Glowpoint Reports Record First Quarter 2008 Revenues of $6.0 Million

Business Wire, May 13, 2008

Continued Focus on Core Services Yields Core Revenue Growth of 19.8%; Gross Margin Increases to 44%

HILLSIDE, N.J. -- Glowpoint, Inc. (OTC BB: GLOW), a premiere, IP-based managed video communications services provider, today announced it has continued its growth trend in the first quarter, ended March 31, 2008, with improvements across many key financial metrics.

Selected Financial Highlights

* Revenues of $6.0 million for first quarter 2008, the highest of any single quarter in Company history.

* Subscription revenue up 18.2% vs. Q1 2007, non-subscription bridging revenue up 16.1% and non-subscription special events and professional services up 68.2%, for an overall increase of 19.8% of Core revenue.

* Cost of revenue decreased 14.4% from year-ago period, demonstrating leverage in Glowpoint's business model.

* Achieved positive "Adjusted EBITDA," as defined in the Senior Secured Notes, to avoid increased interest rate under the Senior Secured Notes.

* Gross Margin jumped to 44.1% vs. 30.8% in Q1 2007.

Selected Operational Highlights

* Glowpoint completed certification for telepresence VNOC services for Polycom telepresence rooms.

* Glowpoint signed first VNOC deal to support Polycom telepresence rooms in March and has begun driving recurring revenue from the new VNOC services line of business.

* Glowpoint completes contract with multi-billion dollar telecommunications company to provide a white labeled VNOC Support Service offering for Cisco telepresence rooms.

* Glowpoint receives initial orders to support Cisco TelePresence rooms, with first rooms due to be online by mid-May.

* Glowpoint multi-point bridging group achieves single month record in both revenue and calls supported in February.

* Glowpoint announces partnership with VBrick to deliver VBrick's VBoss Solution and Glowpoint's Managed Network Services for plug and play live Internet TV and empowering the broadcast and management of live events over the Internet.

Michael Brandofino, chief executive officer of Glowpoint, commented, "Our ability to continue to drive improvements quarter after quarter in all key financial metrics, while at the same time adapting to the changes in our industry and aligning ourselves with some of the largest players, is a testament to the dedication and focus of everyone on the Glowpoint team."

Mr. Brandofino added, "Our industry is going through a significant transition as video communications is moving from a 'nice to have' to a mission-critical application. Glowpoint's early recognition of the importance of managed services and our vast experience in support of video communications has established Glowpoint as one of the key service providers in the space. We have already been asked to partner on many significant bid opportunities as it relates to telepresence VNOC services and have seen a marked increase in requests for proposals in recent months. As we move through this year, we anticipate a growing demand for our telepresence VNOC services both directly and through additional relationships where Glowpoint will be the underlying provider of services branded by our partners."

Financial Results

For the first quarter ended March 31, 2008, total revenue increased 6.0%, to $6.0 million from $5.7 million in the first quarter of 2007.

Subscription and related revenue increased 18.2%, to $4.1 million in the first quarter of 2008 from $3.5 million in the first quarter of 2007. The increased subscription and related revenue is the result of increases in installed subscription services and revenue per installation. The non-subscription revenue for managed service bridging support increased 16.1%, to $1.0 million in the first quarter of 2008 from $0.8 million in the first quarter of 2007. Special events and professional services increased 68.2%, to $0.3 million from $0.2 million in the year-ago period. The increase resulted from a new event and a development project(s) for VNOC (Video Network Operating Center) Support Services.

For the three months ended March 31, 2008, non-core revenue, which consists of ISDN resale revenues and integration services, decreased 47.1% to $0.6 million from $1.2 million in the year-ago period. The year-ago period included one-time integration revenues for a broadcast customer that did not re-occur in first quarter 2008.

Gross profit increased 51.7%, to $2.6 million in the first quarter of 2008 from $1.7 million in the first quarter of 2007. Gross margin as a percentage of sales was 44.1% in the first quarter of 2008 compared to 30.8% in the first quarter of 2007. The gross margin in the first quarter represented a 750 sequential basis point improvement compared to the 36.6% gross profit margin in the fourth quarter of 2007.

Total selling, general and administrative expenses increased 9.5% to $3.0 million in the first quarter of 2008 from $2.8 million in the 2007 quarter. The increase was primarily related to our growth plans, which drove some higher salaries, benefits and commissions, travel costs, and advertising and marketing expenses higher, offset by a decrease in professional fees related to the restatements of prior period financial statements and a reduction in the accrual for sales taxes and regulatory fees and penalties.