12% Revenue Growth; Non-GAAP Net Income, GAAP Loss Narrows REDWOOD
CITY, Calif., Aug. 4 /PRNewswire-FirstCall/ -- Tumbleweed(R)
Communications Corp. (NASDAQ:TMWD), an industry leader in managed
file transfer, email security, and identity validation, today
reported financial results for the second quarter ended June 30,
2008, including revenue growth, positive cash flow, and continued
expansion of contribution from channel partners. Revenue for the
quarter rose 12 percent to $15.8 million from $14.1 million in
second-quarter 2007. Non-GAAP net income for the quarter was
$825,000, or $0.02 per share, compared to a non-GAAP net loss of
$1.2 million, or $(0.02) per share, for the second quarter of 2007.
Non-GAAP results for second-quarter 2008 exclude $3.2 million of
expenses consisting of $1.3 million in stock-based compensation and
$1.9 million in acquisition-related expenses. Non-GAAP results for
the second-quarter of 2007 exclude a total of $1.5 million in
expenses for stock-based compensation and the amortization of
intangible assets. On a GAAP basis, the net loss for the quarter
narrowed to $2.4 million, or $(0.05) per share, from a net loss of
$2.7 million, or $(0.05) per share, for the second quarter of 2007.
A reconciliation of GAAP and non-GAAP results is presented in the
tables below. Due to positive cash flow for the quarter, cash and
cash equivalents increased by $700,000 to $29.2 million at June 30,
2008, from $28.5 million on March 31, 2008; and increased by $2.9
million from $26.3 million on December 31, 2007. Product revenue
for the quarter was 15 percent higher at $5.9 million, compared to
$5.1 million in second-quarter 2007. Service revenue for the
quarter increased to $8.6 million from $8.0 million in
second-quarter 2007. Revenue from intellectual property also
increased to $1.2 million, compared to $1.0 million in the second
quarter of 2007. Second-Quarter Highlights -- Channel partners
delivered 77 percent of the company's non-renewal commercial
bookings for the second quarter of 2008, compared to 37 percent for
the second quarter of 2007. -- Tumbleweed was positioned in the
Leaders Quadrant of the newly released "Gartner Magic Quadrant for
Managed File Transfer." -- The U.S. Patent and Trademark Office
granted Tumbleweed two patents: U.S. Patent No. 7,380,274, titled
"Email Firewall," which describes the enforcement of multiple
administrator-selected policies to email traffic entering or
leaving an organization; and U.S. Patent No. 7,389,413, titled
"Method & System for Filtering Communication," which describes
the management of email traffic by comparing attributes of messages
to a spam database. -- Secure Messenger(TM) received a 5-star
rating in Secure Computing Magazine's Email Security Group Test. --
MailGate(R) received a "Recommended" rating in addition to its
5-star rating in Secure Computing Magazine's Email Content
Management Group Test. -- Announced the release of MailGate 3.6,
the latest version of the Company's award-winning email security
product that adds a number of compelling capabilities for
government agencies and regulated industries. -- Shipped the FTP
Analyzer(TM) -- a tool which enables enterprises to monitor File
Transfer Protocol (FTP) traffic and identify misuse and unsecured
exchanges. Non-GAAP Information The non-GAAP financial information
included in this press release is not prepared in accordance with
GAAP as it excludes amortization of intangible assets and
stock-based compensation expense. Management believes that the
presentation of non-GAAP information may provide useful information
to investors because Tumbleweed has historically provided this
information and understands that some investors consider it useful
in evaluating Tumbleweed's expenses. Management also uses this
non-GAAP information, along with GAAP information, in evaluating
Tumbleweed's expenses and comparing Tumbleweed's performance with
that of its competitors. The non-GAAP results should not be
considered a substitute for financial information presented in
accordance with generally accepted accounting principles, and may
be different from non-GAAP measures used by other companies. About
Tumbleweed Tumbleweed Communications Corp. (NASDAQ:TMWD), an
industry leader in managed file transfer, email security and
identity validation, provides enterprise-class solutions to
organizations of all sizes. Tumbleweed's innovative products enable
organizations to effectively manage and protect business-critical
Internet communications, with capabilities that span secure file
transfer, encryption, data loss prevention, and email security.
Tumbleweed has approximately 3,500 customers worldwide, including
blue-chip companies across an array of industries such as
Technology, Retail, Finance, Healthcare, Manufacturing, Consumer
Packaged Goods, Telecom, Energy, and the U.S. Government. The
world's most security conscious organizations rely upon Tumbleweed
technology including Bank of America Securities, JP Morgan Chase
& Co., the U.S. Food and Drug Administration, and the U.S.
Department of Defense. Our award-winning products build on 15 years
of R&D and 31 security patents in the U.S. alone -- many of
which are licensed by other security vendors. More information can
be found at http://www.tumbleweed.com/. Tumbleweed, Secure
Messenger, MailGate and FTP Analyzer are either registered
trademarks or trademarks of Tumbleweed Communications Corp. in the
United States and/or other countries. All other trademarks are the
property of their respective owners. Contact: Tumbleweed
Communications Corp. Matt Clawson, 949-474-4300 (Investor
Relations) or SHIFT Communications Dan Gould, 415-591-8428 (Media
Relations) [Financial tables next pages] Tumbleweed Communications
Corp. Condensed Consolidated Statements of Operations June 30, 2008
(in 000s, except per share data) Three Months Ended Six Months
Ended June 30, June 30, (unaudited) (unaudited) 2008 2007 2008 2007
REVENUES Product revenue $5,892 $5,121 $10,890 $11,018 Service
revenue 8,640 7,973 16,852 16,995 Intellectual property revenue
1,226 1,036 3,276 1,132 NET REVENUE 15,758 14,130 31,018 29,145
COST OF REVENUE Cost of product revenue (1) 1,627 1,307 2,997 3,063
Provision for excess inventory - - - 164 Cost of service revenue
(1) 1,578 1,929 3,324 3,828 Amortization of intangible assets - 234
201 468 GROSS PROFIT 12,553 10,660 24,496 21,622 OPERATING EXPENSES
Research and development (1) 4,068 3,859 7,925 7,755 Sales and
marketing (1) 6,470 7,311 13,065 13,928 General and administrative
(1) 2,655 2,516 5,448 5,003 Amortization of intangible assets - 44
32 227 Merger and Acquisition costs 1,903 - 1,903 - TOTAL OPERATING
EXPENSES 15,096 13,730 28,373 26,913 OPERATING LOSS (2,543) (3,070)
(3,877) (5,291) Other income, net 170 381 394 720 NET LOSS BEFORE
TAXES (2,373) (2,689) (3,483) (4,571) Provision for income taxes 16
21 41 34 NET LOSS $(2,389) $(2,710) $(3,524) $(4,605) BASIC AND
DILUTED NET LOSS PER SHARE $(0.05) $(0.05) $(0.07) $(0.09)
RECONCILIATION TO NON-GAAP NET INCOME (LOSS) NET LOSS $(2,389)
$(2,710) $(3,524) $(4,605) Stock-based compensation expense 1,311
1,190 2,657 2,300 Amortization of intangible assets - 278 233 695
Merger and Acquisition costs 1,903 - 1,903 - NON-GAAP NET INCOME
(LOSS) $825 $(1,242) $1,269 $(1,610) NON-GAAP BASIC NET INCOME
(LOSS) PER SHARE $0.02 $(0.02) $0.02 $(0.03) NON-GAAP DILUTED NET
INCOME (LOSS) PER SHARE $0.02 $(0.02) $0.02 $(0.03) WEIGHTED
AVERAGE SHARES: BASIC 51,272 51,052 51,211 50,947 DILUTED 53,005
51,052 52,569 50,947 (1) Stock-based compensation expense is
classified as follows: Cost of service revenue 45 39 82 65 Research
and development 300 257 574 560 Sales and marketing 288 319 688 539
General and administrative 678 575 1,313 1,136 $1,311 $1,190 $2,657
$2,300 Tumbleweed Communications Corp. Condensed Consolidated
Balance Sheets June 30, 2008 (in 000s) 6/30/2008 12/31/2007 ASSETS
(unaudited) (unaudited) CURRENT ASSETS Cash and cash equivalents
$29,186 $26,299 Accounts receivable, net 9,558 13,074 Other current
assets 2,588 1,733 TOTAL CURRENT ASSETS 41,332 41,106 Goodwill
48,074 48,074 Intangible assets, net - 233 Property and equipment,
net 1,891 2,038 Other assets 442 385 TOTAL ASSETS $91,739 $91,836
LIABILITIES & EQUITY CURRENT LIABILITIES Accounts payable $126
$820 Accrued liabilities 8,764 6,795 Deferred revenue 21,414 20,996
TOTAL CURRENT LIABILITIES 30,304 28,611 LONG TERM LIABILITIES
Deferred revenue, excluding current portion 4,496 5,401 Other long
term liabilities 14 13 TOTAL LONG TERM LIABILITIES 4,510 5,414
TOTAL LIABILITIES 34,814 34,025 STOCKHOLDERS' EQUITY Common stock
52 52 Additional paid-in capital 367,697 365,155 Treasury stock
(796) (796) Accumulated other comprehensive income 190 94
Accumulated deficit (310,218) (306,694) TOTAL STOCKHOLDERS' EQUITY
56,925 57,811 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $91,739
$91,836 DATASOURCE: Tumbleweed Communications Corp. CONTACT: Matt
Clawson, Investor Relations, +1-949-474-4300, ; or Dan Gould, Media
Relations of SHIFT Communications, +1-415-591-8428, , both for
Tumbleweed Communications Corp. Web site:
http://www.tumbleweed.com/
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