Bitstream Inc. Reports Second Quarter Results for 2007

Business Wire, August 7, 2007

The Company reported second quarter revenue of $6,037,000 and net income of $1,225,000 or $0.11 diluted net income per share.

CAMBRIDGE, Mass. -- Bitstream Inc. (Nasdaq: BITS) today reported that it increased total revenue by $1,045,000 or 20.9% to $6,037,000 for the three months ended June 30, 2007 as compared to $4,992,000 for the three months ended June 30, 2006. The Company's cash and cash equivalents at June 30, 2007 totaled $13,477,000, an increase of $1,789,000 from $11,688,000 at March 31, 2007 and an increase of $2,935,000 from $10,542,000 at December 31, 2006.

"Our 2007 second quarter was very strong. We achieved our highest level of quarterly revenue since going public with year-over-year revenue growth of 21% for the quarter and six months ended June 30, 2007 as compared to the same periods in 2006," said Anna M. Chagnon, President and Chief Executive Officer. "We also attained our highest quarterly operating profit and net income levels since going public, excluding one time gains from the sale of a product line in 1998 and a legal fee reimbursement in 2006."

GAAP Results

Our income from operations increased $307,000 or 39.7% to $1,080,000 for the three months ended June 30, 2007 as compared to $773,000 for the three months ended June 30, 2006, while net income decreased $28,000 or 2.2% to $1,225,000 or $0.11 per diluted share for the three months ended June 30, 2007 as compared to net income of $1,253,000 for the three months ended June 30, 2006. Income from operations and net income for the three months ended June 30, 2006 included a one time gain of $464,000 from a court awarded legal fee reimbursement which is excluded from income from operations and net income in our Non-GAAP results below.

Non-GAAP Results

Our income from operations increased $349,000 or 42.2% to $1,176,000 for the three months ended June 30, 2007 as compared to $827,000 for the three months ended June 30, 2006, while net income increased $478,000 or 56.7% to $1,321,000 or $0.12 per diluted share for the three months ended June 30, 2007 as compared to net income of $843,000 or $0.08 per diluted share for the three months ended June 30, 2006.

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

SECOND QUARTER 2007 HIGHLIGHTS

April 18, 2007 -- Bitstream announced a robust new campaign tracking technology. These campaign tracking features are available with the Pageflex product, and enable users to track each aspect of their marketing campaigns. The level of detail provided by our technology allows marketers to determine whether their marketing campaigns are effective and where they are getting the best return on their marketing investment.

April 19, 2007 -- Bitstream announced that Pageflex Storefront was named the Best of Show Award winner in the category of Web-to-Print Solutions at the On Demand Conference and Exhibition and that Pageflex 5.0, Bitstream's enterprise solution for variable publishing, was given an honorable mention award in the category of Document Creation Software. This marks the second consecutive year that Pageflex Storefront has been honored with the Best in Show Award at the On Demand Conference.

June 4, 2007 -- Bitstream announced that it was selected as the 20th ranked Massachusetts-based public company in the 19th Annual Boston Globe 100, highlighting its 2006 business successes. The ranking marked Bitstream's first appearance in the Globe's 100 rankings.

June 13, 2007 - Bitstream announced the conclusion of the First Annual Pageflex User Group Conference, held in Cambridge, MA. The conference brought together nearly 100 Pageflex software users from around the world for a two-day educational program that offered technical, marketing and business development updates, in-depth sessions on new product features, and informative presentations on publishing industry trends.

June 25, 2007 - Bitstream announced its inclusion in the Russell Microcap[TM] Index, effective June 22, 2007. The addition of Bitstream to the index enables the company to be included in the portfolios of investors who rely on the Russell Indexes as part of their investment strategies.

June 26, 2007 - Bitstream announced that TVWorks, LLC licensed Bitstream's Font Fusion font rasterizing technology and the Tiresias Screenfont, a font developed by the Royal National Institute for the Blind to improve the legibility of text on TV screens.

CONFERENCE CALL REMINDER

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

* Domestic Dial-in number: 1-866-804-3545

* International Dial-in number: 1-703-639-1326

Call into the conference number 5-10 minutes prior to the start time. An operator will check 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 August 17, 2007 (access code): 338729