Broadsoft (BSFT) 8-K BroadSoft Reports Fourth Quarter and Full Year 2012 Financial Results

Exhibit 99.2

BroadSoft, Inc.

Historical Revenue, GAAP Cost of Revenue and GAAP Gross Profit Reclassification (Unaudited)

(all dollar amounts in thousands)

	2010		Q1 11		Q2 11		Q3 11		Q4 11		2011		Q1 12		Q2 12		Q3 12		Q4 12		2012
Revenue
License software	$	53,302	$	15,191	$	19,202	$	17,414	$	25,482	$	77,289	$	21,265	$	22,501	$	21,554	$	24,430	$	89,750
Subscription and maintenance support		33,743		9,130		10,431		10,384		12,517		42,462		12,373		13,794		15,375		16,707		58,249
Professional services and other		8,578		5,333		2,546		7,882		2,552		18,313		4,705		4,221		3,245		4,672		16,843
TOTAL		95,623		29,654		32,179		35,680		40,551		138,064		38,343		40,516		40,174		45,809		164,842
Cost of Revenue
License software		5,341		1,399		1,489		1,389		1,800		6,077		2,221		2,653		2,030		1,739		8,643
Subscription and maintenance support		7,691		2,497		2,494		2,599		2,829		10,419		3,388		3,457		3,667		4,319		14,831
Professional services and other		7,010		1,934		2,248		2,091		2,205		8,478		2,463		2,211		2,028		2,310		9,012
TOTAL		20,042		5,830		6,231		6,079		6,834		24,974		8,072		8,321		7,725		8,368		32,486
Gross Profit
License software		47,961		13,792		17,713		16,025		23,682		71,212		19,044		19,848		19,524		22,691		81,107
Subscription and maintenance support		26,051		6,633		7,937		7,785		9,688		32,043		8,985		10,337		11,708		12,388		43,418
Professional services and other		1,568		3,399		298		5,791		347		9,835		2,242		2,010		1,217		2,362		7,831
TOTAL		75,581		23,824		25,948		29,601		33,717		113,090		30,271		32,195		32,449		37,441		132,356

BroadSoft, Inc.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

(all dollar amounts in thousands)

	2010			Q1 11			Q2 11			Q3 11			Q4 11			2011			Q1 12			Q2 12			Q3 12			Q4 12			2012
License Software:
GAAP Gross Profit	$	47,961		$	13,792		$	17,713		$	16,025		$	23,682		$	71,212		$	19,044		$	19,848		$	19,524		$	22,691		$	81,107
(% of related revenue)		90	%		91	%		92	%		92	%		93	%		92	%		90	%		88	%		91	%		93	%		90	%
Plus
Stock-based compensation expense		89			30			62			111			128			331			141			175			113			124			553
Amortization of acquired intangible assets		675			160			160			151			233			704			241			239			214			244			938
Non-GAAP gross profit	$	48,725		$	13,982		$	17,935		$	16,287		$	24,043		$	72,247		$	19,426		$	20,262		$	19,851		$	23,059		$	82,598
(% of related revenue)		91	%		92	%		93	%		94	%		94	%		93	%		91	%		90	%		92	%		94	%		92	%
Subscription and Maintenance Support:
GAAP Gross Profit	$	26,051		$	6,633		$	7,937		$	7,785		$	9,688		$	32,043		$	8,985		$	10,337		$	11,708		$	12,388		$	43,418
(% of related revenue)		77	%		73	%		76	%		75	%		77	%		75	%		73	%		75	%		76	%		74	%		75	%
Plus
Stock-based compensation expense		81			20			83			98			133			334			162			191			170			316			839
Amortization of acquired intangible assets		118			79			91			85			336			591			318			318			516			570			1,722
Non-GAAP gross profit	$	26,251		$	6,732		$	8,111		$	7,968		$	10,157		$	32,968		$	9,465		$	10,846		$	12,394		$	13,274		$	45,979
(% of related revenue)		78	%		74	%		78	%		77	%		81	%		78	%		76	%		79	%		81	%		79	%		79	%
Professional services and other:
GAAP Gross Profit	$	1,568		$	3,399		$	298		$	5,791		$	347		$	9,835		$	2,242		$	2,010		$	1,217		$	2,362		$	7,831
(% of related revenue)		18	%		64	%		12	%		73	%		14	%		54	%		48	%		48	%		38	%		51	%		46	%
Plus
Stock-based compensation expense		40			16			66			78			91			251			105			117			102			115			439
Non-GAAP gross profit	$	1,608		$	3,415		$	364		$	5,869		$	438		$	10,086		$	2,347		$	2,127		$	1,319		$	2,477		$	8,270
(% of related revenue)		19	%		64	%		14	%		74	%		17	%		55	%		50	%		50	%		41	%		53	%		49	%

BroadSoft, Inc.

Historical Revenue, Cost of Revenue and Gross Profit Reclassification: FY10 – FY12

Non-GAAP Financial Measures

In addition to our GAAP operating results, we use certain non-GAAP financial measures when planning, monitoring, and evaluating our performance. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of certain non-cash expenses, such as stock-based compensation expense and amortization of acquired intangibles expense so management and investors can compare our core business operating results over multiple periods. While we believe that these non-GAAP financial measures are useful in evaluating our business, this information should be considered as supplemental in nature and is not meant as a substitute for revenue recognized in accordance with U.S. GAAP. In addition, other companies, including companies in our industry, may calculate such measures differently, which reduces its usefulness as a comparative measure. We believe that these non-GAAP measures reflect our ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of trends in our business, as they exclude certain expenses.

As discussed in our earnings call held on February 27, 2013, beginning with the fourth quarter of fiscal 2012 and for our 2012 results, we reclassified our revenue disclosure from two categories to three categories: software license revenue; subscription and maintenance support; and professional services and other. This summary shows such reclassification for fiscal years 2010, 2011 and 2012, and, on a quarterly results basis, the most recent eight quarters.

The presentation of non-GAAP gross profit below is not meant to be a substitute for “gross profit” or other financial measures presented in accordance with GAAP, but rather should be evaluated in conjunction with such data. Our definition of “non-GAAP gross profit” may differ from a similarly titled non-GAAP measure used by other companies and may differ from period to period. In reporting non-GAAP measures in the future, we may make other adjustments for expenses and gains we do not consider reflective of core operating performance in a particular period and may modify “non-GAAP gross profit” by excluding these expenses and gains.

Non-GAAP gross profit, license gross profit, subscription and maintenance support gross profit, and professional services and other gross profit. BroadSoft defines non-GAAP gross profit as gross profit plus stock-based compensation expense and amortization expense for acquired intangible assets. BroadSoft considers non-GAAP gross profit to be a useful metric for management and our investors because it excludes the effect of certain non-cash expenses so management and its investors can compare BroadSoft’s sales margins over multiple periods. Where BroadSoft provides further breakdown of non-GAAP gross profit between license, subscription and maintenance support and professional services and other, the Company adds back the stock-based compensation expense and amortization expense, as applicable, to the related gross profit.