Revenue of $2.5 Million and Pro Forma Net Loss of $0.31 per Share Consistent with Prior Disclosure 

HAYWARD, Calif., August 30, 2001 - Certicom Corp. (NASDAQ NM: CERT; TSE: CIC), a leading provider of security for mobile e-business, today announced revenue of $2.5 million for the first quarter of fiscal 2002 ended July 31, 2001. Revenue results reflect a change in business model implemented during the quarter. Under the Company's new subscription licensing model, revenue is recognized ratably over the term of the license agreement, rather than upon shipment. For Q1 fiscal 2001, the company recognized revenue of $5.1 million, which was comprised of product revenue recognized primarily under the Company's prior perpetual license model. 

Certicom reported a pro forma net loss (excluding non-operating, restructuring, and goodwill impairment charges) of $9.6 million, or $(0.31) per share for the first quarter of fiscal 2002. In the same period a year ago, under the prior business model, the pro forma net loss was $3.2 million, or $(0.13) per share. 

On an as-reported basis, including non-operating charges of $9.5 million for restructuring, $9.4 million for goodwill impairment, $3.6 million in depreciation and amortization, and $0.5 million for deferred compensation. Certicom reported a net loss of $32.6 million, or $(1.06) per share, for the first quarter of fiscal 2002. In the same period a year ago, under the prior business model, on an as-reported basis, Certicom reported a net loss of $6.6 million, or $(0.26) per share, which included $3.3 million of non-operating charges related to depreciation and amortization, deferred compensation amortization and a one-time non-cash interest expense. 

"Q1 was a challenging quarter for Certicom, but even in the context of a continuing pullback in telecom and wireless, we achieved many of our important goals," said Rick Dalmazzi, president and CEO of Certicom. "We successfully leveraged our new subscription licensing model into 26 new licenses during fiscal Q1, up from 18 last quarter." 

"However, the larger deals remain illusive as buying decisions continue to get pushed out by our larger, more diversified customers and prospects," Dalmazzi continued. "In order to stay the course for our commitment to profitability by October 2002, we initiated a second round of restructuring in early Q2, which we deemed necessary to meet our profitability goals." 

Q1 FY 2002 Highlights

Enabling Technologies: Certicom announced key agreements with industry leaders including ALSTOM, Borland Software, NetManage and Sterling Commerce. Two other key wins included Openwave's adoption of ECC for its browser and gateway products and Verizon Communication's use of SSL Plus™ for its internal networks. In addition, Certicom joined forces with leading Bluetooth™ companies Classwave, Socket and WIDCOMM to enable trusted wireless solutions, and was the first company to demonstrate a VPN solution for handheld devices over Bluetooth. 

Trust Services: Several wireless application service providers (ASP) purchased Certicom's MobileTrust™ digital server certificates as a first step in rolling out mutually-authenticated applications. During the quarter, Certicom announced a landmark relationship with MEDePass, Inc. to provide digital IDs for physicians to enable the secure exchange of confidential patient information from the desktop to mobile devices. 

Enterprise Application Software: Certicom launched movianCrypt™, the industry's most powerful and efficient transparent data encryptor for Palm handhelds, and already has over 90 customers using the product. With the launch of movianCrypt, Certicom further expanded its movian product line and its position as a provider of high-powered security solutions directly to Fortune 1000 companies. Certicom's movianVPN product continued to gain industry support with over 70 customers, 20 of which are in the midst of substantial pilots. In addition, Certicom announced a movianVPN bundling agreement with Nortel Networks, who now ships movianVPN with its popular VPN Contivity products. 

Other highlights: In conjunction with Cisco and Deloitte and Touche, Certicom hosted the first Bay Area Summit on Wireless Computing. The Company also offered a series of wireless security seminars that featured speakers from Nortel Networks, 724 Solutions and other industry experts. Lastly, the Company named Gregory M. Capitolo as its new chief financial officer. 

Q2 FY 2002 Outlook
The following statements are forward looking, and actual results may differ materially. Please consult the Company's recent disclosures (including its most recent Form 10-K) on file with the Securities and Exchange Commission (SEC) and the Ontario Securities Commission (OSC) for a further discussion of risks.

  • Revenue in Q2 FY 2002 is expected to be at least $2.5 million.
  • Total costs of revenue and operating expenses are expected to decline from $12.9 million in Q1 to approximately $10.5 million in Q2. Operating expenses are expected to continue to decline as the cost savings anticipated from the Company's restructuring initiative announced on August 17 accrue towards the latter part of the quarter, as transitions are completed and payroll is reduced.
  • The pro forma net loss (excluding non-operating, restructuring, and goodwill impairment charges) is expected to decline from $9.6 million in Q1 to approximately $8.0 million in Q2, or approximately ($0.26) per share.
  • Cash and cash equivalents, restricted cash, and short-term investments ("Cash") are expected to total approximately $20 million at the end of Q2, compared to $35.1 million at the end of Q1. The anticipated change in Cash includes capital expenditures of approximately $11 million, which reflects the completion of contractual obligations related to real estate commitments. Capital expenditures are expected to fall to less than $1 million per quarter in quarters subsequent to Q2 FY 2002.
  • The Company expects to achieve profitability by the end of Q2 FY 2003 (October 2002).

Conference Call
Certicom will host a conference call to discuss these results. All parties are invited to listen to the call. 

Topic: Q1 FY 2002 Earnings Release
Date: August 30, 2001
Time: 2:00 PM Pacific (5:00 PM Eastern)
Dial-in: 1-800-360-9865 (U.S. and Canada)
1-973-694-6836 (International) 
Password "Certicom" 
(please dial in at least ten minutes prior to the scheduled start time)
Webcast: http://www.certicom.com
Replay: (Available August 30 7:00 PM Pacific to September 1 12:00 AM Pacific) 
1-800-428-6051 (U.S. and Canada) 
1-973-704-2089 (International) 
Password "206477"
Archive: http://www.certicom.com

About Certicom 
Certicom is a leading provider of information security software and services, specializing in solutions for mobile e-business. The company's products and services are specifically designed to address the challenges imposed by a wireless data environment. Certicom's solutions incorporate its efficient encryption technology and are based on industry standards for information security that utilize public key cryptography. Certicom's products are currently licensed to more than 200 customers including Cisco Systems, Inc., Handspring Inc., Motorola, Inc., Nortel Networks, Openwave Systems, Inc., Palm, Inc., QUALCOMM, Inc., Research In Motion Ltd., Sony International (Europe) GmbH, and Verizon Communications Inc. Certicom's headquarters and worldwide sales and marketing operations are based in the Silicon Valley in Hayward. For more information, visit Certicom's Web site at http://www.certicom.com. Certicom is a trademark of Certicom Corp. All other companies and products listed herein are trademarks or registered trademarks of their respective holders. 

Except for historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, those relating to our ability to close our transaction involving convertible notes, which includes our ability to obtain a receipt for a final prospectus qualifying the issuance of the Debentures on the exchange of the Notes, the acceptance of mobile and wireless devices and the continued growth of e-commerce and m-commerce, the continued acceptance by our customers of our subscription license model, our ability to implement our restructuring initiatives and our ability to realize resulting cost savings, the increase of the demand for mutual authentication in m-commerce transactions, the acceptance of Elliptic Curve Cryptography (ECC) technology as an industry standard, the market acceptance of our principal products and sales of our customer's products, the impact of competitive products and technologies, the possibility of our products infringing patents and other intellectual property of fourth parties, and costs of product development. Certicom will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect Certicom's financial results is included in the documents Certicom files from time to time with the Securities and Exchange Commission and Canadian securities regulatory authorities. For further information, please contact:
Gregory M. Capitolo
Chief Financial Officer
Certicom Corp.
(510) 780-5084 

Annie Chang
Investor Relations
Certicom Corp.
(510) 780-5404

Lorraine Kauffman
Corporate Communications
Certicom Corp.
(510) 780-5417