Commtouch® (NASDAQ:CTCH), a leading cloud-based Internet
security provider, today announced its second quarter 2011 results,
ended June 30, 2011.
Second Quarter 2011 Financial
Highlights:
- Revenues for the second quarter of 2011
increased by 39% to $5.7 million compared to $4.1 million in the
second quarter of 2010.
- Net income in accordance with US
Generally Accepted Accounting Principles (US GAAP) for the second
quarter of 2011 increased by 60% to $1.4 million, as compared with
$0.9 million in the second quarter of 2010.
- GAAP earnings per diluted share for the
second quarter of 2011 were $0.06, an increase of 50 percent,
compared to $0.04 in the second quarter of 2010.
- Non-GAAP net income for the second
quarter of 2011 increased by 19% to $1.6 million, as compared with
non-GAAP net income of $1.3 million for the second quarter of
2010.
- Non-GAAP earnings per diluted share for
the second quarter of 2011 were $0.06, an increase of 20 percent,
compared to $0.05 for the second quarter of 2010.
- Deferred Revenues (long-term and
short-term) as of June 30, 2011 amounted to $3.5 million compared
to $3.8 million in deferred revenues as of March 31, 2011.
- Operating cash flow for the second
quarter of 2011 was $1.9 million, compared to $1.2 million in the
second quarter of 2010.
- Cash as of June 30, 2011 amounted to
$16.1 million, compared to $14.4 million as of March 31, 2011.
For information regarding the non-GAAP financial measures
discussed in this release, please see below “Use of Non-GAAP
Measures” and “Reconciliation of Selected GAAP Measures to Non-GAAP
Measures.”
“We are pleased with the company’s overall progress since the
beginning of the year and our second quarter performance -- another
record quarter for Commtouch,” said Ido Hadari, Commtouch’s chief
executive officer. “The Q2 financial results demonstrate our
ability to increase profitability while consistently growing the
business and generating strong operating cash flow.”
Second Quarter 2011 Business
Highlights:
- During the quarter, the company
acquired new customers, among them: Bullguard, a leading European
desktop and mobile security antivirus company; and Neo Technology,
an end-point security provider.
- In addition, the company continued
expanding contracts with existing customers, with Command Antivirus
and GlobalView URL Filtering products driving cross-sale
success.
- The company launched GlobalView™ URL
Filtering for Mobile, its first dedicated product for the mobile
industry designed to protect end-users while browsing from
Android-powered mobile devices.
Mr. Hadari added: “We are broadening the use of our cloud
security platform, which is one of our strategic assets. Our
expansion into the mobile security space is part of our continuous
efforts in building for the future. We remain focused on increasing
sales of our Internet security suite and extending our product
portfolio, which are key drivers of our growth moving forward.”
Business Outlook
Management reaffirmed the guidance it has previously provided
for 2011 full year results.
Full year 2011 revenues are expected to reach between $22.5
million and $23.5 million. Net income for 2011 is expected to reach
between $6.2 million and $6.7 million on a non-GAAP basis.
The above outlook is as of the date of this release, and the
company undertakes no obligation to update its estimates in the
future.
Use of Non-GAAP Measures
Non-GAAP financial measures consist of GAAP financial measures
adjusted to exclude: share based compensation expenses,
amortization of acquired intangible assets, deferred taxes and
acquisition related costs. The purpose of such adjustments is to
give an indication of our performance exclusive of non-cash charges
and other items that are considered by management to be outside of
our core operating results. Our non-GAAP financial measures are not
meant to be considered in isolation or as a substitute for
comparable GAAP measures, and should be read only in conjunction
with our consolidated financial statements prepared in accordance
with GAAP. Our management regularly uses our supplemental non-GAAP
financial measures internally to understand, manage and evaluate
our business and make operating decisions.
These non-GAAP measures are among the primary factors management
uses in planning for and forecasting future periods. We believe
this adjustment is useful to investors as a measure of the ongoing
performance of our business. We believe these non-GAAP financial
measures provide consistent and comparable measures to help
investors understand our current and future operating cash flow
performance. 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 a table immediately following the Consolidated
Statements of Income. The presentation of this non-GAAP financial
information is not intended to be considered in isolation or as a
substitute for the financial information prepared and presented in
accordance with GAAP. Management uses both GAAP and non-GAAP
measures when evaluating the business internally and therefore felt
it important to make these non-GAAP adjustments available to
investors.
Financial Results Conference
Call
The company has scheduled a conference call later today, August
3, 2011, at 9 a.m. ET.
To participate in the call, please dial one of the following
numbers ten minutes prior to the start time of the call:
US Dial-in Number: 1 888 281 1167
Israel Dial-in Number: 03 918 0644
International Dial-in Number: +972 3 918
0644
The call will be simultaneously webcast live from a link on
Commtouch’s website at www.commtouch.com.
For those unable to listen to the live call, a replay of the
call will be available the day after the call in the investor
relations section of Commtouch’s website, at:
http://www.commtouch.com/ir.
About Commtouch
Commtouch® (NASDAQ: CTCH) safeguards the world’s leading
security companies and service providers with cloud-based Internet
security services. A cloud-security pioneer, Commtouch’s real-time
threat intelligence from its GlobalView™ Network powers Web
security, messaging security and antivirus solutions, protecting
thousands of organizations and hundreds of millions of users
worldwide. Information about Commtouch can be found at
www.commtouch.com or by writing to info@commtouch.com.
Recurrent Pattern Detection, RPD, Zero-Hour and GlobalView are
trademarks, and Commtouch, Authentium, Command Antivirus and
Command Anti-malware are registered trademarks, 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 i) stated ability to increase profitability while
consistently growing the business and generating strong operating
cash flow, and ii) optimistic business outlook for 2011, 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 www.sec.gov.
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In
US$ thousands, except per share amounts)
Three months endedJune
30
Six months endedJune 30
2011 2010 2011 2010 Unaudited Unaudited
Unaudited Unaudited Revenues $5,696 $4,104 $11,211 $8,183
Cost of revenues 938 652 1,948 1,261 Gross profit
4,758 3,452 9,263 6,922 Operating expenses:
Research and development 1,377 561 2,624 1,371 Sales and
marketing 1,318 1,024 2,709 2,086 General and administrative
1,004 873 1,897 1,665 Total operating expenses 3,699 2,458
7,230 5,122 Operating profit 1,059 994 2,033 1,800
Financial expenses (income), net 45 12 59 62 Income before
taxes 1,014 982 1,974 1,738 Income taxes (tax benefit), net
(401) 97 (462) 59
Net income attributable to ordinary and
equivalently participating shareholders
$1,415
$885
$2,436
$1,679
Earning per share- basic $0.06 $0.04 $0.10 $0.07
Earning per share- diluted $0.06 $0.04 $0.10 $0.07
Weighted average number of shares outstanding: Basic 23,512 23,404
23,508 23,719 Diluted 24,554 24,726 24,653 25,075
COMMTOUCH SOFTWARE LTD.
RECONCILIATION OF SELECTED GAAP
MEASURES TO NON GAAP MEASURES
(In US$ thousands, except per share amounts)
Three months endedJune
30
Six months endedJune 30
2011 2010 2011 2010 Unaudited Unaudited
Unaudited Unaudited GAAP operating profit $1,059 $994 $2,033
$1,800 Stock-based compensation (1) 287 338 584 669 Other
acquisition related costs (2) 53 - 53 - Amortization of intangible
assets (3) 136 - 265 - Non-GAAP operating profit $1,535
$1,332 $2,935 $2,469 GAAP net income $1,415 $885 $2,436
$1,679 Stock-based compensation (1) 287 338 584 669 Other
acquisition related costs (2) 53 - 53 - Amortization of intangible
assets (3) 136 - 265 - Adjustment to earnout obligation (4) 81 - 81
- Income taxes (5) (401) 97 (462) 59 Non-GAAP net income
$1,571 $1,320 $2,957 $2,407 GAAP earnings per share $0.06
$0.04 $0.10 $0.07 Stock-based compensation (1) 0.01 0.01 0.02 0.03
Other acquisition related costs (2) 0.002 - 0.002 - Amortization of
intangible assets (3) 0.006 - 0.011 - Adjustment to earnout
obligation (4) 0.003 - 0.003 - Income taxes (5) (0.016) 0.004
(0.019) 0.002 Non-GAAP earnings per share $0.06 $0.05 $0.12
$0.10
Numbers of shares used in computing
Non-GAAP earnings per share (diluted)
24,554 24,726 24,653 25,075
(1) Stock-based
compensation
Cost of revenues $6 $10 $12 $19 Research and development 71 80 146
153 Sales and marketing 90 97 185 190 General and administrative
120 151 241 307 $287 $338 $584 $669
(2) Other
acquisition related costs
General and administrative 53 - 53 - $53 - $53 -
(3) Amortization
of intangible assets
Cost of revenues $43 - $92 - Sales and marketing 93 - 173 -
$136 - $265 -
(4) Adjustment to
earnout obligation
Financial expenses (income), net 81 - 81 - $81 - $81 -
(5) Income
taxes
Deferred tax asset - tax benefit (401) 97 (462) 59 ($401) 97
($462) 59
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 December 31 2011 2010 Unaudited
Audited In US$ thousands
Assets: Current Assets: Cash
and cash equivalents $16,072 $13,432 Trade receivables 2,611 2,968
Deferred income taxes 2,222 1,940 Prepaid expenses and other
accounts receivable 277 384 Total current assets 21,182 18,724
Long-term lease deposits 52 41 Severance pay fund 1,318
1,208 Property and equipment, net 913 920 Deferred income taxes
1,740 1,560 Intangible assets, net 4,245 4,510 Goodwill 3,792 3,792
Investment in affiliate 1,227 1,227 Total assets 34,469 31,982
Liabilities and Shareholders’ Equity Current
Liabilities: Accounts payable 439 550 Employees and payroll
accruals 1,062 1,073 Accrued expenses and other liabilities 362 330
Deferred revenues 2,882 3,178 Total current liabilities 4,745 5,131
Deferred revenues 634 964 Other long term liabilities 2,912
2,831 Accrued severance pay 1,410 1,303 Total liabilities 4,956
5,098 Shareholders’ equity 24,768 21,753 Total liabilities
and shareholders’ equity $34,469 $31,982
COMMTOUCH SOFTWARE LTD. CONDENSED
CONSOLIDATED CASH FLOW DATA (In US$ thousands)
Three months endedJune
30
Six months endedJune 30
2011 2010 2011 2010 Cash flow from
operating activities Unaudited Unaudited Unaudited Unaudited
Net income $1,415 $885 $2,436 $1,679
Adjustments:
Depreciation 142 111 278 239 Compensation related to options issued
to employees and consultants 287 335 567 678 Amortization of
intangible assets 136 - 265 -
Changes in assets
and liabilities:
Decrease (Increase) in trade receivables 348 (10) 357 (20) Increase
(decrease) in deferred taxes (401) 97 (462) 59 Decrease in prepaid
expenses and other receivables 61 (110) 107 (110) Increase
(decrease) in accounts payable 162 (3) (51) (62) Increase
(decrease) in employees and payroll accruals, accrued expenses and
other liabilities 50 (8) 102 (17) Decrease in deferred revenues
(316) (116) (626) (581) Capital gain from sale of fixed assets -
(9) - (9) (Decrease) increase in accrued severance pay, net (16) 6
(3) 22
Net cash provided by operating activities 1,868 1,178
2,970 1,878
Cash from investing activities
Change in long - term lease deposits (22) 12 (11) 10
Proceeds from sale of fixed assets
- 9 - 9 Purchase of property and equipment (212) (294) (331) (334)
Net cash used in investing activities (234) (273) (342)
(315)
Cash flows from financing activities
Buyback of outstanding shares - (805) - (2,827) Proceeds from
options and warrants exercised 12 (39) 12 25
Net cash provided
by (used in) financing activities 12 (844) 12 (2,802)
Increase (decrease) in cash and cash equivalents
1,646 61 2,640 (1,239) Cash and cash
equivalents at the beginning of the period 14,426
15,975 13,432 17,275 Cash and cash
equivalents at the end of the period $16,072
$16,036 $16,072 $16,036
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