Critical Path (CPTH) 8-K Critical Path Announces Second Quarter 2007 Results

Exhibit 99.1

Critical Path Announces Second Quarter 2007 Results

Revenue and Gross Margins Improved Year Over Year

SAN FRANCISCO, Calif. (August 14, 2007) – Critical Path, Inc. (OTC: CPTH), a leading provider of messaging software and services, today announced unaudited financial results for the fiscal second quarter ended June 30, 2007.

Revenue and Gross Margins

For the second quarter of 2007, revenues were $12.1 million, compared to $12.0 million in the same period last year and $12.2 million in the first quarter of 2007. Gross margins, based upon U.S. Generally Accepted Accounting Principles (U.S. GAAP), for the second quarter of 2007 were 58%, compared to 56% in the same period last year and 53% in the first quarter of 2007. On an adjusted EBITDA basis, gross margins in the second quarter of 2007 were 60%, compared to 58% in the same period last year and 55% in the first quarter of 2007.

Adjusted EBITDA is a non-GAAP metric used by management to measure the company’s operating performance and its earnings before net interest expense, benefit from (provision for) income taxes, depreciation and amortization adjusted to exclude other items, such as gain on sale of assets, write-off of capitalized legal costs, restructuring expense, other income (expense), stock-based expenses and dividends and accretion on redeemable preferred stock.

Net Results

Net loss on a U.S. GAAP basis, which excludes the dividends and accretion of redeemable preferred stock (a non-cash item related to outstanding preferred stock), for the second quarter of 2007, was $2.4 million, compared to a net loss of $2.6 million in the same period last year and a net loss of $3.0 million in the first quarter of 2007. For the second quarter of 2007, total cost of net revenues and operating expenses, on a U.S. GAAP basis, was $13.2 million, compared to $14.3 million in the same period last year and $14.2 million in the first quarter of 2007.

Net loss attributable to common shareholders based on U.S. GAAP, which includes dividends and accretion of redeemable preferred stock, for the second quarter of 2007, was $6.2 million or $0.17 per share, compared to a net loss of $6.1 million or $0.17 per share in the same period last year and a net loss of $6.6 million or $0.18 per share in the first quarter of 2007.

Net loss on an adjusted EBITDA basis for the second quarter of 2007, was $0.4 million, or $0.01 per share, compared to a net loss of $1.5 million, or $0.04 per share, in the same period last year and a net loss of $1.2 million, or $0.03 per share, in the first quarter of 2007. For the second quarter of 2007, total cost of net revenues and operating expenses on an adjusted EBITDA basis was $12.5 million, compared to $13.5 million for the same period last year and $13.4 million for the first quarter of 2007.

“Q2 proved to be another solid quarter for Critical Path,” said Mark Palomba, CEO, Critical Path, Inc. “Year over year, we continued to grow revenue and improve gross margins. During the quarter, we had new customer wins and expanded our community-oriented messaging solutions at existing customers. In addition, we saw the market opportunity for consumer mobile email and messaging continue to grow, along with the value of our Memova Mobile solutions. We look forward to further capitalizing on this opportunity, while staying focused on improved financial results.”

Cash and Cash Equivalents

As of June 30, 2007, the company’s cash and cash equivalents totaled $7.8 million, compared to $12.2 million at March 31, 2007. The decrease in cash and cash equivalents is primarily due to timing differences in the collection of the company’s accounts receivables which, at June 30, 2007, totaled $19.0 million compared to accounts receivables of $16.1 million at March 31, 2007.

Second Quarter 2007 Highlights

• Memova® Mobile –Critical Path continued to gain traction in its mobile business in Q2, announcing yet another operator launch of consumer mobile email services. One of Europe’s largest operators – Telecom Italia – launched a new Memova Mobile service under its ALICE brand, making mobile email accessible for use by 98% of its mobile phone subscribers.

• Memova® Messaging – Critical Path continued to work with service providers around the globe to expand their messaging platforms and provide new community-oriented services with the latest version of the Memova Messaging platform – Version 8.0. One such customer, Wind Telecomunicazioni S.p.A (WIND), rolled out the new platform in the second quarter, launching new email and value-added services on its portal Libero.it – Italy’s largest Internet community with more than 12 million active members.

• Continued Financial Improvements –For the three- and six-month periods ended June 30, 2007, total revenue and overall gross margins improved compared to the same periods last year. Notably, software license revenues for the second quarter of 2007 were up 10% year over year, and for the first six months of 2007, they increased 25% compared to the same period last year.

Regulation G

The Company uses both GAAP and non-GAAP metrics to measure its financial results. The non-GAAP metrics used are: income (loss) on an adjusted EBITDA basis and both cost of revenues and operating expenses on an adjusted EBITDA basis. The most directly comparable GAAP measures are the net loss attributable to common shareholders and cost of net revenues and operating expenses, respectively. The adjusted EBITDA results exclude net interest expense, benefit from (provision for) income taxes, depreciation and amortization as well as other items such as gain on sale of assets, write-off of capitalized legal costs, restructuring expense, other income (expense), stock-based expenses and dividends and accretion on redeemable preferred stock. There is no difference between adjusted EBITDA and GAAP revenues. Management believes that, in addition to GAAP metrics, these non-GAAP metrics assist the company in measuring its cash-based performance. In addition, management believes these non-GAAP metrics are useful to investors because they remove unusual and nonrecurring charges that occur in the affected period and provide a basis for measuring the company’s financial condition against other quarters. Since the company has historically reported non-GAAP results to the investment community, management also believes the inclusion of non-GAAP measures provides consistency in its financial reporting. However, non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. The calculations for these non-GAAP metrics are in the alternative measurement reconciliation table below.

More Information

Critical Path will not conduct a conference call for the fiscal quarter ended June 30, 2007. Questions about the quarter and the company’s financial results may be submitted toir@criticalpath.net. Any questions regarding the quarterly results that are submitted by 6 PM Eastern time, Friday, August 17, 2007 may be publicly responded to by the company on the Investor Relations section of the company’s Web site (http://www.criticalpath.net/investors). The company does not undertake to publicly respond to all such questions submitted.

About Critical Path, Inc.

Critical Path’s Memova® solutions provide a new and improved email experience for millions of consumers worldwide, helping mobile operators, broadband and fixed-line service providers unlock the potential of email in the mass market. Memova® Mobile gives consumers instant, on-the-go access to the messages that matter most. Featuring industry-leading anti-spam and anti-virus technology, Memova® Anti-Abuse is designed to protect consumers against viruses and spam. Memova® Messaging provides consumers with a rich email experience, enabling service providers to develop customized offerings for high-speed subscribers. Headquartered in San Francisco with offices around the globe, Critical Path’s solutions are deployed by service providers throughout the world. More information is available atwww.criticalpath.net.

Cautionary Note Regarding Forward-Looking Statements:

This press release contains forward-looking statements by the Company and its executives regarding the growing market acceptance of our product and service offerings, our plans and ability to capitalize on the market opportunity for consumer email and messaging, and our ability to minimize costs and improve financial performance. The words and expressions “look forward to,” “will,” “expect,” “plan,” “believe,” “seek,” “strive for,” “anticipate,” “hope,” “estimate” and similar expressions are intended to identify the Company’s forward-looking statements. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks include, but are not limited to, completion of the company’s year-end close and audit procedures, our evolving business strategy and the emerging and changing nature of the market for our products and services, our ability to deliver on our sales objectives, the ability of our technology and our competitors’ technologies to address customer demands, changes in economic and market conditions, and software and service design defects. These and other risks and uncertainties are described in more detail in the Company’s filings with the U.S. Securities and Exchange Commission (www.sec.gov) made from time to time including Critical Path, Inc.’s Form 10-Q for the three months ended June 30, 2007 and all subsequent filings with the United States Securities and Exchange Commission (www.sec.gov). The Company makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made.

Note to Editors: Critical Path and the Critical Path logo, Memova and the Memova logo and Messages that Matter are the trademarks of Critical Path, Inc., some of which are registered in various jurisdictions. All other trademarks are the property of their respective holders.

Contact Information

For Reporters and Editors:	For Investors:
Critical Path, Inc.	Critical Path, Inc.
Michelle Weber	Investor Relations
415.541.2575	415.541.2619
cp-publicrelations@criticalpath.net	ir@criticalpath.net
www.criticalpath.net	www.criticalpath.net

Critical Path, Inc.

Condensed Consolidated Balance Sheets

	June 30, 2007			December 31, 2006			June 30, 2006
	(in thousands; unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	7,830		$	14,542		$	20,054
Accounts receivable, net		19,020			10,283			14,545
Other current assets		2,954			2,427			2,094
Total current assets		29,804			27,252			36,693
Property and equipment, net		2,496			2,612			2,784
Goodwill		7,544			7,460			7,313
Other assets		452			679			905
Total assets	$	40,296		$	38,003		$	47,695
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable	$	4,397		$	3,995		$	4,616
Accrued expenses		13,912			16,837			19,548
Deferred revenue		10,417			6,848			11,483
Notes payable, short-term		24,516						—
Capital lease and other obligations, current		12			24			62
Total current liabilities		53,254			27,704			35,709
Deferred revenue, long-term		592			229			640
Notes payable, long-term		—			22,396			20,374
Income and other tax liabilities, long-term		3,764			—			—
Embedded derivative liability		470			612			1,020
Total liabilities		58,080			50,941			57,743
Redeemable preferred stock		141,111			134,406			127,260
Total shareholders’ deficit		(158,895	)		(147,344	)		(137,308	)
Total liabilities, redeemable preferred stock and shareholders’ deficit	$	40,296		$	38,003		$	47,695

Critical Path, Inc.

Condensed Consolidated Statement of Operations on an United States GAAP Basis

	Three months ended
	June 30,			March 31,			June 30,			Six months ended June 30,
	2007			2007			2006			2007			2006
	(in thousands, except per share amounts; unaudited)
NET REVENUE
Software licensing	$	3,820		$	4,181		$	3,481		$	8,001		$	6,409
Hosted services		1,001			1,508			1,167			2,509			2,389
Professional services		2,741			2,082			2,828			4,823			5,403
Maintenance and support		4,577			4,453			4,548			9,030			8,837
Total net revenue		12,139			12,224			12,024			24,363			23,038
COST OF NET REVENUE
Software licensing		923			1,546			1,060			2,469			2,366
Hosted services		713			767			758			1,480			1,535
Professional services		1,997			2,017			2,220			4,014			4,196
Maintenance and support		1,415			1,369			1,224			2,784			2,518
Total cost of net revenue		5,048			5,699			5,262			10,747			10,615
GROSS PROFIT		7,091			6,525			6,762			13,616			12,423
OPERATING EXPENSES
Selling and marketing		3,102			3,154			3,326			6,256			6,816
Research and development		2,486			2,233			2,525			4,719			4,845
General and administrative		2,503			3,218			3,019			5,721			6,288
Restructuring expense		81			48			126			129			1,041
Gain on sale of assets		(2	)		(127	)		—			(129	)		(1,971	)
					��
Total operating expenses		8,170			8,526			8,996			16,696			17,019
OPERATING LOSS		(1,079	)		(2,001	)		(2,234	)		(3,080	)		(4,596	)
Other income (expense), net		168			(109	)		537			59			78
Interest expense, net		(1,041	)		(1,021	)		(900	)		(2,062	)		(1,753	)
Loss before provision for income taxes		(1,952	)		(3,131	)		(2,597	)		(5,083	)		(6,271	)
Benefit from (provision for) income taxes		(410	)		146			(45	)		(264	)		(313	)
NET LOSS		(2,362	)		(2,985	)		(2,642	)		(5,347	)		(6,584	)
Dividends and accretion on redeemable preferred stock		(3,798	)		(3,649	)		(3,505	)		(7,447	)		(6,967	)
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(6,160	)	$	(6,634	)	$	(6,147	)	$	(12,794	)	$	(13,551	)
Net loss per share attributable to common shareholders - basic and diluted	$	(0.17	)	$	(0.18	)	$	(0.17	)	$	(0.35	)	$	(0.37	)
Weighted average shares - basic and diluted		36,807			36,696			36,085			36,751			36,183

Critical Path, Inc.

Condensed Consolidated Statement of Operations on a Non-GAAP (Adjusted EBITDA*) Basis

	Three months ended
	June 30, 2007			March 31, 2007			June 30, 2006			Six months ended June 30,
										2007			2006
	(in thousands, except per share amounts; unaudited)
NET REVENUE
Software licensing	$	3,820		$	4,181		$	3,481		$	8,001		$	6,409
Hosted services		1,001			1,508			1,167			2,509			2,389
Professional services		2,741			2,082			2,828			4,823			5,403
Maintenance and support		4,577			4,453			4,548			9,030			8,837
Total net revenue		12,139			12,224			12,024			24,363			23,038
COST OF NET REVENUE
Software licensing		923			1,546			1,060			2,469			2,366
Hosted services		550			610			680			1,160			1,242
Professional services		1,993			2,014			2,167			4,007			4,113
Maintenance and support		1,414			1,366			1,202			2,780			2,486
Total cost of net revenue		4,880			5,536			5,109			10,416			10,207
GROSS PROFIT		7,259			6,688			6,915			13,947			12,831
OPERATING EXPENSES
Selling and marketing		3,098			3,148			3,249			6,246			6,671
Research and development		2,474			2,217			2,391			4,691			4,619
General and administrative		2,080			2,507			2,729			4,587			5,778
Total operating expenses		7,652			7,872			8,369			15,524			17,068
ADJUSTED EBITDA LOSS	$	(393	)	$	(1,184	)	$	(1,454	)	$	(1,577	)	$	(4,237	)
Adjusted EBITDA loss per share	$	(0.01	)	$	(0.03	)	$	(0.04	)	$	(0.04	)	$	(0.12	)
Weighted average shares		36,807			36,696			36,085			36,751			36,183

* Excludes interest expense, net, benefit from (provision for) income taxes, depreciation and amortization adjusted to exclude other items such as restructure expense, gain on sale of assets, write-off of capitalized legal costs, stock-based expenses, other income (expense), net and dividends and accretion on redeemable preferred stock.

Critical Path, Inc.

Alternative Measurements Reconciliation

The following table provides a reconcilation between the Company’s Non-GAAP results and Adjusted

EBITDA Loss to the Company’s Condensed Consolidated Statement of Operations on a United States GAAP basis.

	Three months ended
	June 30, 2007			March 31, 2007			June 30, 2006			Six months ended June 30,
										2007			2006
	(in thousands, except per share amounts; unaudited)
Adjusted EBITDA loss	$	(393	)	$	(1,184	)	$	(1,454	)	$	(1,577	)	$	(4,237	)
Interest expense, net		(1,041	)		(1,021	)		(900	)		(2,062	)		(1,753	)
Benefit from (provision for) income taxes		(410	)		146			(45	)		(264	)		(313	)
Depreciation and amortization		(491	)		(445	)		(364	)		(935	)		(854	)
Other income (expense), net		168			(109	)		537			59			78
Gain on sale of assets		2			127			—			129			1,971
Restructuring expenses		(81	)		(48	)		(126	)		(129	)		(1,041	)
Stock-based expenses		(116	)		(30	)		(290	)		(147	)		(435	)
Write-off of capitalized legal costs		—			(421	)		—			(421	)		—
Net loss		(2,362	)		(2,985	)		(2,642	)		(5,347	)		(6,584	)
Dividends and accretion on redeemable preferred stock		3,798			3,649			3,505			7,447			6,967
Net loss attributable to common shareholders	$	(6,160	)	$	(6,634	)	$	(6,147	)	$	(12,794	)	$	(13,551	)
Net loss per share attributable to common shareholders - basic and diluted	$	(0.17	)	$	(0.18	)	$	(0.17	)	$	(0.35	)	$	(0.37	)
Weighted average shares - basic and diluted		36,807			36,696			36,085			36,751			36,183
The following table provides a reconcilation between the total cost of net revenues and operating expenses on an
Adjusted EBITDA basis to the Company’s cost of revenues and operating expense on a United States GAAP basis.
	Three months ended
	June 30, 2007			March 31, 2007			June 30, 2006			Six months ended June 30,
										2007			2006
	(in thousands; unaudited)
Total cost of net revenues and operating expenses on an adjusted EBITDA basis	$	12,532		$	13,408		$	13,478		$	25,940		$	27,275
Depreciation and amortization		(491	)		(445	)		(364	)		(935	)		(854	)
Gain on sale of assets		2			127			—			129			1,971
Restructuring expenses		(81	)		(48	)		(126	)		(129	)		(1,041	)
Stock-based expenses		(116	)		(30	)		(290	)		(147	)		(435	)
Write-off of capitalized legal costs		—			(421	)		—			(421	)		—
Total cost of net revenues and operating expenses on a United States GAAP basis	$	13,218		$	14,225		$	14,258		$	27,443		$	27,634