Jacada Reports Fourth Quarter and Fiscal Year 2008 Results

Jacada Ltd. (Nasdaq: JCDA), a leading provider of unified desktop and process optimization solutions for customer service operations, today reported financial results for the fourth quarter and for the fiscal year ended December 31, 2008.

For the fourth quarter of 2008, total reported revenues were $5.5 million compared to $6.1 million in the fourth quarter of 2007. Total reported revenues for the fiscal year 2008 rose 73% to $23 million compared to $13.3 million for the fiscal year 2007.

Non-GAAP gross profit for the fourth quarter was $2.7 million, or 49% gross margin, compared to $2.5 million in gross profit, or 41% gross margin in the fourth quarter last year. For the fiscal year 2008, non-GAAP gross profit was $12.1 million, or 53% gross margin, compared to $6.2 million or 47% gross margin for the fiscal year 2007.

The fourth quarter non-GAAP net loss from continuing operations improved 36% to ($1.5 million), or ($0.9) per share, when compared to ($2.3 million), or ($0.11) per share in the fourth quarter of 2007. Non-GAAP net loss for the fiscal year 2008 improved 52% to ($5.3 million) compared to a net loss of ($11 million) for the fiscal year 2007.

Total GAAP gross profit was $2.7 million, or 49% gross margin, compared to $2.3 million and 37%, respectively, in last year’s fourth quarter. For the fiscal year 2008, GAAP gross profit was $11.9 million, or 52% gross margin, compared to $5.8 million or 43% gross margin for the fiscal year 2007.

"We are pleased to have exceeded both our revenue and bottom-line guidance for 2008,” commented Paul O’Callaghan, chief executive officer for Jacada. "Our record annual revenue growth was led by a 106% increase in software license revenue. This record growth combined with improved services margins and continued improvement in operational efficiency contributed to our exceeding expectations for our bottom-line results as well. We believe we have demonstrated strong fiscal management and performance over the past eight quarters, and have managed well through this difficult period. During the fourth quarter we instituted a reduction in force and other expense containment strategies as part of our ongoing focus on reducing costs and improving our bottom line results. We remain committed to continue to make significant progress towards improving margins and reducing losses, while working hard to win new business.”

Overall GAAP net loss for the fourth quarter of 2008 was ($2.6 million), or ($0.16) per share, which includes ($1.0 million) of net loss from continuing operations and a ($1.6 million) net loss from discontinued operations. This is compared to a GAAP net income of $5.4 million or $0.26 per share for the fourth quarter of fiscal year 2007, which includes $3.3 million of net income from continuing operations and $2.1 million of net income from discontinued operations. GAAP net income for the fiscal year 2008 was $13.2 million, or $0.68 per share, which includes ($5.0 million) of net loss from continuing operations and $18.2 million of capital gain net of taxes from discontinued operations. This is compared to a GAAP net income of $4.1 million or $0.20 per share for the fiscal year 2007, which includes ($3.4 million) of net loss from continuing operations and $7.5 million of net income from discontinued operations.

"Our core value proposition of improving customer retention and reducing operating expense is a message that continues to resonate with our target markets,” continued O’Callaghan. "Our ability to implement in as little as four months, and deliver a complete return on investment in less than 12 months is seen as a very attractive alternative to large scale systems replacements, especially in a market that now demands quick time-to-value and has little appetite for long, expensive and risky large-scale application implementation projects.”

At the end of the fourth quarter of 2008 cash and investments including restricted cash were $33.1 million, compared to $33.8 million reported on December 31, 2007. The restricted cash includes $2.6 million, which is being held in escrow as part of the sale of the company’s legacy business to Software AG.

During the year, the company:

• Signed and announced eight material software and/or services contracts with new and existing customers, the most in the company’s history. The company defines a material contract as one with an initial value of $1 million or more.
• Successfully deployed the Jacada unified desktop solution in eight new customer accounts, three of which were delivered by strategic systems integration partners.
• Announced a major new release of the flagship product Jacada WorkSpace, with first-time support for the IBM WebSphere platform. Previous versions of the product were available on the BEA (Oracle) WebLogic application server only.
• Gained industry recognition when Nationwide Insurance won the prestigious InfoWorld 100 Award for their Jacada unified desktop project.
• Signed a reseller agreement with Tieto (OMX: TIE1V), a large global IT services firm. Active in more than 25 countries with approximately 16,000 employees and nearly $3 billion in revenue, Tieto is one of the largest IT services providers in Europe.

"Due to the uncertain nature of the economy and lack of visibility regarding the impact of these market conditions on our customers, we are suspending our traditional guidance at this time,” concluded O’Callaghan. "As we all await an economic recovery, Jacada will continue to manage what we can manage, and focus on the bottom line through tight expense management and other initiatives to expand our margins.”

Conference Call Details

Jacada management will host a conference call at 10:30 a.m. Eastern Time on February 12, 2009, to discuss the results with the investment community. To participate in the teleconference, please call toll-free 866-783-2144, or 857-350-1603 for international callers, and provide passcode 98976117 approximately 10 minutes prior to the start time. A (live audio) webcast will also be available over the Internet at www.jacada.com (under "About Us" then "Investors") or www.earnings.com. A replay of the teleconference will be available for three days beginning at 12:30 p.m. ET on February 12, 2009. To access the replay, dial toll-free 888-286-8010, or for international callers dial 617-801-6888, and provide passcode 29134328.

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 discontinued operations, taxes, non-cash stock-based compensation expenses in accordance with SFAS 123R, amortization of acquired intangible assets related to acquisitions effected by Jacada in previous years, restructuring costs and devaluation of ARS. Jacada management believes the non-GAAP financial information provided in this release is useful to investors’ understanding and assessment of the on-going core operations of Jacada 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 desktop, Jacada solutions create greater operational efficiency and increase agent and customer satisfaction. Founded in 1990, Jacada 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.