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Press Release

Jacada Reports First Quarter 2007 Results

Achieves most profitable quarter in company history on a 23.6% year-over-year revenue increase

Management increases 2007 full-year revenue growth guidance

ATLANTA, May 14, 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 first quarter of 2007.

Total revenues increased 23.6% to $6.4 million compared to $5.2 million in the first quarter of 2006, led by a $1.2 million rise in services revenues resulting from the delivery of call center solutions. Non-GAAP gross profit increased to $5.1 million, or 79.4% gross margin, compared to $4.1 million, and 78.9%, respectively, in the first quarter last year. Total GAAP gross profit rose to $5.0 million, or 77.5% gross margin, compared to $4.0 million, and 76.6%, respectively, in last year's first quarter.

Non-GAAP net income for the first quarter of 2007 was $752,000, or $0.04 per diluted share , compared to a non-GAAP net loss of ($471,000), or ($0.02) per basic and diluted share, in last year's first quarter. GAAP net income, for the quarter was $468,000, or $0.02 per diluted share compared to a GAAP net loss of ($674,000), or ($0.03) per basic and diluted share in the first quarter last year. The $1.2 million increase in non-GAAP net income for the quarter was mainly the result of higher revenues, improvement in the services gross margin combined with flat operating expenses.

At the end of the first quarter of 2007, cash and investments were relatively flat at $35.8 million.

"We are encouraged by the milestones that we are achieving and the improved execution of our business plan as reflected in the financial results we reported today," commented Gideon Hollander, chief executive officer of Jacada. "Senior management team changes in 2006 were instrumental in improving our execution, and reaching profitability ahead of plan is a great way to start the year."

"We continue to take the steps necessary to validate our customer value proposition and product positioning in the markets we serve," continued Mr. Hollander. "Revenue generated from our new Jacada WorkSpace and Jacada Fusion products was the most significant contributor to our year-over-year quarterly revenue growth. Thanks to improved market conditions, we saw our legacy business stabilize and contribute to our quarterly revenue growth. Going forward, we anticipate that an increasing proportion of revenue from our new products will lead our next phase of growth, as we drive market awareness for our innovative call center desktop solutions."

Other First Quarter Highlights:

The first quarter of 2007 resulted in notable new contracts and partner activity. During the quarter, Jacada:

• Announced a joint marketing agreement with Avaya to market and deliver Jacada unified customer service desktop solutions globally
• Announced that Lillian Vernon selected the Jacada unified customer service desktop to increase its operational efficiencies and customer satisfaction
• Announced an expanded agreement with Datapoint to extend the company's reach into the Spanish market
• Announced the signing of a material contract with ING Canada, Inc.
• Signed first-time license agreements with two new, large systems integration/call center outsourcer partners. The initial agreements are in support of government and insurance call center unified desktop projects.
• Signed first-ever Jacada WorkSpace contract in Australia

"The strategy we have chosen, in pursuing partnerships with the world's leading IT integrators and call center infrastructure providers, is resulting in new customer wins and a deeper sales pipeline," added Paul O'Callaghan, president of Jacada. "These partnerships, in addition to our direct customer wins, will be key catalysts for our future growth, as we progress in expanding our market presence and responding to increasing demand for our products and services."

"We are excited about the improvement in our bottom-line results, however, in order to take advantage of the opportunities now in front of us, we anticipate adding resources to support our growth, which could impact our profitability," concluded Mr. Hollander. "Given the strength of the results in the first quarter, our growing backlog, and the visibility in our sales pipeline for both our legacy and new products for the remainder of the year, we are increasing our annual revenue guidance growth range to 23%-27% from 20%-24%, with that growth occurring in the second half of the year, and moderate year-over-year growth in the second quarter."

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 May 14. To participate in the teleconference, please call toll-free 800-295-3991 or 617-614-3924 for international callers and provide passcode 46423604, 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 May 14. To access the replay, dial toll-free 888-286-8010, or for international callers dial 617-801-6888, and provide Access Code 88002505.

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 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" WorkSpace, Jacada solutions create greater operational efficiency and increase agent and customer satisfaction. Founded in 1990, Jacada has more than 1200 customers and 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,
			2007			2006
			Unaudited
Revenues:
Software licenses			2,515			2,503
Services			1,612			411
Maintenance		$	2,306		$	2,289
Total revenues			6,433			5,203
Cost of revenues:
Software licenses			129			116
Services			1.094			880
Maintenance			224			223
Total cost of revenues			1,447			1,219
Gross profit			4,986			3,984
Operating expenses:
Research and development			1,202			1,003
Sales and marketing			2,448			2,621
General and administrative			1,247			1,266
Total operating expenses			4,897			4,890
Operating income (loss)			89			(906)
Financial income, net			436			278
Pretax income (loss)			525			(628)
Taxes			57			46
Net income (loss)		$	468		$	(674)
Basic net income (loss) per share		$	0.02		$	(0.03)
Diluted net income (loss) per share		$	0.02		$	(0.03)
Weighted average number of shares   used in computing basic net income   (loss) per share			20,145,607			19,620,359
Weighted average number of shares   used in computing diluted net income   (loss) per share			20,737,493			19,620,359

 

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NON-GAAP CONSOLIDATED STATEMENTS OF OPERATIONS (U.S. Dollars in thousands, except per share data)
			Three months ended March 31,
			2007			2006
			Unaudited
Revenues:
Software licenses			2,515			2,503
Services			1,612			411
Maintenance		$	2,306		$	2,289
Total revenues			6,433			5,203
Cost of revenues:
Software licenses			27			14
Services			1,075			866
Maintenance			223			220
Total cost of revenues			1,325			1,100
Gross profit			5,108			4,103
Operating expenses:
Research and development			1,187			978
Sales and marketing			2,406			2,581
General and administrative			1,142			1,247
Total operating expenses			4,735			4,806
Operating income (loss)			373			(703)
Financial income, net			436			278
Pretax income (loss)			809			(425)
Taxes			57			46
Net income (loss)		$	752		$	(471)
Basic net income (loss) per share		$	0.04		$	(0.02)
Diluted net income (loss) per share		$	0.04		$	(0.02)
Weighted average number of shares   used in computing basic net income   (loss) per share			20,145,607			19,620,359
Weighted average number of shares   used in computing diluted net income   (loss) per share			20,737,493			19,620,359

 

 

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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 March 31, 2007
			GAAP			Adjustments						Non-GAAP
						Amortization of acquired Intangible assets			Stock based compensation expenses
Revenues:
Software licenses		$	2,515		$	-		$	-		$	2,515
Services			1,612			-			-			1,612
Maintenance			2,306			-			-			2,306
Total revenues			6,433			-			-			6,433
Cost of revenues:
Software licenses			129			(102)			-			27
Services			1,094			-			(19)			1,075
Maintenance			224			-			(1)			223
Total cost of revenues			1,447			(102)			(20)			1,325
Gross profit			4,986			102			20			5,108
Operating expenses:
Research and development			1,202			-			(15)			1,187
Sales and marketing			2,448			-			(42)			2,406
General and administrative			1,247			-			(105)			1,142
Total operating expenses			4,897			-			(162)			4,735
Operating income			89			102			182			373
Financial income, net			436			-			-			436
Pretax income (loss)			525			102			182			809
Taxes			57									57
Net income		$	468		$	102		$	182		$	752
Basic net income per share		$	0.02								$	0.04
Diluted net income per share		$	0.02								$	0.04
Weighted average   number of shares   used in computing   basic net income per share			20,145,607									20,145,607
Weighted average   number of shares   used in computing   diluted net income per share			20,737,493									20,737,493

 

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CONSOLIDATED BALANCE SHEETS (U.S. dollars in thousands)
		March 31,			December 31,
		2007			2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents *)	$	4,057		$	4,735
Marketable securities *)		10,478			12,338
Trade receivables, net		2,722			1,681
Other current assets		1,946			933
Total current assets		19,203			19,687
LONG-TERM INVESTMENTS:
Marketable securities *)		21,306			18,849
Severance pay fund		1,067			1,040
Total long-term investments		22,373			19,889
PROPERTY AND EQUIPMENT, NET		988			930
OTHER ASSETS, NET:    Other intangibles, net		472			574
Goodwill		4,630			4,630
Total other assets, net		5,102			5,204
Total assets	$	47,666		$	45,710
*) Total Cash and Investments	$	35,841		$	35,922
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables	$	1,194		$	1.202
Deferred revenues		6,347			5,514
Accrued expenses and other liabilities		4,213			3,813
Total current liabilities		11,754			10,529
LONG-TERM LIABILITIES:
Deferred revenues		55			219
Accrued severance pay		1,648			1,567
Total long-term liabilities		1,703			1,786
SHAREHOLDERS' EQUITY:
Share capital		58			58
Additional paid-in capital		71,806			71,547
Accumulated other comprehensive loss		(41)			(128)
Accumulated deficit		(37,614)			(38,082)
Total shareholders' equity		34,209			33,395
Total liabilities and shareholders' equity	$	47,666		$	45,710