Document Sciences Announces Record Quarterly Revenue

Carlsbad, CA - 3 August 2007

License revenues rose by 46% in the second quarter

Document Sciences Corporation, a global leader in providing customer communications management solutions, today reported revenues of $11.2 million for the quarter ended June 30, 2007, a record for the company and an increase of 32% over revenues of $8.5 million for the quarter ended June 30, 2006. Net income for the quarter ended June 30, 2007, was $738,000 compared with net income of $144,000 for the quarter ended June 30, 2006. Net income per share for the quarter ended June 30, 2007, was $0.14 based on 5,244,968 diluted shares outstanding, compared with net income per share of $0.03, based on 5,372,663 diluted shares outstanding for the quarter ended June 30, 2006.

For the six months ended June 30, 2007, revenues were $19.4 million, compared with revenues of $16.2 million for the same period in 2006, representing an increase of 19%. For the six months ending June 30, 2007, the company reported a net loss of $799,000, or $0.19 per share based on 4,285,330 shares outstanding, compared with a net loss of $315,000, or $0.07 per share based on 4,235,085 shares outstanding, for the six months ending June 30, 2006.

Jack McGannon, Document Sciences' President and CEO, stated that "we are pleased with the second quarter revenues, which were $2.4 million higher than any previous quarter in the company's history and represented the twelfth consecutive quarter of year-over-year revenue growth. Importantly, we achieved record quarterly results for both of our revenue components, License Fees and Services & Other. License revenues were up an impressive 46% over the second quarter of 2006 while Services & Other revenues increased by 8%. The growth in revenues enabled us to generate a significant profit in the quarter, and our plan envisions profitability for the second half of the year as well."

McGannon added that "the quarter's result reflects a return on the investment that we have made in Sales & Marketing to bolster our go-to-market capacity and validates our plan to grow to over $50 million of revenue in 2008. Acknowledging the competitive strength of our xPression technology suite, late in 2006, we began to grow our sales force, particularly in North America, and augmented this expansion with additional marketing outlays. Given the relatively long sales cycles of enterprise software, we are now enjoying the benefits of these expenditures."

Included in expenses for the three and six months ended June 30, 2007 are $153,000 and $290,000, respectively, of stock-based compensation expenses, compared to $122,000 and $209,000 for the three and six months ended June 30, 2006.

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