Saba Software 8-K Saba Announces Fourth Quarter and Fiscal 2003 Year End

EXHIBIT 99.1

FOR IMMEDIATE RELEASE

CONTACT:

Saba Software, Inc.

Ronald Kisling

Chief Financial Officer

+1.650.581.2635

rkisling@saba.com

SABA ANNOUNCES FOURTH QUARTER AND FISCAL 2003 YEAR END

FINANCIAL RESULTS

Redwood Shores, CA, June 19, 2003—Saba Software, Inc. (NASDAQ: SABA), the leading provider of human capital development and management (HCDM) solutions, today reported financial results for its fourth quarter and year ended May 31, 2003.

Fourth quarter revenue increased sequentially by 10% to $10.6 million from $9.6 million in the prior quarter, in line with prior guidance. Saba’s pro-forma net loss of $2.4 million or $0.18 per share in the fourth quarter of fiscal 2003 declined from a pro forma net loss of $3.3 million or $0.25 per share in the prior quarter. Pro-forma net loss excludes non-cash stock compensation costs, amortization of purchased intangible assets and, in the prior quarter, restructuring charges. During the quarter, deferred revenue increased to $9.5 million. Net loss in the quarter was $2.6 million or $0.20 per share compared to $4.7 million or $0.36 per share in the prior quarter. All loss per share amounts reflect Saba’s one-for-four reverse stock split, which was effective on May 12, 2003. Saba ended its fiscal year with $21.2 million in cash and investments.

In the fourth quarter of fiscal 2003, Saba completed 22 new deals demonstrating momentum in key vertical industries around the world, including financial services, life sciences, manufacturing and government. The average enterprise deal size remained essentially flat with the prior quarter at $300,000.

For the year ended May 31, 2003, Saba posted $44.4 million in total revenue compared to $55.6 million for the year ended May 31, 2002. New software sales for the year ended May 31, 2003 were $15.0 million compared to $14.9 for the year ended May 31, 2002. Net loss for the year was $17.2 million or $1.35 per share compared to $25.5 million or $2.19 per share in the prior year.

Many leading companies are deploying Saba solutions to address mission critical programs to increase productivity and speed of new product introductions.

• Microsoft is using Saba’s Peak Performance solution to help drive individual, team and organizational readiness performance through performance improvement programs that increase the predictability of peak sales results.

• BMW is deploying Saba to train its dealers on all new models for both its BMW and Mini lines.

• In addition, during the quarter, Saba entered into an alliance agreement with Accenture. Saba considers Accenture an important global partner and is working with them on a number of joint opportunities.

“During the year, we grew our worldwide client base of industry-leading organizations and expanded our presence in our existing customers, despite the economic downturn in IT spending. I feel that our financial performance, along with our customer and product successes, and the basic business fundamentals of the Company are building increased momentum as we enter FY 2004,” stated Geno Tolari, Saba Chairman and CEO.

Additional news regarding Saba’s fiscal year 2003 achievements is reported in our companion press release “Saba Announces Year in Review” released today.

Business Outlook:

The following statements are based on current expectations as of the date of this release. These statements are forward-looking, and actual results may differ materially. Saba does not undertake to update these targets in any way or for any reason.

• Saba anticipates revenue for fiscal 2004 to be in the range of $50-$55 million and anticipates being profitable on a GAAP basis for fiscal 2004 as a whole.

• Saba anticipates revenue for its first quarter of fiscal 2004 (August 31, 2003) to be in the range of $10.0 to $11.0 million.

• Saba anticipates GAAP net loss per share for its first quarter of fiscal 2004 (August 31, 2003) to be in the range of $0.14 to $0.22.

About Saba

Saba (NASDAQ: SABA) is the leading provider of human capital development and management (HCDM) solutions, which increase organizational performance through the implementation of a management system for aligning, developing, and managing people. Among the Global 2000, Saba customers include Alcatel, Anheuser-Busch, Cisco Systems, DaimlerChrysler, EMC Corp., Kaiser Permanente, Medtronic, Procter & Gamble, and VERITAS Software. Saba has received industry recognition for its solutions, and recently achieved the leader quadrant position in the Gartner 2003 e-Learning Suite “Magic Quadrant.”

Founded in 1997, Saba is headquartered in Redwood Shores, California, with offices worldwide. For more information, please visit www.saba.com or call (877) SABA-101 or (650) 779-2791.

Saba, the Saba logo, and the marks relating to other Saba products and services referenced herein are either trademarks or registered trademarks of Saba Software, Inc. All other trademarks are the property of their respective owners.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements such as Saba’s guidance for fiscal year 2004, including the first quarter of fiscal year 2004, and Saba’s ability to achieve or sustain profitability, increase revenue, build increased momentum or execute growth opportunities. Saba’s actual results could differ materially from those expressed in any forward-looking statements. Risks and uncertainties Saba faces that could cause results to differ materially include risks associated with: Saba’s limited operating history and history of losses, dependence on growth of the markets for Saba’s products, dependence on acceptance of Saba’s products by customers and channel partners, dependence on success of Saba’s channel partners, market acceptance of Saba’s products, fluctuation in customer spending, length of Saba’s sales cycle, competition, dependence on hiring key personnel, rapid technological change, dependence on new product introductions and enhancements, and potential software defects. . Readers should also refer to the section entitled “Factors That May Affect Future Operating Results” on pages 21 through 29 of Saba’s Annual Report on Form 10-K dated August 29, 2002 and similar disclosures in subsequent Saba periodic SEC reports. The forward-looking statements and risks stated in this press release are based on information available to Saba today. Saba assumes no obligation to update them.

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Saba Software, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

(share amounts adjusted for 1-for-4 reverse split)

	Three months ended May 31,						Year ended May 31,
	2003			2002			2003			2002
Revenues:
License	$	3,401		$	7,292		$	16,440		$	27,277
Services		7,224			6,631			27,976			28,371
Total revenues		10,625			13,923			44,416			55,648
Cost of revenues:
Cost of license		56			59			156			186
Cost of services		3,471			3,177			13,258			14,456
Amortization of acquired developed technology		194			388			1,358			1,536
Total cost of revenues		3,721			3,624			14,772			16,178
Gross profit		6,904			10,299			29,644			39,470
Operating expenses:
Research and development		2,790			3,289			11,817			14,628
Sales and marketing		5,325			6,922			26,047			30,360
General and administrative		1,669			1,758			6,514			6,855
(Reversal) amortization of deferred stock compensation and other stock charges		(40	)		1,265			1,850			7,113
Amortization of goodwill and purchased intangible assets		104			904			855			3,657
Acquired in-process research and development		—			—			—			2,199
Total operating expenses		9,848			14,138			47,083			64,812
Loss from operations		(2,944	)		(3,839	)		(17,439	)		(25,342	)
Interest income and other, net		240			102			407			39
Loss before provision for income taxes		(2,704	)		(3,737	)		(17,032	)		(25,303	)
Provision for income taxes		68			(51	)		(175	)		(164	)
Net loss	$	(2,636	)	$	(3,788	)	$	(17,207	)	$	(25,467	)
Basic and diluted net loss per share	$	(0.20	)	$	(0.32	)	$	(1.35	)	$	(2.19	)
Shares used in computing basic and diluted net loss per share		13,259			11,811			12,775			11,623

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Saba Software, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

	May 31, 2003		May 31, 2002
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	21,197	$	22,141
Accounts receivable, net		9,315		12,182
Prepaid expenses and other current assets		1,218		901
Total current assets		31,730		35,224
Property and equipment, net		2,385		4,575
Other assets		6,721		8,889
Total assets	$	40,836	$	48,688
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,713	$	1,547
Accrued expenses		6,527		7,844
Deferred revenue		9,497		10,127
Short-term debt and current portion of capital lease obligations		675		1,381
Total current liabilities		18,412		20,899
Deferred revenue		31		52
Long-term debt and other long-term liabilities		3,889		3,019
Capital lease obligations, less current portion		44		372
Total liabilities		22,376		24,342
Stockholders’ equity:
Total stockholders’ equity		18,460		24,346
Total liabilities and stockholders’ equity	$	40,836	$	48,688

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Saba Software, Inc.

Pro forma Condensed Consolidated Statements of Operations

Excluding Amortization of Goodwill, Intangibles and Deferred Stock Compensation,

Write-off of Acquired In-Process Research and Development and Cost of Restructuring

(in thousands, except per share data)

(unaudited)

(share amounts adjusted for 1-for-4 reverse split)

	Three months ended May 31,							Year ended May 31,
	2003			2002			2003			2002
Revenues	$	10,625		$	13,923		$	44,416		$	55,648
Cost of revenues		3,527			2,894			13,272			14,008
Gross profit		7,098			11,029			31,144			41,640
Operating expenses:
Research and development		2,790			3,183			11,259			13,893
Sales and marketing		5,325			6,267			25,156			28,922
General and administrative		1,669			1,575			6,294			6,468
Total operating expenses		9,784			11,025			42,709			49,283
Income (loss) from operations		(2,686	)		4			(11,565	)		(7,643	)
Interest income and other, net		240			102			407			39
Pro forma net income (loss) before provision for income taxes		(2,446	)		106			(11,158	)		(7,604	)
Provision for income taxes		68			(51	)		(175	)		(164	)
Pro forma net income (loss)	$	(2,378	)	$	55		$	(11,333	)	$	(7,768	)
Pro forma basic net income (loss) per share	$	(0.18	)	$	0.00		$	(0.89	)	$	(0.67	)
Shares used in computing basic net income (loss) per share		13,259			11,811			12,775			11,623
Pro forma diluted net income (loss) per share	$	(0.18	)	$	0.00		$	(0.89	)	$	(0.67	)
Shares used in computing diluted net income (loss) per share		13,259			12,348			12,775			11,623
The above pro forma amounts have been adjusted to exclude the following items:
Amortization of acquired developed technology	$	194		$	388		$	1,358		$	1,536
(Reversal) amortization of deferred stock compensation and other stock charges		(40	)		1,265			1,850			7,113
Amortization of goodwill and purchased intangible assets		104			904			855			3,657
Acquired in-process research and development		—			—			—			2,199
Cost of restructuring		—			1,286			1,811			3,194
Net effect of pro forma adjustments	$	258		$	3,843		$	5,874		$	17,699

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