Preview Systems Reports Revenues Up 471 Percent For Fiscal 1999; Network Technology Secures Digital Rights E-Commerce for Both Software and Music

Business Wire, Jan 25, 2000

Business Editors

CUPERTINO, Calif.--(BUSINESS WIRE)--Jan. 25, 2000

Preview Systems Inc. (Nasdaq:PRVW), a leading provider of solutions for electronic distribution and licensing of digital goods through the Internet, today announced record results for the fourth quarter ending December 31, 1999.

Preview Systems recorded record fourth quarter revenues of $1.22 million, representing a gain of $862,000 or a 241 percent increase over the corresponding quarter in 1998. Total revenues for fiscal year ended December 31, 1999 also set a record at $3.48 million, an increase of $2.87 million or a 471 percent increase from fiscal year 1998. Including acquisition related charges and stock based compensation costs, the net loss for the quarter was $5.53 million, or $(0.94) per share, compared to a net loss of $3.39 million or $(1.26) per share in the fourth quarter of 1998. The net loss for fiscal year 1999 was $17.05 million, or $(4.65) per share, compared with a net loss of $11.28 million or $(7.55) a share for fiscal year 1998.

When excluding the effects of acquisition related costs and costs associated with stock-based compensation, Preview Systems recorded a pro forma net loss for the fourth quarter of $4.39 million or $(0.74) per share, compared with a pro forma net loss of $2.83 million or $(1.06) per share during the corresponding quarter of 1998. For fiscal 1999, excluding the aforementioned charges, the company posted a pro forma net loss of $14.18 million or $(3.87) per share, compared with a pro forma net loss of $8.28 million or $(5.54) per share for fiscal year 1998.

Highlights for the quarter include:

--   12 new direct licensees consisting of new distributors,
     publishers and resellers.

--   8 new live customer sites taking commercial transactions.

--   Completed integration of Intel's Software Integrity System for
     SDMI-compliant secure distribution of music.

--   Completed a development and marketing agreement with Microsoft to
     integrate Microsoft's digital rights management system into
     Preview Systems' platform and support the Windows Multimedia
     Player.

--   Completed a co-marketing agreement with Akamai to extend the
     benefits of the Akamai Network to Preview Systems' customers.

--   Completed a successful initial public offering, adding
     approximately $85 million of new equity.

Vincent Pluvinage, President and Chief Executive Officer of Preview Systems, stated, &uot;The fourth quarter of 1999 was a solid quarter financially, operationally and strategically. At the financial level we achieved record revenues and we raised over $85 million in our Initial Public Offering, including the over-allotment option exercised in the first week of January.&uot;

&uot;At the operational level, we increased our total number of direct customers by 30 percent, across multiple segments of the software distribution channel,&uot; said Brad Solso, Chief Operating Officer and Chief Financial Officer of Preview Systems. &uot;We also completed the integration of our technology at Ingram Micro, the world's largest distributor of technology products, and enabled the launch of live commercial transactions, offering electronic software products in real-time to customers of Buy.com, a consumer on-line retailer. Additionally, during the quarter, products from Macromedia, Lotus and The Learning Company began electronic sales using our solution.&uot;

Vincent Pluvinage continued, &uot;Strategically, we completed the integration of Intel's Software Integrity System(TM) into our technology platform, to provide SDMI-compliant secure music rights management and playback on MP3 players and the AOL WinAmp players. Significantly, in January, 2000, our first music licensee began offering for electronic sales premium music albums from EMI, one of the world's largest music labels. We also entered into a marketing agreement with Akamai, providing our current installed base of customers the ability to leverage the Akamai network to minimize download latency and ensure reliable electronic fulfillment of music and software to end-users on a worldwide basis. We also agreed with Sony to provide inter-operability to support Sony's Open Magic Gate technology for Portable Music Players. Finally, we entered into a development and marketing agreement with Microsoft to integrate Microsoft's digital rights management system and support Microsoft's Window's Multimedia Player with our digital goods e-commerce solution.&uot;

&uot;Because our business model is designed to enable rather than compete with multiple publishers and distribution channels, we are working with many of our customers to further expand our digital goods e-commerce networks to include a growing set of their business partners. The fourth quarter was an excellent step in our quest to become the de facto standard secure e-commerce infrastructure for the software and the music industries,&uot; Pluvinage concluded.

About Preview Systems

Preview Systems' technology solutions enable global e-commerce networks for electronically distributing and licensing digital goods. Its systems provide an Internet-based infrastructure to connect publishers of software, music and other digital products, simultaneously to any of their distribution channels. Distribution rights, branding, licensing transactions and reports, worldwide electronic fulfillment to end-users and control of their usage rights are securely managed in real-time. Preview Systems is publicly traded on NASDAQ under the symbol PRVW. For more information please visit our corporate Website at http://www.previewsystems.com.