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Press Release

Jacada Reports Third Quarter 2007 Results

Backlog rises 36% to a record $12.9 million

Two new reseller agreements signed with leading global systems integrators

ATLANTA, November 13, 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 third quarter and for the nine-month period ended September 30, 2007.

Total revenues were $5.1 million compared to $5.2 million in the third quarter of 2006. Non-GAAP gross profit was $3.5 million or 67% gross margin, compared to $4.0 million and 77%, respectively, in the third quarter last year. Total GAAP gross profit was $3.4 million or 66% gross margin, compared to $3.9 million and 75%, respectively, in last year’s third quarter.

Non-GAAP net loss for the third quarter of 2007 was ($797,000), or ($0.04) per basic and diluted share, compared to a non-GAAP net income of $89,000, or $0.00 per diluted share, in last year’s third quarter. GAAP net loss for the quarter was ($1.1 million), or ($0.05) per basic and diluted share compared to a GAAP net loss of ($181,000), or ($0.01) per basic and diluted share in the third quarter last year.

Total revenues for the first nine months of 2007 grew 10% to $16.7 million from $15.2 million in the first nine months of 2006.

Non-GAAP gross profit for the first nine months of 2007 was $12.5 million or 75% gross margin, compared to $11.9 million and 79%, respectively, for the first nine months of last year. Total GAAP gross profit was $12.2 million or 73% gross margin, compared to $11.6 million and 76%, respectively, in the first nine months of last year.

Non-GAAP net loss for the first nine months of 2007 was ($430,000), or ($0.02) per diluted share, compared to a non-GAAP net loss of ($1.2 million), or ($0.06) per basic and diluted share, in the first nine months of 2006. On a GAAP basis, net loss for the first nine months of 2007 was ($1.3 million), or ($0.06) per basic and diluted share, compared to a net loss of ($1.9 million), or ($0.10) per basic and diluted share, in the first nine months of 2006.

At the end of the third quarter of 2007 cash and investments were $35.1 million, compared to $35.9 million reported on December 31, 2006.

"We had an exceptionally strong quarter in bookings and backlog growth, particularly in North America," commented Gideon Hollander, chief executive officer of Jacada. "Our backlog, which speaks to the visibility and health of our future revenues, grew to $12.9 million. This represents a 36% increase over backlog of $9.5 million reported for the second quarter of 2007 and an 82% increase over the backlog for the same quarter last year. More than 90% of this backlog is for our call center solutions business."

"We continue to experience robust demand for our customer service solutions, as well as an increase in the size and strategic significance of our client projects," continued Mr. Hollander. "Due to the sophistication and high level of customization required to complete certain projects, some of these contracts include product acceptance milestones that can affect the timing of revenue recognition. While we recognized revenue in the third quarter from the acceptance of several customer project milestones, the total revenue for the third quarter was negatively impacted by a delay in acceptance from one of our large projects. We anticipate that this project will be mostly recognized in the fourth quarter."

Other Third Quarter Highlights:

The third quarter of 2007 resulted in notable customer activity. During the quarter:

• Jacada signed two material contracts with large North American public utilities. One of the utilities is Central Hudson Gas & Electric. Central Hudson selected Jacada unified service desktop and process optimization solutions to automate critical call processes and integrate their existing business systems into a simplified customer service desktop. According to Charlie Freni, senior vice president of Customer Services, "After a very comprehensive search for a solution provider, we partnered with Jacada because of the company's expertise in solving complicated customer service issues. The Jacada team's thorough, consultative approach allowed them to truly understand our business and provide a detailed analysis of our process pain points. The Jacada solutions will not only simplify our agents' desktops, but will optimize and guide them through critical call processes such as customer moves, billing and collections."
• Jacada signed reseller agreements with two of the leading global systems integrators. Significant contributions from these partners are expected to occur in 2008.
• Jacada announced that Spectrum Systems, Inc., a leading provider of end-to-end enterprise IT solutions and services to the public and private sectors, has added Jacada contact center solutions to its General Services Administration/Federal Acquisition Schedule (GSA/FAS).
• Jacada won the first U.S. Federal Government contract for Jacada WorkSpace. A major financial division of the U.S. Department of Defense will use the Jacada unified desktop solution to simplify customer service operations to reduce costs and improve efficiency. By creating a simplified and automated desktop process, their customer service agents will be able to handle more call types which can help them eliminate the need for specialized agents.

"Market awareness of Jacada best-in-class solutions is on the rise," said Paul O’Callaghan, president of Jacada. "We are quickly gaining recognition as customer service solutions experts throughout the contact center universe. While our technology remains a key differentiator in our sales process, our customers continue to tell us that our expertise in resolving complex customer service issues is also a critical factor for them in making a Jacada decision."

"The versatility of our products and the sizes of contracts we are winning are attracting the attention of some of the leading global systems integrators," added Mr. O’Callaghan. "In the third quarter, we were successful in signing global reseller agreements with two of the world’s best known systems integrators, and both companies are actively engaged and delivering qualified project opportunities to our pipeline. As we move through 2008, we anticipate that these relationships will contribute to continued growth and improved financial results, particularly towards the second half of the year."

"Due to our backlog and current visibility into the progress of project deliverables, and subject to the timing of customer acceptance of certain project deliverables, we are reiterating our annual revenue guidance growth of 23%-27% for 2007," concluded Mr. Hollander.

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, 2007. To participate in the teleconference, please call toll-free 866-356-3377 or 617-597-5392 for international callers and provide passcode 40909828, 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.earnings.com. A telephonic playback of the teleconference will be available for three days beginning at 12:30 p.m. ET on November 13, 2007. To access the replay, dial toll-free 888-286-8010, or for international callers dial 617-801-6888, and provide access code 21669656.

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 income (loss), net income (loss) and income (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

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,
		2007			2006			2007			2006
		Unaudited
Revenues:
Software licenses	$	4,259		$	5,156		$	745		$	1,298
Services		5,286			3,052			2,064			1,652
Maintenance		7,148			6,964			2,329			2,248
Total revenues		16,693			15,172			5,138			5,198
Cost of revenues:
Software licenses		325			357			83			116
Services		3,474			2,591			1,409			981
Maintenance		717			654			257			209
Total cost of revenues		4,516			3,602			1,749			1,306
Gross profit		12,177			11,570			3,389			3,892
Operating expenses:
Research and development		3,407			2,958			1,143			1,028
Sales and marketing		7,475			7,730			2,426			2,332
General and administrative		3,703			3,707			1,320			1,018
Total operating expenses		14,585			14,395			4,889			4,378
Operating loss		(2,408)			(2,825)			(1,500)			(486)
Financial income, net		1,213			999			385			364
Pretax loss		(1,195)			(1,826)			(1,115)			(122)
Taxes on income		92			112			(41)			59
Net loss	$	(1,287)		$	(1,938)		$	(1,074)		$	(181)
Basic net loss per share	$	(0.06)		$	(0.10)		$	(0.05)		$	(0.01)
Diluted net loss per share	$	(0.06)		$	(0.10)		$	(0.05)		$	(0.01)
Weighted average number of shares   used in computing   basic net loss per share		20,300,030			19,729,599			20,477,573			19,913,246
Weighted average number of shares   used in computing   diluted net loss per share		20,300,030			19,729,599			20,477,573			19,913,246

 

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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,
		2007			2006			2007			2006
		Unaudited
Revenues:
Software licenses	$	4,259		$	5,156		$	745		$	1,298
Services		5,286			3,052			2,064			1,652
Maintenance		7,148			6,964			2,329			2,248
Total revenues		16,693			15,172			5,138			5,198
Cost of revenues:
Software licenses		70			46			34			11
Services		3,405			2,553			1,384			969
Maintenance		714			646			256			207
Total cost of revenues		4,189			3,245			1,674			1,187
Gross profit		12,504			11,927			3,464			4,011
Operating expenses:
Research and development		3,354			2,895			1,123			1,011
Sales and marketing		7,273			7,650			2,318			2,304
General and administrative		3,428			3,512			1,246			912
Total operating expenses		14,055			14,057			4,687			4,227
Operating loss		(1,551)			(2,130)			(1,223)			(216)
Financial income, net		1,213			999			385			364
Pretax income (loss)		(338)			(1,131)			(838)			148
Taxes on income		92			112			(41)			59
Net income (loss)	$	(430)		$	(1,243)		$	(797)		$	89
Basic net income (loss) per share	$	(0.02)		$	(0.06)		$	(0.04)		$	0.00
Diluted net income (loss) per share	$	(0.02)		$	(0.06)		$	(0.04)		$	0.00
Weighted average number of shares   used in computing basic net income   (loss) per share		20,300,030			19,729,599			20,477,573			19,913,246
Weighted average number of shares   used in computing diluted net income   (loss) per share		20,300,030			19,729,599			20,477,573			20,301,429

 

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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, 2007 (unaudited)
			GAAP			Adjustments						Non-GAAP
						Amortization of acquired intangible assets			Stock-based compensation expenses
Revenues:
Software licenses		$	4,259		$			$			$	4,259
Services			5,286									5,286
Maintenance			7,148									7,148
Total revenues			16,693									16,693
Cost of revenues:
Software licenses			325			(255)						70
Services			3,474						(69)			3,405
Maintenance			717						(3)			714
Total cost of revenues			4,516			(255)			(72)			4,189
Gross profit			12,177			255			72			12,504
Operating expenses:
Research and development			3,407						(53)			3,354
Sales and marketing			7,475						(202)			7,273
General and administrative			3,703						(275)			3,428
Total operating expenses			14,585						(530)			14,055
Operating income (loss)			(2,408)			255			602			(1,551)
Financial income, net			1,213									1,213
Pretax income (loss)			(1,195)			255			602			(338)
Taxes on income			92									92
Net income (loss)		$	(1,287)		$	255		$	602		$	(430)
Basic net loss per share		$	(0.06)								$	(0.02)
Diluted net loss per share		$	(0.06)								$	(0.02)
Weighted average   number of shares   used in computing   basic net loss per share			20,300,030									20,300,030
Weighted average   number of shares   used in computing   diluted net loss per share			20,300,030									20,300,030

 

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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, 2007 (unaudited)

			GAAP			Adjustments						Non-GAAP
						Amortization of acquired intangible assets			Stock based compensation expenses
Revenues:
Software licenses		$	745		$			$			$	745
Services			2,064									2,064
Maintenance			2,329									2,329
Total revenues			5,138									5,138
Cost of revenues:
Software licenses			83			(49)						34
Services			1,409						(25)			1,384
Maintenance			257						(1)			256
Total cost of revenues			1,749			(49)			(26)			1,674
Gross profit			3,389			49			26			3,464
Operating expenses:
Research and development			1,143						(20)			1,123
Sales and marketing			2,426						(108)			2,318
General and administrative			1,320						(74)			1,246
Total operating expenses			4,889						(202)			4,687
Operating income (loss)			(1,500)			49			228			(1,223)
Financial income, net			385									385
Pretax income (loss)			(1,115)			49			228			(838)
Taxes on income			(41)									(41)
Net income (loss)		$	(1,074)		$	49		$	228		$	(797)
Basic net loss per share		$	(0.05)								$	(0.04)
Diluted net loss per share		$	(0.05)								$	(0.04)
Weighted average   number of shares   used in computing   basic net loss per share			20,477,573									20,477,573
Weighted average   number of shares   used in computing   diluted net loss per share			20,477,573									20,477,573

 

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CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands
		September 30,			December 31,
		2007			2006
ASSETS		Unaudited
CURRENT ASSETS:
Cash and cash equivalents	$	5,991		$	4,735
Marketable securities		12,527			12,338
Trade receivables		2,682			1,681
Other current assets		2,806			933
Total current assets		24,006			19,687
LONG-TERM INVESTMENTS:
Marketable securities		16,612			18,849
Severance pay fund		922			1,040
Total long-term investments		17,534			19,889
PROPERTY AND EQUIPMENT, NET		939			930
OTHER ASSETS, NET:    Other intangibles, net		319			574
Goodwill		4,630			4,630
Total other assets		4,949			5,204
Total assets	$	47,428		$	45,710
*)Total Cash and Investments	$	35,130		$	35,922
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Trade payables	$	1,060		$	1,202
Deferred revenues		6,701			5,514
Accrued expenses and other liabilities		4,200			3,813
Total current liabilities		11,961			10,529
LONG-TERM LIABILITIES:
Deferred revenues		48			219
Accrued severance pay		1,479			1,567
Total long-term liabilities		1,527			1,786
SHAREHOLDERS' EQUITY:
Share capital		59			58
Additional paid-in capital		73,083			71,547
Accumulated other comprehensive profit (loss)		167			(128)
Accumulated deficit		(39,369)			(38,082)
Total shareholders' equity		33,940			33,395
Total Liabilities	$	47,428		$	45,710