Virage Logic Reports Third-Quarter Fiscal 2006 Results; License Revenues Increase 7% Sequentially and 20% Year-Over-Year

FREMONT, Calif.--July 27, 2006--Virage Logic Corporation (Nasdaq:VIRL), a pioneer in Silicon Aware IP(TM) and leading provider of semiconductor intellectual property (IP) platforms, today reported its financial results for the third fiscal quarter ended June 30, 2006.

Revenues for the third quarter of fiscal 2006 were $15.3 million, compared with $12.0 million for the third quarter of fiscal 2005 and $15.2 million for the second quarter of fiscal 2006. License revenue for the third quarter of fiscal 2006 was $11.1 million, up 20 percent from $9.3 million year-over-year and up seven percent sequentially from $10.4 million for the previous quarter. Royalties for the third quarter of fiscal 2006 were $4.2 million, compared with $2.7 million for the third quarter of fiscal 2005 and $4.8 million for the second quarter of fiscal 2006.

As reported under U.S. generally accepted accounting principles (GAAP), net loss for the third quarter of fiscal 2006 was $1.6 million, or $0.07 per share, compared with a net loss of $1.3 million, or $0.06 per share, for the same period a year ago and with net income of $176,000, or $0.01 per share, for the second quarter of fiscal 2006.

Excluding the effects of FAS123R, the company would have reported net income of $1.4 million, or $0.06 per share. Net loss for the third quarter of fiscal 2006 included $1.6 million of stock-based compensation expense related to the adoption of FAS123R. The exclusion of FAS123R from the company's net income represents a non-GAAP measure provided by the company to allow comparability to prior fiscal periods.

"We are very pleased to have achieved both sequential license revenue growth and continued profitability on a non-GAAP basis. These achievements are a result of the improvements we continue to make in managing the sales and engineering processes involved in licensing our semiconductor IP. We believe that these improvements together with the organizational changes that we've made in recent quarters will enable us to cost-effectively scale our semiconductor IP licensing growth," said Adam Kablanian, president and CEO.

Virage Logic also announced today its business outlook for the fourth quarter of fiscal 2006 ending September 30, 2006. The company currently anticipates total revenues of approximately $15.4 million to $15.8 million, including royalties of approximately $4.0 million to $4.3 million. The company expects to report a GAAP net loss of approximately $0.00 to $0.03 per share. The company also expects $1.8 million of stock-based compensation expense per FAS123R. Without the impact of stock-based compensation expense, the company would expect earnings per diluted share of $0.04 to $0.06 for the fourth fiscal quarter. Although this news release will be available on the company's website, the company disclaims any duty or intention to update these or any other forward-looking statements.

Virage Logic's management plans to hold a teleconference on third-quarter 2006 results at 1:30 p.m. PT / 4:30 p.m. ET today. A live webcast of management's teleconference regarding third-quarter results will be available to all investors, and an archived webcast will be available from July 27, 2006 until July 27, 2007 on the Investor Relations page of Virage Logic's website at http://www.viragelogic.com. In addition, a telephonic replay will be available through August 3, 2006 at (719) 457-0820, access code 5514747.

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About Virage Logic

Founded in 1996, Virage Logic Corporation (Nasdaq:VIRL) rapidly established itself as a technology and market leader in providing advanced embedded memory intellectual property (IP) for the design of complex integrated circuits. Now, as the company celebrates its 10th anniversary, it is a global leader in semiconductor IP platforms comprising embedded memories, logic, and I/Os and is pioneering the development of a new class of IP called Silicon Aware IP(TM). Silicon Aware IP tightly integrates Physical IP (memory, logic and I/Os) with the embedded test, diagnostic, and repair capabilities of Infrastructure IP to help ensure manufacturability and optimized yield at the advanced process nodes. Virage Logic's highly differentiated product portfolio provides higher performance, lower power, higher density and optimal yield to foundries, integrated device manufacturers (IDMs) and fabless customers who develop products for the consumer, communications and networking, hand-held and portable, and computer and graphics markets. The company uses its FirstPass-Silicon(TM) Characterization Lab for certain products to help ensure high quality, reliable IP across a wide range of foundries and process technologies. The company also prides itself on providing superior customer support and was recently named Customer Service Leader of the Year in the Semiconductor IP Market by Frost & Sullivan. Headquartered in Fremont, California, Virage Logic has R&D, sales and support offices worldwide. For more information, visit www.viragelogic.com.

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