Nuance to Acquire BeVocal

Nuance to Acquire BeVocal, Expand Speech-Based Customer Care Solutions for Mobile Market

Nuance Communications, Inc. (NASDAQ: NUAN), a leading supplier of speech and imaging solutions, today announced that it has signed an agreement to acquire BeVocal, a provider of self-service customer care solutions that address the unique business requirements of the mobile communications market and its customers. The acquisition of BeVocal expands Nuance’s existing product portfolio with a unique solution set for mobile customer lifecycle management and a range of premium services for the mobile consumer.

According to industry data, there are currently two billion mobile subscribers globally, with a surge to three billion subscribers expected by 2010. As this base of mobile subscribers expands, BeVocal’s solutions address the significant domestic and global requirements for companies to reduce costs, increase revenue and improve mobile customer satisfaction. Through this acquisition, BeVocal brings to Nuance a portfolio of highly repeatable applications, proven success within major reference accounts and a predictable, recurring revenue stream derived from software-as-a-service (SaaS) and subscription-based offerings. BeVocal’s customers include Cingular, Liberty Wireless, Metro PCS and Virgin Mobile.

“The acquisition of BeVocal expands our position as a leading supplier of speech enabled solutions to mobile carriers and their customers,” said Paul Ricci, chairman and CEO, Nuance. “The growth of the mobile industry, coupled with the value of speech as a means of accessing information and services in this environment, presents a great opportunity to expand the presence of Nuance solutions in the mobile market. BeVocal’s intellectual property, solutions expertise and established carrier relationships will expand our ability to serve this growing market.”

Nuance expects the acquisition to add between $21 million and $23 million in revenue in fiscal year 2007 and between $65 million and $70 million in fiscal year 2008. The acquisition is expected to be approximately neutral to earnings on a GAAP basis in fiscal year 2007 and $0.01 accretive per share in fiscal year 2008. On a non-GAAP basis, the acquisition is expected to be accretive to earnings, excluding amortization, stock-based compensation and non-cash taxes, by approximately $0.00 to $0.01 per share in fiscal year 2007 and $0.05 to $0.06 cents per share in fiscal year 2008.

Under the terms of the agreement, total consideration is approximately $140 million, net of BeVocal’s cash and using yesterday’s closing price of Nuance stock at $14.98 per share. The consideration comprises approximately 8.3 million shares of Nuance common stock and a net cash payment of approximately $15 million, due at closing. Terms also include the potential for additional cash consideration of up to $60 million in the form of an earn-out, payable 18-months after closing and based on the business achieving performance targets. The acquisition has been approved by both companies’ Boards of Directors and is currently expected to close before the end of March 2007, subject to regulatory approvals and customary conditions.

The relationship between providers of mobile services and their customers is becoming increasingly complex. Current service channels have not scaled to keep pace with growing customer demand for service and information, especially as consumer offerings have expanded. Approximately 70 percent of mobile consumers obtain support via the phone, and the number of support calls has increased 42 percent over the last five years. BeVocal’s customer lifecycle management solution set meets the specific needs of this growing market with a focus on helping mobile carriers and related vendors reduce customer churn, increase average revenue per user (ARPU), reduce cash cost per user (CCPU), reduce cost per gross addition (CPGA) and increase customer satisfaction.

The acquisition enables Nuance to offer complete speech-based solutions that address the need to service the large and growing customer base of the mobile industry. The offering also includes applications that can be delivered through additional channels such as Web and SMS, allowing increasingly data-savvy subscribers to self-serve in their preferred channel. Because this solution has been designed specifically for wireless service providers and other companies focused on the mobile market, it makes the most of every customer contact – including handset activation, customer care, intelligent promotional offers, and sales and fulfillment of add-on features.

“The communications landscape is changing dramatically and mobile is at the center of the change. Mobile carriers are faced with new customer service needs that cannot be met with call center agents,” said Mikael Berner, president and CEO of BeVocal. “BeVocal’s on-demand mobile customer care solution creates a powerful personalized relationship with the customer, offering a superior consumer experience. This drives increased customer loyalty, reduces churn and increases ARPU for the mobile providers. Joining Nuance will provide us with the reach to expand our market penetration and early access to technology advancements that achieve optimized performance for customers as well as net new capabilities.”

The addition of BeVocal brings many advantages and synergies that are expected to further expand Nuance’s market presence and leadership in the rapidly expanding mobile market:

— Innovative Self-Service Solutions for Mobile Markets: BeVocal’s comprehensive self-service solutions provide the mobile community with the next-generation of customer care, addressing the entire subscriber lifecycle. The solution includes intelligent offer management, demand generation and fulfillment capabilities, and activation applications. BeVocal’s targeted solutions approach complements Nuance’s continued progression from a core technology provider to a solutions resource. The ability to deliver complete solutions for targeted industries eliminates the complexity of deploying custom solutions and creates new opportunities for Nuance to expand the adoption of its speech solutions for specific markets.

— Portfolio of Premium Services: BeVocal also brings to Nuance a portfolio of premium services to support the mobile industry, which complement Nuance’s existing voice-enabled information, entertainment and communication services. These include a speech-based ringtone download store, weather reports, stock quotes, sports updates, trivia and personalized wake-up calls, among others.

— Speech Solution Market Expansion through BeVocal Cafe: BeVocal brings a dedicated association of developers through BeVocal Cafe, a resource that delivers a world-class, web-based development environment. The Cafe provides all the tools and resources developers need to create their own innovative speech applications for the telephone, driving additional speech innovation across multiple industries.

— Talented Employees and Proven Leadership Team: In addition to an innovative product portfolio, BeVocal boasts a passionate and dedicated team of engineers, business leaders and industry experts. Pairing the technical expertise of this talented team with the global resources and market strength of Nuance will enable the combined organization to accelerate the delivery of innovative customer care solutions for the mobile market.

Investor Conference Call Information

In conjunction with this announcement Nuance will broadcast a conference call over the Internet today at 8:30 a.m. ET. Those who wish to listen to the live broadcast should visit the Investor Relations section of the Nuance Web site (www.nuance.com) at least 15 minutes prior to the event and follow the instructions provided to ensure that the necessary audio applications are downloaded and installed. The conference call can be heard live by dialing (888) 428-4480 or (612) 234-9960 five minutes prior to the call and reference conference code 864953. A replay of the call will be available within 24 hours of the announcement. To access the replay, dial (800) 475-6701 or (320) 365-3844 and refer to access code 864953.

About BeVocal

BeVocal provides businesses with an on-demand self-service solution that enables people everywhere to seamlessly get help, make purchases and save time. Its automated solutions help BeVocal’s clients make the most of every self-service customer contact so they can reduce customer care costs, increase revenues, and raise customer satisfaction. Delivering a rich suite of integrated Voice, Web, and mobile data applications, BeVocal provides the only complete self-service solution for the total customer lifecycle. BeVocal’s award-winning solutions are deployed on a carrier-grade hosting network to answer, automate, and route customer self-service interactions across a variety of customer-selected self-service channels.

About Nuance Communications, Inc.

Nuance is a leading provider of speech and imaging solutions for business and consumers around the world. Its technologies, applications, and services make the user experience more compelling by transforming the way people interact with information and how they create, share, and use documents. Every day, millions of users and thousands of businesses experience Nuance’s proven applications. For more information, please visit www.nuance.com.

Nuance and the Nuance logo are trademarks or registered trademarks of Nuance Communications, Inc. or its affiliates in the United States and/or other countries. All other trademarks referenced herein are the property of their respective owners.