BroadSoft Reports Third Quarter 2012 Financial Results

BroadSoft Reports Third Quarter 2012 Financial Results 
GAITHERSBURG, MD -- (Marketwire) -- 11/05/12 --   BroadSoft, Inc.
(NASDAQ: BSFT), the leading global provider of Internet
protocol-based, or IP-based, communications services to the
telecommunications industry, today announced financial results for
the quarter ended September 30, 2012.  
Financial Highlights for the Third Quarter of 2012  


 
--  Total revenue increased 13% year-over-year to $40.2 million
    
    
--  GAAP gross profit equaled 81% of total revenue; non-GAAP gross profit
    equaled 84% of total revenue
    
    
--  GAAP income from operations totaled $6.5 million or 16% of revenue;
    non-GAAP income from operations totaled $10.5 million or 26% of
    revenue
    
    
--  GAAP diluted EPS equaled $0.11 per common share; non-GAAP diluted EPS
    equaled $0.35 per common share

  
Results for the three months ended September 30, 2012 
Total revenue rose to $40.2 million in the third quarter of 2012, an
increase of 13% compared to $35.7 million in the third quarter of
2011.  
Net income for the third quarter of 2012 was $3.1 million, or $0.11
per diluted common share, compared to net income of $7.3 million, or
$0.26 per diluted common share in the third quarter of 2011.  
On a non-GAAP basis, net income in the third quarter of 2012 was
$10.0 million, or $0.35 per diluted common share, compared to
non-GAAP net income of $10.7 million, or $0.38 per diluted common
share, in the third quarter of 2011. A reconciliation of non-GAAP and
GAAP results is included in the financial tables below. 
Results for the nine months ended September 30, 2012 
Total revenue was $119.0 million for the first nine months of 2012,
compared to $97.5 million for the first nine months of 2011,
reflecting year-over-year growth of 22%.  
Net income for the first nine months of 2012 was $7.2 million, or
$0.25 per diluted common share, compared to net income of $26.8
million, or $0.96 per diluted common share, for the first nine months
of 2011. Results for the nine months ended September 30, 2011
included an income tax benefit of $9.9 million, or $0.36 per diluted
common share, resulting from the release of a tax valuation allowance
relating to net deferred tax assets. 
On a non-GAAP basis, net income for the first nine months of 2012 was
$27.5 million or $0.97 per diluted common share, compared to non-GAAP
net income of $23.7 million, or $0.85 per diluted common share, in
the first nine months of 2011. A reconciliation of non-GAAP and GAAP
results is included in the financial tables below. 
Management Commentary 
"We remain laser-focused on executing against our strategic
initiatives, which helped us deliver solid third quarter results and
positions us for further growth with our customers. We continue to be
excited by the growth of our addressable market as we help our
customers extend their hosted voice services into a comprehensive
Unified Communications offer," said Michael Tessler, president and
chief executive officer, BroadSoft. "We further solidified our
innovation leadership and strategic partner position with many of our
customers two weeks ago at our annual executive users' conference,
BroadSoft Connections. At the event, we announced extensive new
capabilities designed to address the needs of varied market segments,
from mobile integration for small businesses to vertical application
integration for large enterprises. These innovative enhancements were
very positively received and led to strategic discussions on how we
could best help our customers accelerate the adoption of their
Unified Communications services." 
"Revenue grew 13% year-over-year in the third quarter and 22% on a
year-to-date basis. Billings, which we define as revenue plus the
quarterly change in total deferred revenue, grew 45% year-over-year
in the third quarter and 31% on a year-to-date basis," said Jim
Tholen, chief financial officer, BroadSoft. "In addition, we also
delivered strong profitability, with non-GAAP gross margin of 84% and
non-GAAP operating margin of 26%. Operating cash flow was $9.7
million during the quarter." 
Guidance 
For the fourth quarter of 2012, BroadSoft anticipates revenue of $43
to $48 million inclusive of approximately $0.8 million in revenue
from the recent Adaption asset acquisition. The Company also expects
to achieve earnings on a non-GAAP basis of $0.33 to $0.48 per diluted
common share which includes expected dilution from the Adaption
acquisition of approximately $0.02 per share. 
For the full year 2012, BroadSoft expects revenue of $162 to $167
million, which includes approximately $1.4 million in contribution
from the Adaption acquisition. The Company anticipates full year 2012
earnings on a non-GAAP basis of $1.30 to $1.45 per diluted common
share, which includes expected dilution of approximately $0.04 per
share for the Adaption acquisition. 
Conference Call 
BroadSoft will discuss its third quarter results and business outlook
today via teleconference at 5:00 p.m. Eastern Time. To participate in
the teleconference, callers can dial the toll free number
1-877-312-5517 (U.S. callers only) or 1-760-666-3772 (from outside
the U.S.). The conference call can also be heard live via audio
webcast at http://investors.broadsoft.com/events.cfm. To help ensure
the conference begins on time, please dial in or connect via the web
five minutes prior to the scheduled start time.  
For those unable to participate in the live call, a recording will be
available shortly after the conclusion of the call at
http://investors.broadsoft.com/events.cfm and will remain available
until immediately prior to our next earnings call. 
BroadSoft has provided in this release, and will provide on this
afternoon's teleconference, financial information that has not been
prepared in accordance with generally accepted accounting principles,
or GAAP. BroadSoft uses these non-GAAP financial measures internally
in analyzing its financial results and believes they are useful to
investors, as a supplement to GAAP measures, in evaluating
BroadSoft's ongoing operational performance. BroadSoft's management
regularly uses these non-GAAP financial measures to understand and
manage its business and believes these non-GAAP financial measures
provide meaningful supplemental information regarding the Company's
performance by excluding certain non-cash expenses, and may include
additional adjustments for items that are infrequent in nature.
BroadSoft believes the use of these non-GAAP financial measures
provides an additional tool for investors to use in evaluating
ongoing operating results and trends and in comparing its financial
results with other companies in BroadSoft's industry, many of which
present similar non-GAAP financial measures to investors. A
reconciliation of the non-GAAP financial measures included in this
release and to be discussed on this afternoon's teleconference to the
most directly comparable GAAP financial measures is set forth below. 
Non-GAAP financial measures: 
Non-GAAP net income and net income per share. BroadSoft defines
non-GAAP net income as net income plus stock-based compensation
expense, amortization expense for acquired intangible assets,
non-cash interest expense on the Company's convertible notes, and
non-cash tax expense included in the GAAP tax provision. BroadSoft
defines non-GAAP income per share as non-GAAP net income divided by
the weighted average shares outstanding. BroadSoft considers these
non-GAAP financial measures to be useful metrics for management and
investors because they exclude the effect of certain non-cash
expenses so management and investors can compare BroadSoft's core
business operating results over multiple periods. 
Non-GAAP gross margin, license gross margin and maintenance and
services gross margin. BroadSoft defines non-GAAP gross margin as
gross margin plus stock-based compensation expense and amortization
expense for acquired intangible assets. BroadSoft considers non-GAAP
gross margin to be a useful metric for management and our investors
because it excludes the effect of certain non-cash expenses so
management and its investors can compare BroadSoft's sales margins
over multiple periods. Where BroadSoft provides further breakdown of
non-GAAP gross margin between license and maintenance services, the
Company adds back the stock-based compensation expense and
amortization expense, as applicable, to the related gross margin. 
Non-GAAP income from operations. BroadSoft defines non-GAAP income
from operations as income from operations plus stock-based
compensation expense and amortization expense for acquired intangible
assets. BroadSoft considers non-GAAP income from operations to be a
useful metric for management and investors because it excludes the
effect of certain non-cash expenses so management and investors can
compare BroadSoft's core business operating results over multiple
periods. Where BroadSoft provides further breakdown of non-GAAP
operating expenses for sales and marketing, research and development
and general and administrative, the Company deducts stock-based
compensation expense included in the applicable expense item.  
Billings. BroadSoft defines billings as revenue plus the net change
in our deferred revenue balance for a particular period. BroadSoft
believes that billings is a key measure of our business activity. 
With respect to our expectations under "Guidance" above,
reconciliation of non-GAAP earnings per share guidance to the closest
corresponding GAAP measure is not available without unreasonable
efforts on a forward-looking basis due to the high variability,
complexity and low visibility with respect to the charges excluded
from these non-GAAP measures, in particular, the measures and effects
of non-cash income taxes, which are extremely difficult to project as
a result of our tax status in a number of foreign jurisdictions, and
stock-based compensation expense specific to equity compensation
awards that are directly impacted by unpredictable fluctuations in
our stock price. We expect the variability of the above charges to
have a significant, and potentially unpredictable, impact on our
future GAAP financial results. 
The presentation of non-GAAP net income, non-GAAP net income per
share, non-GAAP gross margin, non-GAAP income from operations,
billings and other non-GAAP financial measures in this release and on
this afternoon's teleconference is not meant to be a substitute for
"net income," "net income per share," "gross margin," "income from
operations" or other financial measures presented in accordance with
GAAP, but rather should be evaluated in conjunction with such data.
BroadSoft's definition of "non-GAAP net income," "non-GAAP net income
per share," "non-GAAP gross margin," "non-GAAP income from
operations," "billings" and other non-GAAP financial measures may
differ from similarly titled non-GAAP measures used by other
companies and may differ from period to period. In reporting non-GAAP
measures in the future, management may make other adjustments for
expenses and gains it does not consider reflective of core operating
performance in a particular period and may modify "non-GAAP net
income," "non-GAAP net income per share," "non-GAAP gross margin,"
"non-GAAP income from operations," "billings" and such other non-GAAP
measures by excluding these expenses and gains. 
Forward-Looking Statements 
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may be identified by their use of
terms and phrases such as "anticipate," "enable," "expect," "will,"
"believe," "continue" and other similar terms and phrases, and such
forward-looking statements include, but are not limited to, the
statements regarding the Company's future financial performance set
forth under the heading "Guidance." The outcome of the events
described in these forward-looking statements is subject to known and
unknown risks, uncertainties and other factors that could cause
actual results to differ materially from the results anticipated by
these forward-looking statements, including, but not limited to: the
Company's dependence on the success of BroadWorks(R) and on its
service provider customers to sell services using its applications;
claims that the Company infringes the intellectual property rights of
others; the Company's dependence in large part on service providers'
continued deployment of, and investment in, their IP-based networks;
the Company's ability to integrate and achieve the expected benefits
from its recent acquisitions, including Adaption Technologies; and
the Company's ability to expand its product offerings, as well as
those factors contained in the "Risk Factors" sections of the
Company's Form 10-Q for the quarter ended June 30, 2012 filed with
the Securities and Exchange Commission, or SEC, on August 6, 2012 and
the Company's Form 10-K for the year ended December 31, 2011 filed
with the SEC on February 29, 2012, and in the Company's other filings
with the SEC. All information in this release is as of November 5,
2012. Except as required by law, the Company undertakes no obligation
to update publicly any forward-looking statement made herein for any
reason to conform the statement to actual results or changes in the
Company's expectations. 
About BroadSoft 
BroadSoft is the leading provider of software and services that
enable mobile, fixed-line and cable service providers to offer
Unified Communications over their Internet Protocol networks. The
Company's core communications platform enables the delivery of a
range of enterprise and consumer calling, messaging and collaboration
communication services, including private branch exchanges, video
calling, text messaging and converged mobile and fixed-line services. 
Financial Statements 
The financial statements set forth below are not the complete set of
the Company's financial statements for the quarter and are presented
below without footnotes. Readers are encouraged to obtain and
carefully review BroadSoft's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2012, including all financial statements
contained therein and the footnotes thereto, when it is filed with
the SEC. Once filed with the SEC, the Form 10-Q may be retrieved from
the SEC's website at www.sec.gov or from BroadSoft's website at
www.broadsoft.com. 


 
                                                                            
                              BroadSoft, Inc.                               
                   Condensed Consolidated Balance Sheets                    
                                (unaudited)                                 
                                                                            
                                               September 30,  December 31,  
                                                    2012           2011     
                                               -------------  ------------- 
                                                (In thousands, except share 
                                                    and per share data)     
Assets:                                                                     
Current assets:                                                             
  Cash and cash equivalents                    $      92,209  $      94,072 
  Short-term investments                              85,347         92,749 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $401 and $54 at                                     
   September 30, 2012 and December 31, 2011,                                
   respectively                                       41,554         47,048 
  Deferred tax assets                                  9,487         
12,968 
  Other current assets                                 7,541          4,435 
                                               -------------  ------------- 
    Total current assets                             236,138        251,272 
                                               -------------  ------------- 
Long-term assets:                                                           
  Property and equipment, net                          5,014          4,221 
  Long-term investments                                5,001          5,000 
  Restricted cash                                        584            959 
  Intangible assets, net                              12,023          8,842 
  Goodwill                                            37,280         17,276 
  Other long-term assets                              12,170          3,386 
                                               -------------  ------------- 
    Total long-term assets                            72,072         39,684 
                                               -------------  ------------- 
      Total assets                             $     308,210  $     290,956 
                                               =============  ============= 
Liabilities and stockholders' equity:                                       
Current liabilities:                                                        
  Accounts payable and accrued expenses        $      13,473  $      14,999 
  Notes payable and bank loans, current                                     
   portion                                               486            891 
  Deferred revenue, current portion                   41,872         55,372 
                                               -------------  ------------- 
      Total current liabilities                       55,831         71,262 
                                                                            
Convertible senior notes                              85,233         81,737 
Notes payable and bank loans                             458            461 
Deferred revenue                                      12,169          1,764 
Deferred tax liabilities                               2,301          1,433 
Other long-term liabilities                            1,133          1,056 
                                               -------------  ------------- 
      Total liabilities                              157,125        157,713 
                                               -------------  ------------- 
                                                                            
Stockholders' equity:                                                       
                                                                            
Common stock, par value $0.01 per share;                                    
 100,000,000 shares authorized at September                                 
 30, 2012 and December 31, 2011; 27,811,304                                 
 and 27,106,393 shares issued and outstanding                               
 at September 30, 2012 and December 31, 2011,                               
 respectively                                            278            271 
  Additional paid-in capital                         202,776        191,714 
  Accumulated other comprehensive loss                (2,981)        (2,557)
  Accumulated deficit                                (48,988)       (56,185)
                                               -------------  ------------- 
Total stockholders' equity                           151,085        133,243 
                                               -------------  ------------- 
Total liabilities and stockholders' equity     $     308,210  $     290,956 
                                               =============  ============= 
                                                                            
                                                                            
                              BroadSoft, Inc.                               
              Condensed Consolidated Statements of Operations               
                                (Unaudited)                                 
                                                                            
                                     Three Months Ended  Nine Months Ended  
                                       September 30,       September 30,    
                                    ------------------- ------------------- 
                                       2012      2011      2012      2011   
                                    --------- --------- --------- --------- 
                                     (In thousands, except per share data)  
Revenue:                                                                    
  Licenses                          $  21,554 $  17,414 $  65,320 $  51,807 
  Maintenance and services             18,620    18,266    53,713    45,706 
                                    --------- --------- --------- --------- 
    Total revenue                      40,174    35,680   119,033    97,513 
                                                                            
Cost of revenue:                                                            
  Licenses                              1,878     1,275     6,453     3,896 
  Maintenance and services              5,117     4,568    15,819    13,518 
  Amortization of intangibles             730       236     1,846       726 
                                    --------- --------- --------- --------- 
    Total cost of revenue               7,725     6,079    24,118    18,140 
                                    --------- --------- --------- --------- 
                                                                            
Gross profit                           32,449    29,601    94,915    79,373 
                                                                            
Operating expenses:                                                         
  Sales and marketing                  11,396     8,581    34,076    26,142 
  Research and development              8,876     6,587    26,483    20,133 
  General and administrative            5,701     5,269    17,395    14,151 
                                    --------- --------- --------- --------- 
    Total operating expenses           25,973    20,437    77,954    60,426 
                                    --------- --------- --------- --------- 
                                                                            
Income from operations                  6,476     9,164    16,961    18,947 
                                                                            
Other expense, net:                     1,627     1,543     4,809     1,714 
                                    --------- --------- --------- --------- 
Income before income taxes              4,849     7,621    12,152    17,233 
  Provision for (benefit from)                                              
   income taxes                         1,709       276     4,955    (9,598)
                                    --------- --------- --------- --------- 
Net income                          $   3,140 $   7,345 $   7,197 $  26,831 
                                    ========= ========= ========= ========= 
                                                                            
                                                                            
Net income per common share                                                 
 available to BroadSoft, Inc.                                               
 common stockholders:                                                       
  Basic                             $    0.11 $    0.27 $    0.26 $    1.01 
  Diluted                           $    0.11 $    0.26 $    0.25 $    0.96 
                                                                            
Weighted average common shares                                              
 outstanding:                                                               
  Basic                                27,673    26,953    27,487    26,447 
  Diluted                              28,385    27,935    28,293    27,839 
                                                                            
Stock-based compensation expense                                            
 included above:                                                            
  Cost of revenue                   $     385 $     287 $   1,276 $     564 
  Sales and marketing                   1,317       466     3,845     1,215 
  Research and development              1,040       506     2,940     1,263 
  General and administrative              584       631     2,237     1,851 
                                                                            
                                                                            
                 Summary of Consolidated Cash Flow Activity                 
   
                             (Unaudited)                                 
                                                                            
                                                         Nine Months Ended  
                                                           September 30,    
                                                      --------------------- 
                                                          2012       2011   
                                                      ---------- ---------- 
                                                          (in thousands)    
                                                                            
  Net cash provided by operating activities               17,928     21,887 
  Net cash used in investing activities                  (19,778)  (100,869)
  Net cash (used in) provided by financing activities       (142)   117,614 
                                                                            
                                                                            
                              BroadSoft, Inc.                               
                                                                            
                                  Billings                                  
                                (Unaudited)                                 
                                                                            
                                     Three Months Ended   Nine Months Ended 
                                        September 30,       September 30,   
                                     ------------------  ------------------ 
                                        2012     2011      2012      2011   
                                     --------- --------  --------  -------- 
                                                                            
Beginning of period deferred revenue                                        
 balance                             $  48,794 $ 54,379  $ 57,136  $ 59,264 
End of period deferred revenue                                              
 balance                                54,041   50,004    54,041    50,004 
                                     --------- --------  --------  -------- 
Increase (decrease) in deferred                                             
 revenue                                 5,247   (4,375)   (3,095)   (9,260)
                                                                            
Revenue                                 40,174   35,680   119,033    97,513 
                                     --------- --------  --------  -------- 
Revenue plus net change in deferred                                         
 revenue                                45,421   31,305   115,938    88,253 
                                                                            
                                                                            
               Reconciliation of Non-GAAP Financial Measures                
                                (Unaudited)                                 
                                                                            
                                                Three                       
                          Three Months Ended    Months    Nine Months Ended 
                             September 30,      Ended       September 30,   
                                               June 30,                     
                            2012      2011       2012      2012      2011   
                          --------  --------  ---------  --------  -------- 
                                            (In thousands)                  
                                                                            
Non-GAAP gross profit:                                                      
GAAP gross profit         $ 32,449  $ 29,601  $  32,195  $ 94,915  $ 79,373 
  (percent of total                                                         
   revenue)                     81%       83%        79%       80%       81%
Plus:                                                                       
  Stock-based                                                               
   compensation expense        385       287        483     1,276       564 
  Amortization of                                                           
   acquired intangible                                                      
   assets                      730       236        557     1,846       726 
                          --------  --------  ---------  --------  -------- 
                                                                            
Non-GAAP gross profit     $ 33,564  $ 30,124  $  33,235  $ 98,037  $ 80,663 
                          ========  ========  =========  ========  ======== 
  (percent of total                                                         
   revenue)                     84%       84%        82%       82%       83%
                                                                            
GAAP license gross profit $ 18,946  $ 15,903  $  19,429  $ 57,021  $ 47,185 
  (percent of related                                                       
   revenue)                     88%       91%        86%       87%       91%
Plus:                                                                       
  Stock-based                                                               
   compensation expense        113       110        174       428       203 
  Amortization of                                                           
   acquired intangible                                                      
   assets                      730       236        557     1,846       726 
                                                                            
Non-GAAP license gross                                                      
 profit                   $ 19,789  $ 16,249  $  20,160  $ 59,295  $ 48,114 
                          ========  ========  =========  ========  ======== 
  (percent of related                                                       
   revenue)                     92%       93%        90%       91%       93%
                                                                            
GAAP maintenance and                                                        
 services gross profit    $ 13,503  $ 13,698  $  12,766  $ 37,894  $ 32,188 
  (percent of related                                                       
   revenue)                     73%       75%        71%       71%       70%
Plus:                                                                       
  Stock-based                                                               
   compensation expense        272       177        309       848       361 
                                                                            
Non-GAAP maintenance and                                                    
 services gross profit    $ 13,775  $ 13,875  $  13,075  $ 38,742  $ 32,549 
                          ========  ========  =========  ========  ======== 
  (percent of related                                                       
   revenue)                     74%       76%        73%       72%       71%
                                                                            
                                                                            
                              BroadSoft, Inc.                               
                                                                            
         Reconciliation of Non-GAAP Financial Measures (continued)          
                                (Unaudited)                                 
                                                                            
                                                Three                       
                          Three Months Ended    Months    Nine Months Ended 
     
                        September 30,      Ended       September 30,   
                                               June 30,                     
                            2012      2011       2012      2012      2011   
                          --------  --------  ---------  --------  -------- 
                                            (In thousands)                  
Non-GAAP income from                                                        
 operations:                                                                
GAAP income from                                                            
 operations               $  6,476  $  9,164  $   5,576  $ 16,961  $ 18,947 
(percent of total                                                           
 revenue)                       16%       26%        14%       14%       19%
Plus:                                                                       
Stock-based compensation                                                    
 expense                     3,326     1,890      3,781    10,298     4,893 
Amortization of acquired                                                    
 intangible assets             730       236        557     1,846       726 
                          --------  --------  ---------  --------  -------- 
                                                                            
Non-GAAP income from                             
                           
 operations               $ 10,532  $ 11,290  $   9,914  $ 29,105  $ 24,566 
                          ========  ========  =========  ========  ======== 
(percent of total                                                           
 revenue)                       26%       32%        24%       24%       25%
                                                                            
GAAP operating expense    $ 25,973  $ 20,437  $  26,619  $ 77,954  $ 60,426 
                                                                            
Less:                                                                       
Stock-based compensation                                                    
 expense                     2,941     1,603      3,298     9,022     4,329 
                          --------  --------  ---------  --------  -------- 
                                                                            
Non-GAAP operating                                                          
 expense                  $ 23,032  $ 18,834  $  23,321  $ 68,932  $ 56,097 
                          ========  ========  =========  ========  ======== 
(as percent of total                                                        
 revenue)                       57%       53%        58%       58%       58%
                                                                            
GAAP sales and marketing                                                    
 expense                  $ 11,396  $  8,581  $  11,608  $ 34,076  $ 26,142 
                                                                            
Less:                                                                       
Stock-based compensation                                                    
 expense                     1,317       466      1,391     3,845     1,215 
                          --------  --------  ---------  --------  -------- 
                                                                            
Non-GAAP sales and                                                          
 marketing expense        $ 10,079  $  8,115  $  10,217  $ 30,231  $ 24,927 
                          ========  ========  =========  ========  ======== 
  (as percent of total                                                      
   revenue)                     25%       23%        25%       25%       26%
                                                                            
GAAP research and                                                           
 development expense      $  8,876  $  6,587  $   9,131  $ 26,483  $ 20,133 
                                                                            
Less:                                                                       
  Stock-based                                                               
   compensation expense      1,040       506      1,101     2,940     1,263 
                          --------  --------  ---------  --------  -------- 
                                                                            
Non-GAAP research and                                                       
 development expense      $  7,836  $  6,081  $   8,030  $ 23,543  $ 18,870 
                          ========  ========  =========  ========  ======== 
  (as percent of total                                                      
   revenue)                     20%       17%        20%       20%       19%
                                                                            
GAAP general and                                                            
 administrative expense   $  5,701  $  5,269  $   5,880  $ 17,395  $ 14,151 
                                                                            
Less:                                                                       
  Stock-based                                                               
   compensation expense        584       631        806     2,237     1,851 
                          --------  --------  ---------  --------  -------- 
                                                                            
Non-GAAP general and                                                        
 administrative expense   $  5,117  $  4,638  $   5,074  $ 15,158  $ 12,300 
                          ========  ========  =========  ========  ======== 
  (as percent of total                                                      
   revenue)                     13%       13%        13%       13%       13%
                                                                            
                                                                            
                              BroadSoft, Inc.                               
                                                                            
         Reconciliation of Non-GAAP Financial Measures (continued)          
                                (Unaudited)                                 
                                                                            
                                                  Three                     
                             Three Months Ended   Months  Nine Months Ended 
                                September 30,     Ended     September 30,   
                                                 June 30,                   
                                2012     2011      2012     2012     2011   
                             --------- -------- --------- -------- -------- 
                                  (In thousands, except per share data)     
Non-GAAP net income and                                                     
 income per share:                                                          
GAAP net income              $   3,140 $  7,345 $   2,356 $  7,197 $ 26,831 
                                                                            
Adjusted for:                                                               
  Stock-based compensation                                                  
   expense                       3,326    1,890     3,781   10,298    4,893 
  Amortization of acquired                                                  
   intangible assets               730      236       557    1,846      726 
  Non-cash interest expense                                                 
   on our convertible notes      1,286    1,159     1,273    3,801    1,331 
  Non-cash tax provision                                                    
   (benefit)                     1,505       58     1,425    4,393  (10,082)
                             --------- -------- --------- -------- -------- 
                                                                            
Non-GAAP net income          $   9,987 $ 10,688 $   9,392 $ 27,535 $ 23,699 
                             ========= ======== ========= ======== ======== 
                                                                            
                                                                            
GAAP net income per basic                                                   
 common share                $    0.11 $   0.27 $    0.09 $   0.26 $   1.01 
                                                                            
Adjusted for:                                                               
  Stock-based compensation                                                  
   expense                        0.12     0.07      0.14     0.37     0.19 
  Amortization of acquired                                                  
   intangible assets              0.03     0.01      0.02     0.07     0.03 
  Non-cash interest expense                                                 
   on our convertible notes       0.05     0.04      0.04     0.14     0.05 
  Non-cash tax provision                                                    
   (benefit)                      0.05        -      0.05     0.16    (0.38)
                             --------- -------- --------- -------- -------- 
                                                                            
Non-GAAP net income per                                                     
 basic common share          $    0.36 $   0.39 $    0.34 $   1.00 $   0.90 
                             ========= ======== ========= ======== ======== 
                                                                            
                                                                            
GAAP net income per diluted                                                 
 common share              
  $    0.11 $   0.26 $    0.08 $   0.25 $   0.96 
                                                                            
Adjusted for:                                                               
  Stock-based compensation                                                  
   expense                        0.12     0.07      0.13     0.36     0.17 
  Amortization of acquired                                                  
   intangible assets              0.03     0.01      0.02     0.07     0.03 
  Non-cash interest expense                                                 
   on our convertible notes       0.04     0.04      0.05     0.13     0.05 
  Non-cash tax provision                                                    
   (benefit)                      0.05        -      0.05     0.16    (0.36)
                             --------- -------- --------- -------- -------- 
                                                                            
Non-GAAP net income per                                                     
 diluted common share        $    0.35 $   0.38 $    0.33 $   0.97 $   0.85 
                             ========= ======== ========= ======== ======== 

  
Contact Information 
For further information contact: 
Investor Relations:
John Kiang, CFA
+1-240-720-0625
jkiang@broadsoft.com  
Industry Analyst / Media Relations:
Brian Lustig
+1-301-775-6203
brian@lustigcommunications.com