eSpeed reported a net loss of $0.4 million, or $0.01 per diluted share, for the second quarter of 2006 based on Generally Accepted Accounting Principles (GAAP). To reflect earnings generated from the Company's operations, eSpeed also reported non-GAAP net operating income of $1.8 million, or $0.04 per diluted share. The difference between non-GAAP net operating income and the GAAP net loss for the quarter occurred primarily due to $2.0 million in expenses relating to the relocation of the Company's London office and $0.5 million in patent litigation costs, partially offset by a positive settlement of a tax-related matter of $0.3 million. All of these differences were net of tax.

For comparative purposes, eSpeed reported a GAAP net loss of $1.5 million, or $0.03 per diluted share, for the second quarter of 2005. For the same period, the Company reported non-GAAP net operating income of $1.9 million, or $0.04 per diluted share. The difference between non-GAAP net operating income and the GAAP net loss for the second quarter 2005 was $2.6 million in MTS-related expenses, $0.6 million for patent litigation costs, and a non-cash charge of less than $0.1 million related to business partner securities, all net of tax.

eSpeed's total GAAP and non-GAAP operating revenues for the second quarter of 2006 were $39.0 million. The Company reported GAAP and non-GAAP total revenues of $37.5 million for the second quarter of 2005.

Fully electronic revenues were $17.3 million in the second quarter of 2006 compared to $18.8 million for the second quarter of 2005. Revenues from Software Solutions in the second quarter of 2006 were $11.5 million versus $10.4 million in the year ago period. Voice assisted and screen assisted revenues totaled $8.1 million in the second quarter of 2006 compared with $6.8 million in the second quarter of 2005. Non-GAAP pre-tax operating margin was 7.3 percent in the second quarter of 2006.

Fully electronic volume on the eSpeed system, excluding new products, was $10.2 trillion for the second quarter of 2006, up 43.9 percent from $7.1 trillion in the second quarter of 2005. eSpeed's voice-assisted volume for the second quarter of 2006 was $8.6 trillion, an increase of 16.4 percent over the $7.4 trillion reported in the second quarter of 2005.

Fully electronic volume on the eSpeed system for new products, which the Company defines as foreign exchange, interest rate swaps, futures and repos, was $744 billion for the second quarter of 2006, up 47.0 percent against the $506 billion reported in the second quarter of 2005.

eSpeed generated cash flow from operations of $4.3 million during the second quarter of 2006, compared with $8.6 million during the comparable period in 2005. The Company also reports free cash flow, which it defines as cash from operations less net cash used in investing activities, including capital expenditures. eSpeed's free cash flow was $0.8 million for the second quarter of 2006 and $0.2 million in the year-earlier period. Excluding related party receivables and payables, free cash flow for the second quarter of 2006 was $6.1 million compared with $4.1 million in the year-ago quarter. As of June 30, 2006, eSpeed's cash and cash equivalents were approximately $178.2 million.

Outlook

For the third quarter of 2006, eSpeed expects to generate non-GAAP operating revenues in excess of $38 million and expects non-GAAP net operating income to be in the range of $0.02 to $0.03 per diluted share.

For full year 2006, eSpeed now expects to generate non-GAAP operating revenues in excess of $154 million, up from the previous outlook of $152 million. The Company now expects non-GAAP operating expenses to be towards the lower end of its previously stated range of $144 million to $147 million. eSpeed currently expects full year 2006 non-GAAP net operating income to be in the range of $0.10 to $0.12 per diluted share, which is an increase from the prior range of $0.07 to $0.10 per diluted share.

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