Total Revenues of $24.6 million – an increase of 16% year-over-year

Product revenues of $9.1 million – an increase of 39% year-over-year

Emerging Growth Products revenues of $2.3 million – an increase of 138% year-over-year

Total Transactions grew to a record 113 – an increase of 5% quarter-over-quarter

Deferred Revenue of $28.3 million – an increase of $4.9 million year-over-year

A stock-based compensation charge in accordance with SFAS 123R of approximately $2.2 million, or $(0.04) per share for the first half of 2007 and $4.4 million, or $(0.07) per share for the full year 2007

Amortization charges of intangible assets primarily associated with the acquisition of Business Signatures, Orion and AmikaNow of approximately $1.2 million, or $(0.02) per share for the first half of 2007 and $2.4 million, or $(0.04) per share for the full year 2007.

Revenue of $24.6 million consisted of 37% product revenue ($9.1 million) and 63% services and maintenance revenue ($15.4 million). The top five product transactions accounted for 11% of Q1, 2007 revenues. There was one product transaction of over $1 million in Q1, 2007.

Emerging growth products (Entrust IdentityGuard, Boundary Messaging and Fraud Detection) accounted for $2.3 million, or 25% of product revenue, up 138% from $954,000 in Q1, 2006. Entrust IdentityGuard transactions increased to 34 this quarter, up from 15 in Q1, 2006. In the quarter, Entrust added three new fraud detection customers in the financial services vertical.

Public Key Infrastructure (PKI) products accounted for $6.4 million, or 70% of product revenue, up 24% from $5.2 million in Q1, 2006. Entrust certificate services increased 20 percent year-over-year and accounted for $1.6 million of product revenue in Q1, 2007.

Single Sign-on (SSO) products accounted for $484,000, or 5% of product revenue, up 3% from $470,000 in Q1, 2006.

Product revenue for the quarter was 60% Extended Government and 40% Extended Enterprise. The financial services vertical continued to be strong, increasing 37% over Q1, 2006 and accounting for approximately 18% of product revenue in Q1, 2007.

The average purchase size in the first quarter was $61,000, a decrease from $85,000 in Q1, 2006. Total transactions in Q1, 2007 reached 113, which is up from 59 in Q1, 2006 and is up from 108 in Q4, 2006. Twenty-three, or 20% of the transactions were from new customers.

Deferred revenue of $28.3 million increased $4.9 million from Q1, 2006 and increased $4.7 from Q4, 2006. The deferred revenue increase from a year ago was made up of $2.0 million in subscription bookings and $2.9 million in professional services and support and maintenance renewals.

Entrust introduced the industry-first $5 one-time-passcode (OTP) security token. The low price point of the Entrust IdentityGuard Token is produced in conjunction with partner ActivIdentity. Expedia will be the first customer for the Entrust IdentityGuard Token, which leverages Entrust’s versatile authentication platform. In addition to the OTP token, Entrust IdentityGuard customers enjoy a range of authentication methods from a single platform. This provides unprecedented flexibility and choice customers currently do not have with existing OTP token vendors.

In effort to promote the collaboration of security-conscious organizations, Entrust announced the first open, standards-based fraud intelligence network, the Entrust Open Fraud Intelligence Network (OFIN). OFIN is an information sharing service designed to help combat online fraud by consolidating and sharing key fraud behavior patterns and data among network participants. It is focused on providing participating members the latest fraud behaviors and tactics as well as key data for helping to detect and combat fraud as it evolves. OFIN is a key component of Entrust's layered security architecture.

Another industry first, Entrust launched Entrust Entelligence Group Share, a leading edge information protection solution that helps organizations secure data stored on corporate networks in a manner that is automatic and transparent to the end-user. With zero-touch folder administration, Entrust Entelligence Group Share offers unprecedented management that allows the ability to change permissions on a shared folder without having to modify the folder or re-encrypt data. Entrust Entelligence Group Share also provides detailed auditing and reporting capabilities to track who is accessing protected information on the network. Furthermore Entrust Entelligence Group Share can use certificates issued from any certificate authority, or use no Public Key Infrastructure (PKI) at all.

As another key element of the layered consumer security strategy, Entrust announced the availability of Extended Validation (EV) SSL Certificates for use with the next-generation of EV-aware browsers and was the first SSL vendor to activate EV SSL Certificates for Windows XP users with Microsoft® Internet Explorer 7. Entrust Extended Validation SSL Certificates — commonly referred to as “EV” certificates — are an effective anti-phishing tool that helps maintain and improve consumer confidence in online transactions by enabling strong visual cues that notify a user that a site is secure. The new technology displays prominent and consistent trust indicators in a browser’s address bar, actually turning the URL address bar green.

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In collaboration with key industry leaders including Microsoft, Entrust announced the availability of Entrust Unified Communications Certificates, which secure and authenticate communication between mail servers, internally between the Exchange servers, and between Microsoft^® Exchange servers and other mail servers. In addition, administrators can enable the new Auto Discover provisioning feature provided by Microsoft Office Outlook^® 2007 and Outlook Web Access through Microsoft Exchange Server. The technology serves as a versatile management system that affords users the ability to track and respond to a range of communication options including e-mail, voicemail, instant message and facsimile.

In December 2006, Entrust made the General Services Administration (GSA) list of approved shared service providers for PKI. Just six weeks later, Entrust completed the next step in this process by receiving a full Authority to Operate (ATO) — an accomplishment that has traditionally taken some providers a full year to accomplish. The ATO is the result of an extensive certification and accreditation review process that the GSA conducts on shared service providers. The ATO also placed the Entrust Shared Service Provider on the HSPD12 Approved Product List. Entrust remains the provider with the largest footprint within U.S. federal civilian agencies.

The Norwegian Ministry of Defense selected Entrust as the preferred vendor to help secure their communication infrastructure via strong versatile authentication and smart cards, while also providing application security, secure VPN and e-mail capabilities. The deal, which was facilitated by Entrust in conjunction with Hewlett Packard, included the purchase of Entrust Authority™ Security Manager and a host of more than 10 additional security components.

The Department of State used their embedded PKI from Entrust to comply with Homeland Security Presidential Directive 12 (HSPD-12). Entrust designed and deployed the Department of State's current PKI solution, which gives State employees critical IT security capabilities including secure messaging, digital signatures, encryption and authentication to key resources. At present, the deployment of PKI technology and credentials to the Department of State's end-user community has reached more than 32,000 people – both inside the country and overseas.

The State of Illinois turned to Entrust for deployment of Entrust Authority infrastructure and a suite of interoperable security products that help deliver valuable secure services to its citizens. The project—titled the Digital Signature/Public Key Infrastructure Project—provides a standardized way for state agencies to manage authentication, encryption and digital signatures to avoid having to purchase, build or manage similar solutions for individual applications. As one of the leading states to implement a large-scale, enterprise public key infrastructure, the State of Illinois issued its 100,000th digital certificate on Jan. 3, 2007, a major milestone for one of the country's leading e-Government initiatives.

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