Veraz Reports Q3

SAN JOSE, Calif. -- Veraz Networks, Inc. (NASDAQ:VRAZ - News), a leading global provider of IP softswitch and media gateway solutions, today released financial results for the third quarter ended September 30, 2007.

Revenues for the third quarter of 2007 were $32.2 million, which represents a year-over-year increase of 23% from the third quarter of last year. Revenues for the nine months ended September 30, 2007 were $90.8 million, a 28% increase over revenues for the nine months ended September 30, 2006. Third quarter IP product revenues were $19.4 million, an increase of 68% over the third quarter of 2006. Year to date IP product revenues were $58.4 million, an increase of 83% over the same period of last year.

For the third quarter of 2007, Veraz recorded net income of $0.3 million, including $0.5 million in stock-based compensation expense, as compared to the third quarter of last year with a net loss of $3.4 million, including $0.5 million in stock-based compensation expense. Year to date net income was $1.3 million, including $1.6 million in stock-based compensation expense, as compared to the same period of last year with a net loss of $13.0 million, including $0.8 million in stock based compensation expense.

“In the third quarter we continued to realize the benefits of our global market penetration strategy as we added additional IP customers to our installed base. These wins have further enhanced our reputation as a technology leader. In Q3, we significantly strengthened our market position in Brazil, and have now been awarded both switch and gateway business from four service providers in this market. Additionally, our technology leadership has now extended into the Class 5 domain with the launching of two Class 5 IP Multimedia Subsystem (IMS) based networks in the Dominican Republic and in Western Europe,” said Doug Sabella, president and chief executive officer of Veraz.

“In Q3, the majority of our IP product revenue came from the initial Next Generation Networks (NGN) deployments for five customers, which was a much higher portion of our revenue mix than what we have seen in prior quarters. Typically, revenues from initial NGN deployments generate lower than normal gross margins and this impact was seen in the decline in Q3 IP product gross margins,” commented Al Wood, chief financial officer. “In Q2 FY07, we raised our guidance from $120 million in revenue and a $4 million loss to $123 - $126 million in revenues and $3 - $6 million in net income. As we are now in the fourth quarter of FY07, we are updating our FY07 guidance to revenues of $124 -126 million, and net income of $2 - 4 million.”

Veraz Networks Inc. (Nasdaq: VRAZ)