ECtel Reports Q4

ROSH HA'AYIN, Israel -- ECtel Ltd. (NASDAQ: ECTX - News), a leading global provider of Integrated Revenue Management (TM) (IRM(TM)) solutions, today reported financial results for the fourth quarter 2007.

Fourth Quarter Highlights (compared to third quarter 2007)

Revenues for the fourth quarter of 2007 totaled $6.6 million, a 15% increase compared to $5.8 million in the third quarter of 2007. Revenues for the fourth quarter of 2006 totaled $7.7 million.

Gross margin for the fourth quarter of 2007 was 55%, compared to the 58% margin in the third quarter 2007. Gross margin in the fourth quarter of 2006 was 32% and includes $2.1 million of one-time charges resulting from the termination of ECtel's participation in the Israeli Chief Scientist program.

Non-GAAP operating loss for the fourth quarter of 2007 reached $0.8 million, a 7% improvement compared to a non-GAAP operating loss of $0.9 million in the third quarter of 2007. Non-GAAP operating income for the fourth quarter of 2006 totaled $0.1 million.

Non-GAAP net loss for the fourth quarter of 2007 totaled $0.5 million, or 3 cents loss per share, a 25% improvement compared with a net loss of $0.7 million, or 4 cents loss per share, in the third quarter of 2007. Non-GAAP net income for the fourth quarter 2006 totaled $0.5 million, or 3 cents per share.

On a GAAP basis, operating loss for the fourth quarter of 2007 reached $1.0 million, compared to an operating loss of $0.9 million in the third quarter of 2007. Operating loss for the fourth quarter of 2006 totaled $2.3 million. On a GAAP basis, net loss for the fourth quarter of 2007 totaled $2.2 million, or 13 cents loss per share, which includes a $1.6 million permanent impairment charge on account of certain securities held by the Company as described below, compared to a net loss of $0.7 million in the third quarter 2007, or 4 cents loss per share. Net loss for the fourth quarter 2006 totaled $2.5 million, or 15 cents loss per share. Results for the fourth quarter of 2006 included $2.8 million of expenses following termination of the Company's participation in the Israeli Office of the Chief Scientist Program.

ECtel's non-GAAP net income differs from results reported under U.S. GAAP. This is due to adjustments made for amortization of acquisition related intangible assets, share-based compensation expenses, the impact of the permanent impairment charge related to certain securities and one-time expenses incurred following termination of the Company's participation in the Israeli OCS program in December 2006. A table providing a full reconciliation from GAAP to Non-GAAP results is provided below.

Cash, cash equivalents, short and long term marketable bonds and securities as of December 31, 2007 were $29.1 million or $1.74 per diluted share, compared to $31.3 million as of September 30, 2007.

"2007 has been a year of change for ECtel, a year of redefining our growth and execution strategy while laying renewed foundations for future growth and performance. Throughout the year we continued to expand our geographic reach to new countries and accounts in North America, APAC and Africa. Furthermore, we launched a selection of new products aimed at further enhancing our value add to our customers in terms of integrated revenue management. This broader solutions offering aims to serve as a key value driver in today's highly competitive world of converged communications and networking solutions, by offering tangible, immediate savings to our customers," commented Itzik Weinstein, CEO of ECtel. "Furthermore, this year we generated several large scale contracts to premier telecom and service providers throughout the world, while generating several additional substantial cross sales of our solutions to long standing, existing customers, clearly attesting to ECtel's market leadership in the global revenue assurance market."

Mr. Weinstein concluded, "On the financial front, in the fourth quarter we continued to execute, with revenues increasing 15% sequentially, reaching 6.6 million dollars. We remain focused on maintaining sequential growth, while steadily trimming our Non-GAAP net loss on a quarter by quarter basis. Throughout the fourth quarter we continued with our strong order generation, ending the year with the highest backlog in recent years, offering us improved visibility. Given our improved execution, maturity and, as such, visibility, we are now comfortable returning to provide annual revenue guidance, and forecast 2008 annual revenues to be in the range of $29-31 million."

ECtel Ltd. (Nasdaq: ECTX)