Jacada
Jacada
Media Contact

Cindy Curtin Knezevich
770-352-1300
cindyk@jacada.com

IR Contact

Peter L. Seltzberg
Hayden Communications
646-415-8972
peter@haydenir.com

Press Release

Jacada Reports First Quarter 2008 Results

Revenue growth of 94% year-over-year, software revenue grows 99%

ATLANTA, May 15, 2008 – Jacada Ltd. (Nasdaq: JCDA), a leading provider of unified desktop and process optimization solutions for customer service operations, today reported financial results for the first quarter ended March 31, 2008.

For the first quarter of 2008, total reported revenues rose 94% to $5.9 million compared to $3 million in the first quarter of 2007.

Non-GAAP gross profit for the first quarter was $3.8 million, or 65% gross margin, compared to $2 million in gross profit, or 65% gross margin in the first quarter last year. The first quarter non-GAAP net loss from continuing operations was ($423,000), or ($0.02) per share, compared to ($2.2 million), or ($0.11) per share in the first quarter of 2007.

Total GAAP gross profit was $3.8 million or 64% gross margin, compared to $1.9 million and 63%, respectively, in last year’s first quarter. Overall first quarter GAAP net income was $20.1 million, or $0.97 per share, which includes ($521,000) of net loss from continuing operations and $20.6 million of capital gain net of taxes from discontinued operations. This is compared to a GAAP net income of $468,000 or $0.02 per share in the first quarter of fiscal year 2007, which includes ($1.5 million) of net loss from continuing operations and $2 million in income net of taxes from discontinued operations.

"We are extremely pleased to begin 2008 with such a strong quarter," commented Paul O’Callaghan, chief executive officer for Jacada. "We increased software revenue 99% year-over year, with software revenue representing 48% of total revenue for the quarter. In the first quarter nearly 20% of the software revenue contribution came from partners. We also saw strong additional orders from existing customers during the quarter, and expect this trend to continue as we successfully deliver initial phases of multi-phase projects. These are important indicators as increasing the software revenue component, and growing the software revenue contribution from our partners, are key elements to us achieving our growth and profitability objectives."

At the end of the first quarter of 2008 cash and investments were $55.4 million, compared to $33.8 million reported on December 31, 2007. The increase in the company’s cash position is a result of the sale of the company’s legacy business to Software AG, which closed on January 1, 2008. An additional $2.6 million is being held in escrow as part of the transaction.

Also during the first quarter, the company:

  • Completed the sale of its application modernization (legacy) business to Software AG for gross proceeds of $26 million.
  • Signed a material contract extension with an existing telecommunications customer based in the United Kingdom.
  • Won new customer contracts in strategic verticals including the telecommunications and financial services industries. The company signed new customer contracts with an international bank based in South Africa, a leading insurance provider in the UK and a leading mobile telecommunications provider in Asia.
  • Announced the hiring of Mike Fuller as SVP of Global Field Services. Fuller has more than 26 years of services management experience in the telecommunications industry, with extensive expertise managing technical teams of as many as 600 specialists and $250 million in revenue. He brings a consistent history of successfully leading large, complex integration programs, services delivery and customer operations around the globe.
  • Announced that it has received the required Israeli court approval for its share repurchase program, which was authorized by the Jacada board of directors and initially announced on February 13, 2008. The company anticipates initiating share repurchases subsequent to the end of its quiet period, after the announcement of first quarter results.

"Our customer service solutions continue to be adopted by major global organizations searching to differentiate brand quality and improve financial performance," concluded Mr. O’Callaghan. "Due to our backlog, visibility in our sales pipeline and the progress of project deliverables, we are reiterating our revenue guidance for 2008 of $20 to $22 million, which represents an increase of 50% to 65% year-over-year. As demonstrated in this quarter’s results, we are well on our way to achieving our stated objectives of reducing our annual non-GAAP net loss by as much as 40% to 50% in 2008 compared to 2007. We also still anticipate reaching non-GAAP profitability during 2009."

Conference Call Details

Any investor or interested individual can participate in the teleconference, which will begin at 10:30 a.m. Eastern Time on May 15, 2008. To participate in the teleconference, please call toll-free 888.713.4205, or 617.213.4862 for international callers, and provide passcode 32868022 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 May 15, 2008. To access the replay, dial toll-free 888-286-8010, or for international callers dial 617-801-6888, and provide passcode 31865026.

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 and amortization of acquired intangible assets related to acquisitions effected by Jacada in previous years. Jacada's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Jacada's on-going core operations 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
(646) 415-8972
peter@haydenir.com

   CONSOLIDATED STATEMENTS OF OPERATIONS

   (U.S. dollars in thousands, except per share data)

 Three months ended
March 31,
2008 2007
Unaudited
Revenues:
Software licenses $ 2,847   $ 1,432
Services   2,558     1,238
Maintenance   498     378
Total Revenues   5,903     3,048
Cost of revenues:
Software licenses   82     61
Services   1,859     902
Maintenance   207     168
Total cost of revenues   2,148     1,131
Gross Profit   3,755     1,917
Operating Expenses:
Research and development   1,154     1,137
Sales and marketing   2,406     2,363
General and administrative   1,298     1,242
Total operating expenses   4,858     4,742
Operating loss   (1,103)     (2,825)
Financial income, net   448     436
Pretax loss from continuing operations   (655)     (2,389)
Tax benefit   134     893
Net loss from continuing operations   (521)     (1,496)
Net income from discontinued operations, net of taxes   20,572     1,964
Net income $ 20,051   $ 468
Basic and diluted net earnings (loss) per share:          
From continuing operations $ (0.03)   $ (0.08)
From discontinued operations $ 1.00   $ 0.10
Basic and diluted net earnings per share $ 0.97   $ 0.02
Weighted average number of shares used in computing basic and diluted net earning (loss) per share   20,620,432     20,145,607
   NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS

   (U.S. dollars in thousands, except per share data)

 Three months ended
March 31,
2008 2007
Unaudited
Revenues:
Software licenses $ 2,847   $ 1,432
Services   2,558     1,238
Maintenance   498     378
Total Revenues   5,903     3,048
Cost of revenues:
Software licenses   45     21
Services   1,835     883
Maintenance   206     167
Total cost of revenues   2,086     1,071
Gross Profit   3,817     1,977
Operating Expenses:
Research and development   1,132     1,122
Sales and marketing   2,340     2,321
General and administrative   1,160     1,137
Total operating expenses   4,632     4,580
Operating loss   (815)     (2,603)
Financial income, net   448     436
Pretax loss from continuing operations   (367)     (2,167)
Tax expense   (56)     (41)
Net loss from continuing operations $ (423)   $ (2,208)
Basic and diluted net earnings (loss) per share: $ (0.02)   $ (0.11)
Weighted average number of shares used in computing basic and diluted net loss per share   20,620,432     20,145,607
   RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS
          GAAP     Three months ended March 31, 2008 (unaudited)
Adjustments		     Non-GAAP
       
  Amortization of acquired intangible assets     Stock-based compensation expenses     Income from discontinued operations net of taxes     Tax benefit associated with discontinued operations  
Revenues:                                        
Software licenses $ 2,847                           $ 2,847
Services         2,558                             2,558
Maintenance         498                             498
Total Revenues         5,903                             5,903
Cost of revenues:                                  
Software licenses   82     (37)                       45
Services         1,859           (24)                 1,835
Maintenance         207           (1)                 206
Total cost of revenues   2,148     (37)     (25)                 2,086
Gross profit         3,755     37     25                 3,817
Operating Expenses:                                  
Research and development         1,154           (22)                 1,132
Sales and marketing   2,406           (66)                 2,340
General and administrative   1,298           (138)                 1,160
Total operating expenses   4,858           (226)                 4,632
Operating loss         (1,103)     37     251                 (815)
Financial income, net   448                             448
Pre-tax income (loss)   (655)     37     251                 (367)
Tax (expense) benefit   134                       190     (56)
Income (Loss) from continuing operations   (521)     37     251           190     (423)
Income from discontinued operations, net of taxes   20,572                 (20,572)           -
Net income (loss) $ 20,051   $ 37   $ 251   $ (20,572)   $ 190   $ (423)
Basic and diluted net earnings (loss) per share                                  
Continuing operations $ (0.03)                           $ (0.02)
Discontinued operations $ 1.00                           $ -
Total       $ 0.97                           $ (0.02)
Weighted average number of shares used in computing basic and   diluted net income (loss) per share   20,620,432                             20,620,432
CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands)

  
March 31,
2008		 December 31,
2007
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents *) $ 23,892   $ 5,960
Marketable securities *)   8,839     10,869
Trade receivables, net   5,051     3,613
Assets of discontinued operations   1,241     7,752
Other current assets   2,408     1,736
Total current assets   41,431     29,930
LONG-TERM INVESTMENTS:
Marketable securities *)   22,643     16,995
Restricted cash held by trustee   2,618     -
Severance pay fund   913     970
Total long-term investments   26,174     17,965
PROPERTY AND EQUIPMENT, NET   1,139     992
OTHER ASSETS, NET:
Other intangibles, net   81     118
Goodwill   3,096     3,096
Total other assets, net   3,177     3,214
Total assets $ 71,921   $ 52,101
*) Total Cash and Investments $ 55,374   $ 33,824
LIABILITIES AND SHAREHOLDERS' EQUITY 
CURRENT LIABILITIES:
Trade payables $ 1,200   $ 1,167
Deferred revenues   2,644     1,893
Accrued expenses and other liabilities   3,403     3,308
Liabilities of discontinued operations   2,258     4,246
Total current liabilities   9,505     10,614
LONG-TERM LIABILITIES:
Deferred revenues   122     61
Accrued severance pay   1,522     1,522
Total long-term liabilities   1,644     1,583
SHAREHOLDERS' EQUITY:          
Share capital   59     59
Additional paid-in capital   73,754     73,393
Accumulated other comprehensive profit   874     418
Accumulated deficit   (13,915)     (33,966)
Total shareholders' equity   60,772     39,904
Total liabilities and shareholders' equity $ 71,921   $ 52,101
CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

   Three months ended
March 31,
2008
    Unaudited
Cash flows from operating activities:    
Net Income   20,051
Less: Net income from discontinued operations net of taxes   (20,572)
Net loss from continuing operations   (521)
Adjustments required to reconcile net loss from continuing operations to net cash used in operating activities from continuing operations :    
Depreciation and amortization   147
Stock-based compensation related to options granted to employees and directors   251
Stock-based compensation expenses related to options granted to non employees   3
Accrued interest and amortization of premium on marketable securities   81
Loss from sales of marketable securities   (105)
Increase in accrued severance pay, net   57
Increase in trade receivables, net   (1,438)
Increase in other current assets   (583)
Increase in trade payables   33
Increase in deferred revenues   812
Increase in accrued expenses and other liabilities   95
Net cash used in operating activities from continuing operations   (1,168)
Net cash provided by operating activities from discontinued operations   324
Net cash provided by operating activities   (844)
Cash flows from investing activities:    
Investment in available-for-sale marketable securities   (19,026)
Proceeds from sale and redemption of available-for-sale marketable securities   15,799
Purchase of property and equipment   (257)
Net cash used in investing activities from continuing operations   (3,484)
Proceeds from sale of discontinued operation, net   22,153
Net cash provided by investing activities   18,669
Cash flows from financing activities:    
Proceeds from exercise of stock options   107
Net cash provided by financing activities from continuing operations   107
Increase in cash and cash equivalents   17,932
Cash and cash equivalents at the beginning of the period   5,960
Cash and cash equivalents at the end of the period   23,892