CUPERTINO, CA–(Marketwire - March 13, 2008) –ArcSight, Inc. (NASDAQ: ARST), a leading global provider of compliance and security management solutions that protect enterprises and government agencies, today announced financial results for the third quarter and nine months ended January 31, 2008.

For the third quarter of fiscal 2008, ArcSight reported total revenues of $27.7 million compared to total revenues of $16.7 million reported in the third quarter of fiscal 2007. Net income on a GAAP basis for the third quarter of fiscal 2008 was $2.4 million, or $0.09 per diluted share, including $143,000 in amortization of intangible assets and $1.3 million in stock-based compensation expense. This compares to a GAAP net loss of $542,000, or $0.05 per share, reported in the third quarter of fiscal 2007, including $130,000 in amortization of intangible assets and $347,000 in stock-based compensation expense.

Non-GAAP net income for the third quarter of fiscal 2008 was $3.8 million, or $0.14 per diluted share, excluding the above-mentioned charges. This compares to a non-GAAP net loss of $65,000, or $0.01 per share, reported in the third quarter of fiscal 2007, excluding the above-mentioned charges.

During the third quarter of 2008, the company generated $7.7 million in cash from operations and closed the third quarter with cash and cash equivalents of $21.2 million. Since the close of the third quarter, ArcSight completed its initial public offering of common stock and raised net proceeds of $46.3 million, after deducting the underwriting discounts and estimated offering expenses.

"We are pleased with our financial results for the third quarter, having executed well across the business," commented Robert W. Shaw, chairman and CEO of ArcSight. "We continued to win important new customer opportunities as well as follow on sales to existing customers, drove higher levels of partner productivity and showed good traction from sales of our Logger appliance products.

"Our business activity continues to be driven by the increasing demand for enterprise risk compliance management solutions. We believe that we are a market leader and we believe that we are uniquely positioned to help customers of all sizes and across all industries handle security threats and compliance violations and protect their business from major risk," concluded Shaw.

For the nine-month period ended January 31, 2008, ArcSight reported total revenues of $72.2 million compared to $44.5 million reported for the same period of fiscal 2007. Net loss for the nine-month period of fiscal 2008 was $0.9 million, or $0.09 per share, including $430,000 in amortization of intangible assets and $3.4 million in stock-based compensation expense. This compares to a net loss of $3.7 million, or $0.38 per share, reported in the same period in 2007, including $346,000 in amortization of intangible assets and $842,000 in stock-based compensation expenses.

Non-GAAP net income for the nine-month period of fiscal 2008 was $2.9 million, or $0.11 per diluted share, excluding the above-mentioned charges. This compares to a non-GAAP net loss of $2.5 million, or $0.26 per share, reported in the same period of fiscal 2007, excluding the above-mentioned charges.

Use of Non-GAAP Financial Measures
ArcSight reports all financial information required in accordance with generally accepted accounting principles (GAAP). To supplement the ArcSight unaudited condensed consolidated financial statements presented in accordance with GAAP, ArcSight uses certain non-GAAP measures of financial performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the results of ArcSight operations as determined in accordance with GAAP. The non-GAAP financial measures used by ArcSight include historical non-GAAP net income (loss) and non-GAAP basic and diluted earnings (loss) per share. These non-GAAP financial measures exclude amortization of intangible assets and stock-based compensation from the ArcSight statement of operations.

For a description of these items, including the reasons why management adjusts for them, and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled "Use of Non-GAAP Financial Information" as well as the related tables that precede it. ArcSight may consider whether other significant non-recurring items that arise in the future should also be excluded in calculating the non-GAAP financial measures it uses.

ArcSight believes that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding the performance of ArcSight by excluding certain items that may not be indicative of the company`s core business, operating results or future outlook. ArcSight management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing operating results of ArcSight, as well as when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate comparisons of the performance of ArcSight to prior periods.

Conference Call Information
ArcSight will host a conference call and live webcast at 2:00 p.m. Pacific Daylight Time today, Thursday, March 13, 2008. To access the conference call, callers from the U.S. and Canada may dial 800-218-4007 and international callers may dial 303-262-2139. The webcast will be available live on the Investor Relations section of the company`s website at www.arcsight.com. An audio replay of the call will also be available to investors by phone beginning at approximately 4:00 p.m. Pacific Daylight Time on March 13, 2008, until 11:59 p.m. Pacific Daylight Time on March 20, 2008, by dialing 800-405-2236 from the U.S. or Canada or 303-590-3000 from all other countries, and entering passcode 11109896#. In addition, an archived webcast will be available on the Investor Relations section of the company`s website at www.arcsight.com.

Cautionary Statement Regarding Forward-Looking Statements
This news release contains forward-looking statements, including without limitation the belief of ArcSight that business activity will be driven by the increasing demand for enterprise risk compliance management solutions, and the company`s belief that it is uniquely positioned to help customers of all sizes and across all industries handle security threats and compliance violations and protect their businesses from major risk. These forward-looking statements are subject to material risks and uncertainties that may cause actual results to differ substantially from expectations. Investors should consider important risk factors, which include: the risk that demand for enterprise risk compliance management solutions may not increase and may decrease; the risk that competitors may be perceived by customers to be better positioned to help handle security threats and compliance violations and protect their businesses from major risk; the risk that the growth of ArcSight may be lower than anticipated; and other risks detailed under the caption "Risk Factors" in the final prospectus for the ArcSight initial public offering filed with the Securities and Exchange Commission under Rule 424(b)(4) (Registration File No. 333-145974) You can obtain copies of the final prospectus for the ArcSight initial public offering on the SEC`s website at www.sec.gov.

The foregoing information represents the company`s outlook only as of the date of this press release, and ArcSight undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, new developments or otherwise.

About ArcSight
ArcSight (NASDAQ: ARST) is a leading global provider of compliance and security management solutions that protect enterprises and government agencies. ArcSight helps customers comply with corporate and regulatory policy, safeguard their assets and processes, and control risk. The ArcSight platform collects and correlates user activity and event data across the enterprise so that businesses can rapidly identify, prioritize, and respond to compliance violations, policy breaches, cybersecurity attacks, and insider threats. For more information, visit www.arcsight.com.