Shift Networks Inc.
TSX VENTURE : SHF

Shift Networks Inc.

November 30, 2006 18:07 ET

Shift Announces Third Quarter Results

Rapid customer acquisition drives growth in recurring revenue

CALGARY, ALBERTA--(CCNMatthews - Nov. 30, 2006) - Shift Networks Inc. ("Shift") (TSX VENTURE:SHF) (www.shiftnetworks.com), a leading provider of hosted IP telephone services and communications tools for small- and medium-sized businesses today announced its results for the third quarter ended September 30, 2006.

Q3 2006 Highlights

- Forward booked contracted revenues rose to $1.8 million, an increase of 533% over Q3, 2005

- Q3 revenues grew to $0.6 million, an increase of 218% over Q3, 2005

- Recurring revenues increased to $0.3 million, an increase of 269% over Q3, 2005

- Subscriber lines increased to 6,200, an increase of 425% over Q3, 2005

On November 7, 2006 the Company launched Shift 2.0, its next generation hosted IP communications network, providing a range of features and functionality previously unavailable to Canadian small and medium business customers, and combining these with best in class reliability and Quality of Service.

"Another record quarter, completion of our next generation national network, and our highly successful "start the breakup" advertising campaign, Shift is an exciting team to be a part of," said Trent Johnsen, President and CEO, Shift Networks. "We're continuing to expand our service offering and market coverage with the launch of our new IP communications platform, Shift 2.0, and the addition of key personnel prepares us for our anticipated rapid growth in Toronto and Ottawa as well as our existing Western Canadian markets."

"We continue to execute our business strategy with increased investment in sales, distribution and network. The quarterly operating loss of $2.8 million is in line with forecast. We anticipate continued increasing operating losses into 2007 as we build a high margin, recurring utility income stream. These investments accounted for the significant increase in our recurring revenue stream this quarter," added Mr. Johnsen. "All of our customers sign 36-month term contracts, and we're pleased that our forward booked contracted revenue now exceeds $5.8 million."

Financial Results

Forward booked contracted revenues for the three months ended September 30, 2006 were $1.8 million, an increase of 533% compared to the same period last year. The increase was primarily due to an additional 1,700 subscriber lines added during the quarter.

Third quarter revenues increased to $0.6 million or by 218% from $0.2 million for the same period last year. Recurring revenues for the three-month period totaled $0.3 million or an increase of 269% from the same period last year. Year-to-date revenue in 2006 increased to $1.7 million or by 287% compared to the third quarter of 2005.

The Company's operating margin on contracted recurring revenue for the third quarter remained consistent with the previous quarter at 57% and increased from 44% in the third quarter of 2005. The Company anticipates further improvements in operating margin as Shift's customer base continues to scale and increased operating efficiencies of the Shift 2.0 network are realized. The increase in general and administrative expenses was mainly due to the addition of sales and customer service personnel coupled with a move to expand office space at the Company's Calgary, Edmonton and Vancouver operations, and its expansion into the Toronto and Ottawa markets.

About Shift Networks

Shift Networks Inc. (TSX VENTURE:SHF) is reinventing the business phone company by combining premium hosted IP communications services, a strict focus on business customers, and unmatched customer service. Visit us at www.shiftnetworks.com.

Except for historical information, this press release contains forward-looking statements, which reflect the Company's current expectation regarding future events. These forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those statements. Those risks and uncertainties include, but are not limited to, changing market conditions, and other risks detailed from time-to-time in the Company's ongoing filings. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in this press release might not occur.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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