Bitstream Inc. Reports Third Quarter Results for 2008

The Company reported third quarter revenue of $5,483,000 and net income of $187,000 or $0.02 per diluted share

CAMBRIDGE, MA—November 12, 2008—Bitstream Inc. (NASDAQ: BITS) today reported that revenue decreased by $324,000 or 6% to $5,483,000 for the three months ended September 30, 2008 as compared to total revenue of $5,807,000 for the three months ended September 30, 2007. The Company’s cash and cash equivalents at September 30, 2008 totaled $15,200,000, an increase of $1,261,000 from a Balance of $13,939,000 at June 30, 2008.

"Our concern about the changing economic outlook affecting large software purchases and consumer spending caused us to adjust our spending and expenses during the third quarter to ensure profitability despite lower than anticipated revenue," said Anna M. Chagnon, President and Chief Executive Officer.   "We are pleased to report that we achieved a net profit of $187,000 for the quarter and increased our cash and cash equivalents for the third quarter by $1,261,000 despite the decrease in revenue of $324,000.  With our strong balance sheet and no debt, we remain well positioned to take advantage of potential growth opportunities while managing our business through uncertain economic times.  We continue to focus on building the Company for the future and increasing shareholder value."

GAAP Results

Our income from operations decreased $568,000 or 78% to $163,000 for the three months ended September 30, 2008 as compared to $731,000 for the three months ended September 30, 2007.  Our net income decreased $689,000 or 79% to $187,000 or $0.02 per diluted share for the three months ended September 30, 2008 as compared to net income of $876,000 or $0.08 per diluted share for the three months ended September 30, 2007. 

Non-GAAP Results

Our income from operations, not including the effect of stock-based compensation expense, decreased $539,000 or 60% to $360,000 for the three months ended September 30, 2008 as compared to $899,000 for the three months ended September 30, 2007. Net income, not including the effect of stock-based compensation expense, decreased $660,000 or 63% to $384,000 or $0.04 per diluted share for the three months ended September 30, 2008 as compared to $1,044,000 or $0.10 per diluted share for the three months ended September 30, 2007. 

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

CONFERENCE CALL REMINDER

Today, November 12, 2008, 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, 2008:

• Domestic Dial-in number: 1-866-219-5885
• International Dial-in number: 1-703-639-1124

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 22, 2008 (access code): 1303925

• 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, 2007.

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.