Total revenues for the second quarter 2008 were $26.4 million, an increase of four percent from $25.5 million for the same period in 2007. Software DRM revenues for the second quarter of 2008 were $16.4 million, in-line with the same period in 2007. Enterprise Security revenues for the second quarter were $10.0 million, an 11 percent increase from $9.0 million recorded in the same period in 2007.

Net income in accordance with U.S. Generally Accepted Accounting Principles (GAAP) for the second quarter of 2008 was $0.1 million, or $0.01 per basic and diluted share, compared to second quarter of 2007 GAAP net income of $3.9 million or $0.27 per basic share and $0.26 per diluted share. GAAP net income for the second quarter of 2008 included $0.4 million for stock-based compensation expenses, compared to $0.2 million reported in the second quarter of 2007.

Excluding stock-based compensation expenses, the Company reported non-GAAP net income for the second quarter of 2008 of $0.5 million, or $0.04 per basic share and diluted share, compared to second quarter of 2007 non-GAAP net income of $4.6 million or $0.32 per basic share and $0.31 per diluted share. Refer to the "Use of Non-GAAP Measures" section and accompanying financial table for a reconciliation of GAAP financial information to non-GAAP.

Cash, cash equivalents and marketable securities totaled $94.5 million at June 30, 2008. The Company generated cash flow from operations of $0.6 million during the second quarter of 2008.

Yanki Margalit, Chairman and CEO of Aladdin Knowledge Systems, said, "Our second quarter 2008 revenue and earnings per share results were in line with our preliminary results announced on July 2, 2008. With a goal of improving long-term performance, we are increasing our investment in customer focused research and development as well as marketing resources in order to drive organic growth while also seeking additional complementary acquisition opportunities. I believe these investments in our core business will strengthen our portfolio of IT security offerings and increase our global brand recognition."