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Guidance Software Releases 2014 Second Quarter Financial Results

August 12, 2014

Guidance Software reported financial results for the second quarter 2014.

According to its release on August 7, the Company noted that the second quarter 2014 financial highlights, calculated in accordance with generally accepted accounting principles include:

-Revenue of $27.2 million, compared to $27.3 million in the second quarter of 2013.

-Product revenue of $8.9 million, a sequential increase of 30 percent from $6.9 million in the first quarter of 2014 and a 16 percent increase from $7.7 million in the second quarter of 2013. Within product revenue, enterprise software revenue increased 65 percent from the second quarter of 2013.

-Services and maintenance revenue of $16.4 million, compared to $16.7 million in the second quarter of 2013.

-SaaS revenues of $1.8 million, compared to $2.9 million in the second quarter of 2013.

-Net loss of $2.9 million, or ($0.11) per share, compared to net loss of $6.6 million, or ($0.26) per share, in the second quarter of 2013.

On a non-GAAP basis, which excludes share-based compensation, amortization of intangibles, realignment expenses and gain on the sale of domain name, the Company reported a pre-tax net loss of $0.7 million, or ($0.02) per share, in the second quarter of 2014, compared to a non-GAAP pre-tax net loss of $3.9 million, or ($0.15) per share, in the second quarter of 2013.

Guidance Software President and Chief Executive Officer Victor Limongelli said, "We are pleased with the strong growth in enterprise software revenue in the second quarter, driven by the strategic changes we implemented earlier in the year. This strong growth was also reflected in the number of new enterprise software customers added during the quarter, which was up 141 percent on a year-over-year basis. In addition, expenses were 10 percent lower than the same quarter last year, reflecting our commitment to bottom- line improvement. We are working on improving other areas of the business so that we can return to growth on an overall basis, and we will continue to focus on enterprise software growth, adding new customers, and further improving our bottom line for the remainder of the year."

Second Quarter 2014 Highlights and Noteworthy Events

-In the second quarter, the Company added 227 new customers of its enterprise-level products, comprised of 141 EnCase Enterprise customers, and 86 customers of EnCase eDiscovery, EnCase Cybersecurity and EnCase Analytics.

-In May, EnCase software was named Best Computer Forensics Solution at the 2014 SC Awards Europe Awards. The award was reported on April 29, at the SC Magazine awards gala during the InfoSecurity Europe conference in London.

-From May 19-22, Guidance hosted CEIC 2014 at Caesar's Palace in Las Vegas. Approximately 1,500 professionals attended the event, the most in the event's history.

-In June, Guidance's Tableau T35u USB 3.0 forensic IDE/SATA Bridge was named Best Computer Forensic Tool in the 2014 Forensic 4:cast Awards. A Tableau device has won the Best Computer Forensic Hardware Tool award each year since the advent of the Forensic 4:cast Awards in 2009.

-Guidance Software was named a "leader" in Gartner's Magic Quadrant for e-discovery software for the fourth consecutive year since the report's inception in 2011.

2014 Financial Outlook:

The Company is updating its guidance for the year ending December 31, as follows:

-Although the Company delivered strong enterprise software performance in the second quarter, the Company now expects 2014 total revenue to be in the range of $113 million to $116 million, in part reflecting lower-than-expected forensic hardware and professional services revenue.

-The Company is maintaining its previous guidance for 2014 non- GAAP pre-tax earnings, which are expected to be approximately $0.00 - $0.03 per share.

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