TippingPoint Reports Results for Third Quarter, Fiscal Year 2005

AUSTIN, Texas – November 18, 2004 – TippingPoint Technologies, Inc. (NASDAQ: TPTI) today reported financial results for its third quarter ended October 31, 2004.

TippingPoint reports revenues of $9.7 million for the three months ended October 31, 2004, an increase of 44% from $6.7 million in the previous quarter ended July 31, 2004.

Net loss for the quarter was $1.8 million, or $0.24 per share, compared with $3.1 million a year ago and $3.2 million for the previous quarter. Included in the net loss were $747,000, $221,000 and $727,000 of stock-based compensation for the three-month periods ended October 31, 2004, October 31, 2003 and July 31, 2004, respectively.

The Company generated $1.5 million in net cash from continuing operations for the third quarter. Cash and cash equivalents, investments and certificates of deposit totaled $29.6 million as of October 31, 2004, an increase of $1.7 million from the previous fiscal quarter.

Guidance

Below are estimates of certain financial data for the company’s fourth quarter ending January 31, 2005. Although TippingPoint believes the expectations reflected in this forward-looking information are reasonable, such expectations are based upon assumptions and anticipated results that are subject to numerous uncertainties. Please see the discussion regarding forward-looking statements at the end of this press release.

Based on TippingPoint’s performance and the current market conditions, TippingPoint expects revenues of $11.8 to $12.4 million for the fourth quarter. The net loss per share for the fourth quarter is expected to be $0.19 to $0.13.

Earnings Call

For those unable to listen to the live call, a replay will be available on the Investor Relations section of TippingPoint’s Web site through December 18, 2004. In case you missed yesterday’s after-hours earning call, you can listen to it here: http://biz.yahoo.com/cc/0/49460.html

About TippingPoint Technologies

TippingPoint is the leading provider of network-based intrusion prevention systems that deliver in-depth Application Protection, Infrastructure Protection, and Performance Protection for corporate enterprises, government agencies, service providers and academic institutions. Our innovative approach offers customers unmatched network-based security with unrivaled economics, ultra-high performance, scalability and reliability. TippingPoint is based in Austin, Texas, and can be contacted through its Web site at http://www.tippingpoint.com or by telephone at 1-88UNITYONE.

TippingPoint Technologies, the TippingPoint logo, UnityOne, the UnityOne logo and Digital Vaccine are registered trademarks of TippingPoint.

Forward-looking Statements

This press release contains various forward-looking statements and information that are based on TippingPoint’s belief, as well as assumptions made by and information currently available to TippingPoint. When used in this press release, words such as “anticipate,” “project,” “expect,” “plan,” “goal,” “forecast,” “intend,” “could,” “believe,” “may,” and similar expressions and statements regarding TippingPoint’s plans and objectives for future operations, are intended to identify forward-looking statements. Although TippingPoint believes that such expectations reflected in such forward-looking statements are reasonable, TippingPoint cannot give assurances that such expectations will prove to be correct. These forward-looking statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. The key factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following: TippingPoint’s limited operating history in the network security industry; the level of demand for TippingPoint’s products; the volume and timing of orders for TippingPoint’s products; product and price competition; the availability of component parts of TippingPoint’s products; reliance on third party manufacturers to produce TippingPoint products; reliance on distribution channels through which TippingPoint products are sold; long sales and implementation cycles for TippingPoint products; TippingPoint’s ability to retain and attract key personnel; TippingPoint’s ability to develop or introduce new products or product enhancements; reliance on certain licensed third party technology to produce TippingPoint products; TippingPoint’s ability to protect its intellectual property and to avoid costly litigation relating to its intellectual property; TippingPoint’s ability to predict its manufacturing requirements accurately; downturns in the network security and related markets; undetected product errors or defects; public perception of TippingPoint’s products in the event of a security breach of one of its customer’s networks; and litigation relating to the failure of one of TippingPoint’s products. These and other risks and assumptions are described in TippingPoint’s reports that are available from the United States Securities and Exchange Commission. TippingPoint has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

The full release with tables can be found here: TippingPoint Reports Results for Third Quarter, Fiscal Year 2005




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