Large multinationals continue to commit to ECC-based licenses

Large multinationals continue to commit to ECC-based licenses


  • GE’s security business licensed Certicom’s Elliptic Curve Cryptography (ECC) technology
  • Philips licensed ECC technology for content protection
  • Fortress Technologies licensed ECC technology to offer products that help meet National Security Agency (NSA) recommended standards

Mississauga, Ontario (September 7, 2006) – Certicom Corp. (TSX: CIC) today announced results for the first quarter of fiscal 2007 ended July 31, 2006. All figures are in U.S. dollars and are in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

First quarter revenue was $4.7 million compared to $3.5 million in the prior year and $5.1 million in the previous quarter. The higher year-over-year revenue was driven by continued growth in customer wins and royalty revenue as ECC adoption gains momentum.

“During the quarter, we won a number of royalty bearing, recurring revenue contracts that demonstrate our ongoing success in establishing relationships with large, multinational companies. We also continued our momentum with new design wins and have begun fiscal 2007 with some impressive new ECC license contracts,” said Ian McKinnon, President and Chief Executive Officer. “In short, we are executing our strategy with solid progress in all our target markets. The long-term opportunities continue to build and the outlook for Certicom’s growth is very positive.”

First Quarter Financial Review
Operating expenses1 for the quarter were $4.5 million compared to $3.5 million in the prior year. The increase in year-over-year operating expenses was due to the strengthening Canadian dollar, higher sales commissions related to increased revenue and a planned increase in product development resources. Beginning this quarter, Certicom is reporting operating expenses excluding cost of revenues, depreciation and amortization and stock-based compensation.

The company posted a net loss on a GAAP basis of $1.2 million or $0.03 per basic and diluted share, compared to $0.8 million, or $0.02 per basic and diluted share in fiscal 2006. The net loss this quarter included $363,000 of income tax paid, which represents a withholding tax related to the Company’s business in Asia. Because the Company does not pay income taxes in North America due to its substantial tax loss carry-forwards, it cannot deduct this amount as a foreign tax credit from income taxes otherwise payable.

Certicom had $21.8 million in cash2 at quarter-end, compared to $24.7 million at year-end. The difference is primarily due to the timing of booking orders during each of the two quarters. Cash was $25.1 million at July 31, 2005. The Company has no debt.

“We were pleased by the support from the investment community for our successful bought deal equity offering, which we completed August 9, 2006 and which netted $22.2 million. When added to our cash position at quarter-end, our cash resources now stand at $43.7 million,” said Hervé Séguin, Chief Financial Officer. “The proceeds from the offering ensure Certicom is in an excellent position to take advantage of the considerable opportunities in front of us in support of its previously announced strategic growth plan and potential acquisitions.”

First Quarter Operational Highlights

  • GE’s security business licensed Certicom’s ECC technology.
  • Philips licensed Certicom’s ECC technology for DisplayPort Content Protection (DPCP). DPCP protects data between a personal computer and a display, and can also be used in consumer electronics applications such as the protection of content on TVs, projectors, DVD players and other displays.
  • Fortress Technologies licensed Certicom’s ECC technology to offer products that help customers meet the National Security Agency’s (NSA) recommended set of cryptographic algorithms, known as Suite B.
  • Certicom partnered with IdentiPHI LLC, which will use Certicom Security ArchitectureTM to add a FIPS 140-2-Validated module to meet the NSA’s Suite B cryptography recommendations.
  • Certicom launched Certicom® Security for Silicon Design Protection™ to help fabless semiconductor designers protect proprietary chip designs and prevent gray market chip theft.
  • The Canadian Advanced Technology Alliance recognized Certicom with this year’s Private Sector Leadership in Advanced Technology Award for innovation, expertise and leadership in security.
  • Certicom announced distinguished speakers at its ECC Conference on November 14 to 16, 2006 in Toronto. Dr. John Manferdelli, Distinguished Engineer and General Manager of Incubation for Advanced Policy and Strategy in the office of the Chief Technology Officer at Microsoft will be the keynote speaker. Robert Thibadeau, Chief Technologist of Seagate Technology, Dr. Matthew Campagna, manager of the Security Technology Division of Pitney Bowes, and Magued Barsoum, Chief Technical Architect of Fortress Technologies will also speak at the conference.

Subsequent to Quarter End Announcements
Certicom completed a bought deal to raise gross proceeds of CDN$26,200,000 from a sale of 4,000,000 common shares at a price of CDN$6.55 per share.

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 2007, excluding cost of revenues, depreciation and amortization and stock-based compensation, are expected to range from $4.6 million to $4.9 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.

Conference Call
Management will host a conference call to discuss Certicom’s performance for the first quarter of fiscal year 2007 starting at 10 a.m. (ET) (7 a.m. PT) on September 7, 2006. The call may be accessed at: 416-644-3416 or 1-800-814-4941. It will also be webcast with supporting slides and subsequently archived at To listen to the webcast, participants will require Windows Media Player™ which can be downloaded via Certicom’s website prior to the event. A taped rebroadcast will be available from September 7 at 12 p.m. (ET) until September 14 at midnight. To access the archive, please call 416-640-1917 or 1-877-289-8525 and enter the passcode 21200253#.

Annual Meeting of Shareholders
Certicom will hold its annual and special meeting of shareholders on Thursday, September 21, 2006 at 10 a.m. ET at the Hockey Hall of Fame located at BCE Place, 30 Yonge Street in Toronto. The meeting will also be simulcast live at Certicom’s web site at

ECC Conference
Certicom will hold its annual ECC Conference from November 14 to 16, 2006 at the Four Seasons Hotel in Toronto.

Consolidated Balance Sheets

Consolidated Statements Of Operations And Retained Earnings

Condensed Consolidated Statements Of Cash Flows

About Certicom
Certicom protects the value of your content, applications and devices with government-approved security. Adopted by the National Security Agency (NSA) for classified and sensitive but unclassified government communications, Elliptic Curve Cryptography (ECC) provides the most security per bit of any known public-key scheme. As the undisputed leader in ECC, Certicom security offerings are currently licensed to more than 300 customers including General Dynamics, Motorola, Oracle, Research In Motion and Unisys. Founded in 1985, Certicom’s corporate offices are in Mississauga, ON, Canada with worldwide sales headquarters in Reston, VA and offices in the US, Canada and Europe. Visit

Operating expenses and cash as defined below are non-GAAP earnings measures that do not have standardized measures prescribed by GAAP, and therefore may not be comparable to similar measures presented by publicly traded companies.

1 This news release contains references to operating expenses. Certicom defines operating expenses as total operating expenses excluding cost of revenues, depreciation and amortization and stock-based compensation. It also excludes interest income, other income (expense) and withholding tax expense.

2 This news release contains references to cash, which is defined as cash and cash equivalents, marketable securities and restricted cash.

Except for historical information contained herein, this news 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 fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar and other currencies, general economic conditions, our ability to successfully integrate newly-hired professionals into the management team, the ability to realize anticipated cost savings from our consolidation initiatives, the acceptance of mobile and wireless devices and the continued growth of e-commerce and m-commerce, the continued commitment to new security investments on the part of the U.S., Canadian and other governments and government agencies, our ability to successfully implement our intellectual property strategy, 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 Canadian securities regulatory authorities.

For further information, please contact:

Investors and Financial Analysts:
Hervé Séguin
Chief Financial Officer 
Certicom Corp. 
(905) 501-3827
John Callahan
Director, Public Relations & Marketing Communications
Certicom Corp.
(703) 234-2357