SOURCE: BroadSoft, Inc.

BroadSoft, Inc.

March 07, 2011 16:30 ET

BroadSoft Reports Record Fourth Quarter 2010 Financial Results

GAITHERSBURG, MD--(Marketwire - March 7, 2011) - BroadSoft, Inc. (NASDAQ: BSFT), the leading global provider of software that enables fixed-line, mobile and cable service providers to deliver real time communications, voice and multimedia, services over their IP-based networks, today announced financial results for the quarter and year ended December 31, 2010.

Financial Highlights For the Fourth Quarter of 2010

--  Total revenue increased 61% sequentially and 85% year-over-year to
    $35.8 million

--  License revenue increased 64% sequentially and 97% year-over-year to
    $21.1 million

--  GAAP income from operations increased to $12.0 million, or 34% of
    total revenue; Non-GAAP income from operations increased to $13.0
    million, or 36% of total revenue

--  GAAP diluted EPS increased to $0.41 per common share; Non-GAAP
    diluted EPS increased to $0.44 per common share

Results for the quarter ended December 31, 2010

Total revenue rose to a record $35.8 million in the fourth quarter of 2010, an increase of 85% compared to $19.3 million in the fourth quarter of 2009 and an increase of 61% compared to $22.3 million in the third quarter of 2010.

Net income for the fourth quarter of 2010 was $11.2 million, or $0.41 per diluted common share, compared to net income of $0.4 million, or $0.05 per diluted common share in the fourth quarter of 2009. GAAP results for the fourth quarter of 2010 included $0.8 million of non-cash stock-based compensation expense and $0.2 million of amortization expense related to acquired intangible assets.

On a non-GAAP basis, net income in the fourth quarter of 2010 was $12.2 million or $0.44 per diluted common share, compared to non-GAAP net income of $1.0 million, or $0.07 per diluted common share, in the fourth quarter of 2009. Non-GAAP net income for these periods excludes the impact of non-cash stock-based compensation expense and amortization expense related to acquired intangible assets.

Management Commentary

"BroadSoft delivered another strong quarter driven by the expanding adoption of our hosted unified communications and SIP trunking applications," said Michael Tessler, president and chief executive officer, BroadSoft. "We continue to innovate and extend our technology and market leadership in the emerging market for voice application servers. In addition to our recently introduced BroadCloud service delivery platform, we announced MobileMxD, an integrated suite of consumer and enterprise UC services optimized for 4G networks. With MobileMxD, we believe mobile operators will be able to quickly introduce new revenue generating services to monetize their LTE investments."

"In the fourth quarter, we achieved a 64% sequential increase in license revenue while growing our deferred revenue balance by $5.0 million quarter over quarter," said Jim Tholen, chief financial officer, BroadSoft. "Moreover, our margins reached the highest levels in company history, with gross margins expanding for the third quarter in a row, to 86% on a non-GAAP basis and 85% on a GAAP basis, while our income from operations as a percent of total revenue rose to 36% on a non-GAAP basis, and 34% on a GAAP basis, in the fourth quarter. In addition, we generated $9.0 million in cash flow from operations during the fourth quarter and ended the year with cash, cash equivalents, and marketable securities totaling $65.9 million."

Results for the year ended December 31, 2010

For the full year, total revenue was $95.6 million, compared to $68.9 million in 2009, reflecting year over year growth of 39%.

Net income for the full year 2010 was $8.0 million, or $0.49 per basic common share and $0.32 per diluted common share, compared to a net loss of $7.8 million, or $(1.25) per basic and diluted common share in 2009. GAAP results in 2010 included $3.0 million of non-cash stock-based compensation expense and $0.8 million of amortization expense related to acquired intangible assets.

On a non-GAAP basis, net income for the full year 2010 was $11.8 million or $0.53 per basic common share and $0.48 per diluted common share, compared to a non-GAAP net loss of $3.4 million, or $(0.18) per basic and diluted common share in 2009. Non-GAAP net income (loss) for these periods excludes the impact of non-cash stock-based compensation expense and amortization expense related to acquired intangible assets and the pro forma conversion of the redeemable convertible preferred stock.

Guidance

For the first quarter of 2011, BroadSoft anticipates revenue of $27.0 to $29.0 million. The Company expects to achieve first quarter earnings on a non-GAAP basis of $0.04 to $0.11 per diluted common share and on a GAAP basis, $0.00 to $0.07 per diluted common share.

For the full year 2011, BroadSoft expects revenue of $116.0 to $120.0 million. The Company expects to achieve full year earnings on a non-GAAP basis of $0.56 to $0.66 per diluted common share and on a GAAP basis, $0.35 to $0.45 per diluted common share.

Conference Call

BroadSoft will discuss its fourth quarter and full year results and business outlook today via teleconference at 5:00 p.m. Eastern Time. To participate in the teleconference, callers can dial the toll free number 1-877-312-5517 (U.S. callers only) or +1-760-666-3772 (from outside the U.S.). The conference call can also be heard live via audio webcast at http://investors.broadsoft.com/events.cfm. To help ensure the conference begins on time, please dial in or connect via the web five minutes prior to the scheduled start time.

For those unable to participate in the live call, an audio replay will be available between 8:00 p.m. Eastern Time March 7, 2011 and 11:59 p.m. Eastern Time March 24, 2011 by calling 1-800-642-1687 or +1-706-645-9291, with Conference ID 14326033. A recording of the call will be available two hours following the conclusion of the call at http://investors.broadsoft.com until April 9, 2011.

Use of Non-GAAP Financial Measures

BroadSoft has provided in this release, and will provide on this afternoon's teleconference, financial information that has not been prepared in accordance with generally accepted accounting principles, or GAAP. BroadSoft uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating BroadSoft's ongoing operational performance. BroadSoft's management regularly uses these non-GAAP financial measures to understand and manage its business and believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance by excluding certain non-cash expenses, and may include additional adjustments for items that are infrequent in nature. BroadSoft believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing its financial results with other companies in BroadSoft's industry, many of which present similar non-GAAP financial measures to investors. A reconciliation of the non-GAAP financial measures included in this release and to be discussed on this afternoon's teleconference to the most directly comparable GAAP financial measures is set forth below.

Non-GAAP net income (loss) and net income (loss) per share. We define non-GAAP net income (loss) as net income (loss) plus stock-based compensation expense and amortization expense related to acquired intangible assets. We define non-GAAP income (loss) per share as non-GAAP net income (loss) divided by the weighted average shares outstanding. Also, in calculating non-GAAP net income (loss) per share for the three months ended December 31, 2009 and the years ended December 31, 2010 and December 31, 2009, we adjusted the GAAP weighted average shares outstanding to include shares of redeemable convertible preferred stock on an "as-if-converted to common stock" basis. We consider these non-GAAP financial measures to be useful metrics for management and our investors because they exclude the effect of certain non-cash expenses so that management and our investors can compare BroadSoft's core business operating results over multiple periods.

Non-GAAP gross margin, license gross margin and maintenance and professional services gross margin. We define non-GAAP gross margin as gross margin plus stock-based compensation expense and amortization expense related to acquired intangible assets. We consider non-GAAP gross margin to be a useful metric for management and our investors because it excludes the effect of certain non-cash expenses so that management and its investors can compare BroadSoft's sales margins over multiple periods. Where we provide further breakdown of non-GAAP gross margin between license, and maintenance and professional services, we add back the stock-based compensation expense and amortization expense, as applicable, to the related gross margin.

Non-GAAP income (loss) from operations. We define non-GAAP income (loss) from operations as income (loss) from operations plus stock-based compensation expense and amortization expense related to acquired intangible assets. We consider non-GAAP income (loss) from operations to be a useful metric for management and our investors because it excludes the effect of certain non-cash expenses so that management and our investors can compare BroadSoft's core business operating results over multiple periods. Where we provide further breakdown of non-GAAP operating expenses for sales and marketing, research and development and general and administrative, we deduct stock-based compensation expense included in the applicable expense item.

The presentation of non-GAAP net income (loss), non-GAAP net income (loss) per share, non-GAAP gross margin, non-GAAP income (loss) from operations and other non-GAAP financial measures in this release and on this afternoon's teleconference is not meant to be a substitute for "net income (loss)," "net income (loss) per share," "gross margin," "income (loss) from operations" or other financial measures presented in accordance with GAAP, but rather should be evaluated in conjunction with such data. Our definition of "non-GAAP net income (loss)," "non-GAAP net income (loss) per share," "non-GAAP gross margin," "non-GAAP income (loss) from operations" and other non-GAAP financial measures may differ from similarly titled non-GAAP measures used by other companies and may differ from period to period. In reporting non-GAAP measures in the future, management may make other adjustments for expenses and gains that it does not consider reflective of core operating performance in a particular period and may modify "non-GAAP net income (loss)," "non-GAAP net income (loss) per share," "non-GAAP gross margin," "non-GAAP income (loss) from operations" and such other non-GAAP measures by excluding these expenses and gains.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by their use of terms and phrases such as "anticipate," "continue," "extend," "expect," "will," "believe" and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding the Company's future financial performance set forth under the heading "Guidance" and the ability of mobile operators to introduce new revenue-generating services using MobileMxD. The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: the Company's dependence on the success of BroadWorks and on its service provider customers to sell services using its applications; claims that the Company infringes the intellectual property rights of others; the Company's dependence in large part on service providers' continued deployment of, and investment in, their IP-based networks; the extent to which mobile operators are receptive to MobileMxD and the Company's ability to expand its product offerings, as well as those factors contained in the "Risk Factors" section of the Company's Annual Report on Form 10-K filed with the SEC on March 7, 2011, and in the Company's other filings with the SEC. All information in this release is as of March 7, 2011. Except as required by law, the Company undertakes no obligation to update publicly any forward-looking statement made herein for any reason to conform the statement to actual results or changes in the Company's expectations.

About BroadSoft

BroadSoft provides software that enables fixed-line, mobile and cable service providers to deliver voice and multimedia services over their IP-based networks. The Company's software, BroadWorks®, enables service providers to provide enterprises and consumers with a range of cloud-based, or hosted, IP multimedia communications, such as hosted IP private branch exchanges, video calling, unified communications, collaboration and converged mobile and fixed-line services.

Financial Statements

The financial statements set forth below are not the complete set of the Company's financial statements for the quarter and year end and are presented below without footnotes. Readers are encouraged to obtain and carefully review BroadSoft's Annual Report on Form 10-K for the year ended December 31, 2010, including all financial statements contained therein and the footnotes thereto, when it is filed with the SEC. Once filed with the SEC, the Form 10-K may be retrieved from the SEC's website at www.sec.gov or from BroadSoft's website at www.broadsoft.com.

                            BroadSoft, Inc.
                Condensed Consolidated Balance Sheets
                             (unaudited)

                                                December 31,  December 31,
                                                    2010          2009
                                                ------------  ------------
                                                  (In thousands, except
                                                share and per share data)
Assets:
Current assets:
  Cash and cash equivalents                     $     47,254  $     22,869
  Short-term investments                              13,703             -
  Accounts receivable, net of allowance for
   doubtful accounts of $38 and $169,
   respectively                                       40,491        25,471
  Other current assets                                 4,866         4,829
                                                ------------  ------------
     Total current assets                            106,314        53,169
                                                ------------  ------------
Long-term assets:
  Property and equipment, net                          3,590         1,563
  Long-term investments                                4,970             -
  Restricted cash                                        972           599
  Intangible assets, net                               3,709         3,163
  Goodwill                                             6,226         4,728
  Other long-term assets                               1,575         3,441
                                                ------------  ------------
     Total long-term assets                           21,042        13,494
                                                ------------  ------------
       Total assets                             $    127,356  $     66,663
                                                ============  ============
Liabilities, redeemable preferred stock,
 redeemable convertible preferred stock and
 stockholders' equity (deficit):
Current liabilities:
  Accounts payable and accrued expenses         $     12,439  $     11,903
  Notes payable and bank loans, current portion        1,170         4,536
  Deferred revenue, current portion                   57,437        33,806
                                                ------------  ------------
       Total current liabilities                      71,046        50,245
Notes payable and bank loans                             800        14,035
Deferred revenue, net of current portion               1,827         6,241
Other long-term liabilities                            1,138           756
                                                ------------  ------------
       Total liabilities                              74,811        71,277
                                                ------------  ------------

Redeemable preferred stock and redeemable
 convertible preferred stock:                              -        73,186
Stockholders' equity (deficit):
BroadSoft, Inc. stockholders' equity (deficit):
   Common stock                                          255            63
   Additional paid-in capital                        142,508        20,340
   Accumulated other comprehensive loss               (1,736)       (1,725)
   Accumulated deficit                               (88,482)      (96,474)
                                                ------------  ------------
Total BroadSoft, Inc. stockholders' equity
 (deficit)                                            52,545       (77,796)
Noncontrolling interest                                    -            (4)
                                                ------------  ------------
Total stockholders' equity (deficit)                  52,545       (77,800)
                                                ------------  ------------
Total liabilities and stockholders' equity
 (deficit)                                      $    127,356  $     66,663
                                                ============  ============


                            BroadSoft, Inc.
            Condensed Consolidated Statements of Operations
                             (unaudited)




                                    Three Months Ended      Year Ended
                                        December 31,        December 31,
                                    ------------------- -------------------
                                      2010      2009      2010      2009
                                    --------- --------  --------- -------- 
                                    (In thousands, except per share data)
Revenue:
  Licenses                          $  21,086 $ 10,705  $  53,302 $ 37,942
  Maintenance and professional
   services                            14,688    8,596     42,321   30,945
                                    --------- --------  --------- --------
     Total revenue                     35,774   19,301     95,623   68,887

Cost of revenue:
  Licenses                              1,263    1,153      4,879    4,432
  Maintenance and professional
   services                             3,813    2,584     14,369   12,142
  Amortization of intangibles             223      170        794      800
                                    --------- --------  --------- --------
     Total cost of revenue              5,299    3,907     20,042   17,374
                                    --------- --------  --------- --------

Gross profit                           30,475   15,394     75,581   51,513

Operating expenses:
  Sales and marketing                   9,217    6,906     31,818   28,534
  Research and development              5,386    4,479     19,616   16,625
  General and administrative            3,874    2,844     14,103   11,405
                                    --------- --------  --------- --------
     Total operating expenses          18,477   14,229     65,537   56,564
                                    --------- --------  --------- --------

Income (loss) from operations          11,998    1,165     10,044   (5,051)

Other expense:                             10      459        883    1,469
                                    --------- --------  --------- --------
Income (loss) before income taxes      11,988      706      9,161   (6,520)
  Provision for income taxes              807      332      1,169    1,333
                                    --------- --------  --------- --------
Net income (loss)                      11,181      374      7,992   (7,853)
                                    --------- --------  --------- --------
  Net (income) loss attributable to
   noncontrolling interest                  -       (1)         -       (4)
                                    --------- --------  --------- --------
Net income (loss) attributable to
 BroadSoft, Inc.                    $  11,181 $    375  $   7,992 $ (7,849)
                                    ========= ========  ========= ========


Net income (loss) per common share
 available to BroadSoft, Inc.
 common stockholders:
  Basic                             $    0.45 $   0.06  $    0.49 $  (1.25)
  Diluted                           $    0.41 $   0.05  $    0.32 $  (1.25)

Weighted average common shares
 outstanding:
  Basic                                24,851    6,303     16,263    6,285
  Diluted                              27,444    7,381     24,721    6,285

Stock-based compensation expense
 included above:
  Cost of revenue                   $      55 $     41  $     210 $    325
  Sales and marketing                     279      162        882    1,088
  Research and development                174       75        638      741
  General and administrative              294      153      1,278    1,475





             Summary of Consolidated Cash Flow Activity
                             (unaudited)


                                                  Year Ended December 31,
                                                      2010         2009
                                                  -----------  -----------
Net cash provided by operating activities         $    19,386  $    10,427
Net cash (used in) provided by investing
 activities                                           (24,274)         694
Net cash provided by (used in) financing
 activities                                            29,203       (2,684)




                            BroadSoft, Inc.

             Reconciliation of Non-GAAP Financial Measures
                             (Unaudited)



                                               Three
                             Three Months      Months
                                Ended          Ended        Year Ended
                             December 31,   September 30,   December 31,
                            2010      2009      2010      2010      2009
                          --------  --------  --------  --------  --------
                                           (In thousands)

Non-GAAP gross profit:
GAAP gross profit         $ 30,475  $ 15,394  $ 17,384  $ 75,581  $ 51,513
  (percent of total
   revenue)                     85%       80%       78%       79%       75%
Plus:
  Stock-based compensation
   expense                      55        41        63       210       325
  Amortization of acquired
   intangible assets           223       170       186       794       800
                          --------  --------  --------  --------  --------

Non-GAAP gross profit     $ 30,753  $ 15,605  $ 17,633  $ 76,585  $ 52,638
                          ========  ========  ========  ========  ========
  (percent of total
   revenue)                     86%       81%       79%       80%       76%

GAAP license gross profit $ 19,600  $  9,382  $ 11,317  $ 47,629  $ 32,710
  (percent of related
   revenue)                     93%       88%       88%       89%       86%
Plus:
  Stock-based compensation
   expense                      20        22        21        89       173
  Amortization of acquired
   intangible assets           223       170       186       794       800

Non-GAAP license gross
 profit                   $ 19,843  $  9,574  $ 11,524  $ 48,512  $ 33,683
                          ========  ========  ========  ========  ========
  (percent of related
   revenue)                     94%       89%       89%       91%       89%

GAAP maintenance and
 professional services
 gross profit             $ 10,875  $  6,012  $  6,067  $ 27,952  $ 18,803
  (percent of related
   revenue)                     74%       70%       65%       66%       61%
Plus:
  Stock-based compensation
   expense                      35        19        42       121       152

Non-GAAP maintenance and
 professional services
 gross profit             $ 10,910  $  6,031  $  6,109  $ 28,073  $ 18,955
                          ========  ========  ========  ========  ========
  (percent of related
   revenue)                     74%       70%       65%       66%       61%





                            BroadSoft, Inc.

             Reconciliation of Non-GAAP Financial Measures
                             (Unaudited)


                                              Three
                            Three Months      Months
                               Ended          Ended        Year Ended
                            December 31,   September 30,   December 31,
                           2010      2009      2010       2010      2009
                         --------  --------  --------  --------  ---------
                                           (In thousands)
Non-GAAP income (loss)
 from operations:
GAAP income (loss) from
 operations              $ 11,998  $  1,165  $  1,459  $ 10,044  $  (5,051)
  (percent of total
   revenue)                    34%        6%        7%       11%      (7%)
Plus:
  Stock-based
   compensation expense       802       431       822     3,008      3,629
  Amortization of
   acquired intangible
   assets                     223       170       186       794        800
                         --------  --------  --------  --------  ---------

Non-GAAP income (loss)
 from operations         $ 13,023  $  1,766  $  2,467  $ 13,846  $    (622)
                         ========  ========  ========  ========  =========
  (percent of total
   revenue)                    36%        9%       11%       14%      (1%)

GAAP operating expense   $ 18,477  $ 14,229  $ 15,925  $ 65,537  $  56,564

Less:
  Stock-based
   compensation expense       747       390       759     2,798      3,304
                         --------  --------  --------  --------  ---------

Non-GAAP operating
 expense                 $ 17,730  $ 13,839  $ 15,166  $ 62,739  $  53,260
                         ========  ========  ========  ========  =========
  (as percent of total
   revenue)                    50%       72%       68%       66%        77%

GAAP sales and marketing
 expense                 $  9,217  $  6,906  $  7,789  $ 31,818  $  28,534

Less:
  Stock-based
   compensation expense       279       162       239       882      1,088
                         --------  --------  --------  --------  ---------

Non-GAAP sales and
 marketing expense       $  8,938  $  6,744  $  7,550  $ 30,936  $  27,446
                         ========  ========  ========  ========  =========
  (as percent of total
   revenue)                    25%       35%       34%       32%        40%

GAAP research and
 development expense     $  5,386  $  4,479  $  4,787  $ 19,616  $  16,625

Less:
  Stock-based
   compensation expense       174        75       196       638        741
                         --------  --------  --------  --------  ---------

Non-GAAP research and
 development expense     $  5,212  $  4,404  $  4,591  $ 18,978  $  15,884
                         ========  ========  ========  ========  =========
  (as percent of total
   revenue)                    15%       23%       21%       20%        23%

GAAP general and
 administrative expense  $  3,874  $  2,844  $  3,349  $ 14,103  $  11,405

Less:
  Stock-based
   compensation expense       294       153       324     1,278      1,475
                         --------  --------  --------  --------  ---------

Non-GAAP general and
 administrative expense  $  3,580  $  2,691  $  3,025  $ 12,825  $   9,930
                         ========  ========  ========  ========  =========
  (as percent of total
   revenue)                    10%       14%       14%       13%        14%





                            BroadSoft, Inc.

             Reconciliation of Non-GAAP Financial Measures
                             (Unaudited)


                                              Three
                            Three Months      Months
                               Ended          Ended        Year Ended
                            December 31,   September 30,   December 31,
                           2010      2009      2010       2010      2009
                         --------- --------  --------- --------  --------
                               (In thousands, except per share data)
Non-GAAP net income
 (loss) and income (loss)
 per share:
GAAP net income (loss)
 attributable to
 BroadSoft, Inc.          $  11,181 $    375  $   1,209 $  7,992  $ (7,849)

Plus:
  Stock-based compensation
   expense                      802      431        822    3,008     3,629
  Amortization of acquired
   intangible assets            223      170        186      794       800
                          --------- --------  --------- --------  --------

Non-GAAP net income
 (loss)                   $  12,206 $    976  $   2,217 $ 11,794  $ (3,420)
                          ========= ========  ========= ========  ========


GAAP net income (loss)
 per basic common share   $    0.45 $   0.06  $    0.05 $   0.49  $  (1.25)

Plus:
  Adjustment for preferred
   stock conversion (1)           -    (0.04)         -    (0.13)     0.84
  Stock-based compensation
   expense                     0.03     0.02       0.03     0.13      0.19
  Amortization of acquired
   intangible assets           0.01     0.01       0.01     0.04      0.04
                          --------- --------  --------- --------  --------

Non-GAAP net income
 (loss) per basic common
 share                    $    0.49 $   0.05  $    0.09 $   0.53  $  (0.18)
                          ========= ========  ========= ========  ========


GAAP net income per
 diluted common share (2)
 (3)                      $    0.41 $   0.05  $    0.05 $   0.32

Plus:
  Adjustment for preferred
   stock conversion (1)
   (3)                            -    (0.03)         -        -
  Stock-based compensation
   expense                     0.02     0.04       0.03     0.12
  Amortization of acquired
   intangible assets           0.01     0.01          -     0.04
                          --------- --------  --------- --------

Non-GAAP net income per
 diluted common share     $    0.44 $   0.07  $    0.08 $   0.48
                          ========= ========  ========= ========


Non-GAAP weighted average
 shares outstanding: (4)
GAAP weighted average
 shares outstanding          24,851    6,303     24,688   16,263     6,285

Add:
  Adjustment for
   convertible preferred
   stock conversion               -   12,914          -    6,073    12,763

Non-GAAP weighted average
 shares outstanding          24,851   19,216     24,688   22,336    19,048

(1) For purposes of the calculation of non-GAAP basic and diluted earnings (loss) per common share, GAAP weighted average shares outstanding is adjusted as if the conversion of all shares of redeemable convertible preferred stock into common stock occurred at the beginning of each respective period.

(2) Net income (loss) per diluted common share for the year ended December 31, 2009 is not presented because the effect of the share equivalents is anti-dilutive given the Company's losses for this period. As a result, non-GAAP net loss per diluted common share is equal to non-GAAP net loss per basic common share.

(3) GAAP net income per diluted common share for the year ended December 31, 2010 reflects the if-converted method of all shares of redeemable convertible preferred stock at the beginning of the period. Accordingly, no further adjustment for preferred stock conversion is made to calculate non-GAAP net income per diluted common share.

(4) For the calculation of GAAP weighted average shares outstanding, the shares of common stock underlying shares of redeemable convertible preferred stock are not included for the periods prior to the IPO, whereas for the non-GAAP weighted average shares outstanding, the conversion of all shares of redeemable convertible preferred stock is assumed to have occurred at the beginning of each respective period.

                            BroadSoft, Inc.

        Reconciliation of Expected Non-GAAP Financial Measures
                             (Unaudited)


                                    Three months ended     Year Ending
                                      March 31, 2011    December 31, 2011
                                    ------------------  -------------------
                                    Low End   High End  Low End   High End
                                    --------  --------- --------- ---------
                                     (In thousands, except per share data)
Non-GAAP net income:

GAAP net (loss) income              $    (85) $   1,915 $   9,911 $  12,711

Plus:
  Stock-based compensation expense       911        911     5,228     5,228
  Amortization of acquired
   intangible assets                     245        245       944       944
                                    --------  --------- --------- ---------

Non-GAAP net income                 $  1,071  $   3,071 $  16,084 $  18,884
                                    ========  ========= ========= =========

Non-GAAP income per share:

GAAP net income per diluted common
 share                              $      -  $    0.07 $    0.35 $    0.45

Plus:
  Stock-based compensation expense      0.03       0.03      0.18      0.18
  Amortization of acquired
   intangible assets                    0.01       0.01      0.03      0.03
                                    --------  --------- --------- ---------

Non-GAAP net income per diluted
 common share                       $   0.04  $    0.11 $    0.56 $    0.66
                                    ========  ========= ========= =========

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