Commtouch approves buyback as revenue rises

Wed. July 30, 2008; Posted: 03:43 PM

Jul 30, 2008 (Globes - McClatchy-Tribune News Service via COMTEX) -- CTCH | Quote | Chart | News | PowerRating -- Jul. 30--Commtouch Software Ltd. (Nasdaq: CTCH | Quote | Chart | News | PowerRating) today published its financial report for the second quarter of 2008 and announced a $4 million share buyback plan. The anti-spam solutions provider posted $3.6 million revenue, up 36 percent on the $2.6 million revenue for the corresponding quarter of 2007.

GAAP-based net profit totaled $582,000 ($0.02 per share) for the second quarter, 20 percent more than for the corresponding quarter. Non-GAAP net profit totaled $938,000, up 30 percent on the $724,000 for the corresponding quarter.

The cash flow from current operations was $591,000 for the second quarter.

Commtouch chairman and CEO Gideon Mantel said, "I am pleased that we have been able to achieve such a good quarter of profitability, revenue growth and positive cash flow, despite the overall market environment, the declining US dollar, and our continued investment in a new product line. I am very excited with regard to our outlook, especially as we assess the potential of our Web Security offering, which we expect to release at the end of this year."

Commtouch's business model is based on OEM licensing agreements with partners who sell the company's products as part of their own brand product lines. This model enables the company to save on operating costs, particularly marketing and customer support, but it hurts the top line. The company signed seven new OEMs during the second quarter and now has 100 OEM partners.

Commtouch reiterated its full-year 2008 guidance of $0.16-0.19 earnings per share on $15-16 million revenue.

If the share buyback is completed in full, it will reduce the share's liquidity by 5 percent. The company will finance the buyback from its cash reserves, which totaled $16.5 million at the end of June.

Commtouch closed at $3.08 yesterday, giving a market cap of $78 million. The share has fallen 49.2 percent since the beginning of the year.

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