PRAGUE, CZECH REPUBLIC -- (Marketwire) -- 08/16/10 -- KIT digital, Inc. (NASDAQ: KITD), the leading global provider of video asset management solutions (VAMs) for multi-screen IP-based delivery, reported financial results for the second quarter ended June 30, 2010. All figures are reported in U.S. dollars.

Revenue in the second quarter of 2010 increased 33% to a record $23.1 million from $17.4 million in the previous quarter, and increased 120% from $10.5 million in the same quarter a year-ago. The company's revenues are primarily comprised of software license and maintenance fees, software set-up fees, and technical integration and creative service charges.

For the second quarter of 2010, net loss was $342,000 or $(0.02) per basic and diluted share, compared to a net loss in the previous quarter of $18.4 million or $(1.33) per basic and diluted share, and a net loss in the second quarter of 2009 of $1.6 million or $(0.37) per basic and diluted share.

Net loss for the second quarter 2010 included $3.1 million in non-cash charges, including $1.1 million in stock-based compensation and $2.0 million of depreciation and amortization; a non-cash derivative gain of $2.4 million; $3.3 million in integration expenses related to the reorganization and integration of recently acquired companies; and $886,000 in merger and acquisitions expenses, including investment banking advisory and legal fees.

Operating EBITDA, a non-GAAP metric, which management uses as a proxy for operating cash-flow, increased 42% to a record $4.2 million or $0.20 per basic share in the second quarter of 2010 from $3.0 million or $0.21 per basic share in the previous quarter and increased 526% from $671,000 or $0.16 per basic share in the same year-ago quarter. The company defines operating EBITDA as earnings before derivative income/loss; non-cash stock based compensation; acquisition-related restructuring costs and integration expenses; impairment of property and equipment; direct merger and acquisition expenses; and depreciation and amortization (see important discussion of operating EBITDA in "About the Presentation of Operating EBITDA," below).

Cash and cash equivalents at June 30, 2010 totaled $67.1 million, as compared to $37.8 million at March 31, 2010. The increase was primarily due to the issuance of common stock during the second quarter, offset by payments related to the repurchase of warrants and acquisition of Benchmark Broadcast Systems.

Management employs a natural hedge by matching, as much as possible, currencies of client revenues with currencies of associated client delivery costs and as such does not believe there is material currency-related risk in the business. Management estimates that the impact of foreign exchange rate movements in the second quarter resulted in an approximate 4% decline in U.S. dollar-reported revenues and less than a 1% increase in U.S. dollar-reported operating EBITDA.

Management estimates that approximately 75% of revenue during the second quarter was derived from fees for the company´s "VX" IP video platform solutions, while approximately 25% was attributable to professional services. Revenues from the company's Europe, Middle East & Africa (EMEA) division constituted approximately 41% of the total during the quarter, with approximately 36% being derived from the Americas and 23% from Asia-Pacific.

KIT digital added 23 net new client contracts during the quarter, with an estimated average monthly revenue per client in excess of $25,000.

Q2 2010 Selected Client Wins

• A top 10 global pharmaceutical company chose KIT digital to provide a video-based digital communications and digital display strategy for ten of its major brands.
• Worldplay Networks, a developer of proprietary video compression and distribution technology, chose VX Enterprise to roll out a new 3-screen sports network that will distribute high definition sports programming to PC, mobile and set-top box viewers in the Americas, Europe and Greater China.
• Delta Air Lines will be using KIT digital's platform to launch DeltaTube, a new internal communications video portal that will feature executive messaging, internal training and company news.
• The Origin Foundation, a large supplier of green energy in Australasia, selected KIT digital's video platform and digital marketing services.
• National Geographic, one of the world's largest non-profit scientific and educational institutions, selected KIT digital's VX platform to support its new campaigns.
• LIVE TV, the leading cable TV operator in Thailand, awarded KIT digital the contract to convert it to a completely IP-based digital video workflow.
• Seznam, one of Central Europe's largest Internet portals, selected KIT digital to deliver exclusive video content to its online audience.
• The Country Network chose KIT's platform to support the three-screen vision of its network. VX Enterprise will allow The Country Network to open up multiple new revenue streams and reduce operational cost by displacing existing satellite infrastructure.

Management Commentary
"These record second quarter results continue to demonstrate the strong global demand for our end-to-end IP-based video asset management technology and the significant leverage in our business model, despite macroeconomic instability in certain regions of the world," said the company's chairman and CEO, Kaleil Isaza Tuzman. "As we move through the midpoint of Q3, we remain on track to exceed our original organic financial targets for fiscal 2010, even before accounting for the positive impact of the acquisitions of Multicast and Benchmark made in the first half of the year. We estimate our organic growth in the second quarter exceeded 50% on a year-on-year basis."

"Our expansion into the BRIC market will continue to be a primary area of strategic focus for KIT digital. This was demonstrated by our second quarter acquisition of Singapore-based Benchmark Broadcast Systems, a leading video asset management provider and broadcast video systems integrator. Benchmark services clients in more than 12 countries through six regional offices in Asia, including India and China. With the addition of Benchmark, the number of KIT digital's end customers now totals nearly 1,100 across more than 40 countries."

Gavin Campion, president of KIT digital, commented: "The ongoing centralization and consolidation of major corporate functions into our Prague headquarters has resulted in cost savings and a more effective central sales organization. Our second quarter performance also reflected our ability to capitalize on upselling and cross-selling opportunities to the client bases of previously acquired companies -- particularly in the North American and BRIC markets."

"We continue to differentiate ourselves from the limited functionality of the online video platform (OVP) players in our market," continued Campion. "Our Q2 new client wins once again reflect our '3-screen' device and network-agnostic approach, and the expanded breadth of functionality available through our VX video asset management solutions. We remain committed to expanding our industry leadership position by going from our current estimated 15%-20% global market share to more than 50% over the next couple of years, by complementing strong organic growth with highly selective, accretive acquisitions."

Isaza Tuzman added: "We should also note that KIT digital is the only company in the industry with sophisticated digital marketing services and IP-based broadcast systems integration capabilities, allowing us to engage in more complex deployments for Global 2000 companies. We believe our comprehensive, global approach to IP video systems deployment and our focus on advanced, multi-point, multi-device publishing capabilities better meets the needs of a maturing IP video marketplace than browser-focused OVPs."

"As a result of our VAMs approach, we have more integrated relationships with major CDNs -- like Akamai, Limelight and Level 3 -- than traditional OVPs, which primarily resell bandwidth and storage," said Isaza Tuzman. "All of our CDN partners serve as sales channels of our VX platform, in addition to being back-end delivery providers."

Campion added: "We estimate 25%+ of the use of our client solutions are already in a mobile network context and we see mobile as the highest area for video usage growth in the global arena. Smartphone applications with effective mobile video delivery are becoming a key to capturing the VAMs market globally. We are already working with several major network operators in introducing next-generation IP video services based on 4G and LTE systems technology, and we are seeing VAMs-related request-for-proposals from major mobile and fixed-line network operators globally, including those in the U.S."

Conference Call
KIT digital's executive management team will host an online video broadcast to discuss these second quarter 2010 results today at 10:30 a.m. Eastern Time (4:30 p.m. Central European time). The presentation will be followed by a question and answer period.

The video webcast will be made available real-time via a link provided in the Investor Relations section of the company's website at http://ir.kitd.com. Please visit the website in advance of the presentation in order to download and install the secure player required for access.

For participants who wish to ask a question during the Q&A period or access the call via telephone only, please call the conference telephone number below at least 5-10 minutes prior to the scheduled start time:

Call Start Time: 10:30 a.m. Eastern time (4:30 p.m. Central European time)
Dial-in # North America toll-free: +1-800-862-9098
Dial-in # outside of North America: +1-785-424-1051
Please provide the operator the Conference ID: 7KITDIGITAL

If you have any difficulty connecting with the conference call, please contact Liolios Group at +1-949-574-3860.

The video presentation and Q&A session will be available for replay via the company's website following the broadcast. An audio replay via telephone will be available after 1:30 p.m. Eastern time and until September 16, 2010:

Toll-free replay # (North America): +1-877-870-5176
International replay # (outside of North America): +1-858-384-5517
Replay pin number: 11021

About KIT digital, Inc.
KIT digital (NASDAQ: KITD) is a leading global provider of video asset management solutions (VAMs) for multi-screen IP-based delivery. KIT VX-one, the company's family of end-to-end software platform solutions, enables enterprise clients to acquire, manage and distribute video assets across the three screens of today's world: the personal computer, mobile device, and IPTV-enabled television set. The application of VX ranges from commercial video distribution to internal corporate deployments, including corporate communications, human resources, training, security and surveillance. KIT digital's client base includes more than 1,000 customers across 40+ countries, including The Associated Press, Best Buy, Bristol-Myers Squibb, Disney-ABC, FedEx, General Motors, Google, Hewlett-Packard, Home Depot, IMG Worldwide, ESPN Star, MediaCorp, News Corp, Telefonica, Verizon and Vodafone. KIT digital is headquartered in Prague, and maintains principal offices in Atlanta, Beijing, Buenos Aires, Cairo, Chennai, Cologne, Delhi, Dubai, Kolkata, London, Melbourne (Australia), Mumbai, New York, Singapore, Stockholm and Toronto. For additional information, visit www.kitd.com or follow the company on Twitter at www.twitter.com/KITdigital.

About the Presentation of Operating EBITDA
Management uses operating EBITDA for forecasting and budgeting, and as a proxy for operating cash flow. Operating EBITDA is not a financial measure calculated in accordance with U.S. generally accepted accounting principles (GAAP) and should not be considered in isolation, or as an alternative to net income, operating income or other financial measures reported under GAAP. The company defines operating EBITDA as earnings before: non-cash derivative income/loss, non-cash stock based compensation; acquisition-related restructuring costs and integration expenses; impairment of property and equipment; merger and acquisition expenses; and depreciation and amortization. Other companies (including the company's competitors) may define operating EBITDA differently. The company presents operating EBITDA because it believes it to be an important supplemental measure of performance that is commonly used by securities analysts, investors and other interested parties in the evaluation of companies in a similar industry. Management also uses this information internally for forecasting, budgeting and performance-based executive compensation. It may not be indicative of the historical operating results of KIT digital nor is it intended to be predictive of potential future results. See "GAAP to non-GAAP Reconciliation" table in the company's second quarter 2009 results press release for further information about this non-GAAP measure and reconciliation of operating EBITDA to net loss for the periods indicated.

GAAP to non-GAAP
 Reconciliation               Three months ended       Six months ended
(amounts in thousands)            June 30,                June 30,
                            ----------------------  ----------------------
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------
Consolidated Statement of
 Operations Reconciliation

Net (loss) income on a GAAP
 basis                      $     (342) $   (1,610) $  (18,784) $    6,784
    Non-cash stock-based
     compensation                1,084         272       1,636         552
    Merger and acquisition
     and investor relations
     expenses                      886         351       2,105         729
    Depreciation and
     amortization                2,049         910       3,703       1,593
    Restructuring charges         (119)        195       3,574         314
    Integration expenses         3,378         747       6,299         991
    Interest income                (27)         (3)        (28)         (4)
    Interest expense               248         178         340         317
    Amortization of deferred
     financing costs                14         449          14         613
    Derivative (income)
     expense                    (2,368)       (506)      9,075     (10,682)
    Other income                  (604)       (311)       (788)       (340)
    Income tax (expense)
     benefit                         -          (1)         14           2
                            ----------  ----------  ----------  ----------
Operating EBITDA income     $    4,199  $      671  $    7,160  $      869
                            ==========  ==========  ==========  ==========

Consolidated Statement of
 Operations Reconciliation
 per Share

Basic net (loss) income per
 share on a GAAP basis      $    (0.02) $    (0.37) $    (1.06) $     1.50
    Non-cash stock-based
     compensation                 0.05        0.06        0.09        0.12
    Merger and acquisition
     and investor relations
     expenses                     0.04        0.08        0.12        0.16
    Depreciation and
     amortization                 0.10        0.21        0.21        0.35
    Restructuring charges            -        0.05        0.20        0.07
    Integration expenses          0.16        0.17        0.36        0.22
    Interest income                  -           -           -           -
    Interest expense              0.01        0.04        0.02        0.07
    Amortization of deferred
     financing costs                 -        0.10           -        0.14
    Derivative (income)
     expense                     (0.11)      (0.11)       0.51       (2.36)
    Other income                 (0.03)      (0.07)      (0.04)      (0.08)
    Income tax expense               -           -           -           -
                            ----------  ----------  ----------  ----------
Operating EBITDA income per
 share                      $     0.20  $     0.16  $     0.41  $     0.19
                            ==========  ==========  ==========  ==========

Basic and diluted weighted
 average common shares
 outstanding                21,404,907   4,322,798  17,662,700   4,535,629
                            ==========  ==========  ==========  ==========

Important Cautions Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements" related to the businesses of KIT digital, Inc., which can be identified by the use of forward-looking terminology, such as "believes," "expects", "plans," "intends," "anticipates" and variations of such words or similar expressions, but their absence does not mean that the statement is not forward-looking. Statements in this announcement that are forward-looking include, but are not limited to, statements made by Mr. Isaza Tuzman that KIT digital remains on track to exceed its original organic financial targets for fiscal 2010, even before accounting for the positive impact of the acquisitions of Multicast and Benchmark made in the first half of the year; organic growth in the second quarter is expected to exceed 50% on a year-on-year basis; and expansion into the BRIC market will continue to be a primary area of strategic focus for KIT digital. Such forward-looking statements involve known and unknown risks and uncertainties, including uncertainties relating to product development and commercialization, the ability to obtain or maintain patent and other proprietary intellectual property protection, market acceptance, future capital requirements, regulatory actions or delays, competition in general and other factors that may cause actual results to be materially different from those described herein. Certain of these risks and uncertainties are or will be described in greater detail in our public filings with the U.S. Securities and Exchange Commission. KIT digital is not under obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

                    KIT DIGITAL, INC. AND SUBSIDIARIES
                       CONSOLIDATED BALANCE SHEETS
                (Amounts in Thousands, Except Share Data)




                                                  June 30,    December 31,
                                                    2010        2009 (A)
                                                ------------  ------------
                                                (Unaudited)
Assets:
Current assets:
    Cash and cash equivalents                   $     67,110  $      6,791
    Restricted cash                                    2,035             -
    Investments                                          932           217
    Accounts receivable, net                          22,512        17,258
    Unbilled revenue                                   2,567         2,960
    Inventory                                          1,065           708
    Other current assets                               5,823         2,205
                                                ------------  ------------
  Total current assets                               102,044        30,139
                                                ------------  ------------

    Property and equipment, net                        5,786         5,697
    Software, net                                      2,920         3,436
    Customer list, net                                 5,450         4,650
    Goodwill                                          79,108        36,492
                                                ------------  ------------
  Total assets                                  $    195,308  $     80,414
                                                ============  ============

Liabilities and Stockholders' Equity:
Current liabilities:
    Bank overdraft                              $      1,608  $      2,944
    Capital lease and other obligations                  801         1,218
    Secured notes payable                                751             -
    Accounts payable                                  10,112         6,647
    Accrued expenses                                   9,702         8,501
    Income tax payable                                   279           312
    Deferred tax liability                               580           580
    Acquisition liability                              2,146         1,075
    Derivative liability                               2,548        21,314
    Other current liabilities                          4,832         3,455
                                                ------------  ------------
  Total current liabilities                           33,359        46,046

    Capital lease and other obligations, net of
     current                                             567           377
    Secured notes payable, net current and debt
     discount                                          5,052             -
    Acquisition liability, net of current              7,560             -
                                                ------------  ------------
  Total liabilities                                   46,538        46,423
                                                ------------  ------------

Equity:
  Stockholders' equity:
    Common stock, $0.0001 par value: authorized
     30,000,000 shares; issued and outstanding
     23,230,279 and 10,844,853, respectively               2             1
    Additional paid-in capital                       263,861       128,263
    Accumulated deficit                             (112,727)      (93,943)
    Accumulated other comprehensive (loss) income     (2,366)         (330)
                                                ------------  ------------
    Total stockholders' equity                       148,770        33,991
                                                ------------  ------------
  Total liabilities and stockholders' equity    $    195,308  $     80,414
                                                ============  ============

(A) - Reference is made to the Company's Annual Report on Form 10-K for the
year ended December 31, 2009, filed with the U.S. Securities and Exchange
Commission on April 5, 2010.

                    KIT DIGITAL, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
           (Amounts in Thousands, Except Share and Per Share Data)
                              (Unaudited)


                              Three months ended       Six months ended
                                June 30, 2010           June 30, 2010
                            ----------------------  ----------------------
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------
Revenue                     $   23,055  $   10,494  $   40,419  $   20,118
                            ----------  ----------  ----------  ----------
Variable and direct third
 party costs:
   Cost of goods and
    services                     6,366       3,634      10,718       7,112
   Hosting, delivery and
    reporting                    1,290         414       2,364         696
   Content costs                   249         357         484         818
   Direct third party
    creative production
    costs                          656       1,153       1,546       1,958
                            ----------  ----------  ----------  ----------
Total variable and direct
 third party costs               8,561       5,558      15,112      10,584
                            ----------  ----------  ----------  ----------
Gross profit                    14,494       4,936      25,307       9,534
General and administrative
 expenses:
   Compensation, travel and
    associated costs
    (including non-cash
    stock-based compensation
    of $1,084, $272, $1,636
    and $552, respectively)      8,536       3,481      14,186       7,174
   Legal, accounting, audit
    and other professional
    service fees                   530         160       1,220         430
   Office, marketing and
    other corporate costs        2,313         896       4,377       1,613
   Merger and acquisition
    and investor relations
    expenses                       886         351       2,105         729
   Depreciation and
    amortization                 2,049         910       3,703       1,593
   Restructuring charges          (119)        195       3,574         314
   Integration expenses          3,378         747       6,299         991
                            ----------  ----------  ----------  ----------
Total general and
 administrative expenses        17,573       6,740      35,464      12,844
                            ----------  ----------  ----------  ----------
Loss from operations            (3,079)     (1,804)    (10,157)     (3,310)
   Interest income                  27           3          28           4
   Interest expense               (248)       (178)       (340)       (317)
   Amortization of deferred
    financing costs and
    debt discount                  (14)       (449)        (14)       (613)
   Derivative income
    (expense)                    2,368         506      (9,075)     10,682
   Other income                    604         311         788         340
                            ----------  ----------  ----------  ----------
Net (loss) income before
 income taxes                     (342)     (1,611)    (18,770)      6,786
   Income tax expense
    (benefit)                        -           1         (14)         (2)
                            ----------  ----------  ----------  ----------
Net (loss) income available
 to common shareholders     $     (342) $   (1,610) $  (18,784) $    6,784
                            ==========  ==========  ==========  ==========

Basic and diluted net
 (loss) income per common
 share                      $    (0.02) $    (0.37) $    (1.06) $     1.50
                            ==========  ==========  ==========  ==========
Basic and diluted weighted
 average common shares
 outstanding                21,404,907   4,322,798  17,662,700   4,535,629
                            ==========  ==========  ==========  ==========

Comprehensive income
 (loss):
Net (loss) income           $     (342) $   (1,610) $  (18,784) $    6,784
   Foreign currency
    translation                 (1,619)        414      (2,052)        377
   Change in unrealized
    gain on investments,
    net                            (53)          -          16           -
                            ----------  ----------  ----------  ----------
Comprehensive (loss)
 income:                    $   (2,014) $   (1,196) $  (20,820) $    7,161
                            ==========  ==========  ==========  ==========