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Wednesday, November 7, 2007 at 4:30 P.M. EST
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Wave Q3 2007 Revenues Rise to a Record
$1.7 Million Driven by Strength in PC OEM Royalties

Lee, MA — November 7, 2007 — Wave Systems Corp. (NASDAQ: WAVX — today reported results for the third quarter (Q3) of 2007 and reviewed recent corporate progress and developments. In today’s Q3 conference call, management plans to review the progress of enterprise upgrade activity.

Principally reflecting an increase in license revenues in Q3 2007 versus last year, Wave’s Q3 2007 net revenues rose to $1,734,000, compared to Q3 2006 net revenues of $846,000. The improvement in license revenues was principally due to increased royalties from shipments of Wave software by Wave’s leading OEM partner. Gross profit for Q3 2007 rose to $1,524,000 or 87.9% compared to $643,000 or 76.0% in Q3 2006.

For Q3 2007 Wave reported a net loss of $4,778,000, or $0.10 per basic and diluted share, compared to a Q3 2006 net loss of $4,487,000, or $0.12 per basic and diluted share. The increased net loss reflects increased spending in both research and development and selling, general and administrative expenses, principally reflecting increased headcount largely in sales and customer support and engineering, as well as higher professional fees, stock option expense, rent and travel expenses. Per-share figures are based on a weighted average number of basic shares outstanding in the third quarters of 2007 and 2006 of 49,737,000 and 37,800,000, respectively.

As of September 30, 2007, Wave had total current assets of $9.6 million, including cash and equivalents of $7.8 million, and no long-term debt.

Steven Sprague, Wave’s president and CEO, commented, "Our Q3 results reflect continued growth principally as a result of the deployment of our trusted computing solutions via our OEM partners. Year-to-date our EMBASSY Trust Suite software has shipped on over 13 million PCs, bringing our total shipments to over 17 million. As the installed base of Trusted Platform Modules (TPMs) increases and trusted computing becomes more prevalent, we are seeing growing interest in the use of the technology. During Q3 and into Q4, we are seeing a healthy increase in demand for software upgrades.

"With the commercial availability of Seagate’s Momentus 5400 (Full Disc Encryption) (FDE) hard drive solutions starting in the third quarter, we have realized a significant uptake in interest in Wave’s trusted computing software solutions. While the revenue contribution from this source was minimal in the third quarter, there is strong interest in our product. We have already successfully closed a number of initial enterprise sales in a variety of industries, and our pipeline of opportunities is growing. In addition to the activity around full disc encryption, we have seen a tremendous up-tick in interest in the TPM. Many customers are considering the deployment of both solutions and in particular, they are looking at the authentication capabilities of TPMs and biometrics as well as Wave’s software to manage those devices.

"Our company-wide imperative is to focus on our current sales opportunities. At the same time, we have worked to expand the reach of our sales and marketing effort through recently forged sales relationships with Safend, Convergent Computing and Ping Identity. Seeking additional complementary partner relationships remains another important component of our effort to expand awareness of our solutions on both an application-specific and geographic basis."

Summary of recent progress/developments:
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About Wave Systems Corp.

Wave is a pioneer in hardware-based PC security that provides software to help solve critical enterprise PC security challenges such as data protection, strong authentication, network access control and the management of these enterprise functions.  Wave is a founding member of the Trusted Computing Group (TCG), a consortium of more than 100 companies that forged open standards for hardware security.  Wave’s EMBASSY® line of client- and server-side software leverages and manages the security functions of the TCG’s industry standard hardware security chip, the Trusted Platform Module (TPM) as well as hard drives that comply with TCG’s “Opal” self-encrypting drive (SED) standard.  Self-encrypting drives are a growing segment of the data protection market, offering increased security and better performance than most existing software-based encryption solutions.  TPMs are standard equipment on many enterprise-class PCs shipping today and have shipped on an estimated 300 million PCs worldwide.  Using TPMs and/or SEDs and Wave software, enterprises can substantially and cost-effectively strengthen their current security solutions.  Visit for more information.

Safe Harbor for Forward Looking Statements

Under the Private Securities Litigation Reform Act of 1995. This press release may contain forward-looking information within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including all statements that are not statements of historical fact regarding the intent, belief or current expectations of the company, its directors or its officers with respect to, among other things: (i) the company’s financing plans; (ii) trends affecting the company’s financial condition or results of operations; (iii) the company’s growth strategy and operating strategy; and (iv) the declaration and payment of dividends. The words "may," "would," "will," "expect," "estimate," "anticipate," "believe," "intend" and similar expressions and variations thereof are intended to identify forward-looking statements. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, many of which are beyond the company’s ability to control, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors.

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For more information please contact:

Wave Contact:
Gerard T. Feeney, CFO
Wave Systems Corp.
Wave Investor Relations Contact
David Collins, Ratula Roy
Catalyst Global LLC


Wave Systems Corp. and Subsidiaries
Consolidated Balance Sheets
(in thousands)


September 30,


December 31,









Current assets:




Cash and cash equivalents



$ 7,966

Accounts receivable, net




Prepaid expenses




  Total current assets








Property and equipment, net




Other assets




  Total Assets








Liabilities and Stockholders’ Equity




Current liabilities:




Accounts payable and accrued expenses




Deferred revenue




  Total current liabilities








  Total Stockholders’ Equity




Total Liabilities and Stockholders’ Equity



$ 9,360

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