TORONTO--(Marketwire - August 08, 2012) - Redknee Solutions, Inc. (TSX: RKN), a leading provider of business-critical software and solutions for communications service providers, reported results for its fiscal third quarter ended June 30, 2012. All figures below are in U.S. dollars.

FY Q3 2012 Financial Highlights as Compared to the Same Year-ago Quarter

- Revenue increased from $14.2 million to $14.8 million

- Gross margin increased from 61% to 71%

- Net income totaled $1.7 million or $0.03 per share versus a loss of $1.9 million or $(0.03) per share

- EBITDA totaled $2.5 million, improving from a loss of $1.4 million

- Recurring revenue as percent of total revenue increased from 44% to 47%

- Order backlog was $55.8 million versus $42.6 million

- Quarter-end cash totaled $20.3 million

FY Q3 2012 Operational Highlights

- The greater industry-wide adoption of 4G LTE, a new standard for wireless communication of high-speed data for mobile phones, led to a multi-million dollar increase in Redknee's Tier 1 business in North America

- Subscriber growth in the Mobile Virtual Network Operator (MVNO) segment led to an expansion of business in Americas with a multi-million dollar contract

- Need for advanced functionality drove upgrades to Redknee's converged billing platform across Asia Pacific resulting in Redknee securing incremental, multi-million dollar, business in the region

- Initiated repurchase program for company's common stock

- Achieved Microsoft Partner Gold status

- Recognized by Branham Group's Top ICT Scorecard as one of Canada's Top 10 wireless companies

FY Q3 2012 Financial Results

Revenue for the fiscal third quarter 2012 was $14.8 million, increasing 5% both sequentially and over the same year-ago quarter. The improvement was primarily due to increases in revenue from software upgrades and support.

Recurring revenue for the trailing 12 months increased to 49% of revenue from 41% in the same year-ago period. The improvement was due to increased sales and renewals of customer support services, software subscriptions and term licenses.

Gross margin for the fiscal third quarter 2012 increased to 71% from 61% in the same year-ago quarter. EBITDA (i.e., earnings before interest, taxes, depreciation, and amortization, including amortization of non-cash stock-based compensation) was $2.5 million or 17% of revenue in the fiscal third quarter, compared to a loss of $1.4 million in the year-ago quarter (see discussion about the presentation of EBITDA, a non-IFRS metric, below).

Net income for the fiscal third quarter 2012 totaled $1.7 million or $0.03 per basic and diluted share, improving from a net loss of $1.9 million or $(0.03) per basic and diluted share in the year-ago quarter. The comparative increase was primarily attributed to disciplined cost management and ongoing improvements in the company's cost structure.

At June 30, 2012, cash and investments totaled $20.3 million compared to $15.7 million as at September 30, 2011. Net cash was $14.6 million at June 30, 2012 compared to $7.6 million at September 30, 2011.

Please refer to the section regarding forward-looking statements which form an integral part of this release. These results, along with the unaudited consolidated financial statements and the company's MD&A, are available on the company's website at www.redknee.com and on SEDAR at www.sedar.com.

Management Commentary

"Our fiscal third quarter results demonstrated our ability to grow with our customer base, continue to manage costs and improve operational efficiencies," said Lucas Skoczkowski, CEO of Redknee. "This is particularly evidenced by our EBITDA increasing 60% to $2.5 million over the previous quarter, and especially compared to the year-ago loss. Our sales momentum continues to be encouraging, driving our order backlog to $55.8 million and giving us a clear pathway to profitable growth.

"Our growth has also been driven by mobile networks working to expand in order to handle the increasing number of users and their data usage. Redknee's award-winning solutions provide a strong value proposition, allowing network operators around the world to differentiate their offerings and manage the complex, dynamic network environments. This has allowed us to secure new multi-million dollar orders in the Americas and Asia Pacific.

"Redknee is well positioned to capitalize on future opportunities as we look to further expand in North America with Tier 1 network operators. We are focused on growing recurring revenue by securing multi-year contracts, with high margins that ultimately result in sustained profitability over the long term."

Conference Call

The company will host a conference call tomorrow (Thursday, August 9, 2012) to discuss these results. Redknee's CEO Lucas Skoczkowski and CFO David Charron will host the presentation starting at 8:30 a.m. Eastern time. A question and answer session will follow the management's presentation.

Dial-in number: 1-877-941-4774

International: 1-480-629-9760

Conference ID#: 4551892

The presentation will be webcast live and available for replay via the Investors section of the company's website at www.redknee.com.

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the call will be available after 11:30 a.m. Eastern time on the same day until September 9, 2012.

Toll-free replay number: 1-877-870-5176

International replay number: 1-858-384-5517

Replay PIN#: 4551892

Forward-Looking Statements

Certain statements in this document may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used in this document, such statements use such words as "may," "will," "expect," "continue," "believe," "plan," "intend," "would," "could," "should," "anticipate" and other similar terminology. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this document. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under the "Risk Factors" section of the Company's the most recently filed AIF which is available on SEDAR at www.sedar.com and on the Company's web-site at www.redknee.com.

Although the forward-looking statements contained in this document are based upon what we believe are reasonable assumptions, we cannot assure investors that our actual results will be consistent with these forward-looking statements. We assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances, except as required by securities law.

About Redknee Solutions, Inc.

Redknee is a leading global provider of innovative communication software products, solutions and services. Redknee's award-winning solutions enable operators to monetize the value of each subscriber transaction while personalizing the subscriber experience to meet mainstream, niche and individual market segment requirements. Redknee's revenue generating solutions provide advanced converged billing, rating, charging and policy for voice, messaging and new generation data services to over 90 network operators in over 50 countries. References to Redknee refer to the combined operations of the parent Redknee Solutions, Inc., and all wholly owned subsidiaries.

Redknee(R), Redknee Solutions, and the Redknee logo are trademarks or registered trademarks of Redknee Solutions Inc. All other company, product names and any registered and unregistered trademarks mentioned (if any) are used for identification purposes only and remain the exclusive property of their respective owners. For more information, visit www.redknee.com.

REDKNEE SOLUTIONS INC.
Interim Condensed Consolidated Statement of Financial Position
(Expressed in U.S. dollars)
(Unaudited)

 June 30, September 30,
 2012 2011
 ------------- -------------

Assets

Current assets:
Cash and cash equivalents $ 19,626,880 $ 14,879,940
 Trade accounts and other receivables 11,010,238 12,987,865
 Unbilled revenue 10,526,941 9,253,901
 Prepaid expenses 1,531,094 1,398,145
 Inventory 543,161 450,788
 ------------- -------------
 43,238,314 38,970,639

Restricted cash 718,260 784,820
Property and equipment 791,790 378,013
Deferred income taxes 1,431,228 1,463,249
Long-term unbilled revenue 350,073 1,226,496
Other assets 2,840,586 464,416
Intangible assets 3,465,845 3,976,609
Goodwill 7,638,590 7,638,590

 ------------- -------------
 $ 60,474,686 $ 54,902,832
 ============= =============

Liabilities and Shareholders' Equity

Current liabilities:
 Accounts payable $ 1,752,569 $ 1,731,396
 Accrued liabilities 5,982,501 6,001,706
 Income taxes payable 3,719,843 3,199,295
 Contingent consideration - 870,789
 Deferred revenue 9,512,456 5,848,086
 Loans and borrowings 1,767,356 3,232,857
 ------------- -------------
 22,734,725 20,884,129

Deferred revenue 556,865 -
Other liabilities 616,463 524,520
Loans and borrowings 3,981,474 4,804,700
Deferred income taxes 739,655 815,829
 ------------- -------------
 28,629,182 27,029,178

Shareholders' equity:
 Share capital, net of employee share
 purchase loans 46,482,504 46,312,920
 Treasury stock (714,608) -
 Contributed surplus 5,236,430 4,739,437
 Deficit (19,172,291) (23,192,172)
 Accumulated other comprehensive income 13,469 13,469
 ------------- -------------
 31,845,504 27,873,654

 ------------- -------------
 $ 60,474,686 $ 54,902,832
 ============= =============



REDKNEE SOLUTIONS INC.
Interim Condensed Consolidated Statement of Comprehensive Income (Loss)
(Expressed in U.S. dollars)
(Unaudited)

 Three months ended Nine months ended
 June 30, June 30,
 2012 2011 2012 2011
 ----------- ----------- ----------- -----------

Revenue:
 Software, services and
 other $ 8,975,327 $ 8,702,956 $25,589,951 $27,979,353
 Support 5,871,850 5,476,797 17,329,066 15,812,867
 ----------- ----------- ----------- -----------
 14,847,177 14,179,753 42,919,017 43,792,220

Cost of revenue 4,245,441 5,482,594 13,424,996 15,763,955
 ----------- ----------- ----------- -----------

Gross profit 10,601,736 8,697,159 29,494,021 28,028,265

Operating expenses:
 Sales and marketing 4,068,675 4,027,724 11,168,586 11,219,153
 General and
 administrative 2,469,876 3,466,962 6,491,404 8,545,013
 Research and
 development 1,997,506 3,451,192 7,143,938 9,870,073
 ----------- ----------- ----------- -----------
 8,536,057 10,945,878 24,803,928 29,634,239
 ----------- ----------- ----------- -----------

Income (loss) from
 operations 2,065,679 (2,248,719) 4,690,093 (1,605,974)

Foreign exchange gain
 (loss) (209,836) 251,093 (216,682) (620,981)
Other income (expense) - 289,538 (13,938) 535,625
Finance income 31,444 36,414 71,657 116,631
Finance costs (79,226) (167,527) (297,173) (434,522)
 ----------- ----------- ----------- -----------

Income (loss) before
 income taxes 1,808,061 (1,839,201) 4,233,957 (2,009,221)

Income taxes (recovery):
 Current 289,153 151,635 513,210 526,987
 Deferred (219,686) (88,041) (299,134) (281,739)
 ----------- ----------- ----------- -----------
 69,467 63,594 214,076 245,248
 ----------- ----------- ----------- -----------

Net income (loss) 1,738,594 (1,902,795) 4,019,881 (2,254,469)

Other comprehensive
 income:
 Foreign currency
 translation
 adjustment - 21,534 - 152,747

 ----------- ----------- ----------- -----------
Comprehensive income
 (loss) $ 1,738,594 $(1,881,261) $ 4,019,881 $(2,101,722)
 =========== =========== =========== ===========

Net income (loss) per
 common share:
 Basic 0.03 (0.03) 0.06 (0.04)
 Diluted 0.03 (0.03) 0.06 (0.04)

 =========== =========== =========== ===========

Weighted average number
 of common shares:
 Basic 64,142,461 64,194,871 64,252,923 64,154,532
Diluted 65,103,596 64,194,871 65,120,420 64,154,532

 =========== =========== =========== ===========



REDKNEE SOLUTIONS INC.
Interim Condensed Consolidated Statement of Cash Flows
(Expressed in U.S. dollars)
(Unaudited)

 Nine months ended
 June 30,
 2012 2011
 ------------- -------------

Cash provided by (used in):

Operating activities:
 Net income (loss) $ 4,019,881 $ (2,254,469)
 Adjustments for:
 Depreciation of property and equipment 147,250 211,872
 Amortization of intangible assets 553,121 1,128,707
 Finance income (71,657) (116,631)
 Finance costs 297,173 434,522
 Income tax expense 214,076 245,248
 Unrealized foreign exchange loss (84,376) 921,515
 Share-based compensation 654,566 640,512
 Revaluation of contingent consideration 6,588 (535,624)
 Changes in non-cash operating working capital 3,465,497 (3,819,537)
 ------------- -------------
 9,202,119 (3,143,885)

 Interest paid (35,974) (18,904)
 Interest received 62,001 116,631
 Income taxes paid (78,672) (301,979)
 ------------- -------------
 9,149,474 (3,348,137)

Financing activities:
 Proceeds from Employee share purchase loans - 5,048
 Proceeds from exercise of stock options 107,443 157,612
 Purchase of treasury stock (714,608) -
 Repayment of loans and borrowings (2,465,544) (1,626,331)
 ------------- -------------
 (3,072,709) (1,463,671)

Investing activities:
 Proceeds from short-term investments - 21,356
 Purchase of property and equipment (561,027) (39,722)
 Purchase of intangible assets (42,357) (29,916)
 Decrease in restricted cash 66,560 35,816
 Acquisition of Nimbus Systems - (257,222)
 Settlement of Nimbus Systems contingent
 consideration (877,377) -
 ------------- -------------
 (1,414,201) (269,688)

Effect of foreign exchange rate changes on cash
 and cash equivalents 84,376 (178,490)
 ------------- -------------

Increase (decrease) in cash and cash equivalents 4,746,940 (5,259,986)

Cash and cash equivalents, beginning of period 14,879,940 18,038,121

 ------------- -------------
Cash and cash equivalents, end of period $ 19,626,880 $ 12,778,135
 ============= =============



REDKNEE SOLUTIONS INC.
Reconciliation of Net Income (Loss) to EBITDA
(Expressed in U.S. dollars)
(Unaudited)

 Three months ended Nine months ended
 June 30, June 30,
 2012 2011 2012 2011
 ----------- ----------- ----------- -----------

Net income (loss) for
 the period 1,738,594 (1,902,795) 4,019,881 (2,254,469)

Add back / (subtract):
 Amortization for
 property and
 equipment and
 intangible assets 231,989 441,057 700,371 1,340,579
 Interest income (31,444) (36,414) (71,657) (116,631)
 Interest expense 79,226 167,527 297,173 434,522
 Income taxes 69,467 63,594 214,076 245,248
 Stock based
 compensation 154,075 134,590 654,566 640,512
 Foreign exchange loss
 (gain) 209,836 (251,093) 216,682 620,981

 ----------- ----------- ----------- -----------
EBITDA (1) $ 2,451,743 $(1,383,534) $ 6,031,092 $ 910,742
 =========== =========== =========== ===========

 (1) EBITDA represents net (loss) income from continuing operations
 excluding amounts for amortization, interest, income taxes, foreign
 exchange (gain) loss and stock based compensation and is a common
 measure of operating performance in the industry. EBITDA is not a
 measure of financial performance under IFRS, and should not be
 considered in isolation or as a substitute for consolidated net income
 (loss) as a measure of performance

FOR FURTHER INFORMATION PLEASE CONTACT:

For further details please contact:

OR

Lucas Skoczkowski, Chief Executive Officer
Redknee Solutions Inc.
David Charron, Chief Financial Officer
Tel: +1 905 625 2622

OR

Liolios Group, Inc.
Investor Relations
Matt Glover or Michael Koehler
Tel: +1 949 574 3860