Jacada Reports Profitable 2002 Fourth Quarter - Software License Revenues up 52% from the Third Quarter

Business Wire, Feb 11, 2003

Business Editors

ATLANTA--(BUSINESS WIRE)--Feb. 11, 2003

Jacada Ltd. (Nasdaq: JCDA), the leading provider of legacy extension, integration and emulation solutions, today reported net income of $444,000, or $0.02 per share, on revenues of $5.6 million for the fourth quarter ended December 31, 2002.

In the 2001 fourth quarter, Jacada reported a net loss of $2.6 million, or $0.14 per share, after non-recurring charges, on revenues of $5.8 million. In the 2002 third quarter, Jacada reported a net loss of $1.3 million, or $0.07 per share, after non-recurring charges, on revenues of $4.6 million.

Gross profit for the 2002 fourth quarter was $4.7 million, or 84% of total revenues, compared to $4.1 million, or 72% of revenues, in the 2001 fourth quarter, and $3.6 million, or 78% of total revenues, in the 2002 third quarter. Software license revenues grew 52% to $2.8 million from $1.8 million in the 2002 third quarter. Service and maintenance revenues were $2.8 million, unchanged from the 2002 third quarter.

"Strength in all aspects of our business -- notably the growth in higher-margin software license revenues -- contributed to positive income from operations in the fourth quarter," said Gideon Hollander, CEO of Jacada. "This is the first quarter Jacada has realized income from operations, a fact that is even more exciting considering that we recognized the cost of acquired technology in the amount of $385,000 during the quarter. We are very pleased to see growing momentum as companies looking to leverage their existing systems continue to choose Jacada's solutions."

"In the fourth quarter, we acquired technology components that will supplement our internal research and development efforts and accelerate the delivery of planned solutions. We also expect to acquire and develop additional products and technologies in 2003 as we round out our product offering," said Hollander. "Our goal remains unchanged: to become the one-stop-shop for all legacy access and integration needs."

At the end of the 2002 fourth quarter, cash and investments remained relatively unchanged from the 2002 third quarter at $41.4 million.

"Jacada's cash position has remained relatively unchanged for the sixth consecutive quarter. We are delighted that we have been able to preserve a strong balance sheet, even after acquiring a business and technology for incorporation into our future products. We enter 2003 keenly focused on extending our technological leadership position while growing both license revenues and operating income," Hollander added.

For the full year ended December 31, 2002, Jacada reported a net loss of $2.9 million after $0.5 million in non-recurring restructuring-related charges, or $0.16 per share, on revenues of $21.5 million, compared to a net loss of $8.8 million after non-recurring charges of $2.8 million, or $0.48 per share, on revenues of $25.5 million in 2001. Gross profit for 2002 was $16.9 million, or 79% of revenues, compared to $18.5 million, or 72% of revenues, in 2001. Software license revenues were $9.8 million in 2002, compared to $10.9 million in 2001.

Jacada also announced today that Mike Potts, who has been with Jacada for over seven years, will step down as president of Jacada Ltd. effective May 31 of this year. Potts is stepping down as president of Jacada Ltd. for personal reasons, most important of which is to spend more time with his family. Potts will continue with Jacada in an advisory role through 2004, concentrating on supporting business development.

"After nearly 17 years in the fast-paced software business, I have decided to take advantage of this window of opportunity and spend more time with my family," said Potts. "With the company in a solid operating and financial position, I am comfortable that this is the right time for me to make this transition."

Fourth-Quarter Highlights

Jacada secured significant new and add-on business during the fourth quarter, experiencing strength in the European channel as well as many of the key vertical markets including, insurance, state and local government, financial services, manufacturing, retail and healthcare. In the fourth quarter, Jacada closed new and follow-on business with customers such as AdminaStar Federal, Banco Bilbao Vizcaya Argentaria (BBVA), Canadian National Railway Company, Farm Credit Canada, Farm Family Insurance, Fiserv, Kmart Corporation, Metals USA, Provident Bank, Qwest Communications, Parametric Technology Corporation (PTC), St. Paul Insurance, and Wausau Benefits.

Jacada experienced definite momentum in its partner channel during the fourth quarter. Computer Associates named Jacada their preferred vendor for mainframe integration and extension, partnering with Jacada to provide enhanced Web-to-host integration to complement CA's offerings in data integration and data management. This new agreement also positions Jacada as a powerful solution for customers leveraging other CA solutions that require mainframe application access such as CleverPath Portal.