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ActivIdentity Reports Second Quarter Fiscal 2006 Financial Results

FREMONT, Calif., May 09, 2007 - ActivIdentity Corporation (NASDAQ: ACTI), a global leader in digital identity assurance, today announced financial results for its second quarter of fiscal 2006 ended March 31, 2006.

Revenue for the quarter ended March 31, 2006 was in line with guidance at $11.1 million compared to $9.2 million for the quarter ended March 31, 2005, and $11.5 million for the previous quarter ended December 31, 2005.

Total gross margin for the three months ended March 31, 2006 was 59 percent compared to 13 percent for the quarter ended March 31, 2005 and 62 percent for the previous quarter ended December 31, 2005.

Total operating expenses for the three months ended March 31, 2006 were $15.6 million compared to $27.2 million for the quarter ended March 31, 2005 and $16.1 million for the previous quarter ended December 31, 2005. Sales and marketing, research and development and general and administrative expenses for the three months ended March 31, 2006 were $15.1 million compared to $14.4 million for the quarter ended March 31, 2005 and $15.3 million for the previous quarter ended December 31, 2005.

Cash used in operations for the three months ending March 31, 2006 was $6.0 million compared to $11.0 million for the quarter ended March 31, 2005 and $8.0 million for the previous quarter ending December 31, 2005.

Net loss for the quarter ended March 31, 2006, was $8.3 million, or $0.18 per basic and diluted share, compared to $25.4 million, or $0.58 per basic and diluted share, for the three months ended March 31, 2005. Net loss for the previous quarter ended December 31, 2005, was $8.6 million, or $0.19 per basic and diluted share.

Jason Hart, CEO of ActivIdentity, said, "The financial performance for this quarter is in line with our previously stated guidance and we continue to concentrate on improving these results. Management is focusing the business on achieving top line revenue growth, operational expense control, improved internal communication and simplification of the business".

"We remain focused on reducing operating costs commensurate with our revenue levels.

"Deferred revenue grew during the quarter and we are pleased with our global reseller announcement with Sun Microsystems Inc. and the selection of our solutions for its internal use.

"We expect to continue to improve our position in the overall market and to strengthen our qualified sales pipeline. We anticipate that our previous successes with our high-end government solutions will assist us in increasing our sales activity predominantly outside of the United States, as evident with our selection in multiple government to citizen identification pilot projects, which if successful, may result in large government-to-citizen deals. While we remain dissatisfied with the actual sales we achieved in the US Government and commercial markets (specifically the HSPD #12 initiative), the twelve month outlook for HSPD #12 remains promising. We continue to utilize our work and experience with the HSPD #12 initiatives in other sales opportunities." Hart said.

Second Quarter Financial Highlights

• Ended the quarter with $139.6 million in cash and short-term investments.
• Deferred revenue increased by $1.1million to 10.4 million.

Second Quarter Business Highlights

• Jason Hart appointed CEO in February.
• Other senior management appointments included Mark Lustig as CFO and Thomas Jahn as COO. Yves Audebert continues as President.
• The reduction in the size of the Board to four external Directors and Mr. Hart as an internal Director.
• The stockholders at the Annual Shareholders Meeting formally approved the company name change from ActivCard Corp. to ActivIdentity Corporation.
• An agreement was achieved with Sun Microsystems to provide a joint solution that combines Sun’s identity management system with ActivIdentity’s Card Management System and Enterprise Single Sign-On.
• Novell launched an OEM version of ActivIdentity SecureLogin Single Sign-On Version 6.0.

Outlook

ActivIdentity anticipates that revenue for its third quarter of fiscal 2006 ending June 30, 2006 will range from $12.5 to $13.5 million, while sales and marketing, research and development, and general and administrative expenses are expected to range from $14.0 to $15.0 million excluding additional stock-based compensation, amortization and restructuring.

Conference Call

ActivIdentity will host a live audio web cast of its quarterly conference call to discuss results of its second fiscal quarter ended March 31, 2006 at 2:00 p.m. PDT (5:00 p.m. EDT) today, Tuesday, May 9, 2006.

The public is invited to listen to the live audio web cast of ActivIdentity’s conference call on the investor relations section of the Company’s website. A replay of the web cast and an audio replay of the conference call will be available approximately two hours after the conclusion of the call. The audio replay will remain available until 9:00 p.m. PDT on May 16, 2006 and can be accessed by dialing 800-642-1687 or 706-645-9291and entering the confirmation code 8851875

About ActivIdentity

ActivIdentity Corporation is a global leader in strong authentication and credential management, providing solutions to confidently establish a person's identity when interacting digitally. For more than two decades the company's experience has been leveraged by security-minded organizations in large-scale deployments such as the U.S. Department of Defense, Nissan, and Saudi Aramco. The company's customers have issued more than 100 million credentials, securing the holder's digital identity. ActivIdentity is headquartered in Silicon Valley, California. For more information, visit www.actividentity.com.

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ActivIdentity is a registered trademark in the United States and/or other countries. All other trademarks are the property of their respective owners in the United States and/or other countries.

Safe Harbor Statement

The statements in this press release that are not historical facts are forward-looking statements that involve risks and uncertainties. These risks and uncertainties include risks relating to our history of losses and need for revenue growth and cost containment, the integration of acquired business and technologies, the variability of our quarterly results, and other risks identified under the caption "Risk Factors" in our most recent Annual Report on Form 10-K, and in subsequent Quarterly Reports on Form 10-Q, which are filed with the United States Securities and Exchange Commission (SEC). There can be no assurance that we will achieve targeted levels of revenues for fiscal 2009 or that our strategic initiatives will result in the anticipated benefits. Copies of our SEC filings, which have more information about these and other risks, are available from the Company and on the SEC website at www.sec.gov. Actual results, events and performance may differ materially from our forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company disclaims any intention to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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