CERTICOM REPORTS THIRD QUARTER RESULTS

Quarterly revenue increased 130% over previous year 

HAYWARD, Calif., March 1, 2001 - Certicom Corp. (Nasdaq NM: CERT; TSE: CIC), a leading provider of mobile e-business security, today announced results for its fiscal third quarter 2001 and nine months ended January 31, 2001.

Certicom reported revenue of $7.6 million for the three months ended January 31, 2001, a 130% increase over revenue of $3.3 million in the same period in fiscal year 2000. The increase in revenues was primarily due to the addition of new licenses for the company's products. In addition, revenues increased 21% over revenue of $6.3 million reported in the quarter ended October 31, 2000. 

Rick Dalmazzi, president and chief executive officer of Certicom, stated, "We saw continued momentum in all areas of our business during the third quarter and posted our tenth consecutive quarter of strong revenue growth. In the third quarter we officially launched Trustpoint, the industry's first PKI solution to bridge the wired and wireless worlds, and movianVPN, the industry's first VPN client for mobile devices. In addition, we opened a European office in London, the first in a number of planned initiatives targeted at increasing our global presence." 

Software licensing fees, consulting and systems integration fees and hardware sales accounted for 74%, 22% and 4%, respectively, of the company's revenue during the third fiscal quarter of 2001.

Certicom reported a net loss of $5.9 million, or $(0.23) per share, excluding $4.4 million of non-cash charges and $1.7 million associated with one-time secondary offering costs for the third quarter ended January 31, 2001, compared to a net loss of $1.5 million, or ($0.07) per share, excluding $2.4 million of non-cash charges for the same period last year. Including non-cash and other charges, Certicom reported a net loss of $12.0 million, or $(0.46) per share, for the third quarter of fiscal 2001, compared to a net loss of $3.9 million, or $(0.18) per share, in the same period a year ago.

For the nine months ended January 31, 2001, the company reported revenue of $19.0 million compared to revenue of $8.1 million for the nine months ended January 31, 2000. Certicom reported a net loss of $14.1 million, or $(0.54) per share, excluding $12.0 million of non-cash charges and $1.7 million associated with one-time secondary offering costs for the nine months ended January 31, 2001, compared to $5.1 million, or ($0.23) per share, excluding $5.9 million of non-cash charges for the same period last year. Including non-cash and other charges, Certicom reported a net loss of $27.8 million, or $(1.07) per share, for the first nine months of fiscal 2001, compared to a net loss of $11.0 million, or $(0.50) per share, in the same period a year ago.

As of January 31, 2001, Certicom had cash and marketable securities of $38.3 million compared to $13.1 million as of April 30, 2000. 

In addition, Certicom announced that Robert P. Wierderhold has been elected to the Board of Directors. Mr. Wiederhold replaces Erling Rasmussen from Motorola, Inc. who served on the Board for four years. Certicom also announced that Philip Deck, Chairman of the Board has resigned to devote his full attention to his position of CEO at Mortice Kern Systems, a publicly held software company in Canada. There are currently seven members on Certicom's Board of Directors. 

Mr. Wiederhold, 41, has extensive experience in the telecommunications industry and has served as President and Chief Executive Officer and a director of Tality Corporation since its inception in July 2000 following its spin-off from Cadence Design Systems, Inc. (NYSE: CDN). Tality is the largest global provider of product development outsourcing. With more than 1,100 engineers located in 14 sites worldwide, they are a leader in the design of complex electronic systems and intellectual property. Tality's primary focus is on the design of products in the fast growing telecommunications market. Prior to joining Cadence in 1985, Mr. Wiederhold worked at AT&T Bell Labs. Wiederhold holds a BSEE from the University of Massachusetts and an MSEE from Cornell University. 

New Licensees
During the third quarter, Certicom's sales and business development team successfully closed a number of new licensing agreements in the wireless market segment. Applications included location-based shopping, mobile enterprise solutions, mobile management software, wireless ASP, ISP and Mobile Application Providers (MAP) and wireless network infrastructure (including WAP proxy servers and browsers). The company also added a number of new customers in other key market areas, including B2B and B2C e-commerce, consumer privacy, content protection, enterprise e-business and wireless content portal software.

Certicom announced licensing agreements with wireless technology leaders including Aether Systems, BEA Systems, Novarra, OmniSky, SaleMinder, Vaultus, Wysdom and XcelleNet. In addition, Alteon WebSystems, Catholic Healthcare West, Collective Communications, Five Nine Solutions, i-drive, iPlanet (a Sun-Netscape Alliance), Ponoi and Tempest Software have joined its growing list of enterprise e-business customers. 

New Products
During the quarter, Certicom announced the availability of Trustpoint, a comprehensive suite of flexible public key infrastructure (PKI) products. The Trustpoint PKI Portal is the industry's first solution that bridges the wired and wireless PKI worlds by allowing companies to manage the security needs of desktop PCs, handheld devices, RIM pagers, HTML PDAs, cHTML phones and WAP-enabled phones from a centralized point of control. Certicom brought Trustpoint to the e-business community to complement its current MobileTrust Certificate Authority (CA) service offering, resulting in an all-encompassing suite of PKI products to suit diverse business needs.

Certicom also launched movianVPN™, the industry's first virtual private network (VPN) client for mobile devices that provides end-to-end security by interoperating with the most popular VPN gateways including Check Point, Cisco and Nortel. movianVPN enables companies to extend critical enterprise applications such as e-mail and customer resource management (CRM) tools to mobile professionals using popular Palm OS® 3.5 or Windows CE 3.0-based devices. With the launch of movianVPN, Certicom further expanded its impressive list of high-powered security solutions and became a provider of wireless security applications directly to various Fortune 1000 companies. Customers who have now purchased movianVPN for deployment projects include Cargill Incorporated, Catholic Healthcare West - Phoenix ITS, Fujitsu, Genencor International, as well as one of the largest global providers of computing solutions and one of the largest global telephone companies. Other companies actively working on deployment projects with Certicom include Lockheed Martin and several of the largest global financial and insurance institutions. 

Strategic Alliances and Partnerships
During the 3rd quarter Certicom announced key partnerships with Lucent Technologies, Openwave Systems and Symbian.

  • Certicom and Lucent announced an alliance to jointly develop secure solutions for Lucent's mobile Internet offerings worldwide. The development effort will focus on end-to-end solutions that provide superior user authentication and security to enable safe and secure transactions between the growing base of mobile Internet devices and the Internet.
  • Certicom and Openwave (formerly Phone.com) announced that Openwave will embed the Certicom MobileTrust root certificate in the Openwave™ UP.Browser® microbrowser, the industry's leading WAP microbrowser. Inclusion of Certicom's trusted root in the UP.Browser provides enhanced security for consumers who engage in wireless transactions such as stock trading, wagering, and banking. Certicom became Premier root key provider, allowing both companies to jointly promote the use of digital certificates.
  • Certicom and Symbian announced a partnership to enable Symbian-based VPN solutions for next generation mobile phones. The partnership will accelerate Certicom's support of the Symbian platform with movianVPN so that users of Symbian-based smartphones and communicators will now have secure access to corporate intranets.

Other Highlights 
During the third quarter Certicom announced the opening of a European office in London. The new office will help Certicom more effectively serve the rapidly growing mobile and wireless enterprise infrastructure markets in Europe and is the first in a number of planned initiatives targeted at increasing its global presence. Also during the quarter, Certicom unveiled the Certicom Trust Partner Program™, an open, industry wide initiative dedicated to providing leading security solutions for today's marketplace. The Certicom Trust Partners Program is intended to enhance the relationship between Certicom and key industry players by providing opportunities for bundling, branding and market development, including specialized programs such as the MobileTrust™ Partner Program. Designed to promote the benefits of security as a key enabler and competitive differentiator, various industry leaders including 724 Solutions, Aether Systems, AvantGo, BEA Systems, GoAmerica, iAnywhere Solutions (Sybase), Motorola, Openwave Systems, Pitney Bowes, QUALCOMM and w-Technologies have joined the alliance in order to leverage security as part of their strategic offering.

Investor Conference Call
Certicom's management team will hold a conference call today at 11:00 am Eastern/ 8:00 am Pacific to discuss third quarter 2001 results. The call can be accessed by going to the company's web site at http://www.certicom.com. A replay of the call will also be posted to Certicom's web site for 90 days.

About Certicom 
Certicom is a leading provider of information security software and services, specializing in solutions for mobile e-business. The company's products and services are specifically designed to address the unique requirements of a wireless data environment. Certicom's solutions incorporate its proprietary encryption technology and are based on industry standards for information security that utilize public key cryptography. Certicom's products are currently licensed to more than 150 customers including ePocrates, Inc., Motorola, Inc., NeoPoint, Inc., Nortel Networks, Openwave Systems, Palm, Inc., Pixo, Inc., QUALCOMM, Inc., Research In Motion Ltd. and Sony International (Europe) GmbH. Certicom's headquarters and worldwide sales and marketing operations are based in the Silicon Valley in Hayward. For more information, visit Certicom's Web site at http://www.certicom.com.

Certicom, MobileTrust, movian, movianVPN and Trustpoint are trademarks and/or registered trademarks of Certicom Corp. All other companies and products listed herein are trademarks or registered trademarks of their respective holders.

Except for historical information contained herein, this press release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, those relating to the acceptance of mobile and wireless devices and the continued growth of e-commerce and m-commerce (mobile e-commerce), the increase of the demand for mutual authentication in m-commerce transactions, the acceptance of Elliptic Curve Cryptography (ECC) technology as an industry standard, the market acceptance of our principle products and sales of our customer's products, the impact of competitive products and technologies, the possibility of our products infringing patents and other intellectual property of third parties, and costs of product development. Certicom will not update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect Certicom's financial results is included in the documents Certicom files from time to time with the Securities and Exchange Commission and Canadian securities regulatory authorities including Certicom's current Annual Report on Form 10-K and quarterly reports on Form 10-Q.

 

For further information, please contact:

Starla Ackley Rich Brounstein
IR Manager CFO
Certicom Corp. Certicom Corp.
(510) 780-5404 (510) 780-5325
sackley@certicom.com rbrounstein@certicom.com
 
Lillian Armstrong (Analysts) Pamela Rigler ( Media)
Lippert/Heilshorn & Associates, Inc. Lippert/Heilshorn & Associates, Inc.
(415) 433-3777 (212) 838-3777
lillian@lhai-sf.com pamela@lhai.com

 

Consolidated Financial Statements:

Consolidated Statements of Operations

(Unaudited - In thousands of U.S. dollars, except per share data)

 

Three months ended January 31,

 

2001

2000

   
REVENUES

$ 7,627

$ 3,309

 
COSTS AND EXPENSES  
Cost of hardware sold

240

186

Systems intergration

1,972

502

Selling and marketing

5,030

1,676

Research and development

3,558

1,034

General and administrative

3,227

1,461

Depreciation and amortization

3,146

1,854

Cost of secondary offering

1,693

-

Amortization of deferred stock compensation

1,284

-

Purchased in-process research and development

-

535

 
 

20,150

7,248

 
OPERATING LOSS

(12,523)

(3,939)

Interest and other

481

9

Non cash interest expense

-

-

 
LOSS BEFORE INCOME TAXES

(12,042)

(3,930)

Income taxes

-

-

 
NET LOSS

$ (12,042)

$ (3,930)

OTHER COMPREHENSIVE INCOME (LOSS)    
Unrealized gain on marketable securities

(74)

-

 
COMPREHENSIVE LOSS

(12,116)

(3,930)

 
BASIC AND DILUTED NET LOSS PER COMMON SHARE

$ (0.46)

$ (0.18)

 
WEIGHTED AVERAGE NUMBER OF OUTSTANDING COMMON SHARES

26,239,038

22,348,000

 

CERTICOM CORP.
Consolidated Statements of Operations

(Unaudited - In thousands of U.S. dollars, except per share data)

 

Nine months ended January 31,

 

2001

2000

   
REVENUES

$ 18,981

$ 8,069

 
COSTS AND EXPENSES  
Cost of hardware sold

695

361

Systems integration

4,472

1,206

Selling and marketing

12,509

4,414

Research and development

9,006

2,616

General and administrative

8,457

4,468

Depreciation and amortization

8,881

5,364

Cost of secondary offering

1,693

-

Amortization of deferred stock compensation

2,754

-

Purchased in-process research and development

-

535

 
 

48,467

18,964

 
OPERATING LOSS

(29,486)

(10,895)

Interest and other

2,266

(12)

Non cash interest expense

(423)

-

 
LOSS BEFORE INCOME TAXES

(27,643)

(10,907)

Income taxes

135

134

 
NET LOSS

$ (27,778)

$ (11,041)

OTHER COMPREHENSIVE INCOME (LOSS)    
Unrealized gain on marketable securities

44

-

 
COMPREHENSIVE LOSS

(27,734)

(11,041)

 
BASIC AND DILUTED NET LOSS PER COMMON SHARE

$ (1.07)

$ (0.50)

 
WEIGHTED AVERAGE NUMBER OF OUTSTANDING COMMON SHARES

25,926,432

22,028,000

 

CERTICOM CORP.
Consolidated Balance Sheets

(In thousands of U.S. dollars)

 

(Unaudited)

 

January 31, 2001

April 30, 2000

ASSETS    
Cash

$ 1,944

$ 10,508

Marketable securities, available for sale

36,322

2,550

Accounts receivable (net of allowance for doubtful accounts of $411 and $161)

7,624

3,862

Unbilled receivables

1,773

2,115

Inventories

340

218

Prepaid expenses, deposits and assets

1,982

1,740

 
Total Current Assets

49,985

20,993

Capital Assets

10,246

5,213

Patents

1,163

873

Acquired intangibles

27,695

24,437

 
Total assets

$ 89,089

$ 51,516

 
LIABILITIES    
Accounts payable

$ 6,107

$ 974

Accrued liabilities

3,693

2,107

Income taxes payable

510

430

Deferred revenue

2,418

909

Note payable

-

10,000

 
Total current liabilities

12,728

14,420

Lease inducements

981

1,105

 
 

8,559

15,525

 
SHAREHOLDERS' EQUITY    
Common shares    
Authorized: unlimited Issued and outstanding: 26,496,814 and 23,087,866

143,453

80,859

Additional paid-in capital

22,520

11,922

Deferred stock compensation

(6,069)

-

Accumulated other comprehensive loss

(2,453)

(2,497)

Accumulated deficit

(82,071)

(54,293)

 
Total shareholders' equity

75,380

35,991

 
Total liabilities and shareholders' equity

$ 89,089

$ 51,516