Global Leadership in Securing Mobile Push Email Applications Driving Growth
Mississauga, Ontario (December 6, 2006) – Certicom Corp. (TSX: CIC) (the “Company”) today reported results for the second quarter and six months ended October 31, 2006. All figures are in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP) except where otherwise noted.
Revenue for the second quarter was $5.9 million compared to $2.2 million in the prior year and $4.7 million in the first quarter of fiscal 2007. For the first six months of fiscal 2007, revenue was $10.6 million, compared to $5.7 million in the first six months of fiscal 2006.
“While our second quarter results were positively skewed by a prepaid royalty contract, our core growth was positive and consistent with our expectations,” said Ian McKinnon, President and Chief Executive Officer. “Our six month results were also in line with Certicom’s business plan and we are on track to achieve our goals for fiscal 2007.”
“We are also pleased with our continued progress this quarter in announcing a number of important royalty-bearing, recurring revenue contracts with large, multinational companies. The Nokia and Visto contracts, combined with our existing relationships with RIM and others, are clear indications of Certicom’s growing global market leadership in securing mobile push email applications,” continued Mr. McKinnon.
The increase in second quarter revenue was primarily attributable to an upfront licensing fee of $3.0 million for prepaid royalties pertaining to a multi-year, multi-million dollar licensing agreement with a global manufacturer announced October 23, 2006. This contract is expected to yield additional royalties in the future once the prepaid number of devices has been deployed. Due to competitive reasons, the customer has requested that their identity not be disclosed. Continued growth in contract wins with large multinationals and increasing royalty revenue also contributed to the second quarter revenue growth.
Second Quarter Financial Review
Operating expenses1 for the quarter were $4.6 million, compared to $3.5 million in the comparable quarter 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. As reported in the first quarter of fiscal 2007, Certicom is reporting operating expenses excluding cost of revenues, depreciation and amortization and stock-based compensation. The company posted net earnings on a GAAP basis of $0.6 million or $0.01 per basic and diluted share for the quarter, compared to a net loss of $2.3 million, or $0.06 per basic and diluted share in fiscal 2006.
Certicom had $44.4 million in cash2 at quarter-end, compared to $21.8 million at the end of the first quarter. The increase reflects the net proceeds of the $22.2 million equity offering that concluded in early August. Excluding the impact of the offering, the Company generated $0.4 million in cash. The cash position was $22.5 million at October 31, 2005. The Company has no debt.
“Certicom’s increased cash position, which is strengthened by our debt-free balance sheet, puts us in an excellent position to drive growth as we continue to execute our five year strategic growth plan,” said Hervé Séguin, Chief Financial Officer.
Six Month Financial Review
Operating expenses1 for the first six months of fiscal 2007 were $9.0 compared to operating expenses of $7.0 million for the same period last year. The year-over-year increase was due to the same factors mentioned above in the second quarter review.
For the first six months of fiscal 2007, the Company posted a net loss on a GAAP basis of $0.7 million or $0.02 per basic and diluted share, compared to $3.1 million, or $0.08 per basic and diluted share for the same period last year.
Second Quarter Operational Highlights
Announcements Subsequent to Quarter End
Our revenue for the six months just ended is consistent with the financial targets contained in Certicom’s fiscal 2007 business plan, and it is generally indicative of our expectations for the remainder of the year. Our outlook for the current year continues to be in line with our five year strategic growth plan.
Operating expenses1 for the third quarter of fiscal 2007, excluding cost of revenues, depreciation and amortization and stock-based compensation, are expected to range from $4.7 to $5.1 million.
Management will host a conference call to discuss Certicom’s performance for the second quarter and six months of the 2007 fiscal year at 10 a.m. ET (7 a.m. PT) on Thursday, December 7, 2006. The call may be accessed at 416-644-3415 or 1-800-814-4890. 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 the event. A taped rebroadcast will be available from 12 p.m. (ET) on December 7 until 12 a.m. (ET) on December 14, 2006. To access the archive, please call 416-640-1917 or 1-877-289-8525 and enter the passcode 21209176#.
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 www.certicom.com.
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.