Bitstream Inc. Reports Third Quarter Results for 2007

The Company reported third quarter revenue of $5,807,000 and net income of $876,000 or $0.08 diluted net income per share.

Cambridge, MA —November 7 , 2007 — Bitstream Inc. (Nasdaq: BITS) today reported that it increased total revenue by $654,000 or 13% to $5,807,000 for the three months ended September 30, 2007 as compared to total revenue of $5,153,000 for the three months ended September 30, 2006. The Company’s cash and cash equivalents at September 30, 2007 totaled $15,229,000, an increase of $1,752,000 from $13,477,000 at June 30, 2007 and an increase of $4,687,000 from $10,542,000 at December 31, 2006. 

“Our third quarter was very strong. We achieved our highest level of revenue as compared to any previous third quarter and our second highest revenue level of quarterly revenue since going public” said Anna M. Chagnon, President and Chief Executive Officer. “We continued to increase our investment in sales and marketing personnel and activities to drive revenue growth in future quarters while maintaining a significant level of investment in research and development activities for all of our technologies. Our GAAP net income for the nine months ended September 30, 2007 increased $213,000 or 8.2% to $2,817,000 as compared to net income of $2,604,000 for the nine months ended September 30, 2006.”

GAAP Results

Our income from operations decreased $120,000 or 14.1% to $731,000 for the three months ended September 30, 2007 as compared to $851,000 for the three months ended September 30, 2006, while net income decreased $77,000 or 8.1% to $876,000 or $0.08 per diluted share for the three months ended September 30, 2007 as compared to net income of $953,000 or $0.09 per diluted share for the three months ended September 30, 2006. 

Non-GAAP Results

Our income from operations not including the effect of stock-based compensation expense decreased $34,000 or 3.6% to $899,000 for the three months ended September 30, 2007 as compared to $933,000 for the three months ended September 30, 2006. Net income increased $9,000 or 0.9% to $1,044,000 or $0.10 per diluted share for the three months ended September 30, 2007 as compared to net income of $1,035,000 or $0.10 per diluted share for the three months ended September 30, 2006.

A reconciliation between GAAP and non-GAAP results is provided at the end of this press release.

THIRD QUARTER 2007 HIGHLIGHTS

September 26, 2007—Bitstream announced the addition of Olaf Heggli as Director of European Business Development. Olaf will be responsible for increasing European sales and partnerships for all of Bitstream’s product lines.

September 24, 2007 — Bitstream announced the release of version 4.0 of Bitstream Panorama™, the worldwide text composition engine that enables developers to compose and render text in any international language. This upgrade includes features that provide support for transparency and enable better performance, and also provides several new APIs.  In addition, Bitstream also announced the release of Font Fusion 4.0, an upgrade that extends the functionality of the company’s premier font subsystem that renders high-quality characters in any format, at any resolution, on any platform or device.

September 6, 2007  — Bitstream announced the integration of its Pageflex publishing products with Objective Advantage software into a highly automated, ”lights out” solution requiring minimal manual input. Associates Graphic Services ( www.agsprint.com ), a world-class printing solutions provider, is the first to deploy the integrated solution, which will support a 7,000-user North American project, customizing a wide range of documents including 12 to 16-page booklets, as well as labels and appointment cards.

August 10, 2007 — Bitstream announced the availability of Pageflex Storefront 5.5. The new features of Storefront 5.5 are expected to drive Pageflex users into new markets by enabling them to create, deploy and manage websites for the lucrative consumer market. Pageflex users can expand their offering to their own customers by utilizing new features that support the development of consumer-oriented products including photo books, stationery and calendars.

August 9, 2007 — Bitstream announced that the U.S. Patent and Trademark Office has awarded the company two patents for its technology that enables browsing on mobile devices. This technology is the foundation of the company’s ThunderHawk™ product. ThunderHawk is the first browser to provide a consistent, full HTML browsing experience between mobile and desktop environments.

CONFERENCE CALL REMINDER

Today, November 7, 2007, at 4:30 p.m. EST, Bitstream will host a conference call with the financial community to discuss its results for the quarter ended September 30, 2007:

• Domestic Dial-in number: 1-866-835-8906
• International Dial-in number: 1-703-639-1413

           
Call into the conference number 5-10 minutes prior to the start time. An operator will request that you provide your name and organization and ask you to wait until the call begins.  If you have any difficulty connecting with the conference call number, please contact at Bitstream: (617) 497-6222.

A replay of the conference call will be available through November 17, 2007 (access code): 1163914

• Domestic Replay number:  1-888-266-2081
• International Replay number: 1-703-925-2533

Forward Looking Statements Disclosure
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on management’s current expectations. Actual performance and results of operations may differ materially from those projected or suggested in the forward-looking statements due to certain risks and uncertainties, including, without limitation, market acceptance of the Company’s products, competition and the timely introduction of new products. Additional information concerning certain risks and uncertainties that would cause actual results to differ materially from those projected or suggested in the forward-looking statements is contained in the Company’s filings with the Securities and Exchange Commission, including Bitstream’s Annual Report on Form 10-K for the year ended December 31, 2006.

About Bitstream

Bitstream Inc. (NASDAQ: BITS) is a software development company that makes communications compelling. Bitstream enables customers worldwide to render high-quality text, browse the Web on wireless devices, select from the largest collection of fonts online, and customize documents over the Internet. Its core competencies include fonts and font technology, browsing technology, and publishing technology. For more information about Bitstream please visit www.bitstream.com.