VA SOFTWARE
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PRESS RELEASE
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VA SOFTWARE REPORTS FIRST QUARTER FISCAL YEAR 2004
RESULTS
First quarter net loss decreases 70% year-over-year to $0.02 loss per share
FREMONT, CA--November 19, 2003--VA Software Corporation (Nasdaq: LNUX), provider
of the award-winning SourceForge(TM) global 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 first quarter of fiscal year 2004, ended October 31, 2003.
Total first quarter fiscal 2004 revenue grew 14% to $5.8 million, compared to
first quarter fiscal 2003 total revenue of $5.1 million. Revenue associated with
the exited hardware business was $31,000 in first quarter fiscal 2004 compared
to $0.2 million in first quarter fiscal 2003. Revenue from the ongoing software
and online businesses increased 18% to $5.8 million in first quarter fiscal 2004
from $4.9 million in first quarter fiscal 2003.
On a GAAP basis, the first quarter fiscal 2004 net loss was $1.2 million, or
$0.02 per share, compared to last year's first quarter fiscal 2003 GAAP net loss
of $4.1 million, or $0.08 per share. The first quarter fiscal 2004 GAAP net loss
includes $17,000 in restructuring credits and a $23,000 charge for amortization
of intangible assets and deferred stock compensation.
The first quarter fiscal 2004 net loss before non-recurring charges, which
excludes restructuring and other special charges and amortization of intangible
assets and deferred stock compensation, improved to $1.2 million, or $0.02 per
share, compared to last year's first quarter fiscal 2003 net loss, before
non-recurring charges, of $3.7 million, or $0.07 per share. Cash and investments
remain strong at $38.2 million as of October 31, 2003.
"We have started fiscal year 2004 strongly. Revenue for both our software and
online businesses grew at double digit rates over last year, our GAAP and pro
forma losses are at the lowest level we've experienced as a public company and
our cash burn rate was only $1.5 million," said Ali Jenab, President and CEO.
"We increased our SourceForge Enterprise Edition installed base to 66 customers
and OSDN continues to grow, reaching record numbers of users as page views grew
to 225 million per month. These improvements in the underlying business coupled
with the recent appointment of Darryll Dewan as EVP of worldwide sales and the
closing of our $15 million private placement in November 2003 increase our
confidence in our ability to execute our plans."
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) 332-0637. A replay of the call will be available for 30
days by dialing (800) 475-6701 or (320) 365-3844; passcode 704590.
Recent Highlights
o Products. SourceForge Enterprise Edition 3.4 was announced for shipment
during the first quarter. SourceForge 3.4 features broader integration with
enterprise environments and tools, including Rational(R) ClearCase(R) 5.0
and Microsoft Project 2002, more powerful access controls to protect
intellectual property and improved management visibility into the status of
critical project tasks. The enhancements included in the 3.4 release
greatly improve the visibility and control over geographically-dispersed
software development projects, while making the platform even more
developer-friendly.
o Customers. During the first quarter, VA Software added 11 new SourceForge
Enterprise Edition accounts, including SRA International, NTT
Communications, AZG, TNO Physics and Electronics Lab, ETAS, The Orphanage,
CC Intelligent Solutions, Cosential and Basis06 to its installed base. In
addition, existing customers including Agilent, General Atomics, Hewlett
Packard, Sun Microsystems and Los Alamos National Laboratories purchased
additional SourceForge licenses and services.
o OSDN. This quarter, OSDN has further extended its reach to all levels of
the IT and development communities by launching ITManagersJournal.com, a
new site dedicated to exclusively addressing the concerns of top-level IT
professionals. This site rounds out the editorial offerings of the OSDN
technical sites to address the resource needs of a key audience, and
further enable advertisers to tap into the considerable buying power of the
OSDN audience. OSDN also redesigned and relaunched several key sites,
including OSDN.com, DevChannel.org and NewsForge.com this quarter, with
improved navigation and drill-down content to further enrich users'
experiences on the sites. OSDN has experienced significant traffic growth
this past quarter, with more than 225 million page views, and 12 million
unique visitors, every month. This traffic surge has further cemented
OSDN's position as one of the top media sites serving the IT industry.
Advertisers and sponsors of the network include Microsoft, IBM, Google,
Hewlett-Packard, Intel, Dell, Legato, AMD, Interland, Rackspace and BEA.
o Management. The company announced the appointment of technology sales
veteran Darryll Dewan as Executive Vice President, Worldwide Sales. Dewan
is a highly experienced technology sales executive with proven results at
such companies as IBM, i2, Amdahl, and Oracle. He recently completed five
years at i2 Technologies, where he rose to the position of executive vice
president and president, global alliances and strategic accounts, managing
75 direct salespeople and executing a strategy that increased penetration
of channel sales and vertical industry market segments.
o $15 million private placement. On November 6, 2003, the company announced
that it had completed a private placement of its common stock with an
institutional investor for aggregate proceeds of approximately $15 million.
VA Software intends to use the proceeds for working capital.
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 web-based application that significantly increases a company's return on its
investment in software development. SourceForge improves communication,
collaboration, and synchronization amongst multi-site team members and gives
managers real-time visibility and control over their projects, regardless of
location. SourceForge enables higher developer productivity and faster project
completion whether teams are in-house, outsourced, onshore or offshore. Major
Fortune 1000 firms and more than 750,000 developers use SourceForge technology
to power their global development efforts.
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; 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 31, 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
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October 31, 2003 October 26, 2002
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(unaudited)
Software revenues $ 815 $ 711
Online revenues 4,951 4,155
Other revenues 31 209
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Net Revenues 5,797 5,075
Software cost of revenues 595 593
Online cost of revenues 2,655 2,311
Other cost of revenues -- (157)
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Cost of revenues 3,250 2,747
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Gross margin 2,547 2,328
Operating Expenses:
Sales and marketing 2,392 2,321
Research and development 1,827 2,044
General and administrative 724 1,755
Restructuring costs and other special
charges (17) (15)
Amortization of deferred stock
compensation 20 38
Amortization of intangible assets 3 644
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Total operating expenses 4,949 6,787
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Loss from operations (2,402) (4,459)
Interest and other, net 1,179 326
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Net loss $ (1,223) $ (4,133)
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Basic and diluted net loss per share $ (0.02) $ (0.08)
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Weighted-average shares outstanding:
Basic and diluted 53,717 56,255
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Reconciliation of net loss as reported
to pro forma net loss:
Three Months Ended
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October 31, 2003 October 26, 2002
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(unaudited)
Net loss as reported $ (1,223) $ (4,133)
Non recurring charges:
Restructuring cost and other special
charges (17) (17)
Restructuring costs classified as cost of
goods -- (182)
Amortization of deferred stock
compensation 20 38
Amortization of intangible assets 3 644
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Net loss before non cash charges $ (1,217) $ (3,650)
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Basic and diluted net loss per share - pro forma $ (0.02) $ (0.07)
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Weighted-average shares outstanding:
Basic and diluted 56,255 53,717
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VA Software Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 31, 2003 July 31, 2003
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(unaudited)
ASSETS
Current Assets:
Cash, cash equivalents, and current marketable securities $ 31,616 $ 34,617
Accounts receivable, net 2,539 1,928
Inventories 568 388
Prepaid expenses and other assets 1,771 1,232
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Total current assets 36,494 38,165
Long-term marketable securities 6,583 5,130
Property and equipment, net 4,165 4,267
Goodwill and intangible assets, net 18 21
Other assets 1,049 912
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Total assets $ 48,309 $ 48,495
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 977 863
Accrued restructuring liabilities 3,577 4,117
Accrued liabilities and other 3,944 4,360
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Total current liabilities 8,498 9,340
Accrued restructuring liabilities, net of current portion 10,272 10,772
Other long-term liabilities 1,166 1,181
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Total liabilities 19,936 21,293
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Stockholders' equity:
Common stock 57 56
Additional paid-in capital 769,211 766,761
Deferred stock compensation -- (20)
Accumulated other comprehensive gain 51 128
Accumulated deficit (740,946) (739,723)
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Total stockholders' equity 28,373 27,202
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Total liabilities and stockholders' equity $ 48,309 $ 48,495
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