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Wave Q1 2008 Revenues Rose 32% to $1.7 Million on Continued Growth in Bundled PC OEM Software Royalties

– Shipments of Bundled Wave Software Reached over 27 Million Units and Continued to Grow Each Month —

– Wave Starting to See Meaningful Software "Upgrade" Billings in Q2 2008 –

Lee, MA — May 12, 2008 — Wave Systems Corp. (NASDAQ: WAVX — today reported results for the first quarter (Q1) of 2008 and provided an update on corporate progress and developments.

Reflecting an increase in license revenues, Wave’s Q1 2008 net revenues rose 32% to $1.7 million, compared to Q1 2007 net revenues of $1.3 million. Wave’s improvement in license revenues was principally due to royalties earned from increased shipments of Wave software by Wave’s leading OEM partner. Gross profit for Q1 2008 rose to $1.5 million compared to $1.1 million in Q1 2007, reflecting the higher level of sales.

For Q1 2008 Wave reported a net loss of approximately $6,010,000, or $0.12 per basic share, compared to a Q1 2007 net loss of approximately $5,046,000, also $0.12 per basic share. Per share figures are based on a weighted average number of basic shares outstanding in the first quarters of 2008 and 2007 of 50,898,515 and 42,243,005 respectively. As of March 31, 2008, Wave had cash and equivalents of approximately $1.5 million and no long-term debt.

Steven Sprague, Wave’s president and CEO, commented, "Our first quarter performance reflected continued strength in bundled sales of our Wave Embassy Trust Suite software in what appears to be the slowest quarter for customer activity each year. While we made continued strides in engaging enterprises in dialogues regarding upgrade activity and worked to expand our pipeline of opportunities, actual sales that closed in the quarter were modest, though we experienced expanding customer interest.

"I’m pleased to say that our efforts in Q1 and prior periods are yielding positive results. We have already received more upgrade orders in Q2 than we received in all of Q1 2008. We are also seeing encouraging activity in the area of full disk encryption. While the number of drives sold was modest, well over 1,000 different enterprises have purchased FDE drives equipped with our software for their evaluation and testing. We believe this illustrates the level of interest we are seeing for FDE solutions, and could present opportunities to ‘up-sell’ enterprise early adopters or beta testers with our EMBASSY Remote Administration Server software, built specifically to support enterprise FDE deployments.

"The growth of the installed base of customers with Wave software is also significant. With over 27 million units shipped to date, the installed base represents an important development for Wave, and we continue to see growing interest in managing the hardware security that is shipping as standard on most enterprise client platforms. Our marketing efforts are promoting significantly greater industry understanding of hardware security, and we have seen increased advertising and marketing efforts by our partners in this area as well.

"Importantly, these efforts are also yielding our first satisfied upgrade customers such as Ken Waring of CBI Health and David Virkler of AdaptaSoft, both of whom have volunteered to serve as reference customers and discuss their network’s adoption of our solutions."

CBI Health
"As one of the largest healthcare services and management providers in all of Canada, with more than 2,300 clinical and support providers on staff, it’s our obligation to safeguard our patients’ information and take proactive measures to mitigate the risk of data breach. Wave offers a technically progressive solution that was compelling when compared to the other market offerings." said Ken Waring, Director of IT at CBI (Canadian Back Institute) Health, a network of more than 135 community- and hospital- based rehabilitation, medical and healthcare facilities. "Wave’s software, which manages both the Seagate Momentus full disk encryption drives and the Trusted Platform Modules on these PCs, is integral to our corporate security strategy going forward. We chose Wave because of its ease of use, low total cost of ownership and their strategic relationship with Dell."

"As providers of software and services for payroll providers, we understand the importance of keeping client and employee information secure. We evaluated data protection solutions from other vendors, but early on we were sold on the inherent advantages of hardware-based encryption for our mobile data. That’s why the clear choice was Wave—their product was in a class above all others," noted David Virkler, Chief Information Officer at AdaptaSoft Inc. based in Francesville, IN. "All of our future laptops will include Wave’s software, TPM’s and FDE hard drives from Seagate. With Wave’s EMBASSY Remote Administration Server, we’ve been able to manage Seagate’s drives and the Trusted Platform Module security chips in our organization. We chose Wave because they had the enterprise infrastructure in mind when they designed their solution, thus enabling a low-touch, fully functional, data protection solution."

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


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