CyberGuard Reports 192% Firewall Unit Growth and 64% Revenue Growth over Prior Year.

FT. LAUDERDALE, Fla.--(BUSINESS WIRE)--April 16, 1997--

Strong Worldwide Demand for Award-winning CyberGuard Firewall and

Improved Distribution Cited for Growth

CyberGuard Corporation (NASDAQ:CYBG) today reported third quarter revenues of approximately $4.1 million of firewall related security products and services for the quarter ended March 31, 1997. This represents a 64% increase in revenue over the $2.5 million reported for the quarter ended March 31, 1996, and a 36% increase in revenue over the $3 million reported in the second fiscal quarter ended December 31, 1996.

For the quarter, CyberGuard reported record firewall unit sales on a worldwide basis. Specifically, 172 units shipped, representing a 171% increase over the 63 units sold in the quarter ended March 31, 1996. The 172 units represented a 44% increase over the 119 units shipped in the previous quarter. Approximately 75% of the firewall units shipped during the quarter were Release 3 family products, including initial shipments to the 20 new members of CyberGuard's domestic reseller program referred to as the CyberGuard Security Alliance Partner Program.

The Company attributes this quarter's significant worldwide revenue growth to increased awareness of the strong, certifiable security provided by CyberGuard's Release 3 product; continued improvement in the indirect distribution channel; outstanding trade press reviews resulting in increased customer leads; and CyberGuard Firewall's recent E3 government certification in the United Kingdom under the European Information Technology Security Evaluation Criteria (ITSEC).

Commenting on the quarter, Robert L. Carberry, chairman, president and CEO of CyberGuard Corporation, noted, "We are very pleased with the continuing strong customer demand for our CyberGuard Firewall family of products. This acceptance has been repeatedly reinforced by recent 'best-of-breed' trade press reviews which further contribute to our leadership position in the network security industry."

"Record unit sales on a worldwide basis through both direct and indirect channels indicates the CyberGuard Firewall is properly positioned for our distribution system. We believe the strong demand will continue as we expand our product and service offerings using our TradeWave suite of offerings and deliver our NT product into the market," Carberry added.

To pursue even broader market opportunities, CyberGuard plans to complement the strength of its firewall family of products with encryption and authentication products, systems and services from TradeWave, its newly-acquired subsidiary. Over time, this is expected to expand the total market opportunity for CyberGuard to nearly three times the firewall-only market it currently serves.

In a January 1997 research report, UBS Securities LLC projected the compound annual growth rate of the firewall market to be 44%, with associated revenue growing from $160 million in 1995 to $980 million in 2000. Although opportunities in authentication and encryption started at lower absolute revenues, UBS projected them to grow at 92% and 108% respectively. In addition, the services related business opportunity was estimated to grow at a 69% rate. CyberGuard plans to leverage its position in the fast-growing firewall segment, and to expand and participate in all elements of the security opportunity- firewalls, encryption, and authentication. It will also provide product, system and services offerings to customers worldwide.

About CyberGuard

CyberGuard Corporation (NASDAQ:CYBG) is a leading Intranet and Internet security solutions provider to Fortune 1000 companies and governments worldwide. CyberGuard's award-winning, industrial-strength firewall and security products protect the integrity of data and applications from hackers and digital thieves. It is certified by the U.S. National Computer Security Center, the National Computer Security Association and the European Information Technology Security Evaluation Criteria. The Company has U.S. headquarters in Ft. Lauderdale, Florida and branch offices worldwide. Products are sold worldwide through a direct sales force, value added resellers, distributors, network integrators and Internet service providers. More information on CyberGuard products and services is available through an E-mail request to [e-mail] and from CyberGuard's web site at www.cyberguardcorp.com

Statements regarding future prospects and strategies, future market growth, future products, revenue growth, market directions, future acceptance of the Company's products, and other statements contained in this press release that address future events are forward looking statements. These statements are based upon assumptions and analyses made by the Company in light of current conditions, future developments, and other factors the Company believes are appropriate in the circumstances, or information obtained from third parties, and are subject to a number of assumptions, risks and uncertainties. Readers are cautioned that forward-looking statements are not guarantees of future performance and that actual results might differ materially from those suggested or projected in the forward-looking statements. Some of the factors that may cause actual future events to differ from those predicted or assumed include: competition, future advances in technologies, the ability to execute on business plans, risks and expense of government regulation, and uncertainties associated with capital markets. Additional information regarding factors that may affect future results are detailed in CyberGuard Corporation's periodic reports and registration statements filed with the Securities and Exchange Commission.

CyberGuard Firewall is a trademark of CyberGuard Corporation. All other trademarks are property of their respective owners.

CONTACT: CyberGuard Corporation

Lisa Thornhill - Press and Investor Relations 

[phone]

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