VocalTec Announces Second Quarter 2007 Results

VocalTec Communications Ltd. (Nasdaq: VOCL) (the “Company” or “VocalTec”), a global provider of carrier-class multimedia and voice-over-IP solutions for communication service providers, today reported results for the second quarter ended June 30, 2007.

Revenues for the second quarter of 2007 were $2.9 million, compared to $2.2 million in the first quarter, and $2.2 million in the second quarter of 2006. Sales growth was driven by both higher average selling price (ASP) and increased volumes in the Russian market.

Gross margin, excluding the effect of amortization of intangible assets, was 55% in the second quarter of 2007, compared to 51% in the first quarter, and 63% in the second quarter of 2006.

Operating expenses for the second quarter of 2007 were $3.4 million. Excluding the effect of share-based compensation expense, operating expenses were $3.0 million, compared to $2.6 million in the first quarter of 2007 and $2.6 million in the second quarter of 2006.

Net loss in the second quarter of 2007 was $1.8 million, or $0.24 per share. This compares to a net loss of $1.8 million, or $0.25 per share, in the first quarter, and $1.6 million, or $0.31 per share, in the second quarter of 2006.

Excluding the effect of share-based compensation expense, net loss for the second quarter of 2007 was $1.4 million, or $0.19 per share, compared to a net loss of $1.5 million or $0.21 per share in the first quarter, and $1.4 million or $0.27 per share in the second quarter of 2006.

Commenting on the results, Yosi Albagli, the Company’s Chief Executive Officer, said, “Our results for the second quarter reflect the continued strategic and operational progress made in the markets in which we are active. We are very pleased with our top line growth of over 30% in the quarter, which is consistent with our main goal of out-pacing the growth of the global VoIP market and is indicative of our success in increasing market share.”

He added, “We gained considerable momentum during the first half of the year, and believe that we are poised to continue building on this momentum during the balance of 2007. We maintain our previous target for sales growth of 70% to 90% over 2006, which reflects the growing acceptance of our solutions by the industry and our ability to continue growing the company.”

About VocalTec

VocalTec Communications (Nasdaq: VOCL) is a leading global provider of carrier-class multimedia and voice-over-IP solutions for communication service providers. A pioneer in VoIP technology since 1994, VocalTec provides proven trunking, peering, access gateway and service delivery solutions that enable flexible deployment of next-generation networks (NGNs). Partnering with prominent system integrators and equipment manufacturers, VocalTec serves an installed base of dozens of leading carriers including Deutsche Telekom and Telecom Italia San Marino. VocalTec is led by a management team comprised of respected industry veterans.

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