Perion Network Ltd.

Incredimail Reports $7.2 Million Revenues, $3.6 Million EBITDA and $2.3 Million Net Profit in Second Quarter of 2010

Thursday 12 August 2010

  Net Profit first half of 2010 $4.4 Million

TEL AVIV, ISRAEL – August 12, 2010 - IncrediMail Ltd. (NASDAQ: MAIL), an Internet company, today reported financial results for the second quarter ended June 30, 2010.

Revenues for the second quarter of 2010 rose 7% to $7.2 million, up from $6.7 million in the same quarter last year.  EBITDA was $3.6 million, or 50% of sales, compared to $3.4 million in the second quarter of 2009.  Net profit in the second quarter of 2010 was $2.3 million or $0.23 per share, compared to $2.4 million, or $0.26 per share in the second quarter of 2009.

In the first half of 2010, revenues increased more than 8% from $13.1 million in the first half of 2009 to $14.2 million this year.  Net profit increased 15% to $4.4 million in the first half of 2010 up from $3.8 million in 2009.

Total operating expenses in the second quarter of 2010 were $3.6 million, which is lower compared to the previous quarter and up 11% compared to the second quarter of 2009, primarily due to higher compensation costs.

“We were able to achieve strong top and bottom line growth this quarter even as we focused much of our attention on our revenue diversification strategy.  This is even more notable given the second quarter is typically affected by seasonality and not our strongest.  While the quarter exceeded our financial expectations, my main goal was to lay the groundwork to enable the Company to diversify revenue sources and continue to achieve strong growth in the second half of 2010 and beyond,” commented, Mr. Ofer Adler.  “The strong second quarter results and  a company that is better positioned to take advantage of multiple market opportunities going forward is the perfect backdrop to hand over the reigns to Josef Mandelbaum as our new CEO.  Josef’s Internet experience and corporate accomplishments are a perfect fit for IncrediMail, and we believe his leadership will be an asset to our Company.”

Mr. Josef Mandelbaum, IncrediMail’s newly appointed CEO commented, “I am very excited to join IncrediMail and look forward to continuing the momentum of these very positive results.  I have known the IncrediMail team for some time, and believe there is a real opportunity for growth moving forward.”

Conference Call

IncrediMail will host a conference call to discuss the results, as well as introduce Mr. Josef Mandelbaum, IncrediMail’s newly appointed CEO, today, August 12th at 10:00 AM EDT (17:00 PM Israel Time). We invite all those interested in participating in the call to dial 1-(866)-229-7198. Callers from Israel may access the call by dialing (03) 918-0685. Participants may also access a live webcast of the conference call through the Investor Relations section of IncrediMail's website at www.incredimail-corp.com. The webcast will be archived on the company’s website for seven days.

About IncrediMail Ltd.

IncrediMail Ltd. (NASDAQ: MAIL, www.incredimail-corp.com) is an internet company that develops customized, downloadable graphic consumer applications used to generate search related revenues and designs, markets and delivers high end personal desktop software. The company’s award winning e-mail client product, IncrediMail Premium, is sold in over 100 countries in 10 different languages. Other products include, HiYo a graphic add-on to instant messaging software, Magentic, a wallpaper and screensaver software, and PhotoJoy, software for presenting digital personal photos.

Non-GAAP measures 

Use of Non-GAAP Financial Information - In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, IncrediMail uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income; interest, taxes, stock-based compensation and depreciation and amortization. IncrediMail's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of IncrediMail’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 as presented in this press release in evaluating and operating business internally and as such deemed it important to provide all this information to investors. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in tables immediately following IncrediMail's Statement of Operations in this press release. 

Forward Looking Statements

This press release contains historical information and forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995 with respect to the business, financial condition and results of operations of the Company. The words “believe,” “expect,” “intend,” “plan,” “should” and similar expressions are intended to identify forward-looking statements. Such statements reflect the current views, assumptions and expectations of the Company with respect to future events and are subject to risks and uncertainties. Many factors could cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements, including, among others, changes in the markets in which the Company operates and in general economic and business conditions, loss of key customers and unpredictable sales cycles, competitive pressures, market acceptance of new products, inability to meet efficiency and cost reduction objectives, changes in business strategy and various other factors, both referenced and not referenced in this press release. Various risks and uncertainties may affect the Company and its results of operations, as described in reports filed by the Company with the Securities and Exchange Commission from time to time. The Company does not assume any obligation to update these forward-looking statements.

 

Contact Information

For further information please contact:

 

Jeff Holzmann

IncrediMail NY, President

Jeff@IncrediMail.com

 

Marybeth Csaby/Rob Fink

KCSA Strategic Communications

(212) 896-1236 / 212-896-1206

mcsaby@kcsa.com/ rfink@kcsa.com

 

### Tables Follow ###

INCREDIMAIL LTD.

CONDENSED BALANCE SHEETS

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

 

 

 

June 30,

 

December 31,

 

 

2010

 

2009

 

 

Unaudited

 

 

ASSETS

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash and cash equivalents

 

$          11,316

 

$          24,368

Marketable securities

 

15,765

 

5,225

Trade receivables

 

2,562

 

2,320

Other receivables and prepaid expenses

 

5,619

 

4,819

Total current assets

 

35,262

 

36,732

LONG-TERM ASSETS:

 

 

 

 

Severance pay fund

 

1,109

 

1,104

Deferred taxes

 

101

 

63

Other long-term assets

 

476

 

495

Property and equipment, net

 

1,205

 

1,366

Other intangible assets, net

 

206

 

134

Total long-term assets

 

3,097

 

3,162

Total assets

 

$          38,359

 

$          39,894

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

Trade payables

 

$            810

 

$            1,039

Deferred revenues

 

2,023

 

2,270

Accrued expenses and other liabilities

 

4,683

 

6,577

Total current liabilities

 

7,516

 

9,886

LONG-TERM LIABILITIES:

 

 

 

 

Deferred revenues

 

1,529

 

1,616

Accrued severance pay

 

1,451

 

1,390

Total long-term liabilities

 

2,980

 

3,006

 

 

 

 

 

SHAREHOLDERS' EQUITY

Shares issued and outstanding: 9,627,572 and 9,527,821 at June 30, 2010 and December 31, 2009, respectively

 

27,863

 

27,002

Total liabilities and shareholders' equity

 

$        38,359

 

$        39,894

INCREDIMAIL LTD.

CONDENSED STATEMENTS OF OPERATIONS

U.S. dollars and number of shares in thousands (except per share data), unaudited

 

 

 

Quarter ended June 30,

 

Six months ended June 30,

 

2010

 

2009

 

2010

 

2009

 

Revenues

$   7,213

 

$   6,746

 

$   14,208

 

$   13,122

 

Cost of revenues

391

 

367

 

762

 

754

 

Gross profit

6,822

 

6,379

 

13,446

 

12,368

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

1,501

 

1,336

 

3,102

 

2,694

 

Selling and marketing

1,284

 

1,150

 

2,669

 

2,319

 

General and administrative

812

 

747

 

1,681

 

1,746

 

Total operating expenses

3,597

 

3,233

 

7,452

 

6,759

 

Operating income

3,225

 

3,146

 

5,994

 

5,609

 

Financial income (expense), net

(63)

 

274

 

(89)

 

(124)

 

Income before taxes on income

3,162

 

3,420

 

6,083

 

5,485

 

Taxes on income

866

 

1,003

 

1,655

 

1,645

 

Net profit

$  2,296

 

$  2,417

 

$   4,428

 

$   3,840

 

 

 

 

 

 

 

 

 

 

Net earnings per Ordinary share:

 

 

 

 

 

 

 

 

Basic

$    0.23

 

$    0.26

 

$      0.45

 

$      0.41

 

Diluted

$    0.23

 

$    0.26

 

$      0.45

 

$      0.41

 

Diluted weighted number of shares

9,791

 

9,378

 

9,329

 

9,830

 

RECONCILIATION OF GAAP TO NON-GAAP RESULTS:

 

 

 

 

 

 

 

GAAP net income

$      2,296

 

$      2,417

 

$   4,428

 

$   3,840

 

Income tax expense

866

 

1,003

 

1,655

 

1,645

 

Interest (income) expense, net

63

 

(274)

 

(89)

 

124

 

Depreciation, Amortization and Stock-based Compensation

407

 

265

 

720

 

672

 

EBITDA

$   3,632

 

$   3,411

 

$   6,714

 

$   6,281