Taleo (TLEO) 8-K Taleo Announces Second Quarter Results

Exhibit 99.1

Media Contact	Investor Relations Contact
Caroline Japic	Mike Magaro
925-452-3833	925-452-3120
cjapic@taleo.com	mmagaro@taleo.com

Taleo Announces Second Quarter Results

• Billings up 36% year over year;

• Deferred subscription and support revenue up 45% year over year;

• Added 275 new customers; 7 greater than $250k in annual subscription value

Dublin, Calif. – August 4, 2011 –Taleo Corporation (NASDAQ: TLEO), the global leader of SaaS-based Talent Management solutions, today announced strong results for its second quarter 2011.

“We saw exceptional growth and momentum across key metrics in our second quarter,” said Michael Gregoire, Taleo’s Chairman and CEO. “We are seeing more customers standardizing on Taleo across all areas of talent management and they tell us that the talent intelligence they garner from Taleo is giving them a powerful competitive advantage.”

Taleo delivered the following results for the second quarter 2011:

Second Quarter Revenue: Subscription revenue for the second quarter was $55.2 million, an increase of 15% on a year-over-year basis. Subscription revenue was reduced by a $6.5 million reserve for the settlement of claims asserted by the United States government. The claims related to a subcontract entered into in 2002 through which services were provided to the Transportation Security Administration (“TSA Settlement”). For further details on the TSA Settlement, please see our report on Form 8-K filed on August 4, 2011. Professional services revenue for the second quarter was $14.5 million, an increase of 74% on a year-over-year basis. Total revenue for the second quarter was $69.7 million, an increase of 24% on a year-over-year basis, which includes the reduction of $6.5 million reserve for the TSA Settlement.

Non-GAAP subscription revenue for the second quarter was $63.6 million, an increase of 32% on a year-over-year basis. Non-GAAP professional services revenues for the second quarter was $15.2 million, an increase of 82% on a year-over-year basis. Non-GAAP subscription revenue for the second quarter has not been reduced for the $6.5 million TSA Settlement. Total second quarter non-GAAP revenue was $78.7 million, an increase of 39% on a year-over-year basis.

Second Quarter Loss per Share:Second quarter net loss per share was $(0.20), compared to a net loss per share of $(0.04) a year ago.

Significant items impacting net loss per share included:

• The TSA Settlement, which reduced second quarter revenue by $6.5 million;

• An agreement reached with Kenexa, disclosed in our filing on Form 8-K on July 5, 2011, under which we agreed, among other things, to dismiss with prejudice all outstanding lawsuits, to cross license certain patents, and to make a one-time cash payment of $3.0 million. The agreement resulted in a $2.4 million charge to general and administrative expenses in the second quarter; and

• $3.2 million in cumulative refundable tax credits associated with Taleo’s acceptance during the second quarter into a Quebec provincial investment tax credit program for 2009, 2010 and 2011. The credits were reflected as a reduction in cost of revenues and operating expenses in the second quarter.

Non-GAAP net income per fully diluted share was $0.27, compared to non-GAAP net income per fully diluted share of $0.14 a year ago.

An explanation of the non-GAAP measures used in this press release is included in the section below titled “Non-GAAP Financial Measures” and a reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.

Cash: Cash generated from operations for the first half of 2011 totaled $19.4 million as compared to $21.3 million in the first half of 2010. Cash flow in 2011 has been impacted by the settlement of the Kenexa lawsuits, acquisition related spending and working capital requirements. Total cash and cash equivalents finished the quarter at $148.4 million, a decrease of $96.5 million from the prior year due primarily to the acquisitions of Learn.com and Cytiva.

Customers: In the second quarter, 275 new customers chose Taleo’s Talent Management solutions for recruiting, performance, learning and/or compensation management, including: Western Union, Bausch & Lomb Incorporated, Devon Energy, Invesco and Volkswagen Group of America. In the second quarter we were awarded 7 new contracts of $250,000 or larger in first year subscription revenue, underscoring the market interest in larger, global deployments and in multiple component suite solutions.

Billings: Billings, defined as the change in short-term deferred subscription revenue plus non-GAAP subscription revenue, was $69.2 million in the second quarter, up 36% year-over-year.

Quarterly Conference Call

Taleo will host a conference call to discuss its second quarter 2011 results at 1:30 p.m. Pacific Time today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the company’s Investor Relations Web site at http://www.taleo.com/ir. Please join the conference call at least 10 minutes early to register. A replay of the conference call will be available until midnight PT on August 9, 2011 athttp://ir.taleo.com/events.cfm, or via dial-in at 800-642-1687 or 706-645-9291. The pass code for the replay is59352226.

About Taleo

Taleo (NASDAQ: TLEO) helps organizations improve the performance of their business by unlocking the power of their people. Taleo is the only company to provideindustry leading solutions in every category ofTalent Management. Through its cloud-based platform, Taleo optimizes recruiting, performance management, learning and compensation – and integrates them all so managers have the insights they need to achieveTalent Intelligence. Customers also plug into Taleo’s uniqueTalent Grid community to harness the power of proven best practices, millions of users, and Taleo-ready partner solutions. From small and medium sized businesses to large enterprises, more than 5,000 organizations rely on Taleo every day to pursue growth, innovation and customer success.

Forward-looking Statements

This release contains forward-looking statements, including statements regarding Taleo’s future financial performance, market growth, the demand for and benefits from the use of Taleo’s solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Taleo’s historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Taleo’s expectations as of the date of this press announcement. Subsequent events may cause these expectations to change, and Taleo disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Further information on potential factors that could affect actual results is included in Part II, Item 1A of Taleo’s Quarterly Report on Form 10-Q, as filed with the SEC on May 9, 2011, and in other reports filed by Taleo with the SEC.

Non-GAAP Financial Measures

Taleo has provided in this release financial information that has not been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP. This information includes non-GAAP revenue and non-GAAP earnings per share. Taleo uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating Taleo’s ongoing operational performance. The non-GAAP measures include amounts excluded from GAAP revenue due to the write down of deferred revenue associated with purchase accounting for the Worldwide Compensation, Learn.com and Cytiva acquisitions and the reduction in GAAP revenue from the TSA Settlement, and exclude costs associated with acquisition-related transaction costs, stock-based compensation expense, amortization of acquisition-related intangibles and accrual for TSA settlement expenses, the refundable tax credits related to 2009 and 2010, the gain on re-measurement of a previously held interest in Worldwide Compensation, the gain on settlement of the Worldwide Compensation escrow account, and income taxes associated with certain non-GAAP adjustments. Second quarter loss per share calculations are based on 40.9 million basic weighted average shares outstanding, while second quarter non-GAAP EPS calculations are based on 44.0 million fully diluted weighted average shares outstanding. The fully diluted weighted average shares outstanding used to compute non-GAAP earnings per share have been calculated without giving consideration to the treasury stock method.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measure. A reconciliation of GAAP to the non-GAAP financial measures has been provided in the tables included as part of this press release.

A historical reconciliation of GAAP to non-GAAP financial measures for past periods can be located on the investor relations section ofwww.taleo.com.

Taleo Corporation

Condensed Consolidated Statements of Operations

(All amounts in thousands except per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
Revenues:
Subscription and support	$	61,714		$	47,928		$	120,104		$	95,492
Professional services		14,495			8,348			27,602			15,830
Accrual for TSA Settlement - subscription and support		(6,500	)		—			(6,500	)		—
Net revenues		69,709			56,276			141,206			111,322
Cost of revenues (Note 1):
Subscription and support		12,426			11,290			24,973			21,652
Amortization of acquisition-related intangibles		1,262			923			2,761			1,874
Total cost of subscription and support revenues		13,688			12,213			27,734			23,526
Professional services		10,015			6,880			20,251			13,365
Total cost of revenues		23,703			19,093			47,985			36,891
Gross profit		46,006			37,183			93,221			74,431
Operating expenses (Note 1):
Sales and marketing		22,283			15,879			42,992			30,816
Sales - amortization of acquisition-related intangibles		4,159			2,254			6,936			4,377
Research and development		12,874			10,873			26,681			20,927
General and administrative		15,153			9,791			27,282			20,089
Total operating expenses		54,469			38,797			103,891			76,209
Loss from operations		(8,463	)		(1,614	)		(10,670	)		(1,778	)
Other income (expense), net:
Interest income		78			124			164			251
Interest expense		(57	)		(30	)		(83	)		(64	)
Gain on remeasurement of previously held interest in Worldwide Compensation, Inc.		—			—			—			885
Gain on Worldwide Compensation, Inc. escrow settlement		350			—			350			—
Total other income (expense), net		371			94			431			1,072
Loss before provision for (benefit from) income taxes		(8,092	)		(1,520	)		(10,239	)		(706	)
Provision for (benefit from) income taxes		(4	)		(110	)		19			(114	)
Net loss attributable to Class A common stockholders	$	(8,088	)	$	(1,410	)	$	(10,258	)	$	(592	)
Net loss per share attributable to Class A common stockholders - basic	$	(0.20	)	$	(0.04	)	$	(0.25	)	$	(0.02	)
Net loss per share attributable to Class A common stockholders - diluted	$	(0.20	)	$	(0.04	)	$	(0.25	)	$	(0.02	)
Weighted average Class A common shares - basic		40,949			39,444			40,776			39,301
Weighted average Class A common shares - diluted		40,949			39,444			40,776			39,301
NOTES
1.      Includes stock-based compensation expense
Subscription and support cost of revenue	$	299		$	242		$	520		$	418
Professional services cost of revenue		576			416			1,100			778
Cost of revenue subtotal		875			658			1,620			1,196
Sales and marketing operating expense		1,541			999			2,702			1,883
Research and development operating expense		1,035			512			1,821			976
General and administrative operating expense		1,649			1,501			3,050			2,792
Operating expense subtotal		4,225			3,012			7,573			5,651
Total stock-based compensation expense	$	5,100		$	3,670		$	9,193		$	6,847

Taleo Corporation

Condensed Consolidated Statements of Operations (continued)

(All amounts in thousands except per share data)

(Unaudited)

Reconciliation of GAAP net loss to non-GAAP net income:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
GAAP net loss reported above	$	(8,088	)	$	(1,410	)	$	(10,258	)	$	(592	)
Add back:
Revenues
Non-GAAP subscription and support revenue		1,858			195			3,522			348
Non-GAAP professional services revenue		667			—			1,765			—
Accrual for TSA Settlement - subscription and support		6,500			—			6,500			—
Total Non-GAAP revenues		9,025			195			11,787			348
Expenses
Acquisition-related transaction costs		1,971			483			3,518			1,022
Accrual for TSA Settlement expenses		300			—			300			—
Refundable tax credits related to 2009 and 2010		(1,296	)		—			(1,296	)		—
Stock-based compensation expense		5,100			3,670			9,193			6,847
Amortization of acquisition-related intangibles		5,421			3,177			9,697			6,251
		11,496			7,330			21,412			14,120
Other income
Gain on remeasurement of previously held interest in Worldwide Compensation, Inc.		—			—			—			(885	)
Gain on settlement of Worldwide Compensation, Inc. escrow		(350	)		—			(350	)		—
		(350	)		—			(350	)		(885	)
Income taxes
Income taxes associated with certain non-GAAP adjustments		(342	)		—			(870	)		—
Non-GAAP net income	$	11,741		$	6,115		$	21,721		$	12,991
Non-GAAP net income per share
Basic	$	0.29		$	0.16		$	0.53		$	0.33
Diluted	$	0.27		$	0.14		$	0.49		$	0.31
Reconciliation of basic and fully diluted share count:
Basic		40,949			39,444			40,776			39,301
Add:
Weighted Average options and unreleased restricted stock, without consideration for the treasury stock method		3,100			3,252			3,109			3,272
Diluted		44,049			42,696			43,885			42,573

Taleo Corporation

Condensed Consolidated Balance Sheets

(All amounts in thousands)

(Unaudited)

	June 30,			December 31,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	148,448		$	141,588
Accounts receivable, net		62,335			58,120
Prepaid expenses and other current assets		21,049			18,065
Investment credits receivable		9,344			6,034
Total current assets		241,176			223,807
Property and equipment, net		25,654			26,552
Restricted cash		224			218
Goodwill		213,986			206,418
Intangible assets, net		59,724			59,478
Other assets		7,742			7,363
Total assets	$	548,506		$	523,836
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	46,798		$	36,377
Deferred revenue - subscription and support and customer deposits		92,170			79,704
Deferred revenue - professional services		16,615			19,692
Capital lease obligations, short-term		76			105
Total current liabilities		155,659			135,878
Long-term deferred revenue - subscription and support and customer deposits		1,565			150
Long-term deferred revenue - professional services		7,134			10,006
Other liabilities		9,929			9,241
Capital lease obligations, long-term		19			46
Total liabilities		174,306			155,321
Stockholders’ equity:
Capital stock		1			1
Additional paid-in capital		457,272			442,514
Accumulated deficit		(86,867	)		(76,609	)
Treasury stock		(264	)		(776	)
Accumulated other comprehensive income		4,058			3,385
Total stockholders’ equity		374,200			368,515
Total liabilities and stockholders’ equity	$	548,506		$	523,836

Taleo Corporation

Condensed Consolidated Statements of Cash Flows

(All amounts in thousands)

(Unaudited)

	Six Months Ended
	June 30,
	2011			2010
Cash flows from operating activities:
Net loss	$	(10,258	)	$	(592	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		17,044			13,361
Loss on disposal of fixed assets		—			58
Amortization of tenant inducements		(98	)		(88	)
Tenant inducements from landlord		—			111
Stock-based compensation expense		9,193		��	6,847
Excess tax benefits on the exercise of stock options		(147	)		(16	)
Tax benefit recorded upon business acquisition		(1,403	)		—
Director fees paid with stock in lieu of cash		128			111
Gain on remeasurement of previously held interest in Worldwide Compensation, Inc.		—			(885	)
Bad debt provision		188			7
Changes in assets and liabilities, net of effect of acquisitions:
Accounts receivable		(4,046	)		2,249
Prepaid expenses and other assets		(2,684	)		(2,270	)
Investment credits receivable		(3,199	)		(1,460	)
Accounts payable and accrued liabilities		1,714			1,612
Accrual for TSA settlement		6,800			—
Deferred revenues and customer deposits		6,210			2,251
Net cash provided by operating activities		19,442			21,296
Cash flows from investing activities:
Purchases of property and equipment		(5,328	)		(10,805	)
Change in restricted cash		(6	)		210
Acquisitions, net of cash acquired		(12,080	)		(13,381	)
Purchase of intangible assets		(650	)		—
Net cash used in investing activities		(18,064	)		(23,976	)
Cash flows from financing activities:
Principal payments on capital lease obligations		(306	)		(783	)
Payments for expenses associated with 2009 equity offering		—			(681	)
Payments for debt issuance costs		(691	)		—
Excess tax benefits on the exercise of stock options		147			16
Treasury stock acquired to settle employees withholding liability		(2,219	)		(937	)
Proceeds from stock options exercised and ESPP shares		8,024			6,079
Net cash provided by financing activities		4,955			3,694
Effect of exchange rate changes on cash and cash equivalents		527			(300	)
Increase in cash and cash equivalents		6,860			714
Cash and cash equivalents:
Beginning of period		141,588			244,229
End of period	$	148,448		$	244,943