Dialogic Inc. Reports Fourth Quarter And Full Year 2010 Financial Results

Dialogic Inc. (NASDAQ: DLGC), a leading provider of communications technologies that power advanced networks, today announced fourth quarter and full year financial results for the period ending December 31, 2010. As the merger between Dialogic Corporation and the former Veraz Networks, Inc. closed on October 1, 2010, these financial results reflect the first quarter of merged company operations.

Financial Results

As reflected below in the reconciliation of the Q4, 2010 Statement of Operations to Adjusted EBITDA, on a non-GAAP basis, Dialogic recorded:

• Revenue of $57.4 million, an 8% increase over the sum of the pre-merger non-GAAP Q3 revenues of the two entities
• Gross Margin of 63%
• Operating Expenses of $35.2 million
• Adjusted EBITDA of $1.2 million

“In the fourth quarter, we delivered solid financial results, while introducing new products, investing in research and development, and integrating a global technology business,” said Nick Jensen, Dialogic’s Chairman and Chief Executive Officer. “We are very pleased with the success of the merger thus far, and our revenue and bookings indicate the market’s acceptance of our technology solutions. We expect to realize additional cost savings from the merger as we complete the integration of the two companies in the coming quarters, which we believe will result in a normalized non-GAAP operating expense rate of $120 million on an annualized basis.”

On a GAAP basis, Q4 revenue was $55.5 million, gross margins were 54%, operating expenses were $49.8 million and net loss attributable to common shareholders was $23.0 million or $0.74 per share. In accordance with GAAP, Dialogic’s 2010 financial results set forth below reflect Dialogic Corporation’s consolidated results for the first three quarters and the combined company’s results for the fourth quarter.

Merger Integration Update

Since completing the merger on October 1, 2010, the company has made significant progress in integrating the Dialogic and Veraz Networks businesses. A key benefit of the merger was the complementary product portfolios and technology platforms of the two entities, which are marketed and sold through existing channels to over 3,000 carrier and enterprise customers worldwide. Effective in Q1, 2011, Dialogic has organized our product and marketing groups into four new global business units:

• Bandwidth Optimization
• Video
• Infrastructure
• Value Added Services and Cloud Enablement

As this new structure is implemented, Dialogic expects to accelerate its sales, marketing and support activities into both existing and new markets and expand its product portfolio.

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