[May 07, 2015]

Espial Reports 2015 First Quarter Results

Transforming the viewing experience worldwide, Espial (News - Alert)® Group Inc. ("Espial" or the "Company"), (TSX:ESP), today announced its first quarter financial results for the three month period ended March 31, 2015.

Espial Q1 Highlights

• Record quarterly revenue of $5.4 million.
• Adjusted EBITDA income of $0.8 million.
• In January, announced a major European cable operator chose Espial's G4 Client software and integration services to deliver their next-gen RDK based 4K DVB set-top box platform and user experience.
• In March, announced a second major European cable operator selected Espial's end-to-end RDK solution, including Espial's G4 Client software for DVB/IP set-top boxes, user experience, and Espial's back-office service management platform.
• Jeff Huppertz joined Espial's management team as VP Marketing and Business Development
• In April, Mike Hayashi, former Time Warner (News - Alert) Cable Executive Vice President, joined Espial's board of directors.
• On May 6, 2015 closed a $35 million bought deal financing.

"Espial had a strong start to 2015, signing two major European cable operator contracts to provide our flagship G4 Client software and integration services," said Jaison Dolvane, CEO, Espial. "We are seeing growing interest in RDK from the worldwide operator community and continue to strengthen our pipeline. I'm also excited to have Jeff Huppertz join our management team and Mike Hayashi join the Espial Board of Directors. These are great additions to our team and I look forward to working together to execute on the opportunity ahead of us"

Financial Summary

For the three-month period ended March 31, 2015, the Company is reporting revenue of $5.4 million compared with revenue of $5.0 million for the three months ended March 31, 2014. Adjusted EBITDA income for the first quarter of fiscal 2015 was $0.8 million compared to $1.3 million for the first quarter of fiscal 2014. Net income for the quarter was $0.4 million, compared with net income of $1.0 million last year. Adjusted net income for the first quarter was $0.8 million compared to adjusted net income of $1.2 million last year.

Q1 Financial Results

• First quarter revenues were $5,415,877 compared with revenues of $4,974,824 in the same period a year ago. First quarter software license and royalty revenues were $2,413,027 compared to $3,427,351 in the first quarter of fiscal 2014. Professional services for the first quarters of 2015 and 2014 were $1,872,706 and $360,394 respectively. Maintenance and support revenues for the first quarter were $1,130,144 compared to $1,187,079 last year.
• North American revenues were $1,341,519 in the first quarter of 2015 compared to $1,859,999 in 2014. Asia revenues were $1,161,278 in the first quarter of 2015 compared to $1,014,449 in 2014. European revenues were $2,913,080 in the first quarter of 2015 compared to $2,100,376 in 2014.
• Gross margin for the first quarter of fiscal 2015 was 78% compared with 85% in the first quarter of fiscal 2014.
• Operating expenses in the first quarter of fiscal 2015 were $3,990,618 compared to $3,149,106 in the first quarter of fiscal 2014.
• Earnings before interest, foreign exchange, taxes, stock compensation, depreciation and amortization (adjusted EBITDA) for the first quarter of fiscal 2015 was income of $785,998 compared to income of $1,305,819 in fiscal 2014.
• Net income, which includes non-cash items like depreciation, goodwill and intangibles, in the first quarter was $359,225 compared to net income of $1,028,574 last year.

Cash, restricted cash and cash equivalents on March 31, 2015, was $17,729,748

A complete set of financial statements and management's discussion and analysis for the quarter ended March 31, 2015 will be available at http://www.sedar.com.

Conference Call

The Company will be hosting a conference call to discuss the Q1 2015 financial results on May 8, 2015 at 10:00AM EDT and the phone number to join the results discussion is:

• Toll Free line (Canada/US) 877-201-0168
• Toll line (International/Local) 647-788-4901

The playback for the call will be available two hours after the call's completion and will be available until 11:59pm ET on June 9, 2015, at the following numbers and passcode:

• Toll-free line: +1-855-859-2056 or +1-404-537-3406, Passcode: 41436385.

About Espial (www.espial.com)

With Espial, video service providers create responsive and engaging subscriber viewing experiences incorporating intuitive content discovery and instinctive navigation. Service providers achieve 'Web-speed' innovation with Espial's flexible, open software leveraging RDK and HTML5 technologies. This provides competitive advantage through an immersive and personalized user experience, seamlessly blending advanced TV services with OTT content. With customers spanning six continents, Espial is headquartered in Ottawa, Canada, has R&D centers in Silicon Valley and the UK, and sales/support offices in the U.S., Europe and Asia. For more information, visit www.espial.com.

Forward Looking Statement

This press release contains information that is forward looking information with respect to Espial within the meaning of Section 138.4(9) of the Ontario Securities Act (forward looking statements) and other applicable securities laws. In some cases, forward-looking information can be identified by the use of terms such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts. In particular, statements or assumptions about, , economic conditions, benefits of new customer and partner relationships, future opportunities for the company and products and any other statements regarding Espial's objectives (and strategies to achieve such objectives), future expectations, beliefs, goals or prospects are or involve forward-looking information.

Forward-looking information is based on certain factors and assumptions. While the company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Forward-looking information, by its nature necessarily involves known and unknown risks and uncertainties. A number of factors could cause actual results to differ materially from those in the forward-looking statements or could cause our current objectives and strategies to change, including but not limited to changing conditions and other risks associated with the on-demand TV software industry and the market segments in which Espial operates, competition, Espial's ability to effectively develop its distribution channels and generate increased demand for its products, economic conditions, technological change, unanticipated changes in our costs, regulatory changes, litigation, the emergence of new opportunities, many of which are beyond our control and current expectation or knowledge.

Additional risks and uncertainties affecting Espial can be found in Management's Discussion and Analysis of Results of Operations and Financial Condition and its Annual Information Form for the fiscal years ended December 31, 2013 and 2014 filed on SEDAR at www.sedar.com. If any of these risks or uncertainties were to materialize, or if the factors and assumptions underlying the forward-looking information were to prove incorrect, actual results could vary materially from those that are expressed or implied by the forward-looking information contained herein and our current objectives or strategies may change. Espial assumes no obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

Non-IFRS Financial Measures

We use adjusted net income (loss) and adjusted diluted earnings (loss) per share, which remove the impact of our amortization of intangible assets and stock based compensation expense, to measure our performance as these measures align our results and improve comparability against our peers. We use adjusted EBITDA to provide investors with a supplemental measure of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure and working capital requirements.

Adjusted net income (loss), adjusted diluted earnings (loss) per share and adjusted EBITDA income (loss) are not recognized, defined or standardized measures under IFRS. Our definition of adjusted net income (loss), adjusted EBITDA income (loss) and adjusted diluted earnings (loss) per share will likely differ from that used by other companies and therefore comparability may be limited. Adjusted net income (loss), adjusted EBITDA income (loss) and adjusted diluted earnings (loss) per share should not be considered a substitute for or in isolation from measures prepared in accordance with IFRS. Investors are encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue reliance on non-IFRS measures and view them in conjunction with the most comparable IFRS financial measures. We have reconciled adjusted net income (loss) and adjusted EBITDA income (loss) to the most comparable IFRS financial measure as follows:

Consolidated Statements of Income and Comprehensive Income
(In Canadian dollars), except share amounts)

Consolidated Balance Sheets

Statements of Cash Flows

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