited
 
Quarter ended March 31,
2011     2010

Cash flows from operating activities:
Net income $ 3,242 $ 2,135
Adjustments required to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 180 192
Stock based compensation expense 281 143
Amortization of premium and accrued interest on marketable securities 47 1
Loss (gain) from marketable securities, net 57 (140 )
Deferred taxes, net (1,340 ) 138
Accrued severance pay, net 74 71
Net changes in operating assets and liabilities:
Trade receivables (322 ) 26
Other receivables and prepaid expenses (1,096 ) (1,181 )
Other long-term assets (7 ) 15
Trade payables (518 ) (27 )
Deferred revenues 30 (104 )
Accrued expenses and other liabilities   1,508     (587 )
Net cash provided by operating activities   2,136     682  
 

Cash flows from investing activities:
Purchase of property and equipment (60 ) (129 )
Capitalization of content costs and domain (13 ) (96 )
Proceeds from sales of marketable securities 3,885 2,641
Investment in marketable securities   (9,757 )   (9,927 )
Net cash used in investing activities   (5,945 )   (7,511 )
 

Cash flows from financing activities:
Exercise of share options   -     158  
 
Decrease in cash and cash equivalents (3,809 ) (6,671 )
Cash and cash equivalents at beginning of year   16,055     24,368  
Cash and cash equivalents at end of year $ 12,246   $ 17,697  

Copyright Business Wire 2010

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