Lancope® PRESS RELEASE

Lancope Announces Record 2005 Performance

2005 Marked by Strong Sales, New Customers, Strategic Partnership and Industry Validation

ATLANTA, JANUARY 24, 2006 - Lancope, Inc., the leading provider of network behavior analysis (NBA) and response systems, today announced record performance in 2005, driven by its strong sales growth, key competitive wins, strategic partnerships and several industry awards recognizing the outstanding technology of its StealthWatch System. The year was marked by the addition of over 50 new enterprise customers, who selected Lancope to secure their internal enterprise networks against zero-day attacks, misuse and security exposures.

Highlights of Lancope’s 2005 performance include:

  • Over 100% revenue growth over 2004 marked by record high six-figure deals in 2005
  • Grew customer base to over 200, with the addition of 50+ enterprises, many in the Fortune 1000
  • StealthWatch Xe for NetFlow and sFlow® appliances represented 65% of Lancope revenues within first year of product availability
  • Expanded internationally to EMEA, opened sales and support office in UK, recruited seven new resellers and added six new customers
  • Strategic partnerships with Foundry Networks, LURHQ and ArcSight
  • Gartner, Inc. named StealthWatch a "veteran" NBA (network behavior analysis) product
  • InfoWorld named StealthWatch 2005 Technology of the Year
  • Lancope customer Boyd Gaming featured on cover of Information Security Magazine
  • Lancope experts spoke at 28 security industry conferences/events throughout 2005

"Lancope closed a record number of large, six-figure enterprise deals during 2005, continuing our strong market growth," said Harland LaVigne, chairman, president and CEO of Lancope. "Increasingly enterprises are embracing the benefits of network behavior analysis and response systems like StealthWatch that leverage the existing network infrastructure, are scalable, and cost-effectively protect the internal network. More and more, enterprises and industry analysts alike are recognizing that StealthWatch provides the network visibility and contextual awareness necessary for maintaining host integrity and improving network health at one-third the cost of alternative solutions."

2005 Highlights

Revenue Growth, New Customers, Competitive Wins

Generating over 100% revenue growth during 2005 through a record number of high six-figure deals, Lancope added over 50 new enterprise customers and solidified its leadership of the network behavior analysis and response market.

Lancope’s key competitive and customer wins in 2005 were one of the world’s largest semiconductor manufacturers, a top 10 private retail chain, an $11B financial institution and a leading provider of business-to-business and retail office products. Lancope’s current customer base includes over 200 enterprise organizations across a variety of industry verticals, including the Financial Services, Manufacturing, Federal Government, Healthcare, Energy and Higher Education. Additionally, Lancope expanded internationally to EMEA, opening a sales and support office in the United Kingdom, recruiting seven new resellers and adding six new customers within the first few months of operations.

Industry Partnerships

During 2005, Lancope announced strategic partnerships with Foundry Networks, LURHQ and ArcSight. As a member of Foundry’s Security Alliance Program, Lancope and Foundry jointly launched StealthWatch Xe for sFlow®, the industry’s only fully sFlow®-enabled anomaly detection system. In addition, Lancope partnered with Managed Security Services Provider LURHQ to deliver zero-day threat mitigation and reduce the risk to enterprises’ critical business assets for a leading brokerage firm. Lancope also announced a technology partnership with the leading Security Incident Management (SIM) vendor, ArcSight.

Industry Recognition and Awards

Throughout 2005, StealthWatch earned top honors from industry publications, product reviews and industry analysts. Kicking off the year, InfoWorld named StealthWatch 2005 Technology of the Year and StealthWatch received outstanding reviews from Network Computing and Computer Reseller News. In August, Information Security Magazine profiled Lancope customer, Boyd Gaming, on its cover and highlighted the growing deployments of network behavior analysis and responses systems in enterprise networks. By December, Gartner, Inc. recognized StealthWatch as a "veteran" NBA product and predicted that "25 percent of large enterprises will deploy NBA as part of their network security strategy by the end of 2007" in its Gartner Research Note ID # G00134030 entitled "Use Network Behavior Analysis for Better Visibility Into Security and Operations Events." Driving market awareness, Lancope also blanketed 2005 with speaking opportunities at 28 different conferences and events, including CSI’s NetSec and TechTarget’s Information Security Decisions.

Product Highlights

In 2005 Lancope extended the award-winning StealthWatch product line with the addition of StealthWatch Xe for sFlow® to deliver a network-wide solution for anomaly detection without costly deployment of sensors throughout the network.

Based on the same platform as the successful StealthWatch Xe for NetFlow, the new appliance leverages sFlow® packet sampling technology, embedded in routers and switches from Foundry Networks (Nasdaq: FDRY), Hewlett Packard (NYSE: HPQ) and Extreme Networks (Nasdaq: EXTR). StealthWatch Xe for sFlow® was launched in conjunction with the general availability of StealthWatch System 5.1, which included enhanced operational reporting and multiple enhancements across the product family to provide unmatched levels of identification, prioritization and control of network behavior for the most cost-effective and accurate enterprise-wide network protection. Within in the first year of product availability, sales of StealthWatch Xe for NetFlow and StealthWatch Xe for sFlow® appliances accounted for 65% of all revenues. Lancope also announced integration of StealthWatch with LURHQ’s industry-leading Sherlock Enterprise Security Platform™ to create a powerful blend of next-generation technology and robust services that significantly reduced risks to enterprises’ critical assets.

About Lancope
Lancope is the leading provider of network behavior analysis (NBA) and response solutions that defeat zero-day worms, internal network misuse and other anomalies that compromise network integrity. Lancope’s StealthWatch System integrates security and network management technology to reduce network risks and maximize network availability by rapidly identifying, prioritizing and mitigating critical threats, whether new or well-known. Both OPSEC and Common Criteria-certified, StealthWatch was named an InfoWorld 2005 Technology of the Year. Defending the networks of Global 2000 organizations, academic institutions and government entities, StealthWatch protects over 200 enterprise customers. Lancope’s Technology Alliance Partners include Foundry Networks, ArcSight, Micromuse, LURHQ and CheckPoint. Lancope is a privately held, venture-backed company headquartered in Atlanta, Georgia. For more information, call 888-419-1462 or visit www.lancope.com.