Revenues Increase 29% Over Previous Quarter Driven by Sales of PowerHouse

AUSTIN, Texas (Oct. 23, 2009) – Active Power, Inc. (NASDAQ: ACPW) announced results for its third quarter ended Sept. 30, 2009.

Revenue for the quarter increased 29% to $8.5 million from $6.6 million in the previous quarter and decreased 31% from $12.4 million in the same period last year.

For the nine-month period ended Sept. 30, 2009, revenue decreased 2% to $26.3 million from the same period in 2008.

For the quarter, net loss was $3.0 million, or $0.04 per share compared to a net loss of $3.5 million or $0.06 per share in the previous quarter and a net loss of $4.1 million, or $0.07 per share in the same period a year ago.

The gross profit margin in the third quarter of 2009 was 22%, which was unchanged from the previous quarter. This compares to a gross profit margin of 9% in the third quarter of 2008.

Cash and investments totaled $8.0 million at Sept. 30, 2009, compared to $11.7 million at June 30, 2009. The decrease of $3.7 million during the quarter includes $1.4 million of increased inventory levels.

“We are cautiously optimistic about the improvement in revenue we experienced this quarter,” said Jim Clishem, president and CEO, Active Power. “We are beginning to see customers execute on their infrastructure plans, which is a positive sign for Active Power. In fact, we recorded more than $15 million in bookings since July 2009 including additional orders for PowerHouse. Efforts to broaden our sales channels and propagate messaging around our key product differentiators – energy efficiency, reliability and green – position Active Power as an attractive and compelling alternative to conventional technologies.” 

Highlights for Third Quarter 2009

• Increased total revenues by 29% over second quarter of 2009 while maintaining gross margins at 22%
  
• Revenue from direct channels increased 87% compared to the second quarter of 2009, primarily driven by growth in Europe
  
• Announced multiple orders in excess of $5 million for PowerHouse product sales
  
• PowerHouse revenues represented approximately 22% of revenue for the third quarter
  
• Increased service revenue by 12% compared to the second quarter of 2009, providing both increasing margin contribution and valuable annuity revenue, a benefit of direct sales initiatives
  
• Received and shipped orders for 56 flywheels to 21 countries, resulting in domestic revenues of 40% versus 60% international
  
• Reduced quarterly net loss by 28% to $3.0 million from $4.1 million loss in third quarter of 2008 and by 15% from $3.5 million loss in second quarter of 2009
  
• Secured product listing on The Carbon Trust Energy Technology List which is managed by UK government, providing 100% first year capital allowance on customer’s UPS (uninterruptible power supply) investment against taxable profits – only UPS product currently listed
  
• Published whitepaper comparing energy efficiency differences among the most common UPS topologies in both the lab setting and actual field tests. Analysis concludes flywheel based UPS technology achieves higher efficiencies as compared to conventional systems across all load factors.
  
• Secured repeat order from Data Cave, Inc., a U.S. collocation datacenter facility for additional flywheel modules, with a total deployment of 2.4 megawatts of CleanSource UPS systems
  

Outlook

Active Power expects fourth quarter 2009 revenues to range between $12 million and $15 million and fiscal 2009 revenues to be between $38 million and $41 million. 

Conference Call Details

Active Power will host a conference call today, Friday, Oct. 23, 2009, at 11:00 a.m. (ET), to further review third quarter 2009 results. Interested parties can listen via Web cast by clicking here. A replay of the Web cast will be available until Nov. 6, 2009. Investors may access the live broadcast and replay via Active Power’s Web site at www.activepower.com.

About Active Power

Active Power (NASDAQ: ACPW) provides efficient, reliable and green critical power solutions and uninterruptible power supply (UPS) systems to enable business continuity in the event of power disturbances. Founded in 1992, Active Power’s flywheel-based UPS systems protect critical operations in data centers, healthcare facilities, manufacturing plants, broadcast stations and governmental agencies in more than 40 countries. With expert power system engineers and worldwide services and support, Active Power ensures organizations have the power to perform. For more information, please visit www.activepower.com.