Metaswitch Networks Annual Results Show Revenue Growth, Strong Profitability and Market Share Gains

Telecommunications solutions vendor extends tier one carrier relationships, consolidates divisions into one brand and positions for accelerated growth as the economy recovers

Enfield, UK: October 7, 2009 — Metaswitch Networks, a leading provider of carrier systems and communications software solutions, today reported its annual results for the 2008/2009 financial year to 31 August. Overall revenue grew 4.2% from £59.3 million to £61.8 million (US$113.7 million), with operating margins sustained above 20%. Completing the process announced 6 months ago, the company also today consolidated both its Carrier Systems and Network Protocol Divisions under a single new corporate brand, Metaswitch Networks.

The company’s Carrier Systems Division business was primarily driven by tier one incumbent operators and major regional competitive providers, as smaller operators’ spending slowed amid uncertainty about market conditions and the timing of federal broadband stimulus funds. With the addition of recent customer wins, 8 of the top 10 incumbent operators in North America now rely on Metaswitch for carrier VoIP infrastructure, while independent analysts reported that the company moved into the lead position in the Class 5 segment of the global carrier VoIP market.

The company’s Network Protocols Division (NPD), previously known as Data Connection Limited (DCL) but now incorporated under the company’s main Metaswitch brand, also saw impressive results. With a balanced mix of business across its MPLS, Routing, VoIP and Session Border Controller product lines, the NPD maintained its leadership position as the protocol development partner of choice with communications equipment vendors worldwide. With all of the top 10 communications equipment vendors worldwide now using Metaswitch Network Protocols Division software to power their networking products, the company expects the division to continue to contribute strongly to its overall growth going forward.

"We are extremely pleased with these results, especially in the light of market conditions which have seen carrier VoIP spending down by more than 30% according to industry analysts," said John Lazar, Metaswitch CEO. "Continued profitability sustains our substantial investment in R&D across both Carrier Systems and Network Protocols Divisions. This has enabled us to carefully grow headcount over the year, and widen the gap between our products and services and those of our competitors who have been forced to make deep cuts."

"Bringing the company’s two divisions together under a single corporate brand is a logical move for Metaswitch," said Joe McGarvey, Principal Analyst, IP Services Infrastructure at industry research firm Current Analysis. "As these positive results show, it is the combination of the carrier systems and network protocols businesses that makes for a successful, resilient company, and demonstrates technology leadership on multiple levels within the industry. By presenting a single corporate image to the market, Metaswitch stands to gain from increased awareness among vendors and carriers alike."

About Metaswitch Networks

Metaswitch Networks is a leading provider of carrier systems and software solutions that are powering the migration of communications networks to open, packet-based architectures. Hundreds of network operators worldwide depend on its Carrier Systems Division for reliable, scalable session control, media gateway and application/feature server solutions to enable compelling revenue-generating services. Its Network Protocols Division develops high performance, portable software components that are integrated into the products of the world's leading communications equipment manufacturers. For more information, please visit www.metaswitch.com.