Last updated on April 17, 2014 at 1:21 EDT

Commtouch Acquires eleven GmbH to Accelerate Launch of Security-as-a-Service Solutions

November 19, 2012

MCLEAN, Virginia, November 19, 2012 /PRNewswire/ –

Commtouch(R) (NASDAQ: CTCH), a leading provider of Internet security technology and
cloud-based services, today announced it acquired Berlin, Germany-based eleven GmbH. The
acquisition was completed on Friday, November 16, 2012.

http://photos.prnewswire.com/prnh/20120501/529254 )

eleven is well-known throughout Germany as the leading provider of mail-based
Security-as-a-Service (SecaaS) solutions, capturing more than 36 percent of the German
market for managed email security. In addition to managed email security and archiving
solutions, eleven also provides advanced on-premise email solutions and services to
selected customers, and its customer base includes some of the largest organizations in
Germany, including BMW, SAP, Siemens and Deutsche Telekom / T-Online. The acquisition of
eleven enables Commtouch to accelerate delivery of private label cloud-based security
solutions specifically designed for OEM and service provider markets. In addition,
Commtouch’s global reach should accelerate sales and adoption of this leading security
technology developed by eleven.

Commtouch will continue expanding eleven’s brand and presence in Germany, Austria and
Switzerland while also supporting the needs of all of eleven’s valued customers, channel
partners and distributors through the combined resources of both companies. Outside of
Germany, Commtouch continues to focus on its primary OEM business and private labeling of
cloud based Security-as-a-Service solutions.

Commtouch will retain the eleven brand in the DACH region. Eleven’s 60 employees will
remain with the company. Robert Rothe, eleven CEO and founder, also joins Commtouch’s
executive team as Chief Technology Officer and head of Commtouch’s operations in Germany.

“eleven’s proven cloud-based technology delivers tremendous capabilities that will
accelerate Commtouch’s strategy to become a cloud-based Security-as-a-Service solution
provider for the OEM and service provider markets,” said Shlomi Yanai, CEO of Commtouch.
“Both the people and the products at eleven will serve a significant role in our continued
effort to grow Commtouch by offering the most advanced and innovative security technology.
We also look forward to serving all of eleven’s current customers and partners and we are
committed to maintaining its leading stance in Germany. I welcome all of eleven’s
employees to the Commtouch family and look forward to the valuable contributions of Robert
Rothe in his new role as CTO at Commtouch.”

“I am pleased to join Commtouch as CTO, and I am excited to combine the resources and
great talent in both companies,” said Rothe. “Through Commtouch’s acquisition of eleven,
there is a tremendous opportunity for global growth as Commtouch brings eleven’s
award-winning technology to larger markets through its extensive base of OEM and service
provider partners. We look forward to continuing great service for our existing customers
while also seeing significant benefit in expanding our opportunities as part of

For the trailing 12-month period ended October 31, 2012, eleven generated revenues of
approximately $8.0 million (EUR6.3 million) and was profitable. Similar to Commtouch,
eleven generates the vast majority of its revenues from the delivery of services to its
clients on a recurring subscription-based revenue model. The acquisition of eleven is
comprised of three elements: cash, shares, and an earn-out component based on the success
of eleven within the combined entity. The closing purchase price included net cash of $9.2
million (EUR7.2 million) and approximately $2.1 million worth of Commtouch restricted
shares. The earn-out component will be paid out through 2015 based on the successful
achievement of certain performance-based revenue goals.

Financial Guidance

With regard to Commtouch’s forward looking financial guidance, based on the
acquisition of eleven announced today, the company’s year-to-date results, as well as the
company’s current expectations for the remainder of 2012, Commtouch is updating its
outlook. Commtouch is increasing its revenue guidance and now anticipates full year 2012
revenue will be in the range of $23.7 million to $23.9 million. The acquisition will be
accretive, with a modest positive contribution for the current fourth quarter of 2012;
accordingly the company is reiterating its expectation that full year 2012 non-GAAP net
income is expected to be greater than $4.0 million.

The above outlook is as of the date of this release, and the company undertakes no
obligation to update its estimates in the future.

Conference Call Information

The company has scheduled a conference call for Monday, November 19, 2012 at 10:00
a.m. ET to review Commtouch’s acquisition of eleven GmbH. To participate in the call,
please dial one of the following access numbers 10 minutes prior to the start time of the

                                  US Dial-in Number: 1-877-407-9210
                            International Dial-in Number: +1-201-689-8049
                               Israel Dial-in Number: 00-800-4626-6666
                           10:00 a.m. Eastern Time, 7:00 a.m. Pacific Time,
                               3:00 p.m. UK Time, 5:00 p.m. Israel Time

The call will be simultaneously webcast live from a link on Commtouch’s Web site at


About eleven

A leading email security provider based in Germany, eleven’s unique eXpurgate
technology offers a spam filter and email categorization service that reliably protects
users against spam and phishing, detects potentially dangerous email, and can distinguish
between individual messages and mass emails. eXpurgate also offers numerous virus
protection options and a powerful email firewall. More than 45,000 organizations of all
sizes use eXpurgate to check and categorize more than a billion email messages every day.
Customers include Internet service providers and telecommunication carriers such as
T-Online, O2, 1&1 and freenet as well as many well-known companies and public
institutions, including Air Berlin, BMW, the Federal Association of German Banks, DATEV,
the Free University of Berlin, Landesbank Berlin, RTL, SAP, ThyssenKrupp and Tobit
Software AG. Visit http://www.eleven.de.

About Commtouch

Commtouch(R) (NASDAQ: CTCH) is a leading provider of Internet security technology and
cloud-based services for vendors and service providers, increasing the value and
profitability of our customers’ solutions by protecting billions of Internet transactions
on a daily basis. With six global data centers and award-winning, patented technology,
Commtouch’s email, Web, and antivirus capabilities easily integrate into our customers’
products and solutions, keeping more than 350 million end users safe. To learn more, visit


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Use of Non-GAAP Measures

Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude:
share based compensation expenses, amortization and impairment of acquired intangible
assets, deferred taxes, acquisition related costs and adjustments to earn-out obligations
related to acquisitions. The purpose of such adjustments is to give an indication of the
company’s performance exclusive of non-cash charges and other items that are considered by
management to be outside of the company’s core operating results. The company’s non-GAAP
financial measures are not meant to be considered in isolation or as a substitute for
comparable GAAP measures, and should be read only in conjunction with the company’s
consolidated financial statements prepared in accordance with GAAP. Company management
regularly uses supplemental non-GAAP financial measures internally to understand, manage
and evaluate our business and make operating decisions.

These non-GAAP measures are among the primary factors management uses in planning for
and forecasting future periods. The company believes this adjustment is useful to
investors as a measure of the ongoing performance of our business. The company believes
these non-GAAP financial measures provide consistent and comparable measures to help
investors understand the company’s current and future operating cash flow performance.
These non-GAAP financial measures may differ materially from the non-GAAP financial
measures used by other companies. The presentation of this non-GAAP financial information
is not intended to be considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP. Management uses both GAAP and
non-GAAP measures when evaluating the business internally and therefore felt it important
to make these non-GAAP adjustments available to investors.

Recurrent Pattern Detection, RPD, Zero-Hour and GlobalView are trademarks, and
Commtouch is a registered trademark of Commtouch. U.S. Patent No. 6,330,590 is owned by
Commtouch. All other trademarks are the property of their respective owners.

This press release contains forward-looking statements, including projections about
our business, within the meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. For example, statements in the future tense,
and statements including words such as “expect,” “plan,” “estimate,” “anticipate,” or
“believe” are forward-looking statements. These statements are based on information
available to us at the time of the release; we assume no obligation to update any of them.
The statements in this release, including those relating to how eleven’s proven
cloud-based system provides tremendous capabilities that will accelerate Commtouch’s
launch of a Security-as-a-Service solution for the OEM market, are not guarantees of
future performance and actual results could differ materially from our current
expectations as a result of numerous factors, including business conditions and growth or
deterioration in the Internet market, commerce and the general economy, both domestic as
well as international; fewer than expected new-partner relationships; competitive factors,
including pricing pressures; technological developments, and products offered by
competitors; the ability of our OEM partners to successfully penetrate markets with
products integrated with Commtouch technology; a slower than expected acceptance rate for
our newer product offerings; availability of qualified staff; and technological
difficulties and resource constraints encountered in developing new products, as well as
those risks described in the text of this press release and the company’s Annual Reports
on Form 20-F and reports on Form 6-K, which are available through http://www.sec.gov.

        Company Contact:
        Ron Ela, Chief Financial Officer
        (US) +1-650-864-2291 (Int'l) +972-9-8636813
        ron.ela @commtouch.com

        Israel Investor Relations Contact:
        Iris Lubitch

        U.S. Investor Contact:
        Christopher Chu

        Commtouch Media Contact:
        Matthew Zintel
        Zintel Public Relations



SOURCE Commtouch

Source: PR Newswire