VA SOFTWARE LOGO
VA SOFTWARE REPORTS FOURTH QUARTER AND
FISCAL YEAR 2003 RESULTS
Fourth Quarter Fiscal 2003 Revenue Increases 42% Compared To
Fourth Quarter Fiscal 2002
FREMONT, CA--August 27, 2003--VA Software Corporation (Nasdaq: LNUX), provider
of the award-winning SourceForge(TM) collaborative application development
platform, and parent company of OSDN(TM) , the leading network of media and
commerce sites serving the Open Source, developer and IT communities, today
announced financial results for its fourth quarter and fiscal year 2003, ended
July 31, 2003.
Total fourth quarter fiscal 2003 revenue grew 42% to $6.6 million, compared to
fourth quarter fiscal 2002 total revenue of $4.6 million. Total revenue for the
year ended July 31, 2003 was $24.2 million, compared to $20.4 million for the
year ended July 27, 2002. Revenue associated with the exited hardware business
was $0.2 million in both the fourth quarters of fiscal 2003 and fiscal 2002;
revenue associated with the exited hardware business declined to $0.7 million
for the year ended July 31, 2003 compared to $3.3 million for the year ended
July 27, 2002. Revenue from the ongoing software and online businesses increased
47% to $6.4 million in the fourth quarter of fiscal 2003 from $4.4 million in
the fourth quarter of fiscal 2002. Revenue from the ongoing software and online
businesses grew 38% to $23.5 million for fiscal 2003 from $17.1 million for
fiscal 2002.
On a GAAP basis, the fourth quarter fiscal 2003 net loss was $2.4 million, or
$0.04 per share, compared to last year's fourth quarter fiscal 2002 GAAP net
loss of $18.8 million, or $0.35 per share. The fourth quarter fiscal 2003 GAAP
net loss includes $0.2 million in restructuring credits and a $0.5 million
charge for amortization of intangible assets and deferred stock compensation and
impairment of long-term assets. For the year ended July 31, 2003, the company's
GAAP net loss was $13.8 million, or $0.25 per share, compared to $91.0 million,
or $1.72 per share, for the year ended July 27, 2002.
The fourth quarter fiscal 2003 net loss before non-recurring charges, which
excludes restructuring and other special charges, amortization of intangible
assets and deferred stock compensation and impairment of long-term assets,
improved to $2.1 million, or $0.04 per share, compared to last year's fourth
quarter fiscal 2002 net loss, before non-recurring charges, of $3.7 million, or
$0.07 per share. Cash and investments remain strong at $39.7 million as of July
31, 2003.
"We have made great progress as a company during fiscal 2003. Sales of
SourceForge Enterprise Edition increased by over 150% compared to fiscal 2002 as
we added 31 new customers to bring our installed base to 55 customers. Our
recently announced sale to IBM for their internal use is one of many customer
validations of the value of our product," said Ali Jenab, President and CEO.
"Fourth quarter financial results exceeded our expectations on all counts. Our
software revenue increased by 56% and online revenue grew a strong 45% compared
to last year's fourth quarter. Advertising revenue achieved record levels during
July. As we enter fiscal 2004, we are well positioned to continue the
significant progress we have made as a company."
A conference call to review results will be held at 5:00 pm (Eastern) today. The
call may be accessed via webcast at http://www.vasoftware.com or by dialing
(800) 450-0785 or (612) 332-0632. A replay of the call will be available for 30
days by dialing (800) 475-6701 or (320) 365-3844; passcode 692527.
Recent Highlights
o IBM Selects SourceForge. On August 5, 2003, VA Software announced that IBM
will use SourceForge Enterprise Edition 3.3 for its internal open source
community, supporting more than 2,000 registered IBM open source
developers. The software from VA Software will help IBM coordinate
internal, community-based development activity in its labs around the world
to increase developer productivity and performance.
o Customers. During the fourth quarter, VA Software added 14 new SourceForge
Enterprise Edition accounts, including IBM, Fujitsu, Sun Microsystems,
Pratt & Whitney, Enbridge Pipelines, Infravio, Myrio, Spawar, CGI Atlantic,
Planet Group, Emic Networks, Osaka Gas Information System and Dataline to
its installed base. In addition, existing customers including Detroit
Edison, General Atomics and Lockheed-Martin purchased additional
SourceForge licenses and services.
o OSDN. OSDN continues to grow and delivers more than 185 million page views,
reaching 10 million unique visitors, per month. Nielsen//NetRatings' Summer
2003 @plan advertising report consistently ranked OSDN in the number one
spot among ALL reported networks for key technology categories. The Summer
2003 release shows OSDN ranking #1 for these categories as well as others
(based on composition):
o #1 for delivering people who have Purchased Hardware Online in
the past 6 months
o #1 for delivering people who have Purchased Software Online in
the past 6 months
o #1 for delivering people who have Purchased Home Electronics
Online in the past 6 months
o #1 for delivering people who Look for News of Any Type Online
Advertising on OSDN has continued to experience strong growth, exceeding
the relatively modest growth recently reported by the online advertising
industry generally. Advertisers and sponsors of the network include Intel,
Oracle, Google, IBM, Microsoft, Hewlett-Packard, Dell, Legato, eBay,
Interland and Rackspace.
o Slashdot Games. Launched in April 2003, the Games section on Slashdot
(http://games.slashdot.org/) is a new information section of the site aimed
at serving the fast-growing gaming community. The new section of the site
provides Slashdot-style editorial to console and PC gamers, developers and
designers and features the same level of dynamic content the Slashdot
community has come to expect--daily articles, new product announcements,
development and programming discussions, interviews, reviews, and open
commentary from site visitors. Because Slashdot site visitors are
consummate gamers, active in the gaming community and likely to purchase
new games, and/or gaming hardware, online advertisers have already begun to
take note of this opportunity. Slashdot games traffic has already reached
1.5 million unique visitors a month, with 2 million visitors projected
within the first six months.
Use of Non-GAAP Financial Information
In addition to reporting financial results in accordance with generally accepted
accounting principles, or GAAP, VA Software uses non-GAAP financial results.
Non-GAAP net income and earnings per share exclude amortization of intangible
assets and deferred stock compensation, impairment of goodwill, intangible
assets and other long-term assets, as well as restructuring costs and other
special charges. These non-GAAP adjustments are provided to enhance the user's
overall understanding of current financial performance and prospects for the
future. Specifically, VA believes the non-GAAP results provide useful
information to both management and investors by excluding certain expenses that
VA believes are not indicative of core operating results. In addition, because
VA has historically reported non-GAAP results to the investment community, VA
believes the inclusion of non-GAAP numbers provides consistency in financial
reporting. Further, these non-GAAP results are one of the primary indicators
management uses for planning and forecasting in future periods. The method VA
uses to produce non-GAAP results is not
computed according to GAAP, is likely to differ from the methods used by other
companies and should not be regarded as a substitute for results prepared in
accordance with accounting principles generally accepted in the United States.
About VA Software
VA Software (Nasdaq: LNUX) is the provider of SourceForge Enterprise Edition,
the award-winning collaborative application development and project management
platform. SourceForge is an integrated web-based application that enables IT and
software engineering organizations to reduce risk and costs by managing
application development more effectively. SourceForge centralizes project
information into a searchable database while integrating software development
and collaboration tools with the ability to track, measure, and report on
software project activity in real-time. With SourceForge, organizations with
distributed teams and offshore development centers realize improved
productivity, communication, coordination, collaboration, project clarity and
insight. The result is significantly improved project manageability and
operational efficiency. Today, SourceForge technology is at work in major
Fortune 1000 companies in financial services, defense and aerospace,
manufacturing, transportation, communications and government, and is in use by
over 700,000 developers worldwide. Information on how SourceForge aligns IT and
business is available at www.vasoftware.com.
About OSDN
OSDN, the Open Source Development Network, Inc., a subsidiary of VA Software, is
the most dynamic community-driven IT media network on the web. The cornerstone
of the Open Source community, OSDN attracts every level of IT decision maker and
buyer, from CTOs to project managers. Technologists, developers and system
administrators turn to OSDN sites to create, debate, and make or break IT news,
tools, technologies and techniques. OSDN is the home of several popular web
sites, including the award winning news discussion site, Slashdot.org, and the
world's largest collaborative software development site, SourceForge.net.
Note Regarding Forward-Looking Statements: This press release contains
forward-looking statements that involve risks and uncertainties, including
statements regarding VA's anticipated financial performance and continued
progress as a company (as described, without limitation, in a quotation from
management contained in this press release) and the benefits of our products to
our customers. Actual results may differ materially from those expressed or
implied in such forward-looking statements due to various factors, including:
VA's success in expanding its SourceForge enterprise software business; VA's
success in meeting scheduled product availability dates; the possibility of
further deterioration in the general economy; VA's ability to achieve and
sustain higher levels of revenue; VA's reliance upon strategic relationships
with other companies; VA's ability to protect and defend its intellectual
property rights; the size and timing of execution of enterprise-level licenses;
decreases or delays in online advertising spending; rapid technological and
market change; future guidelines and interpretations regarding software revenue
recognition; unforeseen expenses that VA may incur in future quarters; and
competition with, and pricing pressures from more established competitors.
Investors should consult VA's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for the fiscal year ended
July 27, 2002 and Form 10-Q for the fiscal quarter ended April 26, 2003, for
further information regarding these and the other risks of the Company's
business. These documents are available at the SEC Web site: www.sec.gov. VA
assumes no obligation to update the forward-looking information contained in
this news release.
Note to editors: VA Software, SourceForge and OSDN are trademarks or registered
trademarks of VA Software Corporation in the United States and other countries.
Slashdot is a registered trademark of the Open Source Development Network, Inc.,
in the United States and other countries. All other trademarks are property of
their respective owners.
Contact:
Investor Relations
VA Software Corp.
(510) 687-8731
ir@vasoftware.com
VA Software Corporation
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------------------------- -----------------------------------------
July 31, 2003 July 27, 2002 July 31, 2003 July 27, 2002
------------------ ---------------- ------------------ -------------------
Software revenues $ 845 $ 541 $ 2,917 $ 1,086
Online revenues 5,555 3,819 20,551 15,967
Other revenues 156 255 760 3,332
-------- -------- -------- ---------
Net revenues 6,556 4,615 24,228 20,385
Software cost of revenues 484 562 1,997 2,387
Online cost of revenues 2,774 2,846 11,166 10,393
Other cost of revenues (6) (2,779) (383) (3,119)
-------- -------- -------- ---------
Cost of revenues 3,252 629 12,780 9,661
-------- -------- -------- ---------
Gross margin 3,304 3,986 11,448 10,724
Operating expenses:
Sales and marketing 2,531 2,060 9,791 12,513
Research and development 1,828 1,930 7,815 8,122
General and administrative 1,342 1,329 6,455 10,850
Restructuring costs and other special charges (229) 1,945 (263) 46,936
Amortization of deferred stock compensation 28 38 144 1,671
Amortization of intangible assets 217 3,212 2,149 11,730
Impairment of goodwill and intangible assets -- 12,150 -- 12,150
-------- -------- -------- ---------
Total operating expenses 5,717 22,664 26,091 103,972
-------- -------- -------- ---------
Loss from operations (2,413) (18,678) (14,643) (93,248)
Interest and other, net 30 (94) 845 2,210
-------- -------- -------- ---------
Net loss $ (2,383) $(18,772) $(13,798) $ (91,038)
======== ======== ======== =========
Basic and diluted net loss per share $ (0.04) $ (0.35) $ (0.25) $ (1.72)
======== ======== ======== =========
Weighted-average shares outstanding:
Basic and diluted 54,895 53,487 54,110 53,064
======== ======== ======== =========
Reconciliation of net loss as reported to net
loss before non-recurring charges:
Three Months Ended Twelve Months Ended
------------------------------------- -----------------------------------------
July 31, 2003 July 27, 2002 July 31, 2003 July 27, 2002
-------------------- ---------------- ------------------ -------------------
Net loss as reported $ (2,383) $(18,772) $(13,798) $ (91,038)
Non-recurring charges:
Restructuring costs and other special charges (229) 1,865 (316) 45,963
Restructuring costs classified as cost of
goods sold (6) (2,423) (432) (5,806)
Amortization of deferred stock compensation 28 38 144 1,671
Amortization of intangible assets 217 3,212 2,149 11,730
Impairment of goodwill and intangible assets -- 12,150 -- 12,150
Impairment of other long-term assets 239 192 239 192
-------- -------- -------- ---------
Net loss before non-recurring charges $ (2,134) $ (3,738) $(12,014) $ (25,138)
======== ======== ======== =========
Basic and diluted net loss per share - pro forma $ (0.04) $ (0.07) $ (0.22) $ (0.47)
======== ======== ======== =========
Weighted-average shares outstanding:
Basic and diluted 54,895 53,487 54,110 53,064
======== ======== ======== =========
VA Software Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, 2003 July 27, 2002
------------- -------------
ASSETS
Current assets:
Cash, cash equivalents, and current marketable securities $ 34,617 $ 43,550
Accounts receivable, net 1,928 764
Inventories 388 300
Prepaid expenses and other assets 1,231 877
--------- ---------
Total current assets 38,164 45,491
Long-term marketable securities 5,130 10,846
Property and equipment, net 4,267 7,223
Goodwill and intangible assets, net 21 2,169
Other assets 913 1,239
--------- ---------
Total assets $ 48,495 $ 66,968
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of loans and notes payable $ -- $ 42
Accounts payable 863 2,075
Accrued restructuring liabilities 4,117 3,397
Accrued liabilities and other 4,360 6,491
--------- ---------
Total current liabilities 9,340 12,005
Accrued restructuring liabilities, net of current portion 10,772 14,597
Other long-term liabilities 1,181 978
--------- ---------
Total liabilities 21,293 27,580
--------- ---------
Stockholders' equity:
Common stock 56 54
Additional paid-in capital 766,761 765,418
Deferred stock compensation (20) (245)
Accumulated other comprehensive loss 128 86
Accumulated deficit (739,723) (725,925)
--------- ---------
Total stockholders' equity 27,202 39,388
--------- ---------
Total liabilities and stockholders' equity $ 48,495 $ 66,968
========= =========