Commtouch Poised for Growth in Mobile Security
Ken Nagy, CFA
On February 14, 2012,
Commtouch Software Ltd. (
, a cloud-based Internet security provider, reported financial
results for its fourth quarter and fiscal year ended December 31,
Commtouch reported mixed results with year over year fourth quarter
revenues increasing $570,000 or 10.7 percent to $5.950 million from
$5.377 million for the comparable quarter of 2010. Still, the
Company's fourth quarter 2011 GAAP net income dropped 23.5 percent
or $392,000 to $1.275 million from $1.667 million during the three
months ended December 31, 2010. The decrease in GAAP net
income was primarily due to lower gross margin as well as a
$917,000 year over year increase in total operating expenses.
Gross margin decreased year over year from 83.2 percent to 81.1
percent for the three months ended December 31, 2011. The lower
gross margin was due to the current product mix containing a larger
blend of lower margin products. Still, the Company expects
its gross margin to continue to be in the range of 80 and 83
percent in the future.
Based on a weighted average number of diluted common shares of
24.828 million, GAAP diluted net income per share resulted in $0.05
per share for the fourth quarter fiscal 2011. This compares
to diluted net income per share of $0.07 on a weighted average
number of diluted shares of 24.767 million during the three months
ended December 31, 2010.
Non-GAAP net income for the fourth quarter of 2011 increased year
over year by 15.6 percent to $1.653 million and non-GAAP earnings
per diluted share for the fourth quarter of 2011 were $0.07
compared to $0.06 for the three months ended December 31, 2010.
Furthermore, net cash provided by operations for the fourth quarter
fiscal 2011 improved year over year to $2.226 million from $802,000
for the fourth quarter ended December 31, 2010.
For the twelve months ended December 31, 2011, year over year
revenues improved by 26.7 percent or $4.855 million to $23.016
million from $18.161 million for the comparable twelve months of
GAAP net income for fiscal 2011 improved by $195,000 or 4.4 percent
year over year to $4.598 million for the full year ended December
31, 2011. This compares to $4.403 million for the comparable twelve
months of 2010.
Still, gross margin for the twelve months decreased to 82.2 percent
compared to gross margin of 83.9 percent for the twelve months
ended December 31, 2010.
Here again, the lower gross margin was due to the current product
mix containing a larger blend of lower margin products. Once
more, the Company expects its gross margin to continue to be in the
range of 80 and 83 percent in the future.
On a non-GAAP basis, net income for the full year ended December
31, 2011 increased year over year by 18.1 percent to $6.383 million
while non-GAAP earnings per diluted share for fiscal 2011 were
$0.19 compared to $0.18 for the twelve months ended December 31,
Commtouch's balance sheet continued to improve with cash and
equivalents increasing by $7.436 million year over year to $20.868
million and working capital improving by $3.748 million to $17.341
million for the period ended December 31, 2011.
Similalry, the Company generated $6.7 million of operating cash
flow for fiscal 2011 compared to operating cash flow of $4.3
million in 2010.
Commtouch expects this improved financial strength to enable the
Company to continually invest in the long term growth of its
business by pursuing further business opportunities, both
internally and in the market place.
Additionally, the improvement further permits Commtouch to expand
and accelerate future plans.
Correspondingly, Commtouch saw growing demand for its products over
the past fiscal year, including the signing of new agreements with
Cox, Hostway, Superb Internet and one of the top three European
Likewise, the Company launched a number of new products during 2011
including version eight of Commtouch's technology, a new URL
filtering solution for mobile as well as the industry's first
unified engine combining email security, Web filtering and
What's more, management plans to further enhance its mobile
solutions offering in fiscal 2012.
Last, by taking advantage of its technological and operational
assets, the Company expects to maintain a double digit revenue
growth rate and further accelerate it in the future.
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