Clarent Reports Revenue Growth of 227% in 1999; Company Market Leadership Grows.

Business Editors/High-Tech Writers

REDWOOD CITY, Calif.--(BUSINESS WIRE)--Jan. 20, 2000

Clarent(R) Corporation (Nasdaq:CLRN) today reported financial results for the fourth quarter and full year ended December 31, 1999.

For the fourth quarter of 1999, the Company reported revenues of $18.6 million, an increase of more than 215% over the $5.9 million reported in the fourth quarter of 1998 and an increase of 40% over the third quarter of 1999.

Net loss for the quarter was $3.5 million, or $0.13 per share, compared to a net loss of $2.2 million, or $0.48 per share reported in the fourth quarter of 1998, and $4.2 million, or $0.17 per share reported in the third quarter of 1999. Excluding expenses associated with the amortization of goodwill and deferred compensation, the net loss was $1.5 million or $0.05 per share compared to $1.7 million or $0.38 per share reported in the fourth quarter of 1998 and $2.3 million or $0.09 per share reported in the third quarter of 1999.

For the full year 1999, the Company reported revenues of $47.8 million, a 227% increase over the $14.6 million reported in 1998. The Company reported a net loss of $30.8 million, or $1.87 per share as compared to a loss of $5.8 million or $1.65 per share reported in 1998. Excluding expenses associated with the amortization of goodwill and deferred compensation the net loss was $11.3 million, or $0.68 per share, as compared to a net loss of $5.0 million, or $1.40 per share in 1998.

&uot;We are very pleased by our strong finish to the year and are appreciative for the commitment our customers have shown to us during 1999,&uot; commented Jerry Chang, Clarent's chief executive officer and president. &uot;The current market opportunity continues to exceed our expectations. One of the key factors contributing to our growth is Clarent's continually expanding global customer base. On this front, we made significant strides this quarter by penetrating emerging markets and by winning new international service provider customers. For the second straight year an independent survey declared Clarent the clear winner, based on minutes volumes, in supplying IP telephony technology to service providers worldwide, with increased market share and network utilization.&uot;

&uot;Additionally, I am enthusiastic about Clarent's ability to take advantage of new opportunities for IP telephony, including local access, enhanced services, enterprise opportunities and further geographic and segment penetration We are committed to investing the resources necessary to lead and shape these new market segments as they develop.&uot;

&uot;Our financial success this quarter illustrates that our innovative product solutions are being well received in the marketplace,&uot; stated Rich Heaps, chief financial officer and chief operating officer. &uot;During the quarter, Clarent's customer base continued to grow as we realized revenue from a record 44 new customers, bringing our total customer base to over 220. Revenue from our software products grew 574% from last year and we continued to see the emergence of the European market as an important contributor to our geographic balance. We believe that both trends are significant signs that our investments in these opportunities are beginning to bear fruit. We are pleased that we were able to grow so impressively while continuing our program of improving our operating efficiency. Overall, this was an exceptionally strong quarter and year.&uot;

Forward Looking Statements

This press release contains forward-looking statements. Such statements reflect management's current expectations. However, actual results could vary dramatically as a result of known and unknown risks and uncertainties, including but not limited to potential issues relating to the Company's ability to maintain gross margins, ability to retain key customers, inability to expand sales and channels, risks associated with international business, lengthy sales cycles, and other known or unknown risks and uncertainties. For a more detailed description of these and other risks and uncertainties affecting the Company's performance, see the Company's recent prospectus filed pursuant to Rule 424(b) of the Securities Act of 1933, with the Securities and Exchange Commission on November 23, 1999 and the Periodic Reports on Forms 10 Q filed most recently with the SEC on November 2, 1999. Clarent assumes no obligation to update the forward-looking information contained in this press release.

About Clarent Corporation

Clarent Corporation is a premier provider of scaleable, IP telephony products to carriers and Internet service providers around the world. Clarent's intelligent architecture and the Clarent Command Center enable Clarent products to route, manage, inter-connect and terminate high volumes of calls for service provider customers including the world's largest long distance telecommunication companies. According to a Cape Saffron report published in 1999, more minutes travel across Clarent-enabled networks worldwide than those of any other equipment supplier.(1)

Founded in July 1996, Clarent is publicly traded on Nasdaq under the symbol CLRN. The Company is headquartered in Redwood City, California and has offices in major cities in Asia, Europe, Latin America and North America.

Note to Editors: Clarent is a registered trademark of Clarent Corporation in the United States and other jurisdictions. All other company or product names mentioned may be trademarks or registered trademarks of the respective companies with which they are associated.

(1) &uot;IP Telephony Clearinghouses - A New Business Model.&uot; Published November 1999 by iLocus. iLocus, a division of Cape Saffron Ltd., is a UK-based research group focused on the IP telephony industry. www.ilocus.com

                          CLARENT CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)
                              (Unaudited)

                         Three Months Ended       Twelve Months Ended
                             December 31,              December 31,
                          1999        1998         1999         1998

Net revenue            $ 18,578     $ 5,899      $47,823     $ 14,647
 Cost of revenue          7,443       3,008       20,305        6,653
Gross profit             11,135       2,891       27,518        7,994
Operating expenses:
 Research and
  development             3,149       1,275        9,172        3,356
 Sales and marketing      8,945       2,394       25,111        7,099
 General and
  administrative          2,475         984        6,877        2,484
 Amortization of
  deferred compensation
  and warrant valuation   1,828         458       19,371          879
 Amortization of
  goodwill                  150          --          150           --
     Total operating
      expenses           16,547       5,111       60,681       13,818

Loss from operations     (5,412)     (2,220)     (33,163)      (5,824)

     Other income, net    1,943          81        2,512           32

Loss before
 income taxes            (3,469)     (2,139)     (30,651)      (5,792)
Provision for
 income taxes               (49)        (43)        (132)         (40)
Net loss               $ (3,518)   $ (2,182)   $ (30,783)     $(5,832)

Basic and diluted
 net loss per share    $  (0.13)   $  (0.48)   $   (1.87)     $ (1.65)

Shares used to
 compute basic and
 diluted net loss
 per share               28,077       4,500       16,457        3,544

Proforma basic and
 diluted net loss
 per share (I)         $  (0.13)   $  (0.12)   $   (1.31)     $ (0.42)

Shares used to
 compute proforma
 basic and diluted
 net loss
 per share (I)           28,077      18,229       23,494       14,048

Net loss per share
 excluding amortization
 of goodwill and
 deferred compensation
 and warrant valuation $  (0.05)   $  (0.38)   $   (0.68)     $ (1.40)

Proforma basic and
 diluted net loss per
 share excluding
 amortization of
 goodwill and deferred
 compensation
 and warrants          $  (0.05)   $  (0.09)   $   (0.48)     $ (0.35)

(I)  Proforma basic and diluted shares outstanding include convertible
     preferred stock using the if-converted method from the original
     date of issuance. The calculation excludes common stock
     equivalents, as their effect would be antidilutive.


                          CLARENT CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)
                              (Unaudited)

                                        December 31,      December 31,
                                           1999               1998

ASSETS
Current assets:
 Cash, cash equivalents
  and short term investments              281,305             11,903
 Accounts receivable, net                  24,218              6,943
 Inventories                                8,404              3,620
 Prepaid expenses and other                 2,826                478
     Total current assets                 316,753             22,944

Property and equipment, net                12,696              2,233
Other assets                                5,919                 --

Total Assets                            $ 335,368           $ 25,177

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
 Accounts payable                           8,552              2,905
 Line of credit                                --              2,500
 Deferred revenue                          10,117              4,414
 Other accrued liabilities                  7,857              1,594
     Total current liabilities             26,526             11,413

Total stockholders' equity                308,842             13,764

Total Liabilities and
 Stockholder's Equity                   $ 335,368           $ 25,177