iBasis Posts Record Traffic Volume and Revenue For Fourth Quarter and Full Year 2001

Company Reports 50% Sequential Growth in Gross Margins; 30% Sequential Improvement in EBITDA

Annual Run Rate of International Voice Traffic Exceeds 2 Billion Minutes

BURLINGTON, MA - February 14, 2002 - iBasis, Inc., (Nasdaq: IBAS), today announced results for the fourth quarter and the full year ended December 31, 2001. Fourth quarter revenue was $39.1 million, an increase of 89% over fourth quarter 2000 revenue of $20.7 million. For the full year 2001, revenue totaled $133.8 million, more than double the company's full year 2000 revenue of $61.2 million.

For the fourth quarter 2001, net loss before acquisition, non-cash compensation, restructuring-related charges and an extraordinary gain on the early retirement of debt, was $26.2 million, or a net loss of $0.59 per share, based on 44.5 million weighted average shares outstanding (ahead of the First Call expected loss of $0.60 per share). This net loss compares to a fourth quarter 2000 net loss before non-cash compensation expense of $20.3 million, or a net loss of $0.59 per share, based on 34.2 million weighted average shares outstanding.

For the fourth quarter 2001, net loss was $33.6 million, or a net loss of $0.76 per share, based on 44.5 million weighted average shares outstanding. This net loss compares to a fourth quarter 2000 net loss of $20.8 million, or a net loss of $0.61 per share, based on 34.2 million weighted average shares outstanding.

"I am extremely pleased with our thirty percent improvement in EBITDA and fifty percent growth in gross margin from the third to the fourth quarter of 2001. We ended the year with excellent momentum in our core Internet telephony business, driven by continuing demand from Tier 1 carriers, greater utilization of our existing infrastructure and enhanced operational efficiencies across the company," said Ofer Gneezy, president and CEO of iBasis."

For 2001, net loss before acquisition, non-cash compensation, restructuring-related charges and an extraordinary gain on the early retirement of certain debt, was $103.7 million, or a net loss of $2.43 per share, based on 42.6 million weighted average shares outstanding (ahead of the First Call expected loss of $2.45 per share). This net loss compares to a full year 2000 net loss before non-cash compensation expense of $61.2 million, or a net loss of $1.82 per share, based upon 33.6 million weighted average shares outstanding.

Net loss for the full year 2001was $190.7 million, or a net loss of $4.47 per share, based on 42.6 million weighted average shares outstanding. This net loss compares to a full year 2000 net loss of $62.3 million, or a net loss of $1.85 per share, based upon 33.6 million weighted average shares outstanding.

"In 2001, we were able to grow our year-over year Internet telephony revenue by 71%, continuing to scale our core business toward profitability," said Gneezy. "During that same period, we also grew our Speech Solutions revenue by 50%. The technical excellence of our SpeechPort platform was recently recognized as Product of the Year by two leading trade publications.

"In the fourth quarter, we improved EBITDA and lowered our operating costs while growing the business dramatically. This was accomplished through the completion of network automation projects, which enhanced the efficiency of our operations, and by growing overseas-originated traffic, particularly in Europe, which increased network utilization.

"Also during the fourth quarter, we reduced our outstanding indebtedness by purchasing approximately $21 million face amount of our Convertible Notes on the open market. Even with the purchase of our Notes, we were able to reduce our cash burn during the quarter. We believe that we are very well-positioned to meet our crossover targets as we continue to ascend the ranks of the world's largest international carriers."

Highlights of the full year and the fourth quarter include:

· Revenue increased 119% in 2001 compared to 2000;

· Minutes increased 140% in 2001 to 1.4 billion minutes;

· December annualized traffic run rate exceeded 2 billion minutes;

· 30% sequential reduction in EBITDA loss during the fourth quarter 2001;

· 50% increase in gross margin from the third to the fourth quarter of 2001;

· New Internet telephony customers in the fourth quarter of 2001 included Cable & Wireless, Telefonica, Telenor, Telecom Argentina, and COLT.

Key Indicators
Minutes of use on The iBasis NetworkTM in the fourth quarter rose to 448.3 million minutes, a 98% increase over the 226.7 million minutes carried in the fourth quarter 2000, and a 25% sequential increase over the 360 million minutes in the third quarter of 2001. Average revenue per minute was steady at 7.64 cents per minute in the fourth quarter of 2001 compared to 7.69 cents per minute in the third quarter of 2001.

During the year, the company continued to increase network capacity in response to demand by expanding capacity at its existing Internet Central Office facilities and adding Points of Presence (PoPs) to The iBasis Network, ending the year with 30,375 total overseas lines and 620 PoPs. With 68% of iBasis international voice traffic originating in the US, the company believes that overseas lines is a useful measure of its global network's capacity.

Operational Milestones
In 2001, iBasis continued to expand its customer base, with major service providers from every region connecting to The iBasis Network. Customers announced in 2001 included Cable & Wireless (UK), the world's 7^th largest carrier, Telefonica (Latin America), Telenor, Norway's largest carrier, COLT (UK), Telecom Argentina, Versatel (The Benelux countries), Jazztel (Spain & Portugal), Zimbabwe Telecom, Hutchison Corporate Access (Hong Kong), Mimos (Singapore), and Baltic Communications (Russia). iBasis finished the quarter with more than 150 customers.

In September 2001, iBasis was honored for the second consecutive year by Deloitte & Touche as the fastest-growing technology company in New England¹.

During the fourth quarter, iBasis continued to increase the percentage of overseas-originated voice traffic it carries, which improves network utilization and generally produces higher margins than US-originated voice traffic. In the fourth quarter 2001, overseas-originated calls accounted for 42% of wholesale telecommunications revenue and 32% of wholesale traffic, up from 34% of wholesale revenue and 28% of wholesale traffic in the third quarter of 2001.

Financial Milestones
Gross margins increased to 19.1% of revenue, or $7.5 million during the fourth quarter, compared with 14.9% or $5.0 million, in the third quarter 2001.

The company recorded an EBITDA loss of $11.6 million in the fourth quarter compared to a $16.5 million EBITDA loss in the third quarter of 2001, and compared to a $15.7 million EBITDA loss in the fourth quarter of 2000.

Total capital expenditures during the quarter were $16.2 million. Of this amount, $10.9 million was financed through vendor financing while the remaining $5.3 million were cash expenditures.

The company's total cash position decreased by approximately $28.9 million during the quarter, compared with a $36.1 million reduction in cash the previous quarter. The fourth quarter's decrease in cash comprised $4.7 million for the open market purchase of the company's 5.75% Convertible Notes through December 31, 2001, cash capital expenditures of $5.3 million, principal payments on capital leases of $3.5 million, EBITDA loss (not including bad debt expense, a non-cash charge), and changes in working capital. Excluding cash expended for debt repurchase of $4.7 million and restructuring charges of $1.3 million, the decrease in cash during the quarter was $22.9 million.

Restructuring Charge
The company took an aggregate restructuring charge of approximately $14.3 million in the fourth quarter. This charge relates primarily to the impairment and related costs for the write-down of certain fixed assets in a limited number of Points Of Presence (PoPs), excess ICO equipment, the anticipated costs of termination or negotiated settlement of certain related contractual obligations and certain severance expenses directly associated with the fourth quarter reduction in force. The charge also includes estimated costs associated with excess office space.

Debt Repurchase
Through December 31, 2001, the company repurchased approximately $21 million Face Amount of its 5.75% Convertible Notes on the open market for aggregate transaction costs of approximately $6.5 million, including a write-down of related deferred financing costs, resulting in an extraordinary gain on the early retirement of debt of approximately $14.5 million during the quarter. In addition, subsequent to year end and through February 11, 2002, the company repurchased approximately $11.5 million Face Amount of its Notes on the open market for aggregate transaction costs of approximately $4.3 million, including a write-down of related deferred financing costs, resulting in an extraordinary gain on the early retirement of debt of approximately $7.2 million. Together, the repurchases have resulted in the reduction of $32.5 million Face Amount of the 5.75% Convertible Notes outstanding and an approximately $1.9 million annualized reduction in interest payments.

Guidance
The following statements are forward-looking and actual results may differ materially due to factors noted below, among others. The information provided in this financial outlook is as of February 14, 2002.

iBasis, Inc. reaffirms its previous guidance. Specifically, iBasis believes that it will achieve positive EBITDA in the second half of 2002. With more than $118 million in cash, cash equivalents and marketable securities as of December 31, 2001, iBasis believes that it continues to be fully funded for growth through to profitability. The company's overall steady-state gross margin target is 25%-35%. In addition, iBasis expects sequential revenue growth in the range of 10-15% per quarter through 2002.

About iBasis
Founded in 1996, iBasis (Nasdaq: IBAS) is the leader in Internet-based voice communications. iBasis delivers toll quality international voice services and provides the infrastructure for hosted communications solutions, including speech-enabled content, e-commerce and customer service applications. The company's customers include many of the largest carriers and enterprises in the world, including AT&T, Cable & Wireless, China Mobile, China Unicom, Concert, ExxonMobil, Gannett, H&R Block, Home Shopping Network, Morgan Stanley, NTT, Telefonica, Telenor, Telstra, Sprint, Western Union, and WorldCom. iBasis' hosted, enhanced service solutions include SpeechPortTM, a scalable, customizable ASP environment for speech-enabled business solutions. The iBasis Network^TM is the world's largest international Cisco Powered Network for Internet Telephony. iBasis is listed in both the Russell 2000® and Russell 3000® Indexes. The company can be reached at its worldwide headquarters in Burlington, Mass., USA at 781-505-7500 or on the Internet at www.ibasis.com .

Assured Quality Routing and iBasis are registered marks, The iBasis Network, Internet Central Office, Internet Branch Office, SpeechPort, IPort and AQR are trademarks of iBasis, Inc. or its subsidiaries. Cisco and Cisco Powered Network are registered trademarks of Cisco Systems, Inc. All other trademarks are the property of their respective owners.

Except for historical information, all of the expectations, projections and assumptions contained in the foregoing press release, including those relating to the company's current expectations regarding revenue growth, sources of revenue, margin improvement and future capital expenditures constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995 and involve risks and uncertainties. Important factors that could cause actual results to differ materially from such forward-looking statements include, but are not limited to, (i) the extent of adoption of the company's voice-based Internet services and messaging services and the timing and amount of revenue generated by these services; (ii) fluctuations in the market for and pricing of Internet Telephony services; and (iii) the other considerations described as "Risk Factors" in iBasis' Annual Report on Form 10-K for its fiscal year ended December 31, 2000, and the company's other SEC filings. We have no current intention to update any forward-looking statements.

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- Tables to Follow -

iBasis, Inc.
Consolidated Statements of Operations
(Unaudited)
		Three Months Ended December 31,
		2001		2000
Net revenue:
Data communications and telecommunications		$ 36,161,050		$ 20,671,641
Professional services		2,962,485		--
Total net revenue		39,123,535		20,671,641
Operating expenses:
Data communications and telecommunications		30,309,290		19,677,640
Professional services		1,334,997		--
Research and development		7,933,603		4,730,297
Selling and marketing		4,953,146		6,073,752
General and administrative		6,227,815		5,840,865
Depreciation and amortization		10,490,292		5,706,635
Total operating expenses		61,249,143		42,029,189
Loss from operations		(22,125,608)		(21,357,548)
Interest income		1,434,808		5,397,202
Interest expense		(5,354,617)		(4,352,496)
Other expenses, net		(108,219)		(16,500)
Net loss before acquisition, non-cash compensation, restructuring-related charges and extraordinary gain		(26,153,636)		(20,329,342)
Amortization of goodwill and other acquired intangible assets		(7,390,521)		--
Non-cash compensation		(334,266)		(501,340)
Restructuring and other costs		(14,314,318)		--
Net loss before extraordinary gain		(48,192,741)		(20,830,682)
Extraordinary gain on early retirement of debt		14,548,973		--
Net loss		$ (33,643,768)		$ (20,830,682)
Net loss per share before acquisition, non-cash compensation, restructuring-related charges and extraordinary gain:
Net loss per share		$ (0.59)		$ (0.59)
Weighted average common shares outstanding		44,463,299		34,171,079
Net loss before extraordinary gain:
Net loss per share		$ (1.08)		$ (0.61)
Weighted average common shares outstanding		44,463,299		34,171,079
Net loss per share:
Net loss per share		$ (0.76)		$ (0.61)
Weighted average common shares outstanding		44,463,299		34,171,079

iBasis, Inc.
Consolidated Statements of Operations
(Unaudited)
		Year Ended December 31,
		2001		2000
Net revenue:
Data communications and telecommunications		$124,577,766		$ 61,217,737
Professional services		9,191,919		--
Total net revenue		133,769,685		61,217,737
Operating expenses:
Data communications and telecommunications		108,716,131		60,594,423
Professional services		4,251,862		--
Research and development		28,522,536		15,167,902
Selling and marketing		23,791,617		19,351,822
General and administrative		27,801,153		18,458,079
Depreciation and amortization		35,924,730		15,717,929
Total operating expenses		229,008,029		129,290,155
Loss from operations		(95,238,344)		(68,072,418)
Interest income		9,413,013		19,824,259
Interest expense		(17,269,909)		(12,844,162)
Other expenses, net		(587,319)		(138,125)
Net loss before acquisition, non-cash compensation, restructuring-related charges and extraordinary gain		(103,682,559)		(61,230,446)
Write-off of in-process research and development costs		(24,431,466)		--
Amortization of goodwill and other acquired intangible assets		(23,908,202)		--
Non-cash compensation		(1,381,800)		(1,061,142)
Restructuring and other costs		(51,834,318)		--
Net loss before extraordinary gain		(205,238,345)		(62,291,588)
Extraordinary gain on early retirement of debt		14,548,973		--
Net loss		$ (190,689,372)		$ (62,291,588)
Net loss per share before acquisition, non-cash compensation, restructuring related charges and extraordinary gain:
Net loss per share		$ (2.43)		$ (1.82)
Weighted average common shares outstanding		42,644,700		33,611,538
Net loss before extraordinary gain:
Net loss per share		$ (4.81)		$ (1.85)
Weighted average common shares outstanding		42,644,700		33,611,538
Net loss per share:
Net loss per share		$ (4.47)		$ (1.85)
Weighted average common shares outstanding		42,644,700		33,611,538

iBasis, Inc.
Consolidated Balance Sheets
(Unaudited)
		December 31,
		2001		2000
Assets
Cash, cash equivalents and marketable securities, $9.0 million restricted as of 2001		$118,690,494		$300,327,398
Accounts receivable, net		31,348,307		17,343,294
Prepaid expenses and other current assets		8,111,208		5,883,560
Property and equipment, net		97,696,715		99,870,110
Due from PriceInteractive Incorporated		--		10,000,000
Goodwill and other intangible assets, net		63,093,785		--
Long term investment in non-marketable security		5,000,000		5,000,000
Deferred debt financing costs, net		2,859,814		4,356,708
Other assets		2,024,757		5,036,649
Total Assets		$ 328,825,080		$447,817,719
Liabilities and stockholders' equity
Accounts payable		$12,708,773		$ 9,080,407
Accrued expenses		30,129,795		14,855,026
Deferred revenue		801,471		--
Current portion of long term debt		26,498,285		26,105,842
Long term debt, net of current portion		171,970,134		190,880,257
Total liabilities		242,108,458		240,921,532
Stockholders' equity:
Common stock		45,271		34,203
Additional paid-in capital		369,692,193		298,572,842
Deferred stock-based compensation		(2,225,074)		(1,604,462)
Accumulated deficit		(280,795,768)		(90,106,396)
Total stockholders' equity		86,716,622		206,896,187
		$ 328,825,080		$447,817,719

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