EXHIBIT 99.01
KANA REPORTS RESULTS FOR THE THIRD QUARTER
ENDED SEPTEMBER 30, 2004
MENLO PARK, Calif. — November 9, 2004 — KANA® (NASDAQ: KANA), the leading provider of Service Resolution Management (SRM) solutions, today announced its results for the quarter ended September 30, 2004.
Revenues in the third quarter of 2004 were $12.4 million, including $3.8 million of license revenue. Revenues in the second quarter of 2004 were $9.6 million and revenues in the third quarter of 2003 were $13.8 million. Net loss on a GAAP basis was $3.4 million or $0.12 per share for the third quarter of 2004, compared to a net loss of $6.5 million or $0.22 per share for the second quarter of 2004, and a net loss of $4.1 million or $0.17 per share in the third quarter of 2003. The Company’s cash and short-term investments totaled $24.2 million at September 30, 2004.
“Global 2000 organizations are realizing that KANA’s Service Resolution Management solutions are critical for decreasing service costs, improving customer satisfaction, and increasing revenue,” said Chuck Bay CEO of KANA. “We are confident that our continued momentum with our integrator partners, absolute commitment to customer satisfaction and industry-leading customer service solutions will position KANA for long-term success and leadership within the industry.”
Corporate Recognition
In addition to securing a number of new customers in the third quarter of 2004, KANA was recognized with several industry accolades.
— Software Magazine named KANA to its annual Software 500, for the fifth consecutive year. The Software 500 is based on total worldwide software and service revenues.
— Leading independent research firm, Forrester Research, recognized two of KANA’s Service Resolution Management solutions, KANA Response and KANA IQ, with top scores in the Agent Collaboration Tools, e-Mail Response Management, Interaction Tracking and Customer History, and Technology/Architecture categories.
“Our solutions enable our customers to reduce costs associated with the inquiry resolution process in the call center, the most cost-intensive aspect of customer service,” said Tim Angst, executive vice president of worldwide operations at KANA. “Organizations today are realizing the value in KANA’s Service Resolution Management solutions.”
Quarterly Conference Call
KANA Software, Inc. will hold its third quarter 2004 earnings conference call on Tuesday, November 9, 2004 at 1:45 p.m. (PST) / 4:45 p.m. (EST). Investors are invited to listen to KANA’s quarterly conference call on the investor relations section of the Web siteat www.kana.com. A replay of the Web cast will also be available atwww.kana.com for a week following the completion of the call.
About KANA
KANA is the leading provider of Service Resolution Management (SRM) solutions that improve customer satisfaction, reduce service costs, and increase revenues. KANA’s award-winning suite of customer service solutions for assisted, self, and proactive service enables companies to
resolve customer requests quickly and accurately across multiple channels. Built on the industry’s most advanced web architecture, KANA’s solutions are in use at more than half of the world’s largest 100 companies. For more information visitwww.kana.com
Cautionary Note Regarding Forward-looking Statements Under the Private Securities
Litigation Reform Act of 1995:
Information in this release regarding KANA’s forecasts, projections, expectations, beliefs, and intentions are forward-looking statements that involve risks and uncertainties. These statements include statements about KANA’s expected revenue, operating results, cash flows, long-term success, new business and market position. All forward-looking statements included in this release are based upon information available to KANA as of the date of this release, which may likely change, and we assume no obligation to update any such forward-looking statement. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include, but are not limited to: competition in our marketplace, including introductions of new products or services, or reductions in prices, by competitors; risks associated with lack of market acceptance of KANA’s products or services; inability to enhance and develop our products and services within budget and on schedule; inability to attract and retain qualified employees, to manage cash and expenditures or to expand sales; inability to manage our business in light of recent personnel reductions; KANA’s history of losses; the effect of potential military action and terrorist activities; and slow economic conditions, particularly as they affect spending by our prospective customers on eCRM and similar enterprise software products. These and other factors are risks associated with our business that may affect our operating results and are discussed in KANA’s filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q.
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NOTE: KANA and KANA iCARE are registered trademarks of KANA Software, Inc. All other company and product names may be trademarks of their respective owners.
Contacts:
Jessica Hohn
KANA
508/598-3356
jhohn@kana.com
Carolyn Bass
Market Street Partners
415/445-3232
carolyn@marketstreetpartners.com
Stephanie Beagan
PAN Communications
978/474-1900
kana@pancomm.com
KANA SOFTWARE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
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| | | September 30, 2004
| | December 31, 2003
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ASSETS | | | | | | |
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Current assets: | | | | | | |
Cash and short-term investments | | $ | 24,191 | | $ | 32,956 |
Accounts receivable, net | | | 2,528 | | | 7,908 |
Prepaid expenses and other current assets | | | 2,976 | | | 3,527 |
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Total current assets | | | 29,695 | | | 44,391 |
Restricted cash | | | 202 | | | 461 |
Property and equipment, net | | | 12,258 | | | 15,435 |
Intangible assets, principally goodwill | | | 8,938 | | | 7,448 |
Other assets | | | 2,111 | | | 2,143 |
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Total assets | | $ | 53,204 | | $ | 69,878 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
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Current liabilities: | | | | | | |
Notes payable | | $ | 3,427 | | $ | 3,427 |
Accounts payable | | | 2,605 | | | 2,238 |
Accrued liabilities | | | 9,356 | | | 10,678 |
Accrued restructuring costs | | | 2,701 | | | 3,336 |
Deferred revenue | | | 18,252 | | | 20,544 |
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Total current liabilities | | | 36,341 | | | 40,223 |
Deferred revenue, less current portion | | | 1,087 | | | 1,265 |
Accrued restructuring, less current portion | | | 5,207 | | | 6,858 |
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Total liabilities | | | 42,635 | | | 48,346 |
Total stockholders’ equity | | | 10,569 | | | 21,532 |
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Total liabilities and stockholders’ equity | | $ | 53,204 | | $ | 69,878 |
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KANA SOFTWARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended September 30,
| | | Nine Months Ended September 30,
| |
| | | 2004
| | | 2003
| | | 2004
| | | 2003
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Revenues: | | | | | | | | | | | | | | | | |
License | | $ | 3,827 | | | $ | 5,083 | | | $ | 9,459 | | | $ | 17,617 | |
Maintenance | | | 7,644 | | | | 7,573 | | | | 23,175 | | | | 23,300 | |
Professional Services | | | 939 | | | | 1,177 | | | | 2,643 | | | | 3,080 | |
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Total revenues | | | 12,410 | | | | 13,833 | | | | 35,277 | | | | 43,997 | |
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Cost of revenues: | | | | | | | | | | | | | | | | |
License | | | 170 | | | | 578 | | | | 1,175 | | | | 2,003 | |
Maintenance | | | 1,233 | | | | 1,368 | | | | 4,003 | | | | 4,152 | |
Professional Services | | | 1,006 | | | | 1,013 | | | | 3,117 | | | | 3,299 | |
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Total cost of revenues | | | 2,409 | | | | 2,959 | | | | 8,295 | | | | 9,454 | |
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Gross profit | | | 10,001 | | | | 10,874 | | | | 26,982 | | | | 34,543 | |
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Operating expenses: | | | | | | | | | | | | | | | | |
Sales and marketing | | | 6,523 | | | | 6,854 | | | | 18,873 | | | | 22,178 | |
Research and development | | | 4,844 | | | | 4,718 | | | | 14,906 | | | | 16,741 | |
General and administrative | | | 1,588 | | | | 1,946 | | | | 5,785 | | | | 7,522 | |
Amortization of intangible assets and stock-based compensation | | | 341 | | | | 1,380 | | | | 1,297 | | | | 5,898 | |
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Total operating expenses | | | 13,296 | | | | 14,898 | | | | 40,861 | | | | 52,339 | |
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Operating loss | | | (3,295 | ) | | | (4,024 | ) | | | (13,879 | ) | | | (17,796 | ) |
Other income/(loss), net | | | (4 | ) | | | 5 | | | | 154 | | | | 112 | |
Income tax expense | | | (78 | ) | | | (35 | ) | | | (153 | ) | | | (129 | ) |
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Net loss | | $ | (3,377 | ) | | $ | (4,054 | ) | | $ | (13,878 | ) | | $ | (17,813 | ) |
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Basic and diluted net loss per share | | $ | (0.12 | ) | | $ | (0.17 | ) | | $ | (0.48 | ) | | $ | (0.77 | ) |
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Shares used in computing basic and diluted net loss per share | | | 29,031 | | | | 23,396 | | | | 28,871 | | | | 23,220 | |
