AuthenTec Reports Second Quarter Financial Results

“In our Embedded Security business, we posted our fifth consecutive quarter of sequential revenue growth while also securing new customer wins in mobile and network security applications. Our products now provide security from the device to the cloud by securing data and communications, and by protecting content and streaming programming. Highlighting these expanding capabilities in mobile security, our content protection services are being utilized in the popular HBO GO® application which has registered nearly 4 million downloads on iPhones, iPads and Android phones. During the quarter we also secured additional design wins around our IPsec solutions for VPN applications on mobile phones. At the device level, we announced new wins in the quarter with semiconductor chip providers who are incorporating our SafeXcel™ security engines in new gateway and multi-core processor chipsets. Companies are integrating our IP security (IPsec) into new chip designs to enhance the security and high-speed networking compatibility of their offerings.

“To leverage what is expected to be a growth opportunity for our sensors in Near Field Communication (NFC)-based mobile commerce, we recently joined forces with several of the leading technology providers in the NFC mobile payment space. This week we announced collaboration with NXP and DeviceFidelity to create secure NFC mobile payment solutions, one of which was used to complete the first biometrically-enabled NFC mobile payment transaction in the U.S. We believe AuthenTec-enabled NFC reference designs created through these and other development efforts will help mobile phone OEMs and wireless carriers address the tremendous growth opportunity as the mobile payment ecosystem continues to mature.”

Business Outlook:

Mr. Ciaccia concluded, “For the third quarter, revenue is expected to sequentially increase 12 to 18 percent to a range of $18.2 million to $19.2 million. I am pleased to note, given this continued growth and cost management, we also expect to achieve non-GAAP profitability during the third quarter. Non-GAAP operating expenses are expected to be in a range between $9.7 million and $10.3 million. We exceeded our goal of achieving $10 million in annualized cost synergies with full realization of those synergies expected in the third quarter. Looking ahead, I am very excited about the opportunities before us. Our unique portfolio of solutions address growing markets around mobile and network security, and we strongly believe that AuthenTec is on the right course for revenue growth, profitability and continued success in the second half of 2011.”

Second Quarter 2011 Financial Results Webcast and Conference Call:

AuthenTec will host a conference call to discuss its second quarter financial results and other information that may be material to investors at 5:00 p.m. Eastern Time (ET) today, August 4, 2011. Investors and analysts may join the conference call by dialing 800-215-2410 and providing the participant pass code 83712978. International callers may join the teleconference by dialing +1-617-597-5410 and using the same pass code. A replay of the conference call will be available beginning at 8:00 p.m. ET and will remain available until midnight ET on Thursday, August 11, 2011. The U.S. replay number is 888-286-8010, with a confirmation code of 96242881. International callers should dial +1-617-801-6888, with the same confirmation code. A live web cast of the conference call will be accessible from the Investor section of the Company's web site at Following the live webcast, an archived version will be made available on AuthenTec’s web site.

Use of GAAP and Non-GAAP Financial Metrics:

To supplement AuthenTec’s consolidated financial statements presented in accordance with GAAP, the Company uses non-GAAP financial measures that exclude from the statement of operations the effects of stock-based compensation, certain acquisition-related charges, amortization of certain intangible assets, impairments on investments, and costs related to a reduction in workforce. AuthenTec uses the above non-GAAP financial measures internally to understand, manage and evaluate the business. Management believes it is useful for itself and investors to review, as applicable, both GAAP information and the non-GAAP measures in order to assess the performance of continuing operations and for planning and forecasting in future periods. The presentation of these non-GAAP measures is intended to provide investors with an understanding of the Company’s operational results and trends that enables them to analyze the base financial and operating performance and facilitate period-to-period comparisons and analysis of operational trends. AuthenTec believes the presentation of these non-GAAP financial measures is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making. Non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered substitutes for or superior to GAAP results. In addition, our non-GAAP financial measures may not be comparable to similarly titled measures utilized by other companies since such other companies may not calculate such measures in the same manner as we do.

Investors are encouraged to review the reconciliation of these non-GAAP financial measures to the comparable GAAP results, which is provided in Table 2 after the text of this release. For additional information regarding these non-GAAP financial measures, and management's explanation of why it considers such measures to be useful, refer to the filings made from time to time with the Securities and Exchange Commission.

Forward Looking Statements:

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