Certicom Reports Results for First Quarter of Fiscal 2008



    Significant Increase in Design Wins in fiscal 2007 Strengthens
    Pipeline of Potential Recurring Revenue

    
    Highlights for the Quarter:

    -   Initiated litigation against Sony for patent infringement

    -   Appointed Dr. Matthew Campagna as Director of Research, who brings
        extensive experience in ECC implementation to the role

    -   Launched UMA Device Software for mobility market

    -   Launched Security Builder API for Open Source

    -   Achieved ECC design win in the digital identity market with a global
        semiconductor manufacturer

    -   Achieved ISO 9001 Certification

    Subsequent to Quarter End:

    -   Launched Security Builder API for .NET

    -   Sicon Semiconductor licensed Certicom security for digital content
        protection

    -   Sony answered Certicom's patent infringement complaint; Certicom
        remains confident in its legal position
    

    MISSISSAUGA, ON, Sept. 5 /CNW/ - Certicom Corp. (TSX: CIC) (the
"Company") today reported results for the first quarter of fiscal 2008 ended
July 31, 2007. All figures are in U.S. dollars and in accordance with Canadian
Generally Accepted Accounting Principles (GAAP) except where otherwise noted.
    Revenue for the quarter was $3.2 million compared to $4.7 million for the
first quarter of fiscal 2007.
    "As in some past quarters, Certicom's first quarter revenue indicates the
quarter-over-quarter variability that can occur due to the complexity of
negotiating large, multi-year contracts," said Bernard Crotty, Certicom's
President and Chief Executive Officer. "It is important to note that we have
not lost any of our Q1 prospective deals and we are confident that we will
successfully conclude these agreements in this fiscal year. During the
quarter, Certicom also continued to invest in expanding markets that are
poised to benefit from our technology expertise, such as the Open Source
cryptographic application market and the mobility market."

    First Quarter Financial Review

    Operating expenses(1) for the quarter were $5.7 million, compared to
$4.5 million in the first quarter of fiscal 2007. The increase in
year-over-year operating expenses was mainly due to legal expenses related to
the Sony litigation, a planned increase in product development resources
specifically related to a new product initiative, and annual salary increases.
However, these expenses were lower than the guidance given for Q1 operating
expenses in the previous quarter due to lower than expected litigation
expenses, which totaled $0.4 million for the quarter. The Company posted a net
loss on a GAAP basis of $3.4 million or $0.08 per basic and diluted share for
the quarter, compared to a net loss of $1.2 million, or $0.03 per basic and
diluted share in the first quarter of fiscal 2007.
    Certicom had $43.6 million in cash(2) at quarter-end compared to
$43.2 million at year-end fiscal 2007 and $21.8 million at July 31, 2006. The
Company has no debt.

    Business Review

    Management notes that during the 2007 fiscal year ending April 30, 2007,
it booked 36 design wins for new technology applications for customers,
compared to 26 design wins in fiscal 2006 and six wins in fiscal 2005. These
wins in fiscal 2007, many of which involved large multinationals, covered a
broad range of sectors, including government and systems integrators,
semiconductor and mobile phone manufacturers, satellite radio, enterprise and
entertainment.
    "While these design wins can take time to translate into revenue, the
marked increase in secured wins in fiscal 2007 signifies the growing global
market acceptance of Certicom's technology," said Mr. Crotty.
    Annual design wins are important as they provide a key barometer for
potential recurring revenue, which is defined as royalties plus annual
software support fees. The Company reports that recurring revenue for the
first quarter just ended was $2.0 million or 62 per cent of total revenue,
compared with $2.0 million or 42 per cent of total revenue in the first
quarter of fiscal 2007.

    Update on Sony Patent Infringement Litigation

    Sony answered Certicom's patent infringement complaint on August 31,
2007, denying infringement and asserting invalidity. Certicom remains
confident in its legal position and in its ability to successfully pursue this
litigation.
    In pursuing the Sony litigation, Certicom management expects to receive a
reasonable royalty on the sales of Sony products that Certicom alleges use its
ECC technology in content protection technologies, such as Advanced Access
Control System (AACS) and Digital Transmission Content Protection (DTCP).

    Outlook

    Management intends to continue its focus on leveraging Certicom's global
leadership position in ECC to build recurring revenue and sustainable profits.
The Company is committed to five key strategies for maximizing market share:
partnering for continued ECC adoption, expanding its global sales presence,
investing in new product development, pursuing acquisitions, and defending its
patent portfolio.
    Operating expenses(1) for the second quarter of fiscal 2008, excluding
cost of revenues, depreciation and amortization, and stock-based compensation,
are expected to range from $6.1 to $6.5 million, including estimated legal
expenses ranging from $0.6 to $1.0 million associated with intellectual
property protection. Management continues to aggressively manage expenses to
achieve a cost structure that is in line with revenue, which is key to
Certicom's goal of achieving sustainable, profitable growth.

    Conference Call

    Management will host a conference call to discuss Certicom's results for
the first quarter of fiscal 2008 at 10 a.m. ET (7 a.m. PT) on Thursday,
September 6, 2007. To access the call, please dial 416-644-3415 or
1-866-249-1964. It will also be webcast with supporting slides and
subsequently archived at www.certicom.com. To listen to the webcast,
participants will require Windows Media Player(TM) which can be downloaded
from Certicom's website prior to the event. An archived recording will be
available from 12 p.m. (ET) on September 6 until 12 a.m. (ET) on September 13,
2007. To access the archive, please call 416-640-1917 or 1-877-289-8525 and
enter passcode 21242946 followed by the number sign.

    Annual and Special Meeting of Shareholders

    Certicom will hold its Annual and Special Meeting of shareholders on
Thursday, September 20, 2007 at 10 a.m. (ET) at The Gallery of the TSX
Broadcast & Conference Centre located at The Exchange Tower, 130 King Street
West in Toronto. The meeting will be webcast live with supporting slides on
Certicom's web site at www.certicom.com.

    About Certicom

    Certicom protects the value of content, applications and devices with
government-approved security. Adopted by the National Security Agency (NSA)
for government communications, Elliptic Curve Cryptography (ECC) provides the
most security per bit of any known public-key scheme. As the global 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,
Ontario, Canada with worldwide sales and marketing headquarters in Reston,
Virginia and offices in the U.S., Canada, Europe and China. Visit
www.certicom.com.

    Certicom, Certicom Security Architecture, Certicom Trust Infrastructure,
Certicom CodeSign, Certicom KeyInject, Security Builder, Security Builder API,
Security Builder BSP, Security Builder Crypto, Security Builder ETS, Security
Builder GSE, Security Builder IPSec, Security Builder NSE, Security Builder
PKI and Security Builder SSL are trademarks or registered trademarks of
Certicom Corp. All other companies and products listed herein are trademarks
or registered trademarks of their respective holders. Information subject to
change.

    
    ENDNOTES:
    ---------
    (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.

                                                       ----------------------
                                                          Three months ended
                                                          ------------------
                                                                July 31,
                                                            2007        2006
                                                       ----------------------
    Sales and marketing                                $   2,199   $   2,072
    Product development and engineering                    1,849       1,496
    General and administrative                             1,615         889
                                                       ----------  ----------
    Total operating expenses                           $   5,663   $   4,457
                                                       ----------  ----------
                                                       ----------  ----------

    (2) This news release contains references to cash, which is defined as
        cash and cash equivalents, short term and long term marketable
        securities and restricted cash.

                                                         July 31,   April 30,
                                                            2007        2007
      Cash and cash equivalents                        $   4,595   $   3,397
      Marketable securities                               24,486      26,752
      Long-term marketable securities                     14,508      13,013
                                                       ----------------------
      Total Cash                                       $  43,589   $  43,162
                                                       ----------------------
    

    Except for historical information contained herein, this news release
contains forward-looking statements that involve risks and uncertainties.
Forward-looking information includes information concerning the Company's
future financial performance, business strategy, plans, goals and objectives.
When used in such documents, the words "plans", "expects", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates", "will",
"believes" or variations of such words and phrases often, but not always,
identify forward looking statements. Factors which could cause actual results
or events to differ materially from current expectations include, among other
things: the ability of the Company to successfully implement its strategic
initiatives and whether such strategic initiatives will yield the expected
benefits; the ability of the Company to develop, promote and protect its
proprietary technology security breaches or defects in the Company's products;
competitive conditions in the businesses in which the Company participates;
changes in consumer spending; the outcome of legal proceedings as they arise;
general economic conditions and normal business uncertainty; consolidation in
the Company's industry and by its customers; customer preferences towards
product offerings; the risk that customers may cancel their contracts with the
Company; reliance on a limited number of customers; demand for ECC-based
technology; performance of the Company's management team and the Company's
ability to attract and retain skilled employees; operating the Company's
business profitably; fluctuations in revenue and foreign currency exchange
rates; interest rate fluctuations and other changes in borrowing costs; the
ability to develop and maintain strategic relationships; and other factors
identified under the heading "Risk Factors" in the Company's annual
information form dated July 26, 2007 and filed on SEDAR at www.sedar.com.
    While the Company believes that its forecasts and assumptions are
reasonable, results or events predicted in this forward-looking information
may differ materially from actual results or events. In particular but without
limitation, there is no assurance that the Company will achieve all or a
portion of the goals outlined in its fiscal 2008 business plan within the time
limits specified therein or at all.

    
                               CERTICOM CORP.
                               --------------
                         CONSOLIDATED BALANCE SHEETS
                       (In thousands of U.S. dollars)

    CANADIAN GAAP

                                                         July 31,   April 30,
                                                            2007        2007
                                                       ----------  ----------
                                                      (Unaudited)   (Audited)
    ASSETS

    Current assets:
      Cash and cash equivalents ...................... $   4,595   $   3,397
      Marketable securities ..........................    24,486      26,752
      Accounts receivable, net .......................     3,230       6,008
      Unbilled receivables ...........................       639         559
      Prepaid expenses and other current assets ......     1,103         758
                                                       ----------  ----------
        Total current assets .........................    34,053      37,474

    Long-term marketable securities ..................    14,508      13,013
    Property and equipment, net ......................     1,227       1,250
    Patents, net .....................................     2,432       2,222
    Other assets .....................................        20          24
                                                       ----------  ----------
        Total assets ................................. $  52,240   $  53,983
                                                       ----------  ----------
                                                       ----------  ----------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:
      Accounts payable ............................... $   1,592   $   2,170
      Accrued liabilities ............................     2,234       2,878
      Deferred revenue ...............................     3,572       3,378
      Current portion of lease inducements ...........        52          52
                                                       ----------  ----------
        Total current liabilities ....................     7,450       8,478

    Other long-term payables .........................       464         491
    Lease inducements, net of current portion ........        74          87
                                                       ----------  ----------
        Total liabilities ............................     7,988       9,056

    Shareholders' equity:
      Share capital ..................................    38,548      36,514
      Contributed surplus ............................     7,272       7,044
      Retained earnings (deficit) ....................    (2,005)      1,369
      Accumulated other comprehensive income .........       437           -
                                                       ----------  ----------
        Total shareholders' equity ...................    44,252      44,927
                                                       ----------  ----------
        Total liabilities and shareholders' equity ... $  52,240   $  53,983
                                                       ----------  ----------
                                                       ----------  ----------



                               CERTICOM CORP.
         CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
         -----------------------------------------------------------
                                 AND DEFICIT
                                 -----------
                       (In thousands of U.S. dollars,
                 except number of shares and per share data)
                                 (Unaudited)

    CANADIAN GAAP

                                                         Three months ended
                                                               July 31,
                                                          2007        2006
                                                       ----------  ----------
    Revenues:
      Product and intellectual property .............. $   1,413   $   2,682
      Services .......................................     1,795       2,051
                                                       ----------  ----------
        Total revenues ...............................     3,208       4,733

    Cost of revenues:
      Product and intellectual property ..............        12          60
      Services .......................................       606         598
                                                       ----------  ----------
        Total cost of revenues .......................       618         658

                                                       ----------  ----------
    Gross margin .....................................     2,590       4,075

    Operating expenses:
      Sales and marketing ............................     2,199       2,072
      Product development and engineering ............     1,849       1,496
      General and administrative .....................     1,615         889
      Depreciation and amortization ..................       308         273
      Stock-based compensation .......................       534         413
                                                       ----------  ----------
        Total operating expenses .....................     6,505       5,143

                                                       ----------  ----------
    Loss from operations .............................    (3,915)     (1,068)

    Other income:
      Interest income ................................       524         270
      Interest expense and other, net ................        33         (79)
                                                       ----------  ----------
        Total other income ...........................       557         191

                                                       ----------------------
    Loss before provision for income taxes ...........    (3,358)       (877)
      Provision for income taxes .....................        16         363
                                                       ----------  ----------
    Net loss for the period .......................... $  (3,374)  $  (1,240)
    Retained earnings, beginning of period ...........     1,369       4,502
                                                       ----------  ----------
    Retained earnings, end of period ................. $  (2,005)  $   3,262
                                                       ----------  ----------
                                                       ----------  ----------

    Basic and diluted net loss per share ............. $   (0.08)  $   (0.03)
                                                       ----------  ----------
                                                       ----------  ----------

    Shares used in basic and diluted net loss per
     share calculations (000s) .......................    43,200      38,475
                                                       ----------  ----------
                                                       ----------  ----------



                               CERTICOM CORP.
                               --------------
                CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                       (In thousands of U.S. dollars)

    CANADIAN GAAP

                                                         Three months ended
                                                               July 31,
                                                          2007        2006
                                                       ----------  ----------

    Net loss for the period .......................... $  (3,374)  $  (1,240)

    Other comprehensive income:
      Net gain on derivatives designated as
       cash flow hedges ..............................        97           -
                                                       ----------  ----------
    Comprehensive loss ............................... $  (3,277)  $  (1,240)
                                                       ----------  ----------
                                                       ----------  ----------



                               CERTICOM CORP.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (In thousands of U.S. dollars)
                                 (Unaudited)
    CANADIAN GAAP

                                                         Three months ended
                                                               July 31,
                                                          2007        2006
                                                       ----------  ----------
    Cash flows from operating activities:
      Net loss ....................................... $  (3,374)  $  (1,240)
      Adjustments to reconcile net loss to net
       cash used in operating activities:
        Depreciation and amortization ................       308         273
        Stock-based compensation .....................       534         413
        Lease inducements ............................       (13)        (13)
        Changes in operating assets and liabilities:
          Accounts receivable and unbilled
           receivables, net ..........................     2,698      (2,064)
          Prepaid expenses and other assets ..........        96        (394)
          Accounts payable ...........................      (578)        236
          Accrued liabilities ........................      (644)       (525)
          Deferred revenue ...........................       194         799
          Other payables .............................       (27)         67
                                                       ----------  ----------
            Net cash used in operating activities ....      (806)     (2,448)

    Cash flows from investing activities:
      Purchase of property and equipment .............      (183)       (439)
      Purchase of patents ............................      (312)       (129)
      Net maturity of marketable securities ..........       771      11,729
                                                       ----------  ----------
        Net cash provided by investing activities ....       276      11,161

    Cash flows from financing activities:
      Proceeds from the issuance of common stock,
       net ...........................................     2,034          70
      Common shares repurchased ......................      (306)          -
                                                       ----------  ----------
        Net cash provided by financing activities ....     1,728          70

    Effect of  exchange rate on cash and cash
     equivalents .....................................         -          (1)
                                                       ----------  ----------
    Net increase in cash and cash equivalents ........     1,198       8,782

    Cash and cash equivalents, beginning of period ...     3,397       2,044
                                                       ----------  ----------
    Cash and cash equivalents, end of period ......... $   4,595   $  10,826
                                                       ----------  ----------
                                                       ----------  ----------
    





For further information:

For further information: Investors and Financial Analysts: Hervé Séguin,
Chief Financial Officer, Certicom Corp., (905) 501-3827, hseguin@certicom.com;
Media: John Callahan, Director, Public Relations & Marketing Communications,
Certicom Corp., (703) 234-2357, jcallahan@certicom.com, www.certicom.com

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