Ixia (XXIA) 8-K Ixia Announces Record Revenues for the Third Quarter of 2005

Exhibit 99.1

For more information, contact:
Tom Miller
Chief Financial Officer
(818) 444-2325
tmiller@ixiacom.com  
The Blueshirt Group
Chris Danne, Rakesh Mehta
(415)217-7722
chris or rakesh@blueshirtgroup.com

Ixia Announces Record Revenues for the Third Quarter of 2005

Third Quarter Revenues Increase 40% and Net Income Increases 91% Year-Over-Year

CALABASAS, CA— October 20, 2005—Ixia (Nasdaq: XXIA) today reported financial results for the third quarter ended September 30, 2005.

Net revenues for the third quarter of 2005 were a record $42.1 million, which represents a year-over-year increase of 40% from the third quarter of last year. Net income on a GAAP basis for the third quarter of 2005 was $9.1 million, or $0.13 per diluted share, a 91% increase when compared to net income of $4.7 million, or $0.07 per diluted share, for the third quarter of 2004.

Ixia’s third quarter of 2005 GAAP results included $1.3 million of non-cash charges related to the amortization of acquired intangible assets and income tax benefits of $560,000 related to the tax effects of the amortization of the acquired intangible assets noted above and tax benefits related to previously recognized stock-based compensation. Excluding the effects of these items, non-GAAP net income for the third quarter of 2005 was $9.8 million, or $0.14 per diluted share, compared to $5.5 million, or $0.09 per diluted share, for the same period last year after excluding the effects of similar items.

“The third quarter represented our 12^th consecutive quarter of increasing sequential revenues and our 30^th consecutive quarter of profitability,” commented Errol Ginsberg, President and Chief Executive Officer of Ixia. “Demand during the period was strong

from network equipment manufacturers and carriers, as the continued adoption of 10 Gigabit Ethernet and the accelerated roll-out of triple play services – voice, video and data over IP – continued to drive revenue. Geographically, we had record revenues in the U.S. and saw strong demand from Asia and Europe.”

     “We were encouraged by the broad demand from our customer base, with over 70 companies placing six figure orders during the period. We believe this broad demand is a testament to the growing need for extensive pre-deployment testing of today’s advanced networks with equipment that can generate wire speed traffic along with a sophisticated mix of real world traffic,” added Mr. Ginsberg.

During the third quarter ended September 30, 2005, Ixia increased cash, cash equivalents and investments by $6.4 million to approximately $192 million.

Ixia will host a conference call today for analysts and investors to discuss its quarterly results at 5:00 p.m. Eastern Time. Open to the public, a live Web cast of the conference call will be accessible from the “Investors” section of Ixia’s Web site (www.ixiacom.com). Following the live Web cast, an archived version will be available in the “Investors” section on the Ixia Web site for 90 days.

Non-GAAP Information

Certain non-GAAP financial measures are included in this press release. These non-GAAP financial measures are provided to enhance the user’s overall understanding of our financial performance. By excluding certain non-cash charges, as well as the related tax effects, our non-GAAP results provide information to both management and investors that is useful in assessing Ixia’s core operating performance and in evaluating and comparing our results of operations on a consistent basis from period to period. These non-GAAP financial measures are also used by management to evaluate financial results and to plan and forecast future periods. The presentation of this additional information is not meant to be considered a substitute for the corresponding financial measures prepared in accordance with generally accepted accounting principles. Investors are encouraged to review the reconciliations of GAAP to non-GAAP financial measures which are included below.

About Ixia

Ixia is a leading, global provider of high performance IP network testing solutions. Its highly scalable solutions generate, capture, characterize, and emulate network and application traffic, establishing definitive performance and conformance metrics of network devices or systems under test. Ixia’s testing solutions are used by network and telephony equipment manufacturers, semiconductor manufacturers, service providers, governments, and large enterprises to validate the functionality and reliability of complex IP networks, devices, and applications. Ixia’s Real World Traffic™ Suite addresses the growing need to test applications and networks prior to deployment under realistic load conditions. Ixia’s analysis solutions utilize a wide range of industry-standard interfaces and are distinguished by their performance, accuracy, reliability, and adaptability to the industry’s constant evolution.

For more information, contact Ixia at 26601 W. Agoura Road, Calabasas, CA 91302; (818) 871-1800, Fax: (818) 871-1805; Email: info@ixiacom.com or visit our Web Site at http://www.ixiacom.com

Ixia, the Ixia four petal logo, ANVL, Chariot, and Real World Traffic are either registered trademarks or trademarks of Ixia in the United States and/or other countries. Other trademarks used in this release are the trademarks or registered trademarks of their respective owners.

Safe Harbor Under the Private Securities Litigation Reform Act of 1995:

Certain statements made in this press release are forward-looking statements, including, without limitation, statements regarding possible future revenues, growth and profitability and future business and market share. In some cases, such forward-looking statements can be identified by terms such as “may,” “will,” “expect,” “plan,” “believe,” “estimate,” “predict” or the like. Such statements reflect the Company’s current intent, belief and expectations and are subject to risks and uncertainties that could cause the Company’s actual results to differ materially from those expressed or implied in the forward-looking statements. Factors that may cause future results to differ materially from the Company’s current expectations include, among other things: consistency of orders from significant customers, our success in developing and producing new products, and market acceptance of our products. These and other risk factors that may affect Ixia’s financial results in the future are discussed in Ixia’s periodic SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2004. Ixia undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

IXIA
Condensed Consolidated Balance Sheets
(in thousands)

	September 30,		December 31,
	2005		2004
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	33,464	$	16,383
Short-term investments in marketable securities		125,891		81,757
Accounts receivable, net		33,662		22,069
Inventories		7,878		6,669
Deferred income taxes		3,582		3,756
Income taxes receivable		518		1,696
Prepaid expenses and other current assets		2,443		2,878
Total current assets		207,438		135,208
Investments in marketable securities		32,954		49,015
Property and equipment, net		17,517		12,268
Deferred income taxes		12,373		4,798
Goodwill		13,468		11,377
Other intangible assets, net		21,757		23,031
Other assets		290		612
Total assets	$	305,797	$	236,309
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	2,667	$	1,556
Accrued expenses		11,896		13,181
Deferred revenues		8,048		7,032
Income taxes payable		4,732		4,203
Total current liabilities		27,343		25,972
Deferred income taxes		4,594		3,411
Total liabilities		31,937		29,383
Shareholders’ equity:
Common stock, without par value; 200,000 shares authorized, 66,231 and 62,459 shares issued and outstanding as of September 30, 2005 and December 31, 2004, respectively		123,811		100,144
Additional paid-in capital		68,349		53,247
Retained earnings		81,700		53,535
Total shareholders’ equity		273,860		206,926
Total liabilities and shareholders’ equity	$	305,797	$	236,309

IXIA
Condensed Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
	2005		2004		2005		2004
Net revenues	$	42,134	$	30,092	$	121,874	$	81,816
Cost of revenues(1)		6,685		5,382		18,879		14,644
Amortization of purchased technology		991		836		2,876		2,207
Gross profit		34,458		23,874		100,119		64,965
Operating expenses:
Research and development		7,994		6,544		23,514		17,726
Sales and marketing		10,264		7,895		29,689		23,247
General and administrative		4,421		3,035		11,940		8,360
Amortization of intangible assets		316		373		944		1,161
Stock-based compensation(2)		—		14		—		389
Total operating expenses		22,995		17,861		66,087		50,883
Income from operations		11,463		6,013		34,032		14,082
Interest and other, net		1,361		597		3,486		1,930
Income before income taxes		12,824		6,610		37,518		16,012
Income tax expense		3,754		1,871		9,353		4,705
Net income	$	9,070	$	4,739	$	28,165	$	11,307
Earnings per share:
Basic	$	0.14	$	0.08	$	0.43	$	0.19
Diluted	$	0.13	$	0.07	$	0.41	$	0.18
Weighted average number of common and common equivalent shares outstanding:
Basic		66,015		60,711		64,753		60,351
Diluted		69,923		63,856		69,281		64,311
_______________________
(1) Stock-based compensation included in:
Cost of revenues	$	—	$	1	$	—	$	30
(2) Stock-based compensation related to:
Research and development	$	—	$	8	$	—	$	271
Sales and marketing		—		5		—		80
General and administrative		—		1		—		38
	$	—	$	14	$	—	$	389

IXIA
Impact of Non-GAAP Adjustments on Net Income
(in thousands, except percentages and per share data)
(unaudited)

	Three months ended September 30, 2005
	GAAP			Adjustments			Non-GAAP
Net revenues	$	42,134		$	—		$	42,134
Cost of revenues		6,685			—			6,685
Amortization of purchased technology		991			(991	)(1)		—
Gross profit		34,458			991			35,449
		81.8	%					84.1	%
Operating expenses:
Research and development		7,994			—			7,994
Sales and marketing		10,264			—			10,264
General and administrative		4,421			—			4,421
Amortization of intangible assets		316			(316	)(1)		—
Total operating expenses		22,995			(316	)		22,679
		54.6	%					53.8	%
Income from operations		11,463			1,307			12,770
Interest and other, net		1,361			—			1,361
Income before income taxes		12,824			1,307			14,131
Income tax expense		3,754			560	(2)		4,314
Net income	$	9,070		$	747		$	9,817
Earnings per share:
Basic	$	0.14		$	0.01	(3)	$	0.15
Diluted	$	0.13		$	0.01	(3)	$	0.14
Weighted average number of common and common equivalent shares outstanding:
Basic		66,015			—			66,015
Diluted		69,923			—			69,923

(1)	The adjustment primarily represents the amortization of intangible assets related to the acquisition of the ANVLTM product line from Empirix, Inc., the acquisition of certain rights associated with the Chariot® product line from NetIQ Corporation, and the acquisitions of G3 Nova Technologies, Inc. and Communication Machinery Corporation.
(2)	The adjustment represents the income tax effects of footnote (1) and the elimination of tax benefits related to previously recognized stock-based compensation.
(3)	The adjustment represents the earnings per share effect of the adjustments noted in footnotes (1) and (2).

IXIA
Impact of Non-GAAP Adjustments on Net Income
(in thousands, except percentages and per share data)
(unaudited)

	Three months ended September 30, 2004
	GAAP			Adjustments			Non-GAAP
Net revenues	$	30,092		$	—		$	30,092
Cost of revenues		5,382			(1	)(1)		5,381
Amortization of purchased technology		836			(836	)(2)		—
Gross profit		23,874			837			24,711
		79.3	%					82.1	%
Operating expenses:
Research and development		6,544			—			6,544
Sales and marketing		7,895			—			7,895
General and administrative		3,035			—			3,035
Amortization of intangible assets		373			(373	)(2)		—
Stock-based compensation		14			(14	)(1)		—
Total operating expenses		17,861			(387	)		17,474
		59.4	%					58.1	%
Income from operations		6,013			1,224			7,237
Interest and other, net		597			—			597
Income before income taxes		6,610			1,224			7,834
Income tax expense		1,871			503	(3)		2,374
Net income	$	4,739		$	721		$	5,460
Earnings per share:
Basic	$	0.08		$	0.01	(4)	$	0.09
Diluted	$	0.07		$	0.02	(4)	$	0.09
Weighted average number of common and common equivalent shares outstanding:
Basic		60,711			—			60,711
Diluted		63,856			—			63,856

(1)	The adjustment represents stock-based compensation related to stock options granted prior to our IPO in October 2000.
(2)	The adjustment primarily represents the amortization of intangible assets related to the acquisition of the ANVLTM product line from Empirix, Inc., the acquisition of certain rights associated with the Chariot® product line from NetIQ Corporation, and the acquisition of G3 Nova Technologies, Inc.
(3)	The adjustment represents the income tax effects of footnotes (1) and (2), and the elimination of tax benefits related to previously recognized stock-based compensation.
(4)	The adjustment represents the earnings per share effect of the adjustments noted in footnotes (1), (2) and (3).

IXIA
Impact of Non-GAAP Adjustments on Net Income
(in thousands, except percentages and per share data)
(unaudited)

	Nine months ended September 30, 2005
	GAAP			Adjustments			Non-GAAP
Net revenues	$	121,874		$	—		$	121,874
Cost of revenues		18,879			—			18,879
Amortization of purchased technology		2,876			(2,876	)(1)		—
Gross profit		100,119			2,876			102,995
		82.1	%					84.5	%
Operating expenses:
Research and development		23,514			—			23,514
Sales and marketing		29,689			—			29,689
General and administrative		11,940			—			11,940
Amortization of intangible assets		944			(944	)(1)		—
Total operating expenses		66,087			(944	)		65,143
		54.2	%					53.5	%
Income from operations		34,032			3,820			37,852
Interest and other, net		3,486			—			3,486
Income before income taxes		37,518			3,820			41,338
Income tax expense		9,353			3,569	(2)		12,922
Net income	$	28,165		$	251		$	28,416
Earnings per share:
Basic	$	0.43		$	0.01	(3)	$	0.44
Diluted	$	0.41		$	—		$	0.41
Weighted average number of common and common equivalent shares outstanding:
Basic		64,753			—			64,753
Diluted		69,281			—			69,281

(1)	The adjustment primarily represents the amortization of intangible assets related to the acquisition of the ANVLTM product line from Empirix, Inc., the acquisition of certain rights associated with the Chariot® product line from NetIQ Corporation, and the acquisitions of G3 Nova Technologies, Inc. and Communication Machinery Corporation.
(2)	The adjustment represents the income tax effects of footnote (1) and the elimination of tax benefits related to previously recognized stock-based compensation.
(3)	The adjustment represents the earnings per share effect of the adjustments noted in footnotes (1) and (2).

IXIA
Impact of Non-GAAP Adjustments on Net Income
(in thousands, except percentages and per share data)
(unaudited)

	Nine months ended September 30, 2004
	GAAP			Adjustments			Non-GAAP
Net revenues	$	81,816		$	—		$	81,816
Cost of revenues		14,644			(30	)(1)		14,614
Amortization of purchased technology		2,207			(2,207	)(2)		—
Gross profit		64,965			2,237			67,202
		79.4	%					82.1	%
Operating expenses:
Research and development		17,726			—			17,726
Sales and marketing		23,247			—			23,247
General and administrative		8,360			—			8,360
Amortization of intangible assets		1,161			(1,161	)(2)		—
Stock-based compensation		389			(389	)(1)		—
Total operating expenses		50,883			(1,550	)		49,333
		62.2	%					60.3	%
Income from operations		14,082			3,787			17,869
Interest and other, net		1,930			—			1,930
Income before income taxes		16,012			3,787			19,799
Income tax expense		4,705			1,657	(3)		6,362
Net income	$	11,307		$	2,130		$	13,437
Earnings per share:
Basic	$	0.19		$	0.03	(4)	$	0.22
Diluted	$	0.18		$	0.03	(4)	$	0.21
Weighted average number of common and common equivalent shares outstanding:
Basic		60,351			—			60,351
Diluted		64,311			—			64,311

(1)	The adjustment represents stock-based compensation related to stock options granted prior to our IPO in October 2000.
(2)	The adjustment primarily represents the amortization of intangible assets related to the acquisition of the ANVLTM product line from Empirix, Inc., the acquisition of certain rights associated with the Chariot® product line from NetIQ Corporation, and the acquisition of G3 Nova Technologies, Inc.
(3)	The adjustment represents the income tax effects of footnotes (1) and (2), and the elimination of tax benefits related to previously recognized stock-based compensation.
(4)	The adjustment represents the earnings per share effect of the adjustments noted in footnotes (1), (2) and (3).