MetaSolv Reports Increased Second Quarter Revenues and Improved Profitability

MetaSolv, Inc. (Nasdaq:MSLV), a global leader in
comprehensive operations support systems solutions for next-generation
communications service providers, today announced financial results
for the second quarter ended June 30, 2006.
   Highlights of MetaSolv's second quarter operating and financial
results include:

   --  A multi-year, multi-million dollar license and services
        contract with Telstra, Australia's leading
        media-communications company, to deploy MetaSolv's Activation
        5 solution as part of a comprehensive network and OSS
        transformation for both fixed-line and mobile services;

   --  A multi-year, multi-million dollar contract with a tier 1
        operator in India for enterprise-wide use of MetaSolv's
        inventory management and service activation solutions;

   --  A major contract win with one of the largest cable providers
        in the U.S. to leverage MetaSolv's inventory management system
        to support the growth of its nationwide IP network and digital
        voice services;

   --  A new win for the Company's provisioning order management
        product, Provisioning 5, with a large, U.S. based incumbent
        carrier to support a new service rollout;

   --  The market launch of two new products expected to serve as a
        platform for future revenue growth -- MetaSolv Configuration
        Management and MetaSolv Subscriber & Service Management --
        both currently being deployed by global Tier 1 operators;

   --  A 53% increase in license revenues, which increased gross
        profit to 59% of total revenues;

   --  Net income of $649,000 or $0.01 per diluted share; adjusted
        EBITDA of $2.4 million, a 108% improvement over the prior
        year; and

   --  A continued solid financial position at quarter end, with
        $58.0 million in cash equivalents and marketable securities
        and no debt.

   Revenues for the quarter increased 8% to $25.4 million, compared
to second quarter 2005 revenues of $23.4 million. MetaSolv reported
net income for the second quarter of $649,000, or $0.01 per diluted
share, compared to a net loss of $663,000, or $0.02 per diluted share,
in the second quarter of 2005. Earnings before interest, taxes,
depreciation and amortization and stock compensation expense
("adjusted EBITDA") for the quarter was $2.4 million, an increase of
108% compared to $1.1 million in the prior year. Non-GAAP net income
for the quarter was $1.7 million, or $0.03 per diluted share, compared
to a net loss of $113,000, or $0.00 per diluted share for the second
quarter of 2005.
   For the six months ended June 30, 2006, revenues were $48.0
million, a 7% increase from $44.8 million for the same period in 2005.
MetaSolv reported net income for the six months of $261,000, or $0.01
per diluted share, compared to a net loss of $2.7 million, or $0.07
per diluted share, for the same period in 2005. Adjusted EBITDA for
the six months ended June 30, 2006 was $3.8 million, an increase of
475% compared to $653,000 for the same period in 2005. Non-GAAP net
income for the six months ended June 30, 2006 was $2.3 million, or
$0.04 per diluted share, compared to a Non-GAAP net loss of $1.9
million, or $0.05 per diluted share for the same period in 2005.
   The Company's net income for the second quarter and six months
ended June 30, 2006 includes stock-based compensation expense related
to the implementation of Statement of Financial Accounting Standard
(SFAS) 123R which was adopted effective January 1, 2006. The Company's
net loss for the second quarter and six months ended June 30, 2005
includes stock-based compensation expense computed under APB 25. The
Company's non-GAAP results exclude stock based compensation expense in
both periods. Please see table below for a complete reconciliation of
non-GAAP net income (loss) and adjusted EBITDA to net income (loss)
reported under accounting principles generally accepted in the United
States.
   "We are pleased to report MetaSolv's continued revenue growth and
increased profitability for the second quarter," said T. Curtis
Holmes, MetaSolv's President and Chief Executive Officer. "This marks
eight consecutive quarters of year-over-year revenue growth. More
importantly, we had our strongest quarterly performance for license
revenues in nearly five years. Communications providers worldwide are
consolidating and converging their networks in the drive to enable
next-generation mobile and IP services. We believe that MetaSolv, with
a strong customer base and proven products, is well positioned to help
service providers worldwide accelerate time-to-market, reduce
operations costs and improve customer satisfaction."
   "The multi-million dollar OSS transformation projects we secured
in recent months are a direct reflection of our compelling value
proposition in automating the fulfillment cycle for next-generation
service providers. We see continued opportunity for MetaSolv as global
operators invest in transformation of their network and OSS systems,"
concluded Holmes.

   Financial Guidance

   Based on the Company's results for the second quarter, the
pipeline of potential contracts, and expectations concerning the
business environment, MetaSolv today established its guidance for
revenues for the third quarter of 2006 in a range of $23.5 million to
$26.5 million, compared with $23.3 million for the third quarter of
2005. The Company also established guidance for its net income for the
period of between $0.00 and $0.03 per diluted share. Net income
guidance for the third quarter of 2006 includes approximately $1.1
million in stock-based compensation expense computed under SFAS 123R.
Excluding stock-based compensation expense, the Company expects to
report non-GAAP net income of between $0.02 and $0.05 per diluted
share for the third quarter of 2006.

   Conference Call Notice

   MetaSolv will hold a conference call to discuss this press release
today at 5:00 p.m. Eastern time. Investors may listen to the
conference call over the Internet at www.metasolv.com by clicking
Investors, or by going to www.earnings.com. Please visit the web site
at least 15 minutes early to register, download, and install any
necessary audio software. A dial-in telephone replay of the conference
call will be available from 8:00 p.m. ET on Thursday, August 3,
through Thursday, August 10. The dial-in replay number is
719-457-0820, and the confirmation number is 5942108.

   About MetaSolv

   MetaSolv, Inc. (Nasdaq:MSLV) is a global leader in comprehensive
operations support system solutions for communications service
providers. MetaSolv's multi-service order management, inventory
management, and service activation capabilities automate the
order-to-activate provisioning process for traditional and
next-generation IP-based wireline and mobile service providers. Many
of the world's largest global service providers -- including Brasil
Telecom, BT, Cable & Wireless, O2, T-Mobile, Vodafone, and others --
use MetaSolv's solutions to achieve increased revenues, reduced costs,
and enhanced customer service. MetaSolv is a global company,
headquartered in Plano, Texas.
   MetaSolv is a registered trademark. The MetaSolv logo is a
trademark of MetaSolv Software, Inc. All other trademarks are property
of their respective owners.

   This press release contains forward-looking statements, including
guidance regarding future financial results that are based upon
current expectations and assumptions and involve a number of risks and
uncertainties. The words "estimates," "expects," "anticipates,"
"projects," "plans," "intends," "believes," "forecasts," "may,"
"should," "guidance," and variations of such words or similar
expressions are intended to identify forward-looking statements. These
statements are not guarantees of future performance. Actual results
could differ materially from MetaSolv's current expectations. MetaSolv
assumes no obligation to update any such forward-looking statement.
Using the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, MetaSolv cautions you that these
statements may be affected by the important factors, among others,
described in the documents and reports filed by MetaSolv from time to
time with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for 2005, and subsequent
Quarterly Reports on Form 10-Q, as well as by other factors,
including, but not limited to: the variance of quarterly operating
results; the Company's ability to successfully manage and integrate
acquisitions; the Company's reliance on sales of its software; the
need to expand sales and distribution capabilities; the need to expand
to new customer markets; the Company's continued use of strategic
relationships; its ability to manage growth; the Company's
international operations; its ability to meet customer expectations;
the quality of the Company's software delivered; competition;
consolidation within the telecommunications industry; limitations on
the ability of customers to obtain adequate financing; and the
Company's ability to reduce its cost structure. The Company assumes no
obligation to update the information contained in this press release.
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                            METASOLV, INC.
                    Summary Financial Information
                (In thousands, except per share data)
                             (Unaudited)

                                  Three Months Ended Six Months Ended
                                       June 30,           June 30,
                                  ------------------ -----------------
                                     2006     2005     2006     2005
                                  --------- -------- -------- --------
Revenues                           $25,382  $23,408  $47,980  $44,768
Income (loss) from operations         $589    $(490)     $91  $(2,547)
Net income (loss)                     $649    $(663)    $261  $(2,718)
Basic and diluted income (loss)
 per share                           $0.01   $(0.02)   $0.01   $(0.07)
Weighted average shares
 outstanding:
   Basic                            50,164   41,045   49,966   40,937
   Diluted                          51,872   41,045   51,635   40,937

Non-GAAP(1)
Net income (loss)                   $1,687    $(113)  $2,309  $(1,871)
Basic and diluted income (loss)
 per share                           $0.03   $(0.00)   $0.04   $(0.05)
 
(1) See table below for a complete reconciliation of non-GAAP results
    with those reported under accounting principles generally accepted
    in the United States.

 
                            METASOLV, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (In thousands, except per share data)
                             (Unaudited)

                                 Three Months Ended  Six Months Ended
                                      June 30,            June 30,
                                 ------------------  -----------------
                                   2006    2005        2006     2005
                                  ------  ------     -------  -------

Revenues:
   License                        $9,926  $6,475     $17,084  $12,426
   Services                        6,083   7,109      12,286   12,403
   Maintenance                     9,373   9,824      18,610   19,939
                                  ------  ------     -------  -------
           Total revenues         25,382  23,408      47,980   44,768

Cost of revenues:
   License                           471     176         666      235
   Services and maintenance
    (1)                            9,826  10,785      19,353   20,383
   Amortization of intangible
    assets                           123     423         353      846
                                  ------  ------     -------  -------
           Total cost of
            revenues              10,420  11,384      20,372   21,464
                                  ------  ------     -------  -------
Gross profit                      14,962  12,024      27,608   23,304

Operating expenses:
   Research and development(1)     5,067   4,594       9,620    9,914
   Sales and marketing(1)          5,943   6,102      11,408   11,631
   General and
    administrative(1)              3,363   1,818       6,489    4,306
                                  ------  ------     -------  -------
           Total operating
            expenses              14,373  12,514      27,517   25,851
                                  ------  ------     -------  -------
Income (loss) from operations        589    (490)         91   (2,547)
Interest and other income, net       542     170         908      421
                                  ------  ------     -------  -------
Income (loss) before taxes         1,131    (320)        999   (2,126)
Income tax expense                   482     343         738      592
                                  ------  ------     -------  -------
Net income (loss)                   $649   $(663)       $261  $(2,718)
                                  ======  ======     =======  =======


Basic and diluted income
 (loss) per share                  $0.01  $(0.02)      $0.01   $(0.07)

Weighted average shares
 outstanding:
   Basic                          50,164  41,045      49,966   40,937
   Diluted                        51,872  41,045      51,635   40,937


(1) Includes stock-based
      compensation expense as 
      follows:
    Cost of revenues-services
     and maintenance                $277    $121        $491     $178
    Research and development         268     211         497      312
    Sales and marketing              178      53         385       87
    General and administrative       315     165         675      270
                                  ------  ------     -------  -------
    Total stock-based
     compensation expense         $1,038    $550      $2,048     $847
                                  ======  ======     =======  =======




                            METASOLV, INC.
                  RECONCILIATION OF NET INCOME (LOSS)
          TO NON-GAAP NET INCOME (LOSS), AND ADJUSTED EBITDA
                            (In thousands)
                              (Unaudited)
                                       Three Months      Six Months 
                                           Ended           Ended
                                      --------------- ----------------
                                         June 30,         June 30,
                                      --------------- ----------------
                                       2006    2005    2006    2005
                                      ------- ------- ------- --------

Net income (loss)                       $649   $(663)   $261  $(2,718)
   Stock compensation expense          1,038     550   2,048      847
                                      ------- ------- ------- --------
Non-GAAP net income (loss)            $1,687   $(113) $2,309  $(1,871)
                                      ======= ======= ======= ========

Net income (loss)                       $649   $(663)   $261  $(2,718)
   Depreciation expense                  627     658   1,264    1,507
   Amortization of intangible assets     123     423     353      846
   Stock-based compensation expense    1,038     550   2,048      847
   Interest and other income, net       (542)   (170)   (908)    (421)
   Income tax expense                    482     343     738      592
                                      ------- ------- ------- --------
Adjusted EBITDA                       $2,377  $1,141  $3,756     $653
                                      ======= ======= ======= ========

In addition to reporting its financial results in accordance with
accounting principles generally accepted in the United States
("GAAP"), MetaSolv has also provided in this release non-GAAP net
income (loss), non-GAAP net income (loss) per diluted share, and
earnings before interest, taxes, depreciation and amortization and
stock compensation expense ("adjusted EBITDA"). Non-GAAP net income
(loss), and Non-GAAP net income (loss) per diluted share are adjusted
to exclude non-cash expenses for stock-based compensation expense.
Management uses these non-GAAP financial measures to evaluate
performance, to analyze trends in cash-based expenses and to establish
operational goals and allocate resources. Stock-based compensation has
been excluded when computing non-GAAP net income (loss) because the
accounting treatment for stock-based compensation has changed with the
adoption of SFAS 123R. Management believes that excluding stock-based
compensation is useful in order to offer consistent information that
is comparable to information MetaSolv has publicly disclosed in prior
periods for which stock-based compensation was expensed under APB 25.
Non-GAAP financial measures should not be considered a measure of
financial performance under generally accepted accounting principles.
Items excluded from these results are significant components in
understanding and assessing financial performance. MetaSolv believes
that inclusion of the non-GAAP financial measures is useful to
investors in allowing for greater transparency of supplemental
information used by management in its financial and operational
decision-making. Non-GAAP results are not a measurement determined in
accordance with generally accepted accounting principles and are thus
susceptible to varying calculations, and they may not be comparable,
as presented, to other similarly titled measures of other companies.
Net income (loss) is the financial measure calculated and presented in
accordance with generally accepted accounting principles that is most
comparable to MetaSolv's non-GAAP results, as defined.


                            METASOLV, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                                               June 30,   December 31,
                                                 2006        2005
                                              ----------- ------------
                                              (Unaudited)
       Assets
Current assets:
   Cash and cash equivalents                     $14,706      $13,314
   Marketable securities                          43,252       44,839
   Trade accounts receivable, less allowance
    for doubtful accounts of $2,201 in 2006
    and $1,805 in 2005                            15,397       13,582
   Unbilled receivables                            5,582        2,461
   Prepaid expenses                                1,982        1,847
   Other current assets                            1,174          669
                                              ----------- ------------
            Total current assets                  82,093       76,712

Property and equipment, net                        5,266        5,529
Intangible assets                                    737        1,090
Other assets                                         854          786
                                              ----------- ------------
            Total assets                         $88,950      $84,117
                                              =========== ============
       Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                               $4,398       $4,775
   Accrued expenses                               18,947       20,512
   Deferred revenue                               11,441        8,068
                                              ----------- ------------
            Total current liabilities             34,786       33,355

Fair value of warrants to purchase common
 stock                                                --        3,442

Temporary equity - Unregistered shares of
 common stock, $0.005 par value, 7,666,667
 shares issued and outstanding at December 31,
 2005                                                 --       17,863

Stockholders' equity:
   Preferred stock, $.01 par value, 10,000,000
    shares authorized, no shares issued or
    outstanding                                       --           --
   Common stock, $.005 par value, 100,000,000
    shares authorized, shares issued and
    outstanding: 50,517,083 in 2006, and
    49,961,132 in 2005                               254          213
   Additional paid-in capital                    175,290      151,443
   Deferred compensation                              --         (328)
   Accumulated other comprehensive income            790          560
   Retained earnings                            (122,170)    (122,431)
                                              ----------- ------------
            Total stockholders' equity            54,164       29,457
                                              ----------- ------------
Total liabilities and stockholders' equity       $88,950      $84,117
                                              =========== ============

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