Achieves Non-GAAP Net Income; GAAP Loss Narrows REDWOOD CITY,
Calif., May 1 /PRNewswire-FirstCall/ -- Tumbleweed(R)
Communications Corp. (NASDAQ:TMWD), an industry leader in managed
file transfer and email security, today reported financial results
for its first quarter ended March 31, 2008. These results included
revenue growth, generation of cash, a strong contribution from IP
licensing fees, increased orders for core products, and continued
improvement in channel contribution. Revenue was $15.3 million for
the quarter ended March 31, 2008, compared to $15.0 million for the
same period last year. Non-GAAP net income for the first quarter of
2008 was $444,000, or $0.01 per share, compared to a non-GAAP net
loss of $368,000, or $(0.01) per share, in the first quarter of
2007. Non-GAAP results exclude expenses for stock-based
compensation and intangible asset amortization of a combined $1.6
million for the first quarter of 2008 and a combined $1.5 million
for the first quarter of 2007. On a GAAP basis, the net loss for
the first quarter of 2008 was $1.1 million, or $(0.02) per share,
compared to a net loss of $1.9 million, or $(0.04) per share, for
the first quarter of 2007. A reconciliation of GAAP and non-GAAP
results is presented in the tables below. Cash and cash equivalents
were $28.5 million at March 31, 2008, an increase of $2.2 million
from $26.3 million at December 31, 2007. "We had solid results this
quarter -- there was 21 percent year-over-year growth in orders for
our core products and we built backlog. I'm encouraged that we're
beginning to reap rewards from the groundwork we laid in 2007 and
our Q1 results reflect this," said James P. Scullion, Chief
Executive Officer of Tumbleweed. "We exceeded our goals for top and
bottom line results, and added to our cash position. We had a
strong contribution from the licensing of our intellectual
property, and we continued to increase the amount of business being
done with our channel partners, a key initiative for us in 2008.
"Although the current economic climate is challenging, we're
optimistic about the opportunity we see, and we remain focused on
continually improving our financial performance," continued
Scullion. "Our balance sheet strengthened considerably during the
quarter as we generated more than $2 million in cash, decreased
collection cycles and maintained a strong level of deferred
revenues." Product revenue for the first quarter of 2008 was $5.0
million, compared to $5.9 million in the first quarter of 2007.
Service revenue for the first quarter of 2008 was $8.2 million,
compared to $9.0 million in the first quarter of 2007. Revenue from
intellectual property was $2.1 million in the first quarter of
2008, as compared to $96,000 in the first quarter of 2007. Backlog
at March 31, 2008, which includes deferred revenue, increased by
$1.6 million from the level at December 31, 2007. Recent Highlights
-- Tumbleweed's core products represented 89% of non-intellectual
property revenue for the quarter ended March 31, 2008, as compared
to 88% in the first quarter of 2007 and 84% in the fourth quarter
of 2007. These core products include award-winning
SecureTransport(TM), Secure Messenger(TM) and MailGate(R), a suite
of managed file transfer and email security solutions that enable
customers to safely utilize the Internet for mission-critical
communications. -- Tumbleweed's channel partners delivered 52% of
the company's non-renewal commercial bookings for the first quarter
of 2008 compared with 29% for the first quarter of 2007. New
channel partners in the first quarter included Dimension Data and
Gotham Technology Group in the U.S., DNS Arrow in Europe, Sigma 5
in Australia, NetEdge Computing Solutions, Nortech Infonet,
SoftCell Technologies, and Texport Technologies in India and ACW
Distribution and Avnet Azure in Malaysia. -- Tumbleweed announced
the launch of the FTP Analyzer, a diagnostic tool that effectively
detects and reports rogue and unsecured FTP (File Transfer
Protocol) traffic. As file sizes have grown, FTP has emerged as a
new target for security attacks, and numerous high-profile data
breaches have occurred. The FTP Analyzer provides IT departments
with the ability to monitor FTP activity on their networks, and
assess their need for a managed file transfer solution. --
Tumbleweed announced the availability of SecureTransport version
4.8. SecureTransport enables enterprises to securely exchange files
of any size over the Internet. SecureTransport 4.8 includes key new
features such as delegated administration, enhanced security,
expanded platform options and support for a Fiber SAN Card with 4.8
appliances. Financial Outlook Second Quarter of 2008: -- Tumbleweed
currently expects total revenue for the second quarter of 2008 to
be between $14.5 million and $16.0 million. -- Non-GAAP results are
expected to range from $(0.01) to $0.01 per share. Non-GAAP results
exclude expected costs for stock-based compensation expense of
$(0.03) per share for the second quarter of 2008. -- GAAP results
are expected to range from $(0.04) to $(0.02) per share. -- Per
share amounts are based on an estimated 51.2 million basic and 53.1
million fully diluted shares outstanding. Conference Call
Information: Tumbleweed management will host a conference call on
Thursday, May 1, 2008 at 2:00 p.m. PDT (5:00 p.m. EDT) to discuss
the first quarter 2008 results. The call can be accessed by dialing
(800) 366-3908 and giving the company name, "Tumbleweed."
Participants are asked to call the assigned number approximately 10
minutes before the conference call begins. A replay of the
conference call will be available after 5:00 p.m. PDT on May 1,
2008 through May 14, 2008 by dialing (800) 405-2236 and entering
pass code 11111876#. The conference call and supplemental financial
information will also be available on the investor relations
portion of the Tumbleweed website. Safe Harbor Statement Except for
the historical information contained herein, the matters discussed
in this press release may constitute forward-looking statements
that could cause actual results to differ materially from those
currently expected, particularly with respect to Tumbleweed's
financial outlook for the second quarter of 2008 (including
estimated revenue, loss, loss per share, income and income per
share on both a GAAP and a non-GAAP basis), as well as Tumbleweed's
beliefs about its opportunities, improved financial performance,
and future growth and success. In some cases, forward-looking
statements can be identified by terminology such as "may," "will,"
"should," "potential," "continue," "expects," "anticipates,"
"intends," "plans," "believes," "estimates," and similar
expressions. For further cautions about the risks of investing in
Tumbleweed, we refer you to the documents Tumbleweed files from
time to time with the Securities and Exchange Commission,
particularly Tumbleweed's Form 10-K filed March 17, 2008 and such
filings for the periods referred to above, to be filed
subsequently. Tumbleweed assumes no obligation to update
information contained in this press release. Although this release
may remain available on Tumbleweed's website or elsewhere, its
continued availability does not indicate that Tumbleweed is
reaffirming or confirming any of the information contained herein
as of a later date. Non-GAAP Information The non-GAAP financial
information included in this press release is not prepared in
accordance with GAAP as it excludes amortization of intangible
assets and stock-based compensation expense. Management believes
that the presentation of non-GAAP information may provide useful
information to investors because Tumbleweed has historically
provided this information and understands that some investors
consider it useful in evaluating Tumbleweed's expenses. Management
also uses this non-GAAP information, along with GAAP information,
in evaluating Tumbleweed's expenses and comparing Tumbleweed's
performance with that of its competitors. The non-GAAP results
should not be considered a substitute for financial information
presented in accordance with generally accepted accounting
principles, and may be different from non-GAAP measures used by
other companies. About Tumbleweed Tumbleweed Communications Corp.
(NASDAQ:TMWD), an industry leader in managed file transfer and
email security, provides enterprise-class solutions to
organizations of all sizes. Tumbleweed's innovative products enable
organizations to effectively manage and protect business-critical
Internet communications, with capabilities that span secure file
transfer, encryption, data loss prevention, and email security.
Tumbleweed has more than 3,300 customers worldwide, including
blue-chip companies across an array of industries such as
Technology, Retail, Finance, Healthcare, Manufacturing, Consumer
Packaged Goods, Telecom, Energy, and the U.S. Government. The
world's most security conscious organizations rely upon Tumbleweed
technology including Bank of America Securities, JP Morgan Chase
& Co., the U.S. Food and Drug Administration, and the U.S.
Department of Defense. Tumbleweed's award-winning products build on
14 years of R&D and 27 security patents in the U.S. alone --
many of which are licensed by other security vendors. More
information can be found at http://www.tumbleweed.com/. Tumbleweed,
SecureTransport, Secure Messenger and MailGate are either
registered trademarks or trademarks of Tumbleweed Communications
Corp. in the United States and/or other countries. All other
trademarks are the property of their respective owners. Contact:
Tumbleweed Communications Corp. Dan Matsui, 949-474-4300 (Investor
Relations) or SHIFT Communications Dan Gould, 415-591-8428 (Media
Relations) [Financial tables next pages] Tumbleweed Communications
Corp. Condensed Consolidated Statements of Operations March 31,
2008 (in 000s, except per share data) Three Months Ended March 31,
(unaudited) 2008 2007 REVENUES Product revenue $4,998 $5,897
Service revenue 8,212 9,022 Intellectual property and other revenue
2,050 96 NET REVENUE 15,260 15,015 COST OF REVENUE Cost of product
revenue 1,370 1,756 Provision for excess inventory - 164 Cost of
service revenue (1) 1,746 1,899 Amortization of intangible assets
201 234 GROSS PROFIT 11,943 10,962 OPERATING EXPENSES Research and
development (1) 3,857 3,896 Sales and marketing (1) 6,595 6,617
General and administrative (1) 2,793 2,487 Amortization of
intangible assets 32 183 TOTAL OPERATING EXPENSES 13,277 13,183
OPERATING LOSS (1,334) (2,221) Other income, net 224 339 NET LOSS
BEFORE TAXES (1,110) (1,882) Provision for income taxes 25 13 NET
LOSS $(1,135) $(1,895) BASIC AND DILUTED NET LOSS PER SHARE $(0.02)
$(0.04) WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC 51,150 50,840
DILUTED 51,150 50,840 RECONCILIATION TO NON-GAAP NET INCOME (LOSS)
NET LOSS $(1,135) $(1,895) Stock-based compensation expense 1,346
1,110 Amortization of intangible assets 233 417 NON-GAAP NET INCOME
(LOSS) $444 $(368) NON-GAAP BASIC NET INCOME (LOSS) PER SHARE $0.01
$(0.01) NON-GAAP DILUTED NET INCOME (LOSS) PER SHARE $0.01 $(0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC 51,150 50,840 DILUTED
52,193 50,840 (1) Stock-based compensation expense is classified as
follows: Cost of service revenue $38 $26 Research and development
274 303 Sales and marketing 400 220 General and administrative 634
561 $1,346 $1,110 Tumbleweed Communications Corp. Condensed
Consolidated Balance Sheets March 31, 2008 (in 000s) 3/31/2008
12/31/2007 ASSETS (unaudited) (unaudited) CURRENT ASSETS Cash and
cash equivalents $28,517 $26,299 Accounts receivable, net 9,273
13,074 Other current assets 2,750 1,733 TOTAL CURRENT ASSETS 40,540
41,106 Goodwill 48,074 48,074 Intangible assets, net - 233 Property
and equipment, net 2,096 2,038 Other assets 392 385 TOTAL ASSETS
$91,102 $91,836 LIABILITIES & EQUITY CURRENT LIABILITIES
Accounts payable $288 $820 Accrued liabilities 6,189 6,795 Deferred
revenue 21,674 20,996 TOTAL CURRENT LIABILITIES 28,151 28,611 LONG
TERM LIABILITIES Deferred revenue, excluding current portion 4,814
5,401 Other long term liabilities 13 13 TOTAL LONG TERM LIABILITIES
4,827 5,414 TOTAL LIABILITIES 32,978 34,025 STOCKHOLDERS' EQUITY
Common stock 52 52 Additional paid-in capital 366,514 365,155
Treasury stock (796) (796) Accumulated other comprehensive income
183 94 Accumulated deficit (307,829) (306,694) TOTAL STOCKHOLDERS'
EQUITY 58,124 57,811 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
$91,102 $91,836 DATASOURCE: Tumbleweed Communications Corp.
CONTACT: investors, Dan Matsui, +1-949-474-4300, ; or media, Dan
Gould of SHIFT Communications, +1-415-591-8428, , both for
Tumbleweed Communications Corp. Web site:
http://www.tumbleweed.com/
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