Second Quarter Highlights    - Revenues reach $5.7 million, up from the $3.4 million last     quarter    - Gross profit increases both sequentially and year over year     reaching $3.4 million    - Gross margin of 60%, highest in the last 10 quarters    - Efficiency measures contribute at all levels; expect annual     savings to surpass $5 million    - Net cash used in operating activities decreased to $0.5     million compared to $2.9 million last quarter     (Logo: http://www.newscom.com/cgi-bin/prnh/20010807/FLTU015LOGO )    Financial Results  

Revenues for the second quarter of 2009 totaled $5.7 million, compared to $6.7 million in the second quarter of 2008, and $3.4 million in the first quarter of 2009.

Gross margin for the second quarter of 2009 reached 60%, compared to the 50% in the second quarter of 2008, and 44% in the first quarter of 2009. The gross margin was positively impacted by a favorable change in product mix as well as the widespread efficiency measures initiated in the fourth quarter of 2008, which included reallocating functions to lower cost regions, salary reductions and manpower downsizing.

Non-GAAP operating profit for the second quarter of 2009 totaled $65 thousand, compared to a non-GAAP operating loss of $1.6 million in the second quarter of 2008, and a $1.6 million non-GAAP operating loss in the first quarter of 2009.

Non-GAAP net income for the second quarter of 2009 totaled $51 thousand, or $0.00 per share, compared with a non-GAAP net loss of $1.4 million, or $0.08 per share, in the second quarter of 2008. Non-GAAP net loss for the first quarter of 2009 totaled $1.4 million, or $0.1 per share.

Non-GAAP operating and net income include a $270 thousand reversal of a provision relating to compensation expenses, recording both under cost of goods sold and operating expenses. Excluding this reversal, the Company neared break even both at the operating income and net income levels, a substantial improvement from the first quarter 2009.

GAAP operating loss for the second quarter of 2009 totaled $0.1 million, compared to an operating loss of $2.0 million in the second quarter of 2008, and an operating loss of $1.8 million for the first quarter of 2009. GAAP net loss for the second quarter of 2009 totaled $0.2 million, or $0.01 per share, a substantial improvement from the $1.7 million net loss, or $0.1 per share, in the second quarter of 2008. Net loss for the first quarter of 2009 totaled $1.6 million or $0.1 per share.

Cash, cash equivalents, and marketable bonds and securities as of June 30, 2009 were $14.3 million or $0.88 per share, compared to $14.8 million or $0.91 per share as of March 31, 2009. During the quarter the Company recorded a cash flow expense of $0.5 million.

"This was a good quarter for ECtel as we witnessed an increase in bookings and pipeline, enforcing our belief that these times create opportunities for ECtel. As operators and service providers continue to navigate this complex climate, seeking to efficiently manage revenues and limit fraud, ECtel's comprehensive solutions effectively meet this need. During the quarter we received orders from three new customers, partly through our proven partnership program, bringing the total new customers purchasing ECtel's products to eight during the first six months of the year. This is in addition to existing customers which ordered additional services and products this quarter," commented Itzik Weinstein, President and CEO of ECtel.

Mr. Weinstein added, "On the financial front, this quarter featured sequential growth in our key parameters including revenues and profitability, with gross margin reaching as high as 60%. The efficiency measures adopted towards the end of 2008 were key drivers in our improving profitability, and we expect our annual cost savings to be higher than the $4 million initially forecasted, based on our current run rate. Looking ahead, we intend to continue to navigate the challenging market and efficiently manage expenses, while identifying new opportunities and customers for our products, and this, without compromising either our development or growth."

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 first quarter results. Itzik Weinstein President & CEO and Mickey Neumann, Senior Vice President & CFO will co-host the call. To participate in the call, please dial one of the following numbers:

   From the United States: 1-888-668-9141   From Israel: 03-918-0609   From the United Kingdom: 0-800-917-5108   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: http://www.ectel.com/.

About ECtel Ltd.

ECtel is a leading global provider of Integrated Revenue Management(TM) (IRM(R)) solutions for communications service providers. A pioneering market leader for nearly 20 years, ECtel offers carrier-grade solutions that enable wireline, wireless, converged and next generation operators to fully manage their revenue and cost processes. ECtel serves prominent Tier One operators, and has more than 100 implementations in over 50 countries worldwide. Established in 1990 ECtel maintains offices and presence in the Americas, Europe and Asia. For more information, visit http://www.ectel.com/.

Use of Non-GAAP Measures

Non-GAAP operating income (loss) and net income (loss) are measures which do not include charges for the amortization of acquisition-related intangible assets and share-based compensation expense. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with the Company's consolidated financial statements prepared in accordance with GAAP. The Company's management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate the Company's business and make operating decisions.