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Press Release

Jacada Reports Financial Results for the 2004 Third Quarter

ATLANTA, October 28, 2004 – Jacada Ltd. (Nasdaq: JCDA), a leader in software solutions that accelerate business improvement, today reported financial results for the 2004 third quarter.

Total revenues for the 2004 third quarter were $4.9 million, compared to $4.9 in the 2004 second quarter and $5.3 million in the third quarter of 2003. Software and product revenues were $1.4 million in the 2004 third quarter, compared to $1.3 million in the 2004 second quarter and $2.3 million in the third quarter of 2003. Service and maintenance revenues were $3.5 million in the 2004 third quarter, compared to $3.5 million in the 2004 second quarter and $3.0 million in the third quarter of 2003.

Gross profit for the 2004 third quarter was $3.7 million, or 76% of total revenues, compared to $3.7 million, or 75% of total revenues, in the 2004 second quarter. Operating loss for the 2004 third quarter was $1.2 million, compared to $2.1 million in the 2004 second quarter, which included $0.5 million of non-recurring charges. Net loss for the third quarter, after financial income, was $1.1 million, or $0.06 per share, compared to a net loss of $1.9 million, or $0.10 per share, in the 2004 second quarter. In the third quarter of 2003, Jacada reported gross profit of $4.2 million, or 79% of total revenues, an operating loss of $0.7 million, and a net loss of $0.6 million, or $0.03 per share.

At the end of the 2004 third quarter, Jacada's cash and investments totaled $38.0 million.

"In May, Jacada introduced Jacada Fusion, expanding our product offering to a larger market," said Gideon Hollander, CEO of Jacada. "After a very encouraging product launch in the second quarter, our efforts during the third quarter focused on execution, developing sales prospects, and preparing for successful product delivery. We are very pleased with our progress and with the market acceptance of Jacada Fusion."

"We see significant future growth potential for Jacada Fusion; however, we continue to anticipate generating stable revenues in the near term as our product mix evolves," said Hollander. "Third-quarter revenues were generated solely from our traditional product line, and we anticipate revenues from Jacada Fusion will be recognized starting in the fourth quarter."

"We are hearing from industry analysts, customers and prospects that virtually every enterprise experiences operational challenges from dealing with multiple, disparate applications, and the need to solve this problem is tremendous," said Hollander. "But where we see the greatest demand is in contact centers."

Jacada Fusion solves a significant productivity and efficiency problem for contact centers, where employees are faced with learning and using multiple, diverse business applications to complete even the simplest task. This complexity results in longer call handling times, expensive training programs, higher employee turnover, and ultimately poor customer satisfaction. Jacada Fusion addresses this dilemma by providing a rapid, non-invasive approach for 'fusing' all the applications at the desktop to deliver a new, simplified process and user interaction.

"We are very excited about the momentum we are experiencing in the contact center market," said Hollander. "Jacada Fusion provides customers with real value, generating a compelling return on investment usually measured in months, as compared to alternative solutions, which typically represent multi-year, multi-million-dollar investments."

In the third quarter, Jacada signed an agreement with West Corporation, one of the largest providers of outsourced contact centers and communication solutions. West selected Jacada Fusion to simplify the way its agents access and manage the data housed in its clients' systems. According to Hollander, product implementation at West is already underway with its first client, and a second project is about to begin.

In addition, a large telecommunications provider has signed a significant Jacada Fusion agreement to improve productivity in one of its contact centers. Jacada expects the revenue from this agreement to be recognized in the fourth quarter. "The process improvements Jacada Fusion is able to provide this customer are dramatic, and we are excited about the potential that this project provides for follow-on revenues," said Hollander.

Additionally, in the third quarter, long-time contact center customer Resort Condominiums International signed an enterprise license to implement Jacada in its contact centers worldwide.

"We are extremely pleased with the reception Jacada Fusion has had in the market. The momentum is increasing and our prospect list is growing daily. We are confident that our investments in technology development and acquisitions, including a third-quarter technology acquisition, will ultimately deliver sales and revenue growth for Jacada," added Hollander.

Jacada will hold a teleconference at 10:30 a.m. Eastern time today. To participate in the teleconference, call 1-888-273-9890. International callers should call 612-332-0637. The teleconference will also be available via Webcast at www.jacada.com (under "Investors") or www.fulldisclosure.com

Jacada's website will also host an archive of the call for a minimum of 30 days. A telephonic playback of the teleconference will be available for 48 hours beginning at 2 p.m. ET on October 28. To access the replay, dial toll-free 800-475-6701, or for international callers dial 320-365-3844, and provide Access Code 750427.

About Jacada

Jacada Ltd. provides software solutions for accelerating business improvement. A recognized leader in integration technology, Jacada solutions help customers simplify and rapidly improve high-value business processes without the need to replace or re-write existing business systems. Jacada has over 1200 customers worldwide including major corporations and government organizations such as AAA Mid-Atlantic, AIT Worldwide Logistics, Bank of America, Caterpillar, Delta Air Lines, The Hartford, Lillian Vernon, the U.S. Navy, Porsche Cars North America, Prudential, Raytheon, and the US Department of Interior. Jacada operates globally with offices in Atlanta, Georgia; Herzliya, Israel; and London, England. Jacada can be reached at www.jacada.com or at 1-800-773-9574.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future financial results and plans for future business development activities, and are prospective. These statements include all statements that are not statements of historical fact and consists of those regarding intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company's financing plans; (ii) trends affecting the Company's financial condition or results of operations; (iii) the Company's growth strategy and operating strategy (including the development of its products and services); and (iv) the expected costs and benefits of the Company's R&D consolidation plans. The words "may," "could," "would," "will," "believe," "anticipate," "estimate," "expect," "intend," "plan," and similar expressions or variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of the future performance and involve risks and uncertainties, many of which are beyond the Company's ability to control. Actual results may differ materially from those projected in the forward-looking statements as a result of various factors including the performance and continued acceptance of our products, general economic conditions and other Risk Factors specifically identified in our reports filed with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made. The Company cannot assess the impact of or the extent to which any single factor or risk, or combination of them, may cause. For a more complete discussion of risk factors, please see the Company's Form 20-F and other Statements filed with the Securities and Exchange Commission.

Jacada is a trademark of Jacada Ltd. All other brands or product names are trademarks of their respective owners.

JACADA LTD. CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
	September 30,	December 31,
	2004	2003
	Unaudited

		ASSETS
		CURRENT ASSETS:
		Cash and cash equivalents	$	3,125	$	9,845
		Marketable securities		15,169		6,638
		Trade receivables (net of allowance      for doubtful accounts of $239 and $234     at September 30, 2004 and December 31,     2003, respectively)		2,840		2,759
		Other current assets		514		561
		Total current assets		21,648		19,803
		LONG-TERM INVESTMENTS:
		Marketable securities		19,754		25,310
		Severance pay fund		874		758
		Long-term other assets		102		61
		Total long-term investments		20,730		26,129
		PROPERTY AND EQUIPMENT, NET		1,351		1,874
		OTHER ASSETS, NET:    Technology		1,506		865
		Other intangibles		45		86
		Total other assets, net		1,551		951
		GOODWILL		4,630		4,630
		Total assets	$	49,910	$	53,387

 

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JACADA LTD. CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands, except share data
	September 30,	December 31,
	2004	2003
	Unaudited

		LIABILITIES AND SHAREHOLDERS' EQUITY
		CURRENT LIABILITIES:
		Trade payables	$	823	$	515
		Deferred revenues		3,708		3,348
		Accrued expenses and other liabilities		3,820		3,776
		Total current liabilities		8,351		7,639
		LONG-TERM LIABILITIES:
		Accrued severance pay		1,357		1,189
		Accrued expenses		-		55
		Total long-term liabilities		1,357		1,244
		SHAREHOLDERS' EQUITY:
		Share capital:
		Ordinary shares of NIS 0.01 par value:
		Authorized: 30,000,000 shares as of        September 30, 2004 and December 31,       2003; Issued and outstanding: 19,310,260       and 19,033,778 shares at September 30,       2004 and December 31, 2003, respectively		56		55
		Additional paid-in capital		69,692		69,277
		Accumulated other comprehensive income		(138)		111
		Accumulated deficit		(29,408)		(24,939)
		Total shareholders' equity		40,202		44,504
			$	49,910	$	53,387

 

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JACADA LTD. CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except share and per share data

	Nine months ended September 30,								Three months ended September 30,					Year ended December 31,
			2004			2003			2004			2003		2003
			Unaudited
Revenues:
Software and products		$	3,990		$	6,594		$	1,356		$	2,294		8,354
Services			4,389			3,295			1,407			1,093		4,704
Maintenance			6,374			5,579			2,135			1,886		7,504
Total revenues			14,753			15,468			4,898			5,273		20,562
Cost of revenues:
Software and products			77			406			34			224		534
Services			2,636			1,747			839			596		2,384
Maintenance			852			824			298			267		1,110
Total cost of revenues			3,565			2,977			1,171			1,087		4,028
Gross profit			11,188			12,491			3,727			4,186		16,534
Operating expenses:
Research and development			4,034			4,109			1,264			1,393		5,620
Sales and marketing			7,768			7,128			2,521			2,338		9,386
General and administrative			3,657			3,601			1,187			1,168		4,714
Restructuring and other			747			-			-			-		-
Total operating expenses			16,206			14,838			4,972			4,899		19,720
Operating loss			(5,018)			(2,347)			(1,245)			(713)		(3,186)
Financial income, net			549			797			173			155		1,037
Net loss			(4,469)			(1,550)			1,072)			(558)		(2,149)
Basic and diluted net loss    per share		$	(0.23)		$	(0.08)		$	(0.06)		$	(0.03)		(0.11)
Weighted average number of   shares used in computing   basic and diluted    net loss per share			19,271,698			19,003,988			19,309,273			19,020,340		19,011,435