NEWARK, NJ -October 23, 2001 - Net2Phone Inc. (Nasdaq: NTOP), the leading provider of voice and enhanced services over IP networks, today announced record results for the fourth quarter and fiscal year ended July 31, 2001.

FOURTH QUARTER FISCAL 2001
Revenues from continuing operations for the fourth quarter totaled $44.1 million, a 77.0% increase year-over-year and 8.6% increase from last quarter. Net loss from continuing operations (excluding restructuring, non-recurring and non-cash compensation charges) for the fourth quarter totaled ($18.3) million or ($0.32) per share, ahead of the consensus net loss estimate of ($23.8) million or ($0.41) per share.

As we guided last quarter, gross margins for the fourth quarter rebounded strongly to 40.3%, a marked improvement over gross margins of 25.4% and 7.6% (excluding nonrecurring charges) in the second and third quarters of fiscal 2001, respectively. Gross margin expansion was driven by a fully implemented least cost routing table, curtailment of free PC2Phone minutes from Microsoft Corporation (Nasdaq: MSFT) and Yahoo! Inc. (Nasdaq: YHOO), and an aggressive focus on maximizing return from the company's most profitable routes and businesses.

EBITDA (earnings before interest, taxes, depreciation & amortization) loss from continuing operations for the quarter stood at ($17.0) million, a 37.0% improvement over EBITDA losses of ($27.1) million in the third quarter and roughly flat to EBITDA losses of ($16.8) million a year ago. EBITDA losses for the current quarter were also 21.8% ahead of the consensus estimate of ($21.8) million.

FULL YEAR FISCAL 2001
Net2Phone's fiscal year 2001 highlights include the following year-over-year growth:

• 107% increase in total revenues to $150.2 million from $72.4 million
• Over 180% increase in paid minutes of use to 1.34 billion from 476 million
• Over 90% increase in billable users to 2.3 million from 1.2 million

CASH AND CAPITAL EXPENDITURES
Cash, cash equivalents, marketable securities and related investments as of July 31, 2001 were approximately $254.0 million versus $268.0 million in the prior quarter. Excluding the impact of $25.0 million raised by Adir Technologies in its second round of financing, Net2Phone's cash position of $229.0 million is in-line with guidance given the previous quarter.

Capital expenditures for the fourth quarter were $10.7 million as compared to $25.3 million in the third quarter; ahead of the sequential 40-50% reduction in capital expenditures we outlined in the previous quarter.

ADIR TECHNOLOGIES
On June 11, 2001, Adir raised $25 million in a Series B round of financing, at a valuation higher than Net2Phone's current market capitalization. On August 14, 2001, Adir closed the acquisition of NetSpeak Corporation, triggering an additional $14 million investment from third parties.

On October 17, 2001, Adir announced the official production launch of its Voxis VoIP Management Suite of products, the first VoIP performance and fault-management software solution that offers service providers the highest degree of visibility and control at the call level, in real-time.

The Voxis Suite is compatible with Cisco 2600, 3600, 5300 and 5400 voice-enabled hardware platforms, opening the door for Adir to extend the Net2Phone standard worldwide to countless Cisco-powered networks.

ABOUT NET2PHONE
Founded in 1995, Net2Phone is a leading provider of voice and enhanced services over IP networks to consumers, businesses and carriers worldwide. With millions of users around the world, Net2Phone enables toll-quality calls between computers, telephones, and broadband devices utilizing IP networks. Recognized as the first company to bridge the Internet with the public switched telephone network, Net2Phone has routed more than 1.5 billion minutes of traffic over its award-winning network. Traded on the NASDAQ under the symbol NTOP, Net2Phone's strategic partners and investors include AT&T, America Online, and Yahoo!. Net2Phone also offers enhanced hosted service solutions, including voice recognition, for businesses around the world. For more information about Net2Phone's products and services, please visit www.net2phone.com.

ABOUT ADIR TECHNOLOGIES
ADIR Technologies, Inc. offers proven, carrier-scale VoIP management software and complete VoIP solutions for telecommunications, Internet, wireless, broadband and next generation service providers and enterprises worldwide. Adir is a majority-owned subsidiary of Net2Phone, the leading provider of Internet telephony services, with minority investments from Cisco Systems Inc., the world's leading maker of networking equipment, and additional strategic and financial partners. Adir's technology is based on the proven, industry-leading VoIP network that Net2Phone has been operating since 1995, a network that currently handles millions of VoIP calls per day. In August of 2001, Adir expanded its set of exceptional VoIP offerings when it acquired NetSpeak Corporation of Boca Raton, Florida. Today, Adir prides itself on creating a company that offers one-stop shopping to services providers seeking the building blocks to build reliable, scalable, manageable, and always-available VoIP networks. More information about Adir can be found at www.adirtech.com.