BroadSoft Reports Fourth Quarter and Full Year 2012 Financial Results

BroadSoft Reports Fourth Quarter and Full Year 2012 Financial Results 
GAITHERSBURG, MD -- (Marketwire) -- 02/27/13 --  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 fourth quarter and twelve-month period ended December 31, 2012.  
Financial Highlights for the Fourth Quarter of 2012  


 
--  Total revenue increased 13% year-over-year to $45.8 million
--  GAAP gross profit equaled 82% of total revenue; non-GAAP gross profit
    equaled 85% of total revenue
--  GAAP income from operations totaled $8.4 million or 18% of revenue;
    non-GAAP income from operations totaled $14.0 million or 31% of
    revenue
--  GAAP diluted EPS equaled $0.17 per common share; non-GAAP diluted EPS
    equaled $0.47 per common share

  
Results for the three months ended December 31, 2012 
Total revenue rose to $45.8 million in the fourth quarter of 2012, an
increase of 13% compared to $40.6 million in the fourth quarter of
2011.  
Net income for the fourth quarter of 2012 was $4.9 million, or $0.17
per diluted common share, compared to net income of $5.5 million, or
$0.19 per diluted common share in the fourth quarter of 2011.  
On a non-GAAP basis, net income in the fourth quarter of 2012 was
$13.4 million, or $0.47 per diluted common share, compared to
non-GAAP net income of $10.8 million, or $0.38 per diluted common
share, in the fourth quarter of 2011. A reconciliation of non-GAAP
and GAAP results is included in the financial tables below. 
Results for the twelve months ended December 31, 2012 
For the full year, total revenue was $164.8 million, an increase of
19% compared to $138.1 million in 2011.  
Net income for the full year of 2012 was $12.1 million, or $0.43 per
diluted common share, compared to net income of $32.3 million, or
$1.15 per diluted common share, in 2011. GAAP results for 2011
included an income tax benefit of $8.9 million, or $0.32 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 full year of 2012 was $40.9
million or $1.44 per diluted common share, compared to non-GAAP net
income of $34.5 million, or $1.23 per diluted common share, in 2011.  
Management Commentary 
"We executed well against our 2012 strategic plan, including our
introduction of UC-One, the only Unified Communications platform
designed for telecommunications service providers," said Michael
Tessler, president and chief executive officer, BroadSoft. "In 2013,
we will continue to focus on developing innovative mobile services to
address the growing multi-device communication trend and provide
users the freedom to communicate from anywhere. We will also closely
collaborate with our customers to design successful go-to-market
strategies to drive the rapid adoption of their hosted Unified
Communications solutions beyond voice services." 
"For 2012, we grew revenues by 19% and billings by an even stronger
24%," said Jim Tholen, chief financial officer, BroadSoft. "We were
pleased that we delivered non-GAAP operating margins of 26% for the
year and cash flow from operations of over $30 million. As we head
into 2013, we remain excited by the opportunities to further drive
adoption of BroadSoft-enabled solutions."  
Guidance 
For the first quarter of 2013, BroadSoft anticipates revenue of $37
to $40 million. The Company also expects to achieve earnings on a
non-GAAP basis of $0.02 to $0.12 per diluted common share. 
For the full year 2013, BroadSoft expects revenue of $181 to $189
million. This range assumes that we do not recognize any material
contribution from amounts currently held in our long-term deferred
revenue balance. The Company anticipates full year 2013 earnings on a
non-GAAP basis of $1.10 to $1.35 per diluted common share.  
"Regarding our revenue guidance for 2013, we expect to see continued
strong growth in our enterprise Unified Communications software and
cloud offerings. We anticipate that this strong growth will be
partially offset by lower consumer applications revenue prior to
service providers ramping up their voice over LTE investment as well
as a decline in our professional services revenue given timing issues
related to professional services revenue recognized in 2011 and 2012
from prior periods," commented Tholen. 
Conference Call 
BroadSoft will discuss its fourth quarter and full year 2012 results
and its 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 fina
ncial 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 profit, license gross profit, subscription and
maintenance support gross profit, and professional services and other
gross profit. BroadSoft defines non-GAAP gross profit as gross profit
plus stock-based compensation expense and amortization expense for
acquired intangible assets. BroadSoft considers non-GAAP gross profit
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
profit between license, subscription and maintenance support and
professional services and other, the Company adds back the
stock-based compensation expense and amortization expense, as
applicable, to the related gross profit. 
Non-GAAP license cost of revenue, subscription and maintenance
support cost of revenue, and professional services and other cost of
revenue. BroadSoft defines non-GAAP cost of revenue less stock-based
compensation expense and amortization expense for acquired intangible
assets. BroadSoft considers non-GAAP cost of revenue 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 cost of revenue over multiple periods. Where
BroadSoft provides further breakdown of non-GAAP cost of revenue
between license, subscription and maintenance support and
professional services and other, the Company subtracts the
stock-based compensation expense and amortization expense, as
applicable, to the related cost of revenue. 
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;
the Company's dependence in large part on service pro
viders'
continued deployment of, and investment in, their IP-based networks;
claims that the Company infringes the intellectual property rights of
others; 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-K for the year ended December 31,
2012 filed with the SEC on February 27, 2013, and in the Company's
other filings with the SEC. All information in this release is as of
February 27, 2013. 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 the year and
are presented below without footnotes. Readers are encouraged to
obtain and carefully review BroadSoft's Annual Report on Form 10-K
for the year ended December 31, 2012, including all financial
statements contained therein and the footnotes thereto, as filed with
the SEC on February 27, 2013. Once filed with the SEC, the Form 10-K
may be retrieved from the SEC's website at www.sec.gov or from
BroadSoft's website at www.broadsoft.com. 
BSFT-F 


 
                                                                            
                               BroadSoft, Inc.                              
                                                                            
                    Condensed Consolidated Balance Sheets                   
                                 (unaudited)                                
                                                                            
                                                                            
                                                December 31,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
                                                (In thousands, except share 
                                                    and per share data)     
Assets:                                                                     
Current assets:                                                             
  Cash and cash equivalents                    $      90,545  $      94,072 
  Short-term investments                              73,075         92,749 
  Accounts receivable, net of allowance for                                 
   doubtful accounts of $139 and $54 at                                     
   December 31, 2012 and December 31, 2011,                                 
   respectively                                       48,980         47,048 
  Deferred tax assets                                  3,732         12,968 
  Other current assets                                10,796          4,435 
                                               -------------  ------------- 
    Total current assets                             227,128        251,272 
                                               -------------  ------------- 
Long-term assets:                                                           
  Property and equipment, net                          7,361          4,221 
  Long-term investments                               30,102          5,000 
  Restricted cash                                        584            959 
  Intangible assets, net                              11,247          8,842 
  Goodwill                                            37,529         17,276 
  Other long-term assets                              12,955          3,386 
                                               -------------  ------------- 
    Total long-term assets                            99,778         39,684 
                                               -------------  ------------- 
      Total assets                             $     326,906  $     290,956 
                                               =============  ============= 
Liabilities and stockholders' equity:                                       
Current liabilities:                                                        
  Accounts payable and accrued expenses        $      15,686  $      14,999 
  Notes payable and bank loans, current                                     
   portion                                               555            891 
  Deferred revenue, current portion                   49,368         55,372 
                                               -------------  ------------- 
      Total current liabilities                       65,609         71,262 
                                                                            
Convertible senior notes                              86,451         81,737 
Notes payable and bank loans                             414            461 
Deferred revenue                                      11,781          1,764 
Deferred tax liabilities                                   -          1,433 
Other long-term liabilities                            1,416          1,056 
                                               -------------  ------------- 
      Total liabilities                              165,671        157,713 
                         
                      -------------  ------------- 
                                                                            
Stockholders' equity:                                                       
                                                                            
Common stock, par value $0.01 per share;                                    
 100,000,000 shares authorized at December 31,                              
 2012 and December 31, 2011; 27,913,471 and                                 
 27,106,393 shares issued and outstanding at                                
 December 31, 2012 and December 31, 2011,                                   
 respectively                                            279            271 
  Additional paid-in capital                         208,073        191,714 
  Accumulated other comprehensive loss                (3,008)        (2,557)
  Accumulated deficit                                (44,109)       (56,185)
                                               -------------  ------------- 
Total stockholders' equity                           161,235        133,243 
                                               -------------  ------------- 
Total liabilities and stockholders' equity     $     326,906  $     290,956 
                                               =============  ============= 
                                                                            
                                                                            
                                                                            
                              BroadSoft, Inc.                               
                                                                            
              Condensed Consolidated Statements of Operations               
                                (Unaudited)                                 
                                                                            
                                                                            
                                     Three Months Ended     Year Ended      
                                        December 31,        December 31,    
                                    ------------------- ------------------- 
                                       2012      2011      2012      2011   
                                    --------- --------- --------- --------- 
                                     (In thousands, except per share data)  
Revenue:                                                                    
  License software                  $  24,430 $  25,482 $  89,750 $  77,289 
  Subscription and maintenance                                              
   support                             16,707    12,517    58,249    42,462 
  Professional services and other       4,672     2,552    16,843    18,313 
                                    --------- --------- --------- --------- 
    Total revenue                      45,809    40,551   164,842   138,064 
                                                                            
Cost of revenue:                                                            
  License software                      1,739     1,800     8,643     6,077 
  Subscription and maintenance                                              
   support                              4,319     2,829    14,831    10,419 
  Professional services and other       2,310     2,205     9,012     8,478 
                                    --------- --------- --------- --------- 
    Total cost of revenue               8,368     6,834    32,486    24,974 
                                    --------- --------- --------- --------- 
                                                                            
Gross profit                           37,441    33,717   132,356   113,090 
                                                                            
Operating expenses:                                                         
  Sales and marketing                  13,835    12,234    47,911    38,376 
  Research and development              9,695     7,611    36,178    27,744 
  General and administrative            5,468     5,383    22,863    19,534 
                                    --------- --------- --------- --------- 
    Total operating expenses           28,998    25,228   106,952    85,654 
                                    ========= ========= ========= ========= 
                                                                            
Income from operations                  8,443     8,489    25,404    27,436 
                                                                            
Other expense, net:                     1,661     1,600     6,470     3,314 
                                    --------- --------- --------- --------- 
Income before income taxes              6,782     6,889    18,934    24,122 
  Provision for (benefit from)                                             
 
   income taxes                         1,903     1,422     6,858    (8,175)
                                    --------- --------- --------- --------- 
Net income                          $   4,879 $   5,467 $  12,076 $  32,297 
                                    ========= ========= ========= ========= 
                                                                            
                                                                            
Net income per common share                                                 
 available to BroadSoft, Inc.                                               
 common stockholders:                                                       
  Basic                             $    0.18 $    0.20 $    0.44 $    1.21 
  Diluted                           $    0.17 $    0.19 $    0.43 $    1.15 
                                                                            
Weighted average common shares                                              
 outstanding:                                                               
  Basic                                27,861    27,065    27,581    26,603 
  Diluted                              28,515    28,142    28,353    27,987 
                                                                            
Stock-based compensation expense                                            
 included above:                                                            
  Cost of revenue                   $     555 $     352 $   1,831 $     916 
  Sales and marketing                   1,764       769     5,609     1,984 
  Research and development              1,558       638     4,498     1,901 
  General and administrative              847       549     3,084     2,400 
                                                                            
                                                                            

 
                                                                            
                              BroadSoft, Inc.                               
                                                                            
                 Summary of Consolidated Cash Flow Activity                 
                                (Unaudited)                                 
                                                                            
                                                                            
                                                  Year ended December 31,   
                                               ---------------------------- 
                                                 2012      2011      2010   
                                               --------  --------  -------- 
                                                      (in thousands)        
Net cash provided by operating activities        30,598    28,575    19,386 
Net cash used in investing activities           (34,153)  (99,136)  (24,274)
Net cash (used in) provided by financing                                    
 activities                                        (121)  117,431    29,203 
                                                                            
                                                                            
                                                                            
                                  Billings                                  
                                 (Unaudited)                                
                                                                            
                                                                            
                                                  Year ended December 31,   
                                                 2012      2011       2010  
                                              --------- ---------  ---------
                                                                            
Beginning of period deferred revenue balance  $  57,136 $  59,264  $  40,047
End of period deferred revenue balance           61,149    57,136     59,264
                                              --------- ---------  ---------
Increase (decrease) in deferred revenue           4,013    (2,128)    19,217
                                                                            
Revenue                                         164,842   138,064     95,623
                                              --------- ---------  ---------
Revenue plus net change in deferred revenue     168,855   135,936    114,840
                                                                            
                                                                            
                                                                            
                              BroadSoft, Inc.                               
                                                                            
               Reconciliation of Non-GAAP Financial Measures                
                                (Unaudited)                                 
                                                                            
                                              Three                         
                       Three Months Ended     Months       Years Ended      
                          December 31,        Ended        December 31,     
                                            September                       
                         2012       2011     30, 2012     2012       2011   
                      ---------  ---------  ---------  ---------  --------- 
                                          (In thousands)                    
                                                                            
Non-GAAP cost of                                                            
 revenue:                                                                   
GAAP license cost of                                                        
 revenue              $   1,739  $   1,800  $   2,030  $   8,643  $   6,077 
                                                                            
Less:                                                                       
Stock-based                                                                 
 compensation expense       124        128        113        553        331 
Amortization of                                                             
 acquired intangibles       244        233        214        938        704 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP license cost                                                       
 of revenue           $   1,371  $   1,439  $   1,703  $   7,152  $   5,042 
                      =========  =========  =========  =========  ========= 
                                                                        
    
GAAP subscription and                                                       
 maintenance support                                                        
 cost of revenue      $   4,319  $   2,829  $   3,667  $  14,831  $  10,419 
                                                                            
Less:                                                                       
Stock-based                                                                 
 compensation expense       316        133        170        839        334 
Amortization of                                                             
 acquired intangibles       570        336        516      1,722        591 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP subscription                                                       
 and maintenance                                                            
 support cost of                                                            
 revenue              $   3,433  $   2,360  $   2,981  $  12,270  $   9,494 
                      =========  =========  =========  =========  ========= 
                                                                            
GAAP professional                                                           
 services and other                                                         
 cost of revenue      $   2,310  $   2,205  $   2,028  $   9,012  $   8,478 
                                                                            
Less:                                                                       
Stock-based                                                                 
 compensation expense       115         91        102        439        251 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP professional                                                       
 services and other                                                         
 cost of revenue      $   2,195  $   2,114  $   1,926  $   8,573  $   8,227 
                      =========  =========  =========  =========  ========= 
                                                                            
Non-GAAP gross                                                              
 profit:                                                                    
GAAP gross profit     $  37,441  $  33,717  $  32,449  $ 132,356  $ 113,090 
  (percent of total                                                         
   revenue)                  82%        83%        81%        80%        82%
Plus:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                  555        352        385      1,831        916 
  Amortization of                                                           
   acquired                                                                 
   intangible assets        814        569        730      2,660      1,295 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP gross profit $  38,810  $  34,638  $  33,564  $ 136,847  $ 115,301 
                      =========  =========  =========  =========  ========= 
  (percent of total                                                         
   revenue)                  85%        85%        84%        83%        84%
                                                                            
GAAP license gross                                                          
 profit               $  22,691  $  23,682  $  19,524  $  81,107  $  71,212 
  (percent of related                                                       
   revenue)                  93%        93%        91%        90%        92%
Plus:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                  124        128        113        553        331 
  Amortization of                                                           
   acquired                                                                 
   intangible assets        244        233        214        938        704 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP license                                                            
 gross profit         $  23,059  $  24,043  $  19,851  $  82,598  $  72,247 
                      =========  =========  =========  =========  ========= 
  (percent of related                                                       
   revenue)                  94%        94%        92%        92%        93%
                                                                            
GAAP subscription and                                                       
 maintenance support                                                        
 gross profit         $  12,388  $   9,688  $  11,708  $  43,418  $  32,043 
  (percent of related                                                       
   revenue)                  74%        77%        76%        75%        75%
Plus:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                  316        133        170        839        334 
  Amortization of                                                           
   acquired                                                                 
   intangible assets        570        336        516      1,722        591 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP subscription                                                       
 and maintenance                                                            
 support gross profit $  13,274  $  10,157  $  12,394  $  45,979  $  32,968 
                      =========  =========  =========  =========  ========= 
  (percent of related                                                       
   revenue)                  79%        81%        81%        79%        78%
                                                                            
GAAP professional                                                           
 services and other                                                         
 gross profit         $   2,362  $     347  $   1,217  $   7,831  $   9,835 
  (percent of related                                                       
   revenue)                  51%        14%        38%        46%        54%
Plus:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                  115         91        102        439        251 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP professional                                                       
 services and other                                                         
 gross profit         $   2,477  $     438  $   1,319  $   8,270  $  10,086 
                      =========  =========  =========  =========  ========= 
  (percent of related                                                       
   revenue)                  53%        17%        41%        49%        55%
                                                                            
                                                                            
                                        
                                    
                              BroadSoft, Inc.                               
                                                                            
         Reconciliation of Non-GAAP Financial Measures (continued)          
                                (Unaudited)                                 
                                                                            
                                              Three                         
                       Three Months Ended     Months       Years Ended      
                          December 31,        Ended        December 31,     
                                            September                       
                         2012       2011     30, 2012     2012       2011   
                      ---------  ---------  ---------  ---------  --------- 
                                          (In thousands)                    
Non-GAAP income from                                                        
 operations:                                                                
GAAP income from                                                            
 operations           $   8,443  $   8,489  $   6,476  $  25,404  $  27,436 
  (percent of total                                                         
   revenue)                  18%        21%        16%        15%        20%
Plus:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                4,724      2,308      3,326     15,022      7,201 
  Amortization of                                                           
   acquired                                                                 
   intangible assets        814        569        730      2,660      1,295 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP income from                                                        
 operations           $  13,981  $  11,366  $  10,532  $  43,086  $  35,932 
                      =========  =========  =========  =========  ========= 
  (percent of total                                                         
   revenue)                  31%        28%        26%        26%        26%
                                                                            
GAAP operating                                                              
 expense              $  28,998  $  25,228  $  25,973  $ 106,952  $  85,654 
                                                                            
Less:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                4,169      1,956      2,941     13,191      6,285 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP operating                                                          
 expense              $  24,829  $  23,272  $  23,032  $  93,761  $  79,369 
                      =========  =========  =========  =========  ========= 
  (as percent of                                                            
   total revenue)            54%        57%        57%        57%        57%
                                                                            
GAAP sales and                                                              
 marketing expense    $  13,835  $  12,234  $  11,396  $  47,911  $  38,376 
                                                                            
Less:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                1,764        769      1,317      5,609      1,984 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP sales and                                                          
 marketing expense    $  12,071  $  11,465  $  10,079  $  42,302  $  36,392 
                      =========  =========  =========  =========  ========= 
  (as percent of                                                            
   total revenue)            26%        28%        25%        26%        26%
                                                                            
GAAP research and                                                           
 development expense  $   9,695  $   7,611  $   8,876  $  36,178  $  27,744 
                                                                            
Less:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                1,558        638      1,040      4,498      1,901 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP research and                                                       
 development expense  $   8,137  $   6,973  $   7,836  $  31,680  $  25,843 
                      =========  =========  =========  =========  ========= 
  (as percent of                                                            
   total revenue)            18%        17%        20%        19%        19%
                                                                            
GAAP general and                                                            
 administrative                                                             
 expense              $   5,468  $   5,383  $   5,701  $  22,863  $  19,534 
                                                                            
Less:                                                                       
  Stock-based                                                               
   compensation                                                             
   expense                  847        549        584      3,084      2,400 
                      ---------  ---------  ---------  ---------  --------- 
                                                                            
Non-GAAP general and                                                        
 administrative                                                             
 expense              $   4,621  $   4,834  $   5,117  $  19,779  $  17,134 
                      =========  =========  =========  =========  ========= 
  (as percent of                                                            
   total revenue)            10%        12%        13%        12%        12%
                                                                            
                                                                            
                                                                            
                              BroadSoft, Inc.                               
                                                                            
         Reconciliation of Non-GAAP Financial Measures (continued)          
                                (Unaudited)                                 
                                                                            
                                                Three                       
                           Three Months Ended   Months      Years Ended     
                              December 31,      Ended       December 31,    
                                              September                     
                             2012      2011    30, 2012    2012      2011   
                          --------- --------- --------- --------- --------- 
                                (In thousands, except per share data)       
Non-GAAP net income and                                                     
 income per share:                                                          
GAAP net income           $   4,879 $   5,467 $   3,140 $  12,076 $  32,297 
                                                                     
       
Adjusted for:                                                               
  Stock-based                                                               
   compensation expense       4,724     2,308     3,326    15,022     7,201 
  Amortization of                                                           
   acquired intangible                                                      
   assets                       814       569       730     2,660     1,295 
  Non-cash interest                                                         
   expense on our                                                           
   convertible notes          1,319     1,230     1,286     5,120     2,561 
  Non-cash tax provision                                                    
   (benefit)                  1,630     1,202     1,505     6,023    (8,879)
                          --------- --------- --------- --------- --------- 
                                                                            
Non-GAAP net income       $  13,366 $  10,776 $   9,987 $  40,901 $  34,475 
                          ========= ========= ========= ========= ========= 
                                                                            
                                                                            
GAAP net income per basic                                                   
 common share             $    0.18 $    0.20 $    0.11 $    0.44 $    1.21 
                                                                            
Adjusted for:                                                               
  Stock-based                                                               
   compensation expense        0.17      0.09      0.12      0.54      0.27 
  Amortization of                                                           
   acquired intangible                                                      
   assets                      0.03      0.02      0.03      0.10      0.05 
  Non-cash interest                                                         
   expense on our                                                           
   convertible notes           0.04      0.05      0.05      0.18      0.10 
  Non-cash tax provision                                                    
   (benefit)                   0.06      0.04      0.05      0.22     (0.33)
                          --------- --------- --------- --------- --------- 
                                                                            
Non-GAAP net income per                                                     
 basic common share       $    0.48 $    0.40 $    0.36 $    1.48 $    1.30 
                          ========= ========= ========= ========= ========= 
                                                                            
                                                                            
GAAP net income per                                                         
 diluted common share     $    0.17 $    0.19 $    0.11 $    0.43 $    1.15 
                                                                            
Adjusted for:                                                               
  Stock-based                                                               
   compensation expense        0.16      0.08      0.12      0.53      0.26 
  Amortization of                                                           
   acquired intangible                                                      
   assets                      0.03      0.02      0.03      0.09      0.05 
  Non-cash interest                                                         
   expense on our                                                           
   convertible notes           0.05      0.05      0.04      0.18      0.09 
  Non-cash tax provision                                                    
   (benefit)                   0.06      0.04      0.05      0.21     (0.32)
                          --------- --------- --------- --------- --------- 
                                                                            
Non-GAAP net income per                                                     
 diluted common share     $    0.47 $    0.38 $    0.35 $    1.44 $    1.23 
                          ========= ========= ========= ========= ========= 

  
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 
 
 
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