Commtouch Software Ltd
(NASDAQ: CTCH) December 2013
1 | Investor Overview: Company Confidential Real Security. In Real Time.
Shlomi Yanai, President
Brian Briggs, CFO
Commtouch, Inc., Headquarters
7927 Jones Branch Drive, Suite 2250
McLean, VA 22102, USA
Tel: 703-760-3320
Fax: 703-760-3321
2 | Investor Overview: Company Confidential Real Security. In Real Time.
Safe Harbor and Forward Looking Statements
This presentation 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 presentation; we assume no obligation to update any of them. The statements in this presentation 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 presentation and the company's Annual Reports on Form 20-F and reports on Form 6-K, which are available through www.sec.gov.
Commtouch Software Ltd. Recurrent Pattern Detection, RPD, Zero-Hour and GlobalView are trademarks, and Commtouch, Authentium, Command Antivirus and Command Anti-malware are registered trademarks, of Commtouch. U.S. Patent No. 6,330,590 is owned by Commtouch
3 | Investor Overview: Company Confidential Real Security. In Real Time.
Leading edge
technology
Recurring
revenue model
Unique go-to-
market strategy
The leading security company you’ve never heard of
Blue chip,
diversified
customer base
Leading market
position
• Patented statistical algorithms (Recurrent Pattern Detection) are future proof,
threat agnostic and enable real-time detection
• Pioneered behavior heuristics for anti-virus
• Security as a Service business model
• 100% of revenue recurring, 90% under multi-year contracts
• Partner revenue share - share in customers’ success
• Offer a complete cloud based private label security solution to OEMs, service
providers and distributors
• Own and operate cloud infrastructure with 12 data centers globally
• Over 180 OEM and service provider customers
• Antivirus solution powers Google’s Gmail and Microsoft offerings
• Messaging security underlies HP’s Unified Threat Management products
• ~30% of the mail security market runs on Commtouch software
• Market leading detection services see more than 12 billion transactions/day,
over 80x more than any other vendor
4 | Investor Overview: Company Confidential Real Security. In Real Time.
Vendors
Security Hardware | Antivirus | Network Devices | Client Software
Partner focus drives Commtouch success
Commtouch powers 30% of the mail security market
Web App Service Providers
Hosting | Saas | ISP/Telco
* Our top 10 customers represent 37% of Annual Revenue (2012)
5 | Investor Overview: Company Confidential Real Security. In Real Time.
• Patented anti-spam
technology
• Pioneered cloud-
assisted detection
• First to block image
based spam
• Language agnostic
• New threats distribution
unique diagnostics
Cloud-based detection a key competitive advantage
Commtouch Security Lab – 24X7 real time detection
6 | Investor Overview: Company Confidential Real Security. In Real Time.
Large, high growth market opportunity
“Good opportunities are being
made available in a number of
security segments to technology
and service providers with cloud
delivery capabilities”
Gartner, Market Trends: Cloud-Based
Security Services, September, 2012
2013 2016
“Security continues to be
something organizations can't do
without. This is especially true as
organizations, of all sizes, turn to
Security Software as a Service
(SaaS)”
IDC, Worldwide Security Software
as a Service 2012-2016 $1.8 B
$2.6 B
Email 11%
Web 18%
Email $1.2 B
Web $0.6 B
Email $1.6 B
Web $1.0 B
CAGR
Source: Gartner Market Trends: Cloud-based Security Services, September, 2012
7 | Investor Overview: Company Confidential Real Security. In Real Time.
• Transforming from a technology service provider to a
complete cloud-based Security-as-a-Service provider
• New management team located in US, closer to customers
• New global salesforce focused on lead generation
• New leading-edge product portfolio:
• Q1 2013: introduced Mail SaaS, Mobile security for Android, and a
new on-premise solution for service providers
• Continued technology innovation:
• Web SaaS to be delivered in Q4 2013
Transforming for growth
8 | Investor Overview: Company Confidential Real Security. In Real Time.
SMB
Internet
Commtouch Detection services (OEM) offering
Vendor device/
Service Provider
Detection Services
8
Network Model Financial Impact
• Low % revenue share • Market user price - ~$50 • For Commtouch:
3-5% from user sell price
“is this spam?”
“Yes”
9 | Investor Overview: Company Confidential Real Security. In Real Time.
Commtouch Private label Security-as-a-Service offering
Network Model Financial Impact
SMB/
Enterprise
Detection and full Services
Internet • High % revenue share (Resell) • Market user price - ~$50 • For Commtouch:
55-75% from user sell price
10 | Investor Overview: Company Confidential Real Security. In Real Time.
Partner benefits:
• Significantly expands market opportunity beyond large
enterprises to SMBs
• Increases product and service capability
Enterprise/SMB benefits:
• Reduces costs (opex vs. capex)
• Supports service level agreements (SLAs)
• Enables faster upgrades
• Solves security issues for out-of-office employees
Cloud offering enhances partners value proposition
11 | Investor Overview: Company Confidential Real Security. In Real Time.
Commtouch product suite
Hig
h $
Lo
w $
Note: Roadmap Items in Blue
WEB AV/AM EMAIL
Security SaaS
Cloud-Assisted Detection Services
• Private Label • Web Service
• On Premise
• Private Label
• Web Service
• On Premise
$2.8B* $2.4B* $9.1B*
* 2013 Market sizes: Source: IDC 2012
• Web Filtering
• Messaging Suite
• On-premise for SPs
• AV SDK
• Mobile Security
• Endpoint apps • APT Detection
12 | Investor Overview: Company Confidential Real Security. In Real Time.
Cloud-based detection at the core of product portfolio
• Commtouch Owned & Operated
• 550M End Users
• 12B Transactions Daily
GlobalView Cloud
• Over 99% detection accuracy
• Language agnostic
• Internal Efficiencies High Margins
• 12 Global Data Centers
• Operational for 14 years
• Zero-hour detection of global threats
• Industry-leading performance
Recurrent Pattern Detection - Patented technology
Spam and
phishing
URLs
Zero-hour
virus
samples,
Malware
URLs
Malware
URLs
Web Antivirus
Threat data sharing between
services: Sum is greater than
the parts
13 | Investor Overview: Company Confidential Real Security. In Real Time.
Email security
Industry-leading spam detection:
• Phishing message and virus outbreak detection
• Advanced heuristic malware defense
Benefits:
• Instant protection from new outbreaks
• High catch rates with almost zero false positives
• Language and content agnostic
• Simple integration
• High performance, low maintenance
• Reduced capital expenditure
14 | Investor Overview: Company Confidential Real Security. In Real Time.
Antivirus
Anti-malware solution for service provider email
and web security gateways:
• Cloud-based pattern detection
• Multi-layer file scanning
Benefits:
• High performance
• Superior detection
• Ease of integration and operation
• Reduced capital expenditure
• Lower total cost of ownership
15 | Investor Overview: Company Confidential Real Security. In Real Time.
Web security
URL Filtering (URLF) enables customers to provide
new levels of service for:
• Web security
• Parental control
• Business productivity management and compliance
• Mobile devices
Benefits:
• Cloud database provides broadest coverage
• Real-time, zero-hour security
• Highest categorization accuracy and quality of service
16 | Company Overview Real Security. In Real Time. 16 | Commtouch Web Security SaaS Real Security. In Real Time.
Web Security – The challenge
Branch office 1
Internet Email GW
Web GW
Branch office 2
Applications
FW
Email GW
Web GW
FW
User apps
Cloud
apps
Mobile
Users
Infected site sends malware/
phishing to user
17 | Company Overview Real Security. In Real Time. 17 | Commtouch Corporate Overview Real Security. In Real Time.
Branch office 1
Branch office 2
Applications
Mobile
Users
Web SecaaS
Infected site sends
malware to user
Malware blocked
Internet
Phishing site blocked
Commtouch Web SaaS – Q4 2013
18 | Investor Overview: Company Confidential Real Security. In Real Time.
• Product: ReadyNAS®
network attached storage
(NAS)
• Target Market: Small and
medium businesses as
well as enterprises
• Commtouch Service:
Antivirus
Customer case study: Netgear
“Security is a key factor in offering
efficient NAS solutions. With
Commtouch Antivirus, we can
provide our customers with state-
of-the art protection from both
known and new viruses, Trojans
and other malware threats.” Davin Oishi, senior product line manager for
NETGEAR Storage
19 | Investor Overview: Company Confidential Real Security. In Real Time.
• Product: Web hosting,
online marketing
• Target Market: Small
businesses
• Commtouch Services:
Inbound Anti-Spam,
Outbound Spam Protection,
Virus Outbreak Detection
Customer case study: Web.com
Jane Landon, Chief Technology Officer,
Web.com
“With the addition of Commtouch
services, we can now better safeguard
our customers from the nuisance of
spam emails, without the risk of having
their critical communications erroneously
blocked.”
20 | Investor Overview: Company Confidential Real Security. In Real Time.
World class, experienced management team
Pete Shah - Senior Vice President, Worldwide Sales
Joined in 2012, bringing over 20 years of experience with international
software organizations.
Haniel Ilouz - Vice President, Global Engineering
Has over 14 years of software development experience including extensive
management of large global engineering teams.
Brian Briggs - Chief Financial Officer
Joined in 2013, bringing more than 22 years of finance and operations experience building
and growing profitable companies.
Joy Nemitz - Chief Marketing Officer
Has over 20 years of technology and communications experience in the field of Cloud,
SaaS and Hosted Services marketing.
Mickey Avram - Vice President, Technology Services
Joined in 2012, bringing over 20 years of experience in the support and operations
management field, many of these in the security industry.
Lior Kohavi - Chief Technology Officer
Has more than 20 years of experience as a senior technology executive..
Lior Samuelson – Chairman and Chief Executive Officer Joined in 2010 as Chairman and became CEO in 2013.
Brett Wilson - Vice President, Products
Has over 20 years of technology and communications experience, including
more than 10 years of experience in the information security industry.
Eva Edwards Markowitz - Vice President, Human Resources Joined in 2013, bringing over 14 years of human resource experience.
Shlomi Yanai - President
Joined in 2011, bringing over two decades of experience in the information security industry.
Sue Perng Lee - Vice President, General Counsel &
Corporate Secretary Joined in 2013, bringing over 10 years of legal experience in both the private
law firm and corporate settings.
21 | Investor Overview: Company Confidential Real Security. In Real Time.
Assured backlog
100%
Strong business model
3 Years Higher rate renewal
Recurring revenue model
0 Months
Deal signed – 3 year revenue commitment
1.5 Years Increased sales
3.9 7.2
11.3 14.1 15.2
18.2
23.0 24.1
32-33
-5
0
5
10
15
20
25
30
35
40
2005 2006 2007 2008 2009 2010 2011 2012 2013
$ in
mill
ion
s
Revenue
Operating Profit
Operating Cost
CoGs
• Recurring revenue and long term contracts provide stability and visibility
• Highly profitable core business supports investments in new growth initiatives
• Solid balance sheet - $4 million in cash and no debt as of September 30, 2013
• NOLs – no tax payments expected over coming years
22 | Investor Overview: Company Confidential Real Security. In Real Time.
Why Commtouch?
SAAS EXCELLENCE
PATENTED TECHNOLOGY
FINANCIALS
PARTNER FOCUSED
Thank You.