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Press Release

Jacada Reports Financial Results for the 2006 Fourth Quarter and Year-end

Agreement with Avaya and Increase in Backlog Position Company for Growth in 2007

ATLANTA, February 12, 2007 - 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 fourth quarter and year-end.

Total revenues for the 2006 fourth quarter increased to $5.5 million, compared to $4.9 million in the fourth quarter of 2005. Total revenues for the full-year ended December 31, 2006 increased to $20.7 million, compared to $19.9 million for the full-year ended December 31, 2005.

Non-GAAP net loss for the 2006 fourth quarter was $242,000, or $0.01 per diluted share, compared to a non-GAAP net loss of $352,000, or $0.02 per diluted share, in the 2005 fourth quarter. On a GAAP basis, net loss for the 2006 fourth quarter was $634,000, or $0.03 per diluted share, compared to a net loss of $406,000, or $0.02 per diluted share, in the 2005 fourth quarter.

Non-GAAP net loss for the full-year ended December 31, 2006 was $1.5 million, or $0.07 per diluted share, compared to a non-GAAP net loss of $4.6 million, or $0.23 per diluted share, in the full-year ended December 31, 2005. On a GAAP basis, net loss for the full-year ended December 31, 2006 was $2.6 million, or $0.13 per diluted share, compared to a net loss of $5.0 million, or $0.25 per diluted share, in the full-year ended December 31, 2005.

At the end of the 2006 fourth quarter, Jacada's cash and investments totaled $35.9 million, compared to $35.6 million at the end of the 2006 third quarter and $35.7 million at the end of the 2005 fourth quarter.

"We believe these results indicate that Jacada's business model is delivering positive results and our business is trending in the right direction," said Gideon Hollander, CEO of Jacada. "In recent quarters, there has been a migration in Jacada's revenue mix, which shows a greater contribution coming from our new flagship call center solutions compared to our traditional legacy products. We are pleased to see the market for unified customer service desktops continuing to show increased demand."

Increase in Backlog

"To quantify the positive impact of our call center solutions business model, we are providing visibility into Jacada's backlog, which represents revenue from signed contracts (not including maintenance renewals) that has not yet been recognized," said Hollander. "At the beginning of fiscal year 2007, we are carrying a backlog of Jacada Fusion and Jacada WorkSpace revenue of approximately $8.1 million, compared to a backlog of $5.4 million at the beginning of fiscal year 2006," stated Hollander.

Fourth Quarter Highlights

In the fourth quarter, Avaya, a leading global provider of business communications applications, systems and services, signed an agreement with Jacada that will extend Jacada's reach into the global call center marketplace. Under the terms of the agreement, Avaya Consulting and Systems Integration and Jacada will jointly market and deliver Jacada customer service solutions globally.

"Avaya's selection of Jacada is tremendous validation as to the traction and success of the Jacada contact center solutions, and the sizable market opportunity that exists," said Paul O'Callaghan, president of Jacada. "Avaya is a trusted advisor to many of the companies in our target markets. Together we can offer a solution that delivers a major competitive advantage for our customers by significantly reducing operational costs and greatly enhancing the customer experience."

In the fourth quarter, Jacada also closed new business in important vertical markets. Capita, the UK's leading provider of integrated professional support services selected Jacada WorkSpace to improve the customer experience by creating a central interaction point for the customer service representative to increase efficiencies and streamline customer service operations. Lillian Vernon, the national catalog and online retailer that markets gift, household, children's and fashion accessory products, has selected Jacada WorkSpace as its standardized unified agent desktop for its customer service operations.

"As a leader in the outsourced call center industry, Capita's selection of Jacada demonstrate the growing acknowledgement that simplifying desktop complexity removes a key customer service obstacle and provides an immediate way to both competitively differentiate and realize significant cost reductions," said O'Callaghan. "And being selected by KarstadtQuelle and Lillian Vernon in 2006, is a strong indication that the online retailer and catalog market also suffers from an overly complex customer service environment."

Financial Outlook

"In 2007, we expect new partner activity and business growth, which will require additional operational investments," said Hollander. "We anticipate revenue to grow between 20% and 24% on an annual basis over 2006, with the growth occurring in the second half of the year."

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 February 12. To participate in the teleconference, please call toll-free 1-866-510-0710 or 617-597-5378 for international callers and provide passcode 20493328, 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 three days beginning at 12:30 p.m. ET on February 12. To access the replay, dial toll-free 1-888-286-8010, or for international callers dial 617-801-6888, and provide Access Code 76771775.

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 loss, 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 is a trademark of Jacada Ltd. All other brands or product names are trademarks of their respective owners.

JACADA LTD. CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except per share data
		Year ended December 31,							Three months ended December 31,
		2006				2005			2006				2005
		Audited
Revenues:
Software licenses	$	6,568		$	*)	6,674		$	1,412		$	*)	1,852
Services		4,810			*)	3,701			1,758			*)	618
Maintenance		9,303				9,567			2,339				2,441
Total revenues		20,681				19,942			5,509				4,911
Cost of revenues:
Software licenses		527			*)	648			170			*)	110
Services		3,671			*)	3,365			1,080			*)	814
Maintenance		864				865			210				202
Total cost of revenues		5,062				4,878			1,460				1,126
Gross profit		15,619				15,064			4049				3,785
Operating expenses:
Research and development		4,067				4,094			1,109				940
Sales and marketing		10,144				11,035			2,414				2,150
General and administrative		5,098			*)	5,681			1,391			*)	1,336
Total operating expenses		19,309				20,810			4,914				4,426
Operating loss		(3,690)				(5,746)			(865)				(641)
Financial income, net		1,372				830			373				241
Net loss before taxes on income		(2,318)				(4,916)			(492)				(400)
Taxes on income		254			*)	42			142			*)	6
Net loss	$	(2,572)		$		(4,958)		$	(634)		$		(406)
Basic net loss per share	$	(0.13)		$		(0.25)		$	(0.03)		$		(0.02)
Weighted average   number of shares   used in computing   basic net loss per share		19,827,852				19,497,726			20,126,244				19,600,587
Diluted net loss per share	$	(0.13)		$		(0.25)		$	(0.03)		$		(0.02)
Weighted average   number of shares   used in computing   diluted net loss per share		19,827,852				19,497,726			20,126,244				19,600,587
*) Reclassified

 

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JACADA LTD. NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS U.S. dollars in thousands, except per share data
		Year ended December 31,							Three months ended December 31,
		2006				2005			2006				2005
		Audited
Revenues:
Software licenses	$	6,568		$	*)	6,674		$	1,412		$	*)	1,852
Services		4,810			*)	3,701			1,758			*)	618
Maintenance		9,303				9,567			2,339				2,441
Total revenues		20,681				19,942			5,509				4,911
Cost of revenues:
Software licenses		111			*)	240			65			*)	56
Services		3614			*)	3,365			1,061			*)	814
Maintenance		854				865			208				202
Total cost of revenues		4,579				4,470			1,334				1,072
Gross profit		16,102				15,472			4,175				3,839
Operating expenses:
Research and development		3,988				4,094			1,093				940
Sales and marketing		10,021				11,035			2,371				2,150
General and administrative		4,696			*)	5,681			1,184			*)	1,336
Total operating expenses		18,705				20,810			4,648				4,426
Operating loss		(2,603)				(5,338)			(473)				(587)
Financial income, net		1,372				830			373				241
Net loss before taxes on income		(1,231)				(4,508)			(100)				(346)
Taxes on income		254			*)	42			142			*)	6
Net loss	$	(1,485)		$		(4,550)		$	(242)		$		(352)
Basic net loss per share	$	(0.07)		$		(0.23)		$	(0.01)		$		(0.02)
Weighted average   number of shares   used in computing   basic net loss per share		19,827,852				19,497,726			20,126,244				19,600,587
Diluted net loss per share	$	(0.07)		$		(0.23)		$	(0.01)		$		(0.02)
Weighted average   number of shares   used in computing   diluted net loss per share		19,827,852				19,497,726			20,126,244				19,600,587
*) Reclassified

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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 December 31, 2006 (audited)
			GAAP			Adjustments						Non-GAAP
						Amortization of acquired intangible assets			Stock based compensation expenses
Revenues:
Software licenses		$	6,568		$			$			$	6,568
Services			4,810									4,810
Maintenance			9,303									9,303
Total revenues			20,681									20,681
Cost of revenues:
Software licenses			527			(416)						111
Services			3,671						(57)			3614
Maintenance			864						(10)			854
Total cost of revenues			5,062			(416)			(67)			4,579
Gross profit			15,619			416			67			16,102
Operating expenses:
Research and development			4,067						(79)			3,988
Sales and marketing			10,144						(123)			10,021
General and administrative			5,098						(402)			4,696
Total operating expenses			19,309						(604)			18,705
Operating loss			(3,690)			416			671			(2,603)
Financial income, net			1,372									1,372
Net loss before taxes on income			(2,318)									(1,231)
Taxes on income			254									254
Net (loss) income		$	(2,572)		$	416		$	671		$	(1,485)
Basic net (loss) income per share		$	(0.13)								$	(0.07)
Weighted average   number of shares   used in computing   basic net loss per share			19,827,852									19,827,852
Diluted net loss per share		$	(0.13)								$	(0.07)
Weighted average   number of shares   used in computing   diluted net loss per share			19,827,852									19,827,852

 

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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 December 31, 2006 (audited)
			GAAP			Adjustments						Non-GAAP
						Amortization of acquired intangible assets			Stock based compensation expenses
Revenues:
Software licenses		$	1,412		$			$			$	1,412
Services			1,758									1,758
Maintenance			2,339									2,339
Total revenues			5,509									5,509
Cost of revenues:
Software licenses			170			(105)						65
Services			1,080						(19)			1,061
Maintenance			210						(2)			208
Total cost of revenues			1,460			(105)			(21)			1,334
Gross profit			4,049			105			21			4,175
Operating expenses:
Research and development			1,109						(16)			1,093
Sales and marketing			2,414						(43)			2,371
General and administrative			1,391						(207)			1,184
Total operating expenses			4,914						(266)			4,648
Operating loss income			(865)			105			287			(473)
Financial income, net			373									373
Net loss before taxes on income			(492)									(100)
Taxes on income			142									142
Net (loss) income		$	(634)		$	105		$	287		$	(242)
Basic net (loss) income per share		$	(0.03)								$	(0.01)
Weighted average number of   shares used in computing   basic net (loss) income per share			20,126,244									20,126,244
Diluted net (loss) income per share		$	(0.03)								$	(0.01)
Weighted average number of   shares used in computing   diluted net (loss) income    per share			20,126,244									20,126,244

 

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CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
		December 31,			December 31,
		2006			2005
		Audited			Audited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents *)	$	4,735		$	3,461
Marketable securities *)		12,338			14,655
Trade receivables		1,681			1,614
Other current assets		933			905
Total current assets		19,687			20,635
LONG-TERM INVESTMENTS:
Marketable securities *)		18,849			17,535
Severance pay fund		1,040			825
Total long-term investments		19,889			18,360
PROPERTY AND EQUIPMENT, NET		930			997
OTHER ASSETS, NET:    Other intangibles, net		574			990
Goodwill		4,630			4,630
Total other assets		5,204			5,620
Total assets	$	45,710		$	45,612
*) Total cash and investments	$	35,922		$	35,651
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Trade payables	$	1,202		$	981
Deferred revenues		5,514			5,533
Accrued expenses and other liabilities		3,813			3,373
Total current liabilities		10,529			9,887
LONG-TERM LIABILITIES:
Deferred revenues		219			-
Accrued severance pay		1,567