IncrediMail Reports $6.6 Million Revenues, $3.3 Million EBITDA and $2.1 Million Net Income in Third Quarter of 2009

http://www.businesswire.com/news/home/20091112005459/en

Net Income First Nine Months of 2009 $5.9 Million
TEL AVIV, Israel--(Business Wire)--
IncrediMail Ltd. (NASDAQ:MAIL) (www.incredimail-corp.com), an Internet company,
today reported financial results for the third quarter ended September 30, 2009.

Total revenue for the third quarter of 2009 rose $0.7 million, or 13%, to $6.6
million, from $5.9 million in the same quarter in 2008. Net income for the third
quarter of 2009 was $2.1 million, compared to $0.1 million same third quarter
last year, with earnings per diluted share of $0.21 compared to $0.01 in the
third quarter last year.

In the first nine months of 2009, revenues were $19.7 million, increasing 25%,
from $15.8 million in the same period last year. Net income in the first nine
months of 2009 was $5.9 million, or $0.63 per diluted share, compared to net
income of $48 thousand in the first nine months of 2008.

Commenting on the results, Mr. Ofer Adler, IncrediMail`s CEO, said,
"Traditionally consumers spend less time in front of their computers in the
summer months, despite this we yet again succeeded in achieving revenues higher
than the prior winter months. This is primarily attributable to our continued
success in growing search generated revenues, with our users currently driving
searches through 4 different product offerings; IncrediMail, HiYo, Magentic and
IncrediGames."

Gross profit increased 16% to $6.2 million in the third quarter of 2009, from
$5.4 million in the third quarter last year, as a result of the higher revenues
and an increase in gross profit margin to 94%, from 92% in the third quarter of
2008. The increased profitability was due to the growing portion of search
related revenues, which have no associated direct costs, and accounted for over
75% of revenues this quarter.

Total operating expenses for the third quarter of 2009 were $3.3 million, down
$1.5 million, or 31%, from the third quarter of 2008.

R&D expenses decreased 17%, to $1.6 million in the third quarter of 2009 from
$1.9 million in the same quarter last year. Sales and Marketing expenses were
$1.2 million in the third quarter of 2009, decreasing by $0.9 million, or 42%.
These decreases were primarily a result of a decrease in customer acquisition
expenses that had increased in 2008 to achieve HiYo market penetration, as well
as the successful reorganization and shifting focus towards search related
revenues.

In the third quarter of 2009, EBITDA was $3.3 million, a robust 50% of revenues,
and in the first nine months of 2009 it was $9.6 million, or 49% of revenues.
Operating income in the first nine months of 2009 was $8.5 million, compared to
$0.3 million in the first nine months of 2008.

Taxes on income in the third quarter of 2009 were $0.9 million, representing an
effective tax rate of approximately 31% for the quarter of 2009. This reflects
the Company`s decision to institute a dividend policy beginning 2009 and as a
result forgo some of its Israeli tax benefits.

"As we continue to grow our revenues, we have been consistently successful in
controlling costs, enabling us to generate EBITDA of $9.6 million in the first
nine months of 2009, at a rate of 49% of revenues. During this quarter we have
seen the successful launch of our IncrediMail 2 product, and we expect this and
other products and initiatives, which we plan to introduce in the fourth
quarter, will assist us in achieving the goals we`ve set out for 2009,"
concluded Mr. Ofer Adler.

Conference Call

IncrediMail will host a conference call to discuss the results today, November
12th at 9:30 AM EDT (16:30 PM Israel Time). We invite all those interested in
participating in the call to dial 1-(888)-668-9141. Callers from Israel may
access the call by dialing (03) 918-0650. Participants may also access a live
webcast of the conference call through the Investor Relations section of
IncrediMail's website at www.incredimail-corp.com. The webcast will be archived
on the company`s website for seven days.

About IncrediMail Ltd.

IncrediMail Ltd. (NASDAQ:MAIL) is an internet company that develops customized,
downloadable graphic consumer applications used to generate search related
revenues and designs, markets and delivers high end personal desktop software.
The company`s award winning e-mail client product, IncrediMail Premium, is sold
in over 100 countries in 10 different languages. Other products include, HiYo a
graphic add-on to instant messaging software, Magentic, a wallpaper and
screensaver software, and PhotoJoy, software for presenting digital personal
photos.

Non-GAAP measures

Use of Non-GAAP Financial Information - In addition to reporting financial
results in accordance with generally accepted accounting principles, or GAAP,
IncrediMail uses non-GAAP measures of net income and earnings per share, which
are adjustments from results based on GAAP to exclude reorganization expenses
and non-cash stock-based compensation expenses. IncrediMail also uses EBITDA as
a non-GAAP financial performance measurement. EBITDA is calculated by adding
back to net income; interest, taxes, stock-based compensation and depreciation
and amortization. IncrediMail's management believes the non-GAAP financial
information provided in this release is useful to investors' understanding and
assessment of IncrediMail`s on-going core operations 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 as
presented in this press release in evaluating and operating business internally
and as such deemed it important to provide all this information to investors.
These non-GAAP financial measures may differ materially from the non-GAAP
financial measures used by other companies. Reconciliation between results on a
GAAP and non-GAAP basis is provided in tables immediately following
IncrediMail's Statement of Operations in this press release.

Forward Looking Statements

This press release contains historical information and forward-looking
statements within the meaning of The Private Securities Litigation Reform Act of
1995 with respect to the business, financial condition and results of operations
of the Company. The words "believe," "expect," "intend," "plan," "should" and
similar expressions are intended to identify forward-looking statements. Such
statements reflect the current views, assumptions and expectations of the
Company with respect to future events and are subject to risks and
uncertainties. Many factors could cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements that may be expressed or implied by such
forward-looking statements, including, among others, changes in the markets in
which the Company operates and in general economic and business conditions, loss
of key customers and unpredictable sales cycles, competitive pressures, market
acceptance of new products, inability to meet efficiency and cost reduction
objectives, changes in business strategy and various other factors, both
referenced and not referenced in this press release. Various risks and
uncertainties may affect the Company and its results of operations, as described
in reports filed by the Company with the Securities and Exchange Commission from
time to time. The Company does not assume any obligation to update these
forward-looking statements.

INCREDIMAIL LTD.
CONDENSED BALANCE SHEETS
U.S. dollars in thousands (except share data)

September 30, December 31,
2009 2008
ASSETS Unaudited
CURRENT ASSETS:
Cash and cash equivalents $ 21,540 $ 7,835
Marketable securities 8,482 18,790
Trade receivables 2,387 2,194
Deferred taxes - 362
Other receivables and prepaid expenses 4,969 4,941
Total current assets 37,378 34,122
LONG-TERM ASSETS:
Severance pay fund 1,055 955
Deferred taxes 252 328
Other long-term assets 500 619
Property and equipment, net 1,446 1,478
Other intangible assets, net 130 149
Total long-term assets 3,383 3,529
Total assets $ 40,761 $ 37,651

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $ 1,094 $ 1,948
Dividend payable 3,839 --
Deferred revenues 2,335 2,605
Accrued expenses and other liabilities 5,877 4,426
Total current liabilities 13,145 8,979
LONG-TERM LIABILITIES:
Deferred revenues 1,629 1,743
Accrued severance pay 1,422 1,385
Total long-term liabilities 3,051 3,128

SHAREHOLDERS' EQUITY 24,565 25,544
Shares issued and outstanding: 9,470,497 and 9,271,159 at September 30, 2009 and December 31, 2008, respectively
Total liabilities and shareholders' equity $ 40,761 $ 37,651

INCREDIMAIL LTD.
CONDENSED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except per share data), unaudited

Quarter ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
Revenues $ 6,608 $ 5,859 $ 19,730 $ 15,839
Cost of revenues 386 483 1,139 1,371
Gross profit 6,222 5,376 18,591 14,468
Operating expenses:
Research and development 1,558 1,876 4,252 5,951
Selling and marketing 1,182 2,035 3,501 4,988
General and administrative 564 873 2,310 3,277
Total operating expenses 3,304 4,784 10,063 14,216
Operating income 2,918 592 8,528 252
Financial income (expense), net 105 (350) (19) (15)
Income before taxes on income 3,023 242 8,509 237
Taxes on income 930 146 2,575 189
Net income $ 2,093 $ 96 $ 5,934 $ 48

Net earnings per Ordinary share:
Basic $ 0.22 $ 0.01 $ 0.63 $ 0.01
Diluted $ 0.21 $ 0.01 $ 0.63 $ 0.01
Diluted weighted number of shares (in thousands) 9,807 9,543 9,489 9,567
RECONCILIATION OF GAAP TO NON-GAAP RESULTS:
GAAP Net income $ 2,093 $ 96 $ 5,934 $ 48
Reorganization expenses -- -- -- 745
Stock based compensation 213 $ 260 532 782
Non-GAAP net income $ 2,306 $ 356 $ 6,466 $ 1,575
Non-GAAP net earnings per share :
Basic $ 0.24 $ 0.04 $ 0.68 $ 0.17
Diluted $ 0.23 $ 0.04 $ 0.68 $ 0.16
GAAP net income $ 2,093 $ 96 $ 5,934 $ 48
Income tax expense 930 146 2,575 189
Interest (income) expense, net (105) 350 19 15
Depreciation, Amortization and Stock-based Compensation 385 470 1,056 1,344
EBITDA $ 3,303 $ 1,062 $ 9,584 $ 1,596

IncrediMail NY
Jeff Holzmann
President
Jeff@IncrediMail.com
or
KCSA Strategic Communications
Todd Fromer, 212-896-1215
tfromer@kcsa.com
Marybeth Csaby, 212-896-1236
mcsaby@kcsa.com

Copyright Business Wire 2009