Sequential Increase in Revenues; Gross Margin Totals 50%;

Sale of $1.73m ARS Portfolio at Par Value Expected to Generate $1.6 Million Capital Gain in Q4-08

ROSH HA'AYIN, Israel, November 5 /PRNewswire-FirstCall/ -- ECtel Ltd. (NASDAQ: ECTX), a leading global provider of Integrated Revenue Management (TM) (IRM(TM)) solutions, today reported financial results for the third quarter of 2008.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20010807/FLTU015LOGO )
    Third Quarter Highlights
    - Revenues up 22% year-over-year, and 6% sequentially, reaching $7.1
      million
    - Gross margin of 50%
    - Commenced Buy-Back during quarter; 404,503 shares bought-back to date
      for $0.5 million
    - In process of selling impaired ARS portfolio at full par
      value of $1.7 million; Expected to record $1.6 million capital gain in
      Q4 2008

Revenues for the third quarter of 2008 totaled $7.1 million, a 22% increase compared to the $5.8 million in the third quarter of 2007, and 6% higher than the $6.7 million revenues in the second quarter 2008.

Non-GAAP gross margin for the third quarter of 2008 was 50%, compared to the 58% margin in the third quarter 2007. Non-GAAP gross margin in the second quarter of 2008 was 50%.

Non-GAAP operating loss for the third quarter of 2008 reached $1.7 million, compared to a non-GAAP operating loss of $0.9 million in the third quarter of 2007, and similar to the non-GAAP operating loss for the second quarter 2008.

Non-GAAP net loss for the third quarter of 2008 totaled $1.6 million, or $0.10 loss per share, compared with a net loss of $0.7 million, or $0.4 loss per share, in the third quarter of 2007. Non-GAAP net loss for the second quarter 2008 totaled $1.4 million, or $0.08 per share.

On a GAAP basis, gross margin for the third quarter 2008 totaled 50%, compared to the 58% margin in the third quarter of 2007, and 50% margin in the second quarter 2008. Operating loss for the third quarter of 2008 reached $2.0 million, compared to an operating loss of $0.9 million in the third quarter of 2007 and an operating loss of $2.0 million for the second quarter of 2008. On a GAAP basis, net loss for the third quarter of 2008 totaled $1.9 million or $0.11 loss per share, compared to $0.7 million or $0.4 per share in the third quarter of 2007. Net loss for the second quarter 2008 totaled $1.7 million or $0.10 per share.

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, expenses related to a one-time due-diligence process and the impact of the permanent impairment charge related to certain securities in December 2007. The accompanying tables provide a full reconciliation from GAAP to Non-GAAP results.

Cash, cash equivalents, and marketable bonds and securities as of September 30, 2008 were $19.3 million or $1.2 per share, compared to $22.8 million or $1.37 per share as of June 30, 2008.

Sale of Auction Rate Securities at Full Par Value during Fourth Quarter 2008

During October 2008, the Company agreed to sell $1.725 million of Auction Rate Securities ('ARS') purchased from Credit Suisse Securities (USA) LLC prior to February 14, 2008, at full par value. The ARS are being sold in consideration for $1.725 million. The outstanding value of the Company's said ARS, in the Company's balance sheet, as at September 30, 2008, totaled $154k. On October 20, 2008 the Company received on account of the sold ARS, $650 thousand in cash, and expects to receive the additional $1.075 million, in cash, by the end of 2008. Assuming receipt of the full $1.725 million, the Company will record a capital gain to the amount of $1.6 million in the fourth quarter of 2008.

'During the third quarter of 2008 we continued to generate revenue growth, while maintaining gross margins at the 50% level,' commented Itzik Weinstein, President and CEO of ECtel.'On the business side, we continued to expand our global presence and generated new orders, while leveraging, once again, our strong partner base to target new, previously inaccessible, customers primarily in Europe and Africa.'

'As the global markets enter this new challenging phase, we expect new opportunities to emerge for ECtel, primarily as demand for revenue assurance and minimizing income leakage, become a key objective for operators worldwide. In the interim, as we closely monitor the challenging environment, we continue to prudently manage our expenses and adjust our annual 2008 revenue guidance to the range of $-26-28 million from the previously announced range of $29 - 31 million,' concluded Mr. Weinstein.

Conference call

ECtel management will host a teleconference later today at 10:00 am ET (9:00am CT, 7:00am PT, and 5:00pm Israel time) to discuss its third quarter results.

To participate in the call, please dial one of the following numbers and request ECtel's third quarter 2008 Earnings Results Conference call:

    From the United States: 1-866-345-5855
    From Israel: 03-918-0609
    From the United Kingdom: 0-800-404-8418
    All other international callers: +972-3-918-0609

A Webcast replay of the earnings call will be available after the call on the Company's web site at: www.ectel.com

About ECtel Ltd.

ECtel (NASDAQ: ECTX) is a leading global provider of Integrated Revenue Management(TM) (IRM(TM)) solutions for communications service providers.