Entrust to post Q2 loss

Entrust expects total revenue for the quarter to be approximately $24.3 million, an increase of 10% over Q2, 2006. Product revenue for the quarter is expected to be approximately $8.8 million, an increase of 20% over Q2, 2006. Services revenue is expected to be approximately $15.5 million, an increase of 6% over Q2, 2006.

Net income on a GAAP basis is expected to be a loss of $0.05 per share for the second quarter, down from a net loss of $0.02 per share in Q2, 2006. On a non-GAAP basis, earnings per share for the second quarter are expected to be a loss of approximately $0.02, down from $0.00 per share in Q2, 2006. These non-GAAP results exclude the following items: amortization of intangible assets related to acquisitions, restructuring and related adjustments, stock- based compensation, and impairment of certain strategic investments. See the financial table below reconciling these non-GAAP figures to GAAP.

"I am pleased that we grew product revenue 29 percent for the first half of the year, however I am disappointed in our revenue attainment from large deals in the quarter. Our growth is underpinned by our revenue from transactions under $500 thousand, which increased by 50 percent in first half of the year over last year and our $5 million increase in deferred revenue from Q2, 2006," said Bill Conner, Entrust Chairman, President and Chief Executive Officer. "Based on the growth on IdentityGuard, PKI, total transactions, new customers and our services business I feel we are well positioned to continue to execute our growth plan for the second half of 2007."

Additional Business Highlights:

• Total revenue increased 13% for the first half of 2007 over the first half of 2006, and increased 10% over Q2, 2006.
• Product revenue increased 29% for the first half of 2007 over the first half of 2006, and increased 19% over Q2, 2006.
• Deferred revenue is expected to be over $28.0 million, an increase of $5.0 million from the $23.0 million in the second ququarter of 2006.
• Product revenue from deals under $500 thousand increased 37% over Q2, 2006. For the first half of 2007, product revenue from deals under $500 thousand increased 50% over the first half of 2006.
• Entrust's top 5 product revenue transactions accounted for 8 percent of revenue in the quarter. Entrust's largest transaction was a U.S. federal government deal valued at approximately $1.0 million, and there were no product deals over $1.0 million in the quarter.
• Transactions increased to 107, up 51% over Q2, 2006. For the first half of 2007 transactions increased 69% over the first half of 2006. New customer traction continued to increase, adding 30 new customers in the quarter, up 67% over Q2, 2006. For the first half of 2007 new customers increased 89% over the first half of 2006.
• Entrust IdentityGuard product revenue increased 40% over Q2, 2006 and the company achieved their first Entrust IdentityGuard Token shipments.
• PKI product revenue increased 9% over Q2, 2006 driven by record SSL and new Extended Validation (EV) SSL certificate revenue.
• Single Sign-on (SSO) product revenue increased 95% over Q2, 2006 driven by government portals and interest in providing SSO as part of a layered authentication approach with Entrust IdentityGuard.
• Services revenue in the quarter was approximately $15.5 million, which is up 6% from Q2 of last year. The key driver for the increase in services revenue was the company's 2nd highest quarterly support and maintenance revenue attainment.
• Entrust expects to have positive cash flow from operations for the quarter. Cash and marketable securities increased to over $23.0 million from $20.8 million in the first quarter of 2007.