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Commtouch® (NASDAQ:CTCH), the leading
OEM provider of real time email defense technology, today announced its
first quarter results for the period ending March 31, 2007.
First Quarter 2007 Highlights:
Revenues for the first quarter of 2007 increased by 63% to $2,405
thousand compared to $1,473 thousand in the first quarter of 2006.
Net income in accordance with US Generally Accepted Accounting
Principles (US GAAP) for the first quarter of 2007 was $267 thousand
compared to a loss of $378 thousand in the first quarter of last year.
Non-GAAP net income for the first quarter of 2007, excluding $243
thousand of stock-based compensation expenses in connection with the
company's adoption of Financial Accounting Standards No. 123R, was
$510 thousand compared to a loss of $214 thousand in the first quarter
of 2006.
Deferred Revenues (long term and short term) as of March 31, 2007
amounted to $2,808 thousand, an increase of 9% over deferred revenues
as of December 31, 2006.
Operating cash flow in the first quarter of 2007 was $953 thousand,
compared to $348 thousand in the first quarter of 2006.
Cash and marketable securities as of March 31, 2007 amounted to
$11,518 thousand compared to $10,004 thousand as of December 31, 2006.
The increase is due to the above-mentioned positive operating cash
flow and receipt of proceeds from the exercise of warrants and options
in the amount of $830 thousand.
The Company signed 11 new OEM licensing agreements during the quarter,
bringing the Company’s global OEM partner
count to 66 at the end of the quarter.
“This has been a strong quarter for us,”
commented Gideon Mantel, Commtouch’s CEO and
chairman of the board. “Again, we achieved
good financial results with increasing revenues and profitability. To
cap it off, we generated almost one million dollars in positive
operating cash flow and signed a record eleven new licensing deals
during the quarter.
“The majority of our revenues is derived from
our anti-spam product,” Mr. Mantel continued. “We
are now just starting to see the demand and revenue growth in our
Zero-Hour virus outbreak protection product line, which we launched in
2005. Most recently, we rolled out our new Reputation Service at the end
of last year, and we expect to see the benefits from this product
starting in several quarters. It has been quite an accomplishment to
continue developing leading edge security solutions while at the same
time increasing our profitability.”
Use of Non-GAAP Measures
This press release includes financial measures for net income (loss),
basic and diluted earnings per share that exclude stock-based
compensation expense and are therefore not calculated in accordance with
generally accepted accounting principles (GAAP). Management believes
that these non-GAAP financial measures provide meaningful supplemental
information regarding our performance that enhances management's and
investors' ability to evaluate the company's net income or loss and
earnings or loss per share and to compare it with historical net income
or loss and earnings or loss per share.
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, Thursday, May
3rd, 2007 at 11 a.m. EDT.
To participate in the call, please dial one of the following numbers ten
minutes prior to the start time of the call:
U.S.: 1-888-668-9141;
UK: 0-800-917-9141;
ISRAEL: 03-918-0609;
INTERNATIONAL: +972-3-918-0609
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 Software Ltd. (NASDAQ:CTCH) is dedicated to protecting and
preserving the integrity of the world's most important communications
tool -- e-mail. Commtouch has over 16 years of experience developing
messaging software and is a global developer and provider of proprietary
anti-spam, Zero-Hour™ virus protection and
Reputation Service solutions. Using core technologies including RPD
(Recurrent Pattern Detection™), the Commtouch
Detection Center analyzes billions of email messages per month to
identify new spam and malware outbreaks within minutes of their
introduction into the Internet. Integrated by more scores of OEM
partners, Commtouch technology protects thousands of organizations, with
over 50 million users in over 100 countries. Commtouch is headquartered
in Netanya, Israel, and has a subsidiary in Sunnyvale, Calif. For more
information, see: www.commtouch.com.
The site includes the Commtouch online lab detailing spam statistics and
charts.
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 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 for
expansion; 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.
Recurrent Pattern Detection, RPD and Zero-Hour are trademarks, and
Commtouch is a registered trademark, of Commtouch Software Ltd. U.S.
Patent No. 6,330,590 is owned by Commtouch.
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31
December 31
2007
2006
Unaudited
Unaudited
In US$ thousands
Assets:
Current Assets:
Cash and cash equivalents
$9,018
$8,004
Marketable securities
2,500
2,000
Trade receivables
682
570
Prepaid expenses and other accounts receivable
210
196
Total current assets
12,410
10,770
Long-term lease deposits
9
13
Severance pay fund
643
607
Property and equipment, net
821
609
Total assets
13,883
11,999
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable
479
344
Employees and payroll accruals
582
503
Accrued expenses and other liabilities
416
379
Short-term deferred revenue
2,212
2,032
Total current liabilities
3,689
3,258
Long-term deferred revenue
596
542
Accrued severance pay
753
706
Total liabilities
1,349
1,248
Shareholders’ equity
8,845
7,493
Total liabilities and shareholders’ equity
$13,883
$11,999
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In US$ thousands, except per share amounts)
Three months ended
March 31
2007
2006
Unaudited
Unaudited
Revenues
$2,405
$1,473
Cost of revenues
286
224
Gross profit
2,119
1,249
Operating expenses:
Research and development
456
417
Sales and marketing
826
730
General and administrative
661
510
Total operating expenses
1,943
1,657
Operating profit (loss)
176
(408)
Interest and other expense, net
91
64
Equity - loss of affiliate
(34)
Net income (loss) attributable to ordinary and equivalently
participating shareholders
$267
($378)
Earning (loss) per share- basic
$0.00
($0.01)
Earning (loss) per share- diluted
$0.00
($0.01)
Weighted average number of shares outstanding:
Basic
72,999
58,171
Diluted
80,494
58,171
Supplementary Financial Information
Unaudited Reconciliation of GAAP Financial Information to NON-GAAP
(In US$ thousands)
Three months ended
March 31
GAAP
FAS123R
Non GAAP
GAAP
FAS123R
Non GAAP
2007
Adjustments
2007
2006
Adjustments
2006
Unaudited
Revenues
$2,405
$2,405
$1,473
$1,473
Cost of revenues
286
7
279
224
9
215
Gross profit
2,119
(7)
2,126
1,249
(9)
1,258
Operating expenses:
Research and development
456
59
397
417
62
355
Sales and marketing
826
46
780
730
62
668
General and administrative
661
131
530
510
31
479
Total operating expenses
1,943
236
1,707
1,657
155
1,502
Operating profit (loss)
176
243
419
(408)
164
(244)
Interest and other expense, net
91
91
64
64
Equity - loss of affiliate
-
-
(34)
(34)
Net income (loss)
$267
$510
($378)
($214)
Earning (loss) per share- basic
$0.00
$0.01
($0.01)
($0.00)
Earning (loss) per share- diluted
$0.00
$0.01
($0.01)
($0.00)
Weighted average number of shares outstanding:
Basic
72,999
72,999
58,171
58,171
Diluted
80,494
80,494
58,171
58,171
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED CASH FLOW DATA
(In US$ thousands)
Three months ended
March 31
2007
2006
Cash flow from operating activities
Unaudited
Unaudited
Net income (loss)
$267
($378)
Adjustments:
Depreciation
82
43
Compensations related to options issued to employees and consultants
255
204
Equity in losses of affiliate
-
34
Changes in assets and liabilities:
(Increase) decrease in trade receivables
(112)
53
Increase in prepaid expenses and other receivables
(14)
(40)
Increase (decrease) in accounts payable
116
(24)
Increase in employees and payroll accruals, accrued expenses and
other liabilities
85
27
Increase in deferred revenues
265
430
Increase in accrued severance pay, net
11
2
Other
(2)
(3)
Net cash provided by operating activities
953
348
Cash from investing activities
Purchase of marketable securities
(500)
-
Decrease in long - term lease deposits
4
6
Proceeds from sale of Fixed Assets
2
-
Purchase of property and equipment
(275)
(92)
Net cash used in investing activities
(769)
(86)
Cash flows from financing activities
Proceeds from options and warrants exercises
830
950
Net cash provided by financing activities
830
950
Increase in cash and cash equivalents
1,014
1,212
Cash and cash equivalents at the beginning of the period
8,004
3,986
Cash and cash equivalents at the end of the period
$9,018
$5,198