CounterPath Reports Third Quarter Fiscal 2014 Financial Results

Vancouver, BC, Canada — July 22, 2014

CounterPath Corporation (“CounterPath” or the “Company”) (NASDAQ: CPAH) (TSX: CCV), an award-winning provider of desktop and mobile VoIP software products and solutions, today announced the financial and operating results for its third quarter ended January 31, 2014 of fiscal 2014.

Third Quarter Financial Highlights

• Quarterly revenue of $2.6 million.
• GAAP and non-GAAP Gross margin of 80%.
• Loss from operations of $1.6 million, non-GAAP loss from operations of $1.4 million.
• Net loss of $0.05 per share.
• Cash of $8.1 million as of January 31, 2014.

Results for the three months ended January 31, 2014

Revenue was $2.6 million compared to revenue of $3.3 million for the third quarter of fiscal 2013.

Net loss was $2.2 million or $0.05 per share compared to net loss of $0.2 million or $0.00 per share for the third quarter of fiscal 2013.

Non-GAAP net loss was $1.9 million or $0.05 per share compared to non-GAAP net loss of $0.5 million or $0.01 per share for the third quarter of fiscal 2013. A reconciliation of non-GAAP and GAAP results is included in the financial tables below.

Management Commentary

“During the quarter we focused on improving our direct sales efforts and developing our channel partners. These efforts are paying off, as our revenues booked to date for the current quarter and our sales funnel look promising,” said Donovan Jones, President and Chief Executive Officer. “Additionally, the recent WhatsApp and Viber acquisitions support our strategy, as our products and services enable operators to counter the over-the-top (OTT) threat by launching their own white labeled voice, video and messaging services, thus strengthening relationships with their customers and reducing customer churn. And with over 1,100 operators and three billion wireless subscribers worldwide, the market for our products is large,” continued Jones.

Recent Business Highlights

• Announced new distribution agreement with ABP Tech, a leading wholesale channel supplier of IP telecommunication infrastructure products and services. ABP Tech supports over 10,000 value-added resellers in North America and Latin America.
• Announced plans to enter Virtual Desktop Infrastructure and Desktop-as-a-Service markets via a new software architecture that can handle delay sensitive applications, such as voice, across all types of virtual desktops including thick clients, thin clients and zero clients.
• Announced plans to enter the Mobile Device Management (MDM) market by partnering with key MDM vendors offering direct channels to thousands of enterprise customers.
• Received two Product of the Year awards from Internet Telephony Magazine (TMC). The awards recognize CounterPath’s leading BlackBerry client and its software-as-a-service offerings.
• Released new Software Development Kit (SDK) for desktop, tablet and mobile platforms, enabling enterprises, carriers and solution vendors to develop customized SIP-based client applications based on CounterPath’s market leading technology.
• Launched next generation of softphone clients containing design updates and advanced enterprise communications features, including: voice quality monitoring, screen sharing and an add-in for Microsoft Outlook.
• Announced new growth in the expanding call center market through deals with InContact, Telmex, Telefonica and Vivo.

Conference Call Information

CounterPath will host an investor conference call and live webcast today at 11:00 a.m. ET to discuss its financial results for the third quarter ended January 31, 2014. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. A question and answer session for analysts and institutional investors will follow management’s presentation.

A live audio webcast of the conference call will be available at www.cnw.ca. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. The webcast will be archived for 30 days.

A taped rebroadcast will be available to listeners until 12 a.m. ET on March 20, 2014. To access the rebroadcast, please dial 416-849-0833 or 1-855-859-2056 and enter passcode 4380232, followed by the number sign.

Forward-Looking Statements

This news release contains “forward-looking statements”. Statements in this news release which are not purely historical, are forward-looking statements and include any statements regarding beliefs, plans, outlook, expectations or intentions regarding the future such as the following: (1) these efforts are paying off, as our revenues booked to date for the current quarter and our sales funnel look promising.

It is important to note that actual outcomes and the Company’s actual results could differ materially from those in such forward-looking statements. Actual results could differ from those projected in any forward-looking statements due to numerous factors. Such factors include, among others: (1) general economic conditions as they affect CounterPath and its current and prospective customers, including a continued downturn in general economic conditions internationally, (2) the variability in CounterPath’s sales from reporting period to reporting period due to extended sales cycles as a result of selling CounterPath’s products through channel partners or the length of time of deployment of CounterPath’s products by its customers, (3) the Company’s ability to manage its operating expenses, which may adversely affect its financial condition, (4) a decline in the Company’s stock price or insufficient investor interest in the Company’s securities which may impact on the Company’s ability to raise additional financing as required, (5) the Company’s ability to remain competitive as other better financed competitors develop and release competitive products, (6) the impact of intellectual property litigation that could materially and adversely affect CounterPath’s business, (7) the success by the Company of the sales of its current and new products, (8) the impact of technology changes on the Company’s products and industry, (9) the failure to develop new and innovative products using the Company’s technologies, and (10) the potential dilution to shareholders or overhang on the Company’s share price of its outstanding stock options and warrants. Readers should also refer to the risk disclosures outlined in the Company’s quarterly reports on Form 10-Q or Form 10-Q/A, or in the annual reports on Form 10-K or Form 10-K/A, and the Company’s other disclosure documents filed from time-to-time with the Securities and Exchange Commission at www.sec.gov and the Company’s interim and annual filings and other disclosure documents filed from time-to-time on SEDAR atwww.sedar.com.

About CounterPath

CounterPath’s SIP-based VoIP softphones are changing the face of telecommunications. An industry and user favorite, Bria softphones for desktop and mobile devices, together with the company’s server applications and Fixed Mobile Convergence (FMC) solutions, enable service providers, OEMs and enterprises large and small around the globe to offer a seamless and unified communications experience across both fixed and mobile networks. Standards-based, cost-effective and reliable, CounterPath’s award-winning solutions power the voice and video calling, messaging, and presence offerings of customers such as Alcatel-Lucent, AT&T, Verizon, BT, Mobilkom Austria, Rogers, Avaya, BroadSoft, Cisco Systems, GENBAND, Metaswitch Networks, Mitel, NTT and NEC.

For more information please visit mrkt-stg.counterpath.com.

Contacts:

David Karp
Chief Financial Officer, CounterPath
[email protected]
(604) 628-9364

Investor Relations
[email protected]
(604) 637-6498

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(TABLES TO FOLLOW)

Non-GAAP Financial Measures

This news release contains “non-GAAP financial measures”. The non-GAAP financial measures in this news release may include non-GAAP gross margin and non-GAAP income (loss) from operations which exclude non-cash stock-based compensation and amortization of intangible asset charges relative to gross profit and income (loss) from operations calculated in accordance with GAAP. The non-GAAP financial measures may also include non-GAAP net income (loss) which excludes non-cash stock-based compensation, amortization of intangible assets and fair value adjustment on derivative instruments charges relative to income (loss) calculated in accordance with GAAP. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. CounterPath utilizes both GAAP and non-GAAP financial measures to assess what it believes to be its core operating performance and to evaluate and manage its internal business and assist in making financial operating decisions. CounterPath believes that the inclusion of non-GAAP financial measures, together with GAAP measures, provides investors with an alternative presentation useful to investors’ understanding of CounterPath’s core operating results and trends.