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Press Release

Jacada Reports Financial Results for the 2006 Third Quarter

ATLANTA - November 13, 2006 - Jacada Ltd.(Nasdaq: JCDA), a leading provider of unified desktop and process optimization solutions for customer service operations, today reported financial results for the 2006 third quarter.

Total revenues for the 2006 third quarter were $5.2 million, compared to $5.5 million in the third quarter of 2005. Software and products revenues were $1.6 million in the 2006 third quarter, compared to $2.0 million in the third quarter of 2005.

Non-GAAP net income for the 2006 third quarter was $89,000, or $0.00 per diluted share, compared to a non-GAAP net loss of $31,000, or $0.00 per diluted share, in the 2005 third quarter. On a GAAP basis, net loss for the 2006 third quarter was $181,000, or $0.01 per diluted share, compared to a net loss of $143,000, or $0.01 per diluted share, in the 2005 third quarter.

Total revenues for the nine months ended September 2006 were $15.2 million, compared to $15.0 million for the nine months ended September 2005. Software and products revenues were $5.8 million for the nine months ended September 2006, compared to $4.8 million for the nine months ended September 2005.

Non-GAAP net loss for the nine months ended September 2006 was $1.2 million, or $0.06 per diluted share, compared to a non-GAAP net loss of $4.2 million, or $0.22 per diluted share, in the nine months ended September 2005. On a GAAP basis, net loss for the nine months ended September 2006 was $1.9 million, or $0.10 per diluted share, compared to a net loss of $4.6 million, or $0.23 per diluted share, in the nine months ended September 2005.

At the end of the 2006 third quarter, Jacada's cash and investments totaled $35.6 million, compared to $35.0 million at the end of the 2006 second quarter and $37.0 million at the end of the 2005 third quarter.

"We believe that Jacada's near breakeven third-quarter results and our stable cash position demonstrate that our business is trending in the right direction," said Gideon Hollander, CEO of Jacada. "Our business model is working and we are witnessing increased demand for unified contact center desktops and customer service process optimization."

During the third quarter, Jacada gained significant traction by adding notable customers including Quelle.Contact Vertrieb GmbH, a subsidiary of KarstadtQuelle's Mail Order Division, Europe's leading mail order retailer; Metavante, a major provider of banking and payments technologies to financial services firms and businesses worldwide; and MiCasa, a leading financial services company in Venezuela. Jacada also signed new business with Embratel, one of the largest telecom companies in Latin America.

"We are excited to see companies investing in Jacada solutions to strategically differentiate their customer service operations by eliminating inefficiencies and streamlining workflows, as well as delivering more robust multi-channel customer service solutions," said Paul O'Callaghan, president of Jacada.

"In the third quarter, Jacada continued building substantial industry relationships with global resellers and systems integrators," said O'Callaghan. "Leveraging these partnerships, Jacada is expanding its presence around the globe, building industry momentum and closing new business."

During the quarter, Jacada and Datapoint Customer Solutions Ltd, the leading UK expert in call center operations, signed a distributor agreement that will augment Jacada's presence in the UK region. A significant partnership with a large systems integrator in Germany yielded the contract with Quelle.Contact. Additionally, Jacada forged a marketing and referral agreement with one of the world's largest contact center outsourcers, where Jacada's contact center solutions will be presented as a value-added offering to the partner's clients.

"At this time, we have good visibility into the full year 2006 results," said Hollander. "Therefore, we expect 2006 total annual revenue to increase over 2004 and 2005 and to exceed $20.0 million. In addition, our backlog of unrecognized revenue for our contact center solutions continues to grow. Based on our sales pipeline, we believe that this backlog will continue to generally grow."

Conference Call Details

Any investor or interested individual can listen to the teleconference, which is scheduled to begin at 10:30 a.m. Eastern Time on November 13. To participate in the teleconference, please call toll-free 1-866-831-6291 or 617-213-8860 for international callers and provide passcode 85417947, approximately 10 minutes prior to the start time. The teleconference will also be available via Webcast at www.jacada.com (under "About Us" then "Investors") or www.fulldisclosure.com.

A telephonic playback of the teleconference will be available for two days beginning at 12:30 p.m. ET on November 13. To access the replay, dial toll-free 1-888-286-8010, or for international callers dial 617-801-6888, and provide Access Code 59886289.

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 net loss and loss per share, which are adjustments from results based on GAAP to exclude 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 provider of customer service productivity solutions. The company's solutions help customers rapidly simplify and improve high-value business processes without the need for long and expensive systems replacement projects.

Jacada provides two award-winning solutions that have been proven to make a significant impact on customer service efficiency and effectiveness. Jacada WorkSpace is a unified desktop that incorporates all critical functions required by the contact center agent to successfully complete customer interactions. Jacada Fusion is a process optimization solution that leverages patented technology to enable customer service centers to improve customer satisfaction and increase revenues by providing customer service representatives with more time for customer care and revenue-generating activities.

Jacada has over 1,200 customers worldwide including many Fortune 1000 corporations and government organizations. 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 or at 1-800-773-9574.

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future financial results and plans for future business development activities, and are prospective. These statements include all statements that are not statements of historical fact and consists of those regarding intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) the Company's financing plans; (ii) trends affecting the Company's financial condition or results of operations; and (iii) the Company's growth strategy and operating strategy (including the development of its products and services). 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. The Company cannot assess the impact of or the extent to which any single factor or risk, or combination of them, may cause. For a more complete discussion of risk factors, please see the Company's Form 20-F and other Statements filed with the Securities and Exchange Commission.

JACADA LTD. CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except per share data
		Nine months ended September 30,						Three months ended September  30,
		2006			2005			2006			2005
		Unaudited
Revenues:
Software and products	$	5,782		$	4,846		$	1,637		$	1,998
Services		2,426			3,059			1,313			1,113
Maintenance		6,964			7,126			2,248			2,413
Total revenues		15,172			15,031			5,198			5,524
Cost of revenues:
Software and products		934			719			116			347
Services		2,014			2,186			981			674
Maintenance		654			663			209			197
Total cost of revenues		3,602			3,568			1,306			1,218
Gross profit		11,570			11,463			3,892			4,306
Operating expenses:
Research and development		2,958			3,338			1,028			1,068
Sales and marketing		7,730			8,885			2,332			2,360
General and administrative		3,819			4,381			1,077			1,273
Total operating expenses		14,507			16,604			4,437			4,701
Operating loss		(2,937)			(5,141)			(545)			(395)
Financial income, net		999			589			364			252
Net loss	$	(1,938)		$	(4,552)		$	(181)		$	(143)
Basic net loss per share	$	(0.10)		$	(0.23)		$	(0.01)		$	(0.01)
Weighted average   number of shares   used in computing   basic net loss per share		19,729,599			19,463,062			19,913,246			19,523,695
Diluted net loss per share	$	(0.10)		$	(0.23)		$	(0.01)		$	(0.01)
Weighted average   number of shares   used in computing   diluted net loss per share		19,729,599			19,463,062			19,913,246			19,523,695

 

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JACADA LTD. NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except per share data
		Nine months ended September 30,						Three months ended September  30,
		2006			2005			2006			2005
		Unaudited
Revenues:
Software and products	$	5,782		$	4,846		$	1,637		$	1,998
Services		2,426			3,059			1,313			1,113
Maintenance		6,964			7,126			2,248			2,413
Total revenues		15,172			15,031			5,198			5,524
Cost of revenues:
Software and products		623			365			11			235
Services		1,976			2,186			969			674
Maintenance		646			663			207			197
Total cost of revenues		3,245			3,214			1,187			1,106
Gross profit		11,927			11,817			4,011			4,418
Operating expenses:
Research and development		2,895			3,338			1,011			1,068
Sales and marketing		7,650			8,885			2,304			2,360
General and administrative		3,624			4,381			971			1,273
Total operating expenses		14,169			16,604			4,286			4,701
Operating loss		(2,242)			(4,787)			(275)			(283)
Financial income, net		999			589			364			252
Net (loss) income	$	(1,243)		$	(4,198)		$	89		$	(31)
Basic net (loss) per share	$	(0.06)		$	(0.22)		$	(0.00)		$	(0.00)
Weighted average   number of shares   used in computing   basic net (loss) per share		19,729,599			19,463,062			19,913,246			19,523,695
Diluted net (loss) per share	$	(0.06)		$	(0.22)		$	(0.00)		$	(0.00)
Weighted average   number of shares   used in computing   diluted net (loss) per share		19,729,599			19,463,062			20,301,429			19,523,695

 

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RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except per share data
			Nine months ended September 30, 2006 (unaudited)
			GAAP			Adjustments						Non-GAAP
						Amortization of acquired intangible assets			Stock based compensation expenses
Revenues:
Software and products		$	5,782		$	-		$	-		$	5,782
Services			2,426			-			-			2,426
Maintenance			6,964			-			-			6,964
Total revenues			15,172			-			-			15,172
Cost of revenues:
Software and products			934			(311)			-			623
Services			2,014			-			(38)			1,976
Maintenance			654			-			(8)			646
Total cost of revenues			3,602			(311)			(46)			3,245
Gross profit			11,570			311			46			11,927
Operating expenses:
Research and development			2,958			-			(63)			2,895
Sales and marketing			7,730			-			(80)			7,650
General and administrative			3,819			-			(195)			3,624
Total operating expenses			14,507			-			(338)			14,169
Operating (loss) income			(2,397)			311			384			(2,242)
Financial income, net			999			-			-			999
Net (loss) income		$	(1,938)		$	311		$	384		$	(1,243)
Basic net loss per share		$	(0.10)								$	(0.06)
Weighted average   number of shares   used in computing   basic net loss per share			19,729,599									19,729,599
Diluted net loss per share		$	(0.10)								$	(0.06)
Weighted average   number of shares   used in computing   diluted net loss per share			19,729,599									19,729,599

 

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RECONCILIATION OF GAAP TO NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except per share data
			Three months ended September 30, 2006 (unaudited)
			GAAP			Adjustments						Non-GAAP
						Amortization of acquired intangible assets			Stock based compensation expenses
Revenues:
Software and products		$	1,637		$	-		$	-		$	1,637
Services			1,313			-			-			1,313
Maintenance			2,248			-			-			2,248
Total revenues			5,198			-			-			5,198
Cost of revenues:
Software and products			116			(105)			-			11
Services			981			-			(12)			969
Maintenance			209			-			(2)			207
Total cost of revenues			1,306			(105)			(14)			1,187
Gross profit			3,892			105			14			4,011
Operating expenses:
Research and development			1,028			-			(17)			1,011
Sales and marketing			2,332			-			(28)			2,304
General and administrative			1,077			-			(106)			971
Total operating expenses			4,437			-			(151)			4,286
Operating (loss) income			(545)			105			165			(275)
Financial income, net			364			-			-			364
Net (loss) income		$	(181)		$	105		$	165		$	89
Basic net (loss) income per share		$	(0.01)								$	(0.00)
Weighted average number of   shares used in computing   basic net (loss) income per share			19,913,246									19,913,246
Diluted net (loss) income per share		$	(0.01)								$	(0.00)
Weighted average number of   shares used in computing   diluted net (loss) income  per share			19,913,246									20,301,429

 

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CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
		September 30,			December 31,
		2006			2005
		Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents *)	$	3,773		$	3,461
Marketable securities *)		10,062			14,655
Trade receivables		1,530			1,614
Other current assets		944			905
Total current assets		16,309			20,635
LONG-TERM INVESTMENTS:
Marketable securities *)		21,776			17,535
Severance pay fund		968			825
Total long-term investments		22,744			18,360
PROPERTY AND EQUIPMENT, NET		1,031			997
OTHER ASSETS, NET:    Other intangibles, net		679			990
Goodwill		4,630			4,630
Total other assets		5,309			5,620
Total assets	$	45,393		$	45,612
*) Total cash and investments	$	35,611		$	35,651
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Trade payables	$	1,103		$	981
Deferred revenues		5,638			5,533
Accrued expenses and other liabilities		3,097			3,373
Total current liabilities		9,838			9,887
LONG-TERM LIABILITIES:
Deferred revenues		397			-
Accrued severance pay		1,471			1,250
Total long-term liabilities		1,868			1,250
SHAREHOLDERS' EQUITY:
Share capital		58			57
Additional paid-in capital		71,242			70,297
Accumulated other comprehensive loss		(165)			(369)
Accumulated deficit		(37,448)			(35,510)
Total shareholders' equity		33,687			34,475
Total Liabilities	$	45,393		$	45,612