Jacada
Jacada

Press Release

Jacada Reports Fourth Quarter and Fiscal Year 2008 Results

Revenue growth of 73% and a 52% improvement to bottom-line results exceeds forecasts

ATLANTA, February 12, 2009 – Jacada Ltd. (Nasdaq: JCDA), a leading provider of unified desktop and process optimization solutions for customer service operations, today reported financial results for the fourth quarter and for the fiscal year ended December 31, 2008.

For the fourth quarter of 2008, total reported revenues were $5.5 million compared to $6.1 million in the fourth quarter of 2007. Total reported revenues for the fiscal year 2008 rose 73% to $23 million compared to $13.3 million for the fiscal year 2007.

Non-GAAP gross profit for the fourth quarter was $2.7 million, or 49% gross margin, compared to $2.5 million in gross profit, or 41% gross margin in the fourth quarter last year. For the fiscal year 2008, non-GAAP gross profit was $12.1 million, or 53% gross margin, compared to $6.2 million or 47% gross margin for the fiscal year 2007.

The fourth quarter non-GAAP net loss from continuing operations improved 36% to ($1.5 million), or ($0.9) per share, when compared to ($2.3 million), or ($0.11) per share in the fourth quarter of 2007. Non-GAAP net loss for the fiscal year 2008 improved 52% to ($5.3 million) compared to a net loss of ($11 million) for the fiscal year 2007.

Total GAAP gross profit was $2.7 million, or 49% gross margin, compared to $2.3 million and 37%, respectively, in last year's fourth quarter. For the fiscal year 2008, GAAP gross profit was $11.9 million, or 52% gross margin, compared to $5.8 million or 43% gross margin for the fiscal year 2007.

"We are pleased to have exceeded both our revenue and bottom-line guidance for 2008," commented Paul O'Callaghan, chief executive officer for Jacada. "Our record annual revenue growth was led by a 106% increase in software license revenue. This record growth combined with improved services margins and continued improvement in operational efficiency contributed to our exceeding expectations for our bottom-line results as well. We believe we have demonstrated strong fiscal management and performance over the past eight quarters, and have managed well through this difficult period. During the fourth quarter we instituted a reduction in force and other expense containment strategies as part of our ongoing focus on reducing costs and improving our bottom line results. We remain committed to continue to make significant progress towards improving margins and reducing losses, while working hard to win new business."

Overall GAAP net loss for the fourth quarter of 2008 was ($2.6 million), or ($0.16) per share, which includes ($1.0 million) of net loss from continuing operations and a ($1.6 million) net loss from discontinued operations. This is compared to a GAAP net income of $5.4 million or $0.26 per share for the fourth quarter of fiscal year 2007, which includes $3.3 million of net income from continuing operations and $2.1 million of net income from discontinued operations. GAAP net income for the fiscal year 2008 was $13.2 million, or $0.68 per share, which includes ($5.0 million) of net loss from continuing operations and $18.2 million of capital gain net of taxes from discontinued operations. This is compared to a GAAP net income of $4.1 million or $0.20 per share for the fiscal year 2007, which includes ($3.4 million) of net loss from continuing operations and $7.5 million of net income from discontinued operations.

"Our core value proposition of improving customer retention and reducing operating expense is a message that continues to resonate with our target markets," continued O'Callaghan. "Our ability to implement in as little as four months, and deliver a complete return on investment in less than 12 months is seen as a very attractive alternative to large scale systems replacements, especially in a market that now demands quick time-to-value and has little appetite for long, expensive and risky large-scale application implementation projects."

At the end of the fourth quarter of 2008 cash and investments including restricted cash were $33.1 million, compared to $33.8 million reported on December 31, 2007. The restricted cash includes $2.6 million, which is being held in escrow as part of the sale of the company's legacy business to Software AG.

During the year, the company:

  • Signed and announced eight material software and/or services contracts with new and existing customers, the most in the company's history. The company defines a material contract as one with an initial value of $1 million or more.
  • Successfully deployed the Jacada unified desktop solution in eight new customer accounts, three of which were delivered by strategic systems integration partners.
  • Announced a major new release of the flagship product Jacada WorkSpace, with first-time support for the IBM WebSphere platform. Previous versions of the product were available on the BEA (Oracle) WebLogic application server only.
  • Gained industry recognition when Nationwide Insurance won the prestigious InfoWorld 100 Award for their Jacada unified desktop project.
  • Signed a reseller agreement with Tieto (OMX: TIE1V), a large global IT services firm. Active in more than 25 countries with approximately 16,000 employees and nearly $3 billion in revenue, Tieto is one of the largest IT services providers in Europe.

"Due to the uncertain nature of the economy and lack of visibility regarding the impact of these market conditions on our customers, we are suspending our traditional guidance at this time," concluded O'Callaghan. "As we all await an economic recovery, Jacada will continue to manage what we can manage, and focus on the bottom line through tight expense management and other initiatives to expand our margins."

Conference Call Details

Jacada management will host a conference call at 10:30 a.m. Eastern Time on February 12, 2009, to discuss the results with the investment community. To participate in the teleconference, please call toll-free 866.783.2144, or 857.350.1603 for international callers, and provide passcode 98976117 approximately 10 minutes prior to the start time. A (live audio) webcast will also be available over the Internet at www.jacada.com (under "About Us" then "Investors") or www.earnings.com. A replay of the teleconference will be available for three days beginning at 12:30 p.m. ET on February 12, 2009. To access the replay, dial toll-free 888-286-8010, or for international callers dial 617-801-6888, and provide passcode 29134328.

Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, Jacada uses non-GAAP measures of operating income (loss), net income (loss) and income (loss) per share, which are adjustments from results based on GAAP to exclude discontinued operations, taxes, non-cash stock-based compensation expenses in accordance with SFAS 123R, amortization of acquired intangible assets related to acquisitions effected by Jacada in previous years, restructuring costs and devaluation of ARS. Jacada management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of the on-going core operations of Jacada and prospects for the future. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating business internally and as such deemed it important to provide all this information to investors.

About Jacada

Jacada is a leading global provider of unified service desktop and process optimization solutions that simplify and automate customer service processes. By bridging disconnected systems into a single, intelligent desktop, Jacada solutions create greater operational efficiency and increase agent and customer satisfaction. Founded in 1990, Jacada operates globally with offices in Atlanta, Georgia; Herzliya, Israel; London, England and Munich, Germany. Jacada can be reached at www.jacada.com.

Forward Looking Statement

This news release may contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. 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. Jacada is a trademark of Jacada Inc. All other brands or product names are trademarks of their respective owners.

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

CONTACT:
Tzvia Broida
Chief Financial Officer
Jacada
972 9 9525927
Tzvia@jacada.com

Or

Peter Seltzberg
Hayden Communications
212-946-2849
peter@haydenir.com

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except per share data
Year ended
December 31,		 Three months ended
December 31,
      2008     2007     2008     2007
    Unaudited
Revenues:
Software licenses   $ 7,647   $ 3,706   $ 1,275   $ 1,693
Services     13,230     7,824     3,714     3,823
Maintenance     2,178     1,812     534     633
Total Revenues     23,055     13,342     5,523     6,149
Cost of revenues:
Software licenses     544     449     77     258
Services     9,728     6,354     2,573     3,418
Maintenance     856     745     187     198
Total cost of revenues     11,128     7,548     2,837     3,874
Gross profit     11,927     5,794     2,686     2,275
Operating expenses:
Research and development     4,819     4,402     1,111     1,175
Sales and marketing     8,829     9,787     1,650     2,530
General and administrative     5,583     5,249     1,571     1,673
Restructuring     451     -     451     -
Total operating expenses     19,682     19,438     4,783     5,378
Operating loss     (7,755)     (13,644)     (2,097)     (3,103)
Financial income (expenses), net     715     1,548     (308)     335
Pretax loss from continuing operations     (7,040)     (12,096)     (2,405)     (2,768)
Tax benefit     2,043     8,672     1,404     6,117
Net income (loss) from continuing operations     (4,997)     (3,424)     (1,001)     3,349
Net income (loss) from discontinued operations, net of taxes     18,234     7,540     (1,624)     2,054
Net income (loss)   $ 13,237   $ 4,116   $ (2,625)   $ 5,403
Basic and diluted net income (loss) per share:                        
Continuing operations   $ (0.26)   $ (0.17)   $ (0.06)   $ 0.16
Discontinued operations   $ 0.94   $ 0.37   $ (0.10)   $ 0.10
Total   $ 0.68   $ 0.20   $ (0.16)   $ 0.26
Weighted average number of shares used in computing basic and diluted net income (loss) per share     19,354,810     20,364,752     16,460,779     20,563,369
NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands, except per share data
Year ended
December 31,		 Three months ended
December 31,
      2008     2007     2008     2007
    Unaudited
Revenues:
Software licenses   $ 7,647   $ 3,706   $ 1,275   $ 1,693
Services     13,230     7,824     3,714     3,823
Maintenance     2,178     1,812     534     633
Total Revenues     23,055     13,342     5,523     6,149
Cost of revenues:
Software licenses     426     120     51     57
Services     9,649     6,262     2,573     3,395
Maintenance     853     740     187     196
Total cost of revenues     10,928     7,122     2,811     3,648
Gross profit     12,127     6,220     2,712     2,501
Operating eexpenses:
Research and development     4,747     4,325     1,104     1,151
Sales and marketing     8,625     9,535     1,629     2,480
General and administrative 5,081 4,884 1,510 1,583
Total operating expenses     18,453     18,744     4,243     5,214
Operating loss     (6,326)     (12,524)     (1,531)     (2,713)
Financial income, net     1,068     1,548     45     335
Pretax loss from continuing operations     (5,258)     (10,976)     (1,486)     (2,378)
Tax (expense) benefit     (83)     (54)     4     41
Net loss from continuing operations   $ (5,341)   $ (11,030)   $ (1,482)   $ (2,337)
Basic and diluted net loss per share:   $ (0.28)   $ (0.54)   $ (0.09)   $ (0.11)
Weighted average number of shares used in computing basic and diluted net loss per share     19,354,810     20,364,752     16,460,779     20,563,369
RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
       
         Year ended December 31, 2008        
       
         Adjustments        
       
GAAP		   Amortization of acquired intangible assets     Stock-based compensation expenses     Income from discontinued operations net of taxes     Tax benefit associated with discontinued operations     Restructuring     Other than temporary impairment on marketable securities   Non-GAAP
Revenues:                                                    
Software licenses $ 7,647                                       $ 7,647
Services         13,230                                         13,230
Maintenance         2,178                                         2,178
Total Revenues         23,055                                         23,055
Cost of revenues:                                              
Software licenses   544     (118)                                   426
Services         9,728           (79)                             9,649
Maintenance         856           (3)                             853
Total cost of revenues   11,128     (118)     (82)                             10,928
Gross profit         11,927     118     82                             12,127
Operating Expenses:                                              
Research and development   4,819           (72)                             4,747
Sales and marketing   8,829           (204)                             8,625
General and administrative   5,583           (502)                             5,081
Restructuring   451                             (451)           -
Total operating expenses   19,682           (778)                 (451)           18,453
Operating loss         (7,755)     118     860                 451           (6,326)
Financial income, net   715                                   353     1,068
Pretax loss   (7,040)     118     860                 451           (5,258)
Tax (expense) benefit   2,043                       (2,126)                 (83)
Income (loss) from continuing operations   (4,997)     118     860           (2,126)     451     353     (5,341)
Income from discontinued operations   18,234                 (18,234)                       -
Net income (loss) $ 13,237   $ 118   $ 860   $ (18,234)   $ (2,126)   $ 451   $ 353   $ (5,341)
Basic and diluted net income (loss) per share                                              
Continuing operations $ (0.26)                                       $ (0.28)
Discontinued operations $ 0.94                                       $ -
Total       $ 0.68                                       $ (0.28)
Weighted average number of shares used in computing basic and diluted net income (loss) per share   19,354,810                                         19,354,810
RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
       
       
Three months ended December 31, 2008 (unaudited)  		        
       
         Adjustments        
       
GAAP		   Amortization of acquired intangible assets     Stock-based compensation expenses     Income from discontinued operations net of taxes     Tax benefit associated with discontinued operations     Restructuring     Other than temporary impairment on marketable securities   Non-GAAP
Revenues:                                                    
Software licenses $ 1,275                                       $ 1,275
Services         3,714                                         3,714
Maintenance         534                                         534
Total Revenues         5,523                                         5,523
Cost of revenues:                                              
Software licenses   77     (26)                                   51
Services         2,573                                         2,573
Maintenance         187                                         187
Total cost of revenues   2,837     (26)                                   2,811
Gross profit         2,686     26                                   2,712
Operating Expenses:                                              
Research and development   1,111           (7)                             1,104
Sales and marketing   1,650           (21)                             1,629
General and administrative   1,571           (61)                             1,510
Restructuring   451                             (451)           -
Total operating expenses   4,783           (89)                 (451)           4,243
Operating loss         (2,097)     26     89                 451           (1,531)
Financial income, net   (308)                                   353     45
Pretax loss   (2,405)     26     89                 451           (1,486)
Tax benefit   1,404                       (1,400)                 4
Loss from continuing operations   (1,001)     26     89     1,624     (1,400)     451     353     (1,482)
Loss from discontinued operations   (1,624)                                         -
Net Loss $ (2,625)   $ 26   $ 89   $ 1,624   $ (1,400)   $ 451   $ 353   $ (1,482)
Basic and diluted net loss per share                                              
Continuing operations $ (0.06)                                       $ (0.09)
Discontinued operations $ (0.10)                                       $ -
Total       $ (0.16)                                       $ (0.09)
Weighted average number of shares used in computing basic and diluted net loss) per share   16,460,779                                         16,460,779
CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

  
December 31,
2008		 December 31,
2007
 Unaudited                                      Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents *) $ 11,059   $ 5,960
Marketable securities *)   8,915     10,869
Trade receivables   4,713     3,613
Restricted cash *)   3,199     -
Other current assets   2,022     1,736
Assets held for sale   64     7,752
Total current assets   29,972     29,930
LONG-TERM INVESTMENTS:
Marketable securities *)   9,896     16,995
Severance pay fund   586     970
Total long-term investments   10,482     17,965
PROPERTY AND EQUIPMENT, NET   1,266     992
OTHER ASSETS, NET:
Other intangibles, net   -     118
Goodwill   3,096     3,096
Total other assets   3,096     3,214
Total assets $ 44,816   $ 52,101
*) Total Cash and Investments including restricted cash $ 33,069   $ 33,824
LIABILITIES AND SHAREHOLDERS' EQUITY 
CURRENT LIABILITIES:
Trade payables $ 1,245   $ 1,167
Deferred revenues   1,006     1,893
Accrued expenses and other liabilities   3,096     3,308
Liabilities held for sale   1,363     4,246
Total current liabilities   6,710     10,614
LONG-TERM LIABILITIES:
Deferred revenues   -     61
Accrued severance pay   1,120     1,522
Other liabilities   185     -
Total long-term liabilities   1,305     1,583
SHAREHOLDERS' EQUITY:          
Share capital   60     59
Additional paid-in capital   75,173     73,393
Treasury shares   (17,863)     -
Accumulated other comprehensive profit   160     418
Accumulated deficit   (20,729)     (33,966)
Total shareholders' equity   36,801     39,904
Total liabilities $ 44,816   $ 52,101
CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

   Year ended
December 31,
2008		   Three months ended
December 31,
2008
    Unaudited
Cash flows from operating activities:        
Net Income (Loss)   13,237   (2,625)
Less: net loss (income) from discontinued operations, net of taxes   (18,234)   1,624
Net loss from continuing operations   (4,997)   (1,001)
Adjustments required to reconcile net loss from continuing operations to net cash used in operating activities from continuing operations :        
Depreciation and amortization   817   358
Stock-based compensation related to options granted to employees and directors   860   89
Stock-based compensation expenses related to options granted to non employees   7   -
Accrued interest and amortization of premium on marketable securities   259   310
Loss (gain) on sales of marketable securities   19   (72)
Impairment of marketable securities   353   353)
Accrued severance pay, net   (18)   (32)
 Increase in trade receivables, net   (1,100)   (911)
Increase in other current assets   (478)   (203)
Increase in trade payables   78   28
Decrease in deferred revenues   (948)   (442)
Decrease in deferred expenses and other liabilities   (212)   (93)
Increase (decrease) in other long-term liabilities   185   (18)
Other   4   1
Net cash used in operating activities from continuing operations   (5,171)   (1,633)
Net cash used in operating activities from discontinued operations   (1,685)   (1,443)
Net cash used in operating activities   (6,856)   (3,076)
Cash flows from investing activities:        
Investment in available-for-sale marketable securities   (29,316)   (3,900)
Proceeds from sale and redemption of available-for-sale marketable securities   37,672   7,483
Purchase of property and equipment   (987)   (116)
Increase in restricted cash   (570)   (570)
Net cash used in investing activities from continuing operations   6,799   2,897
Proceeds from sale of discontinued operations, net   22,105   -
Net cash provided by investing activities   28,904   2,897
Cash flows from financing activities:        
Purchase of treasury shares   (17,863)   (1)
Proceeds from exercise of stock options   914   192
Net cash used in financing activities from continuing operations   (16,949)   191
Increase in cash and cash equivalents   5,099   12
Cash and cash equivalents at the beginning of the year/quarter   5,960   11,047
Cash and cash equivalents at the end of the period   11,059   11,059
Marketable securities   18,811   18,811
Restricted cash   3,199   3,199
Total cash and investments at the end of the period including restricted cash   33,069   33,069
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