• Delivered fourth consecutive quarter of revenue growth and improved bottom line performance
• Signed an intellectual property license agreement with Freescale Semiconductor
• Security Builder® GSE-C™ earned FIPS 140-2 validation, making it easier and faster for device manufacturers and software vendors to sell into the U.S. federal government
Mississauga, Ontario (September 8, 2005) – Certicom Corp. (TSX: CIC) today announced results for the first quarter of fiscal year 2006 ended July 31, 2005. All figures are in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.
First quarter revenue for fiscal 2006 rose 22% to $3.5 million from $2.9 million in the first quarter of fiscal 2005, and $3.1 million in the fourth quarter of fiscal 2005. The increase was primarily due to increased sales in both product and intellectual property licensing.
“The U.S. government’s inclusion of ECC within its standards for securing classified and sensitive but unclassified information is driving greater interest in ECC than we’ve ever seen. This is having a very positive impact for Certicom in both our government and private sector target markets,” said Ian McKinnon, President and Chief Executive Officer. “We are pleased that with our expanded sales force, Certicom is capitalizing on this growing demand and is discussing licensing agreements with a significant number of multinational companies. We are focused on concluding agreements with as many of those companies as possible to maximize revenue in fiscal 2006 and beyond to achieve sustainable, profitable growth.”
First Quarter Financial Review
Operating expenses1 for the quarter were $4.0 million compared to operating expenses of $3.3 million in the same period last year. The increase in year-over-year operating expenses was due to the strengthening Canadian dollar, the initiation of accruing a portion of annual bonus payments, and higher sales and operational costs.
The net loss on a GAAP basis for the quarter was $0.8 million, or $0.02 per basic and diluted share, compared with a net loss of $1.2 million, or $0.03 per basic and diluted share last year.
Certicom had $25.1 million in cash2 at quarter-end, compared to $25.9 million at year-end and $38.5 million at July 31, 2004. In August 2004, the company fully retired its $10 million debt.
“ Certicom has demonstrated a steady trend of revenue growth helping to reduce our net loss compared to last year,” said Hervé Séguin, Chief Financial Officer. “We are in a solid financial position to execute our strategy, with healthy recurring revenues, a strong cash position and a debt-free balance sheet. Management will continue to prudently control expenses.”
First Quarter Operational Highlights
• Certicom signed an intellectual property license agreement with Freescale Semiconductor. This is the fourth contract since Certicom launched its patent licensing business in March 2004.
• Intelligent Recognition Systems licensed Security Builder® Crypto™, part of Certicom Security Architecture™ to build prototype communications technology for the U.S. Special Forces and U.S. Army Rangers. Certicom’s technology will generate certificates, encrypt data and provide Elliptic Curve Cryptography (ECC)-based authentication.
• The Company announced a patent licensing agreement with Pitney Bowes for Certicom’s latest digital signature scheme, Nyberg Rueppel, which offers greater protection against fraud without compromising speed.
• Security Builder® GSE-C™, a module of Certicom Security Architecture™, earned FIPS 140-2 validation. Certicom Security Architecture™ for Government enables device manufacturers and software vendors to add government-approved security to their products. It saves them from undergoing the time-consuming and costly Federal Information Processing Standards (FIPS) process.
• The Company announced it will host second annual Certicom ECC Conference to take place in Toronto, Ontario from October 3 to 5, 2005. Headline speakers from Bell Canada, Intertrust, Nokia, Research In Motion and XM Satellite Radio will discuss a number of topics related to ECC, including solving security issues, meeting government standards, digital rights management (DRM) and the National Security Agency’s cryptography recommendations for secure but unclassified information.
Subsequent To Quarter End
• Certicom announced it has developed a method to accelerate verification of the elliptic curve digital signatures algorithm (ECDSA). Certicom has reduced the time needed to verify these digital signatures by 40 percent, making ECDSA more efficient than open source and legacy systems.
Certicom does not provide guidance for revenue and cash, but does provide quarterly guidance for operating expenses. Operating expenses1 in the second quarter of fiscal 2006, including cost of sales and bonus accrual, are expected to range from $3.8 million to $4.1 million.
Certicom continues to work diligently to maximize the potential of its business and to build recurring revenue. The management team expects to grow market share to achieve sustainable, profitable growth.
Management will host a conference call to discuss Certicom’s performance for the first quarter and fiscal year 2006 starting at 10 a.m. (ET) (7 a.m. PT) on September 8, 2005. The call may be accessed at: 1-800-814-4859 or 416-640-4127. It will also be webcast with supporting slides and subsequently archived at http://www.certicom.com. To listen to the webcast, participants will require Windows Media Player™ which can be downloaded via Certicom’s website, prior to accessing the event. A taped rebroadcast will be available from September 8 at 7 p.m. (ET) until September 15 at midnight. For access, please call 1-877-289-8525 or 416-640-1917 and enter the passcode 21134657#.
Annual Meeting of Shareholders
Certicom will hold its annual and special meeting of shareholders on Thursday, September 22 at 10 a.m. ET at the TSX Conference Centre Auditorium located at The Exchange Tower at 130 King Street West in Toronto. The meeting will also be simulcast live at Certicom's web site at www.certicom.com
Certicom Corp. (TSX: CIC) is the authority for strong, efficient cryptography required by software vendors and device manufacturers to embed security in their products. Adopted by the US Government’s National Security Agency (NSA), Certicom technologies for Elliptic Curve Cryptography (ECC) provide the most security per bit of any known public key scheme, making it ideal for constrained environments. Certicom products and services are currently licensed to more than 300 customers including Motorola, Oracle, Research In Motion, Terayon, Texas Instruments and Unisys. Founded in 1985, Certicom is headquartered in Mississauga, ON, Canada, with offices in Ottawa, ON; Reston, VA; San Mateo, CA; and London, England and Saltsjo-boo, Sweden. Visit www.certicom.com.
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