EXHIBIT 1
Commtouch Reports Record Third Quarter Revenue of $8.1 Million
Enterprise Market Drives Increase in Backlog to Record $40 million
Mountain View, California (October 25, 2000) -- Commtouch (Nasdaq: CTCH), the
worldwide leader in outsourced email and messaging solutions, today announced
record financial results for the third quarter 2000 and nine months ending
September 30, 2000. Revenues for the quarter were $8.1 million, an increase of
627% over third quarter 1999 revenues of $1.1 million and a 37% increase over
second quarter 2000 revenues of $5.9 million. Excluding amortization charges,
the net loss for the quarter was $6.4 million, or $0.41 per share, compared to a
net loss of $ 7.2 million, or $0.47 per share, in the second quarter of 2000,
and a net loss of $3.92 million, or $0.31 per share, in the same quarter a year
ago. The company also reported gross margin, of $5.1 million, a 64% increase
over gross margin of $3.1 million in the quarter ended June 30, 2000. As of
September 30, 2000, the Company had a backlog from contracts amounting to
approximately $40 million, representing firm revenue commitments that will be
recognized as revenue over future quarters. Enterprise customers represent 30%
of this backlog.
"Commtouch delivered outstanding performance this quarter on all fronts with a
strong contribution from the enterprise market." said Gideon Mantel, Commtouch
CEO. "We wrote over $16 million in new business, with over 50% of the new
backlog coming from enterprise customers. The quality of our revenue
dramatically improved this quarter as a result of the growing trend by small,
medium and large enterprises as well as and Internet-centric companies to select
Commtouch for sophisticated email and messaging solutions." Mantel added, "The
combination of our stronger margins, accelerating revenue streams from the
enterprise market and strong channel development makes us very confident about
our prospects in 2001 in topline growth and profitable operations."
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Enterprise Solutions:
Commtouch signed several significant channel distribution deals this quarter and
expanded several existing contracts into the corporate outsourcing market
including with Intel Online Services. Other notable distribution deals were with
Registrars.com, Smart Online and FutureLink to provide Commtouch's messaging
solutions and services to their customers.
Of the Internet-centric deals Commtouch signed in Q3 2000, the trend is toward
large "clicks and mortar" corporations like Labatt, the Canadian brewer, and
Banco Santander Central Hispanico, a leading Spanish bank, who are looking for
Commtouch's expertise in web-based email to provide their representative
websites with Commtouch services.
Wireless Enterprise:
"We have successfully executed on our wireless strategy with a group of
partners providing Commtouch with the appropriate solutions for engaging each
segment of the wireless market," said Mr. Mantel. "These connectivity
partnerships highlight the true advantages of Commtouch's technology and
services. In addition, each of our wireless solutions partners serve as
additional channels for our enterprise services."
Commtouch has signed deals with mobileID, GoAmerica, Pixo, Metricom's Ricochet
Alliance, StarBand and OpenGrid to provide email to each of these wireless
platform providers. This opens up an enormous opportunity on the scale of
hundreds of millions of email boxes that Commtouch will be serving on wireless
platforms.
International:
Commtouch's growth among international customers is reflected in its current new
backlog of $16 million, of which 37% of the backlog relates to international
customers. In addition, Commtouch now provides its new services in 26 languages,
representing the most comprehensive language capabilities in the messaging
space.
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Earnings Release Conference Call
Commtouch's third quarter conference call will take place at 5 p.m. (EDT) today.
The call can be accessed via a simultaneous webcast at www.commtouch.com under
the Investor Relations button. A replay of the call will remain on the site for
approximately five days following the call.
About Commtouch
Commtouch is the leading global provider of outsourced integrated email and
messaging solutions, currently serving 18 million email boxes worldwide.
Commtouch provides messaging solutions for some 400 various corporations, data
centers, small to medium size enterprises, ASPs, ISPs, portals and online
companies.
Commtouch offers integrated messaging applications in 26 languages that include
advance features such as online calendaring, unified messaging, wireless
integration, security and direct marketing applications.
Founded in 1991, Commtouch has offices in Silicon Valley, Los Angeles, New York
City, Miami, London, Tel Aviv and Tokyo. Additional Company information may be
obtained by visiting www.commtouch.com.
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 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; 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 Company's registration statement on Form 20-F filed with the
SEC which is available through www.sec.gov.
(C) 2000 Commtouch Software, Ltd. All rights reserved.
Commtouch is a registered trademark of Commtouch Software Ltd.
Terms and product names in this document may be trademarks of others.
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<TABLE>
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
September 30, December 31,
2000 1999
-------- --------
<S> <C> <C>
ASSETS
Current Assets:
Cash and short term investments $ 42,243 $ 84,046
Trade receivables 6,907 2,378
Prepaid marketing expenses relating to Go2Net and Microsoft
warrants 150 4,508
Prepaid expenses and other accounts receivable 3,889 1,648
-------- --------
Total current assets 53,189 92,580
Severance Pay Fund 811 354
Security Deposit 1,481 1,254
Investment 7,025 --
Property and Equipment, net 20,232 6,148
-------- --------
$ 82,738 $100,336
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,598 $ 1,510
Employees and payroll accruals 1,590 1,032
Deferred revenue 1,313 561
Other liabilities 1,710 1,424
-------- --------
Total current liabilities 7,211 4,527
-------- --------
Long-term Portion of Bank Loans and Capital Leases 24 44
Accrued Severance Pay 983 453
Minority Interest 132 --
-------- --------
1,139 497
-------- --------
Shareholders' Equity 74,388 95,312
-------- --------
$ 82,738 $100,336
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<TABLE>
COMMTOUCH SOFTWARE LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Email Services $ 6,246 $ 1,117 $ 16,429 $ 2,015
Licenses 1,870 -- 1,870 --
-------- -------- -------- --------
Total revenues 8,116 1,117 18,299 2,015
-------- -------- -------- --------
Cost of revenues
Email Services 3,025 1,043 7,930 2,083
Licenses -- -- -- --
-------- -------- -------- --------
Total cost of revenues 3,025 1,043 7,930 2,083
-------- -------- -------- --------
Gross profit (loss) 5,091 74 10,369 (68)
-------- -------- -------- --------
Operating expenses:
Research and development, net 2,561 857 6,824 1,707
Sales and marketing 6,587 2,368 17,737 4,339
General and administrative 3,184 1,345 7,866 2,645
Amortization of the prepaid marketing
expenses relating to Go2Net & Microsoft
warrant 476 1,464 4,358 1,464
Amortization of stock-based employee
deferred compensation 763 1,096 2,288 2,495
-------- -------- -------- --------
Total operating expenses 13,571 7,130 39,073 12,650
-------- -------- -------- --------
Operating loss (8,480) (7,056) (28,704) (12,718)
Interest income (expense) and other, net 883 577 2,752 312
-------- -------- -------- --------
Net loss $ (7,597) $ (6,479) $(25,952) $(12,406)
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Basic and diluted net loss per share $ (0.50) $ (0.51) $ (1.70) $ (2.25)
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Weighted average number of shares used in
computing basic and diluted net loss per
share 15,347 12,719 15,231 5,510
======== ======== ======== ========
Net Loss
- as adjusted (1) $ (6,358) $ (3,919) $(19,306) $ (8,447)
========= ======== ======== ========
Basic and diluted net loss per share
- as adjusted (1) $ (0.41) $ (0.31) $ (1.27) $ (1.53)
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<FN>
(1) Excludes charges for amortization of stock-based employee compensation and Go2Net and Microsoft Warrants.
</FN>
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