EXHIBIT 99.1
[VA SOFTWARE LOGO]
- --------------------------------------------------------------------------------
PRESS RELEASE
- --------------------------------------------------------------------------------
VA SOFTWARE REPORTS FOURTH QUARTER AND
FISCAL YEAR 2004 RESULTS
Fourth quarter software revenue grows by 92% year-over-year and total fiscal
year 2004 company revenue increases 21% compared to fiscal year 2003
FREMONT, CA--August 26, 2004--VA Software Corporation (Nasdaq: LNUX), provider
of the award-winning SourceForge(R) Global Development Platform(TM) for
optimizing distributed development, and parent company of OSTG, the leading
online network of news and information sites for IT managers and development
professionals, today announced financial results for its fourth quarter and
fiscal year 2004, ended July 31, 2004.
Total fourth quarter fiscal 2004 revenue grew 12% to $7.3 million, compared to
fourth quarter fiscal 2003 total revenue of $6.6 million. Revenue from the
software business increased 92% to $1.6 million in fourth quarter fiscal 2004
from $0.8 million in fourth quarter fiscal 2003. Total revenue for the year
ended July 31, 2004 was $29.3 million, up 21% compared to $24.2 million for the
year ended July 31, 2003. Revenue from the software business increased 71% to
$5.0 million for the year ended July 31, 2004 compared to $2.9 million for the
year end July 31, 2003.
On a GAAP basis, the fourth quarter fiscal 2004 net loss was $0.9 million, or
$0.01 per share, compared to last year's fourth quarter fiscal 2003 GAAP net
loss of $2.4 million, or $0.04 per share. The fourth quarter fiscal 2004 GAAP
net loss includes a $12,000 restructuring credit classified in cost of sales due
to the release of remaining warranty reserve associated with the pre-existing
hardware business and a $3,000 charge for amortization of intangible assets. For
the year ended July 31, 2004, the company's GAAP net loss was $7.6 million, or
$0.13 per share, compared to $13.8 million, or $0.25 per share, for the year
July 31, 2003.
As specified in the attached reconciliation of net loss as reported to pro forma
net loss, the fourth quarter fiscal 2004 net loss before non-recurring charges
was $0.9 million, or $0.01 per share, compared to last year's fourth quarter
fiscal 2003 net loss before non-recurring charges of $2.1 million, or $0.04 per
share. For the year ended July 31, 2004, the net loss before non-recurring
charges was $6.0 million, or $0.10 per share, compared to $12.0 million, or
$0.22 per share, for the year ended July 31, 2003. Cash and investments remain
strong at $45.5 million as of July 31, 2004.
"Our financial results for the fourth quarter and for the year reflect our
emphasis on execution. Software revenue increased to $1.6 million during the
fourth quarter driven by the addition of 11 new accounts as well as purchases by
our installed base. We enter fiscal year 2005 having sold our SourceForge
solution to 97 customers," said Ali Jenab, President and CEO. "We have also
positioned our online business, OSTG for growth in fiscal year 2005. OSTG, with
its focused emphasis on providing up-to-the-minute news about Linux and other
open source technologies to the IT community, is poised to capitalize on the
growing interest in open source solutions. In addition, OSTG's recently
announced strategic reltationships with IDG and Yahoo! expand OSTG's reach
beyond our historical advertisers."
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) 862-9098 or (785) 424-1051. A replay of the call will be available for 30
days by dialing (800) 934-3942 or (402) 220-1162.
Recent Highlights
o Customers. During the fourth quarter of fiscal 2004, VA Software added 11
new SourceForge Enterprise Edition accounts, including Acxiom, Bank One,
Bowman Systems, First American, Sony Pictures Imageworks and the US Air
Force, among others, to its installed base. In addition, existing customers
including Pfizer, Hewlett Packard, Fleet Numerical Meteorology and
Oceanography Center, TNO and Los Alamos National Laboratory purchased
additional SourceForge licenses and services.
o SourceForge Enterprise Edition 4.1. SourceForge Enterprise Edition 4.1 was
released in June. The latest release is built on a platform-independent
Java 2 Enterprise Edition(TM)(J2EE) architecture and includes an open API
and complementary software development kit. These enhancements make it
easier to integrate with a wide range of third-party applications,
authentication systems, databases, software configuration management
systems and in-house tools. A significantly enhanced and more intuitive
user interface is also a key new feature of this release. SourceForge
Enterprise Edition 4.1 allows customers to lower development costs,
increase development efficiency, and improve development visibility and
control beyond the results provided by earlier releases of the product.
o OSTG. Formerly known as OSDN, OSTG (Open Source Technology Group) is the
leading network of news and information sites for IT managers and
development professionals. During the fourth quarter, in addition to
announcing its new name, OSTG relaunched several of its IT-focused sites.
The name change to OSTG reflects the company's long-term strategy to meet
the evolving information needs of its growing audience, and address market
trends driving the rapid adoption of Open Source technologies for business
and the desktop. For the tenth-consecutive quarter, based on composition,
OSTG has been named the number one network for delivering visitors who look
for technology news online and for delivering visitors who make software
purchases online, according to the Nielsen//NetRatings @Plan Summer 2004
Report.
OSTG continues to experience rapid traffic growth and increased advertising
revenue while maintaining its commitment to a community-based technology
audience working with a range of platforms and technologies.
SourceForge.net(R), the world's largest repository of Open Source software,
continues to break new records with over 900,000 registered users and
86,000 projects. Two Microsoft projects released under the company's
"Shared Source Initiative" are in the top 10% of active projects hosted on
SourceForge.net. The network as a whole serves more than 250 million page
views, and 16 million unique visitors monthly.* This ranks OSTG among the
top technology networks both in terms of size and purchasing power.
Advertisers and sponsors of the network include Microsoft, IBM,
Hewlett-Packard, Intel, Red Hat, Legato, AMD, Sun Microsystems, Interland
and Rackspace.
o OSTG Strategic Relationships. OSTG announced several strategic
relationships designed to expand its reach beyond historical advertisers.
On August 5, 2004, OSTG announced a marketing and sales agreement with
International Data Group (IDG), where IDG's Global Solutions' sales force
will sell advertising on OSTG's network of sites giving international
technology advertisers more media options and exposing them to the
fast-growing global open source community. On August 17, OSTG announced
that it would expand its site and Web search capabilities with Yahoo!
Search Technology and add contextually-relevant paid advertising to its
sites using Overture Services' Content Match product.
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, remeasurement of warrant liability, 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 non-recurring 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 at the center of today's technology revolution and
incites innovation by empowering the IT and developer communities with
information, community support and software. VA Software is the parent company
of OSTG (Open Source Technology Group), formerly OSDN, and the creator of
SourceForge. SourceForge.net is the global nexus for the Open Source community
with 85,000+ Open Source projects and 900,000+ registered users. SourceForge
Enterprise Edition optimizes distributed development for Fortune 500 companies.
OSTG, the cornerstone of the Open Source movement, is the leading online network
for IT managers and development professionals. OSTG technology-focused sites
include Slashdot.org, SourceForge.net, ITManagersJournal.com, NewsForge.com,
Linux.com and freshmeat.net. OSTG also runs ThinkGeek.com, an online retailer of
technology products, and the MediaBuilder network, featuring
AnimationFactory.com. OSTG receives more than 250 million page views and nearly
16 million unique visitors monthly.
For more information about VA Software, visit www.vasoftware.com.
For more information about OSTG, visit www.ostg.com.
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, including OSTG's anticpated online advertising growth and
ability to capitalize on interest in open source solutions. 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 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 and Form 10-Q
for the fiscal quarter ended April 30, 2004, 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 OSTG are trademarks or registered
trademarks of VA Software Corporation in the United States and other countries.
Slashdot is a registered trademark of the OSTG, Inc., in the United States and
other countries. All other trademarks are property of their respective owners.
* Publisher's own data based on internal traffic audits.
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, 2004 July 31, 2003 July 31, 2004 July 31, 2003
------------- ------------- ------------- -------------
Software revenues $ 1,618 $ 845 $ 4,995 $ 2,917
Online revenues 5,699 5,555 24,217 20,551
Other revenues -- 156 49 760
-------- -------- -------- --------
Net revenues 7,317 6,556 29,261 24,228
Software cost of revenues 364 484 1,860 1,997
Online cost of revenues 3,108 2,774 13,689 11,166
Other cost of revenues (12) (6) (12) (383)
-------- -------- -------- --------
Cost of revenues 3,460 3,252 15,537 12,780
-------- -------- -------- --------
Gross margin 3,857 3,304 13,724 11,448
Operating Expenses:
Sales and marketing 2,470 2,531 10,093 9,791
Research and development 1,522 1,828 6,732 7,815
General and administrative 893 1,342 4,665 6,455
Restructuring costs and other special charges -- (229) 3,209 (263)
Amortization of deferred stock compensation -- 28 20 144
Amortization of intangible assets 3 217 12 2,149
-------- -------- -------- --------
Total operating expenses 4,894 5,717 24,731 26,091
-------- -------- -------- --------
Loss from operations (1,031) (2,413) (11,007) (14,643)
Remeasurement of warrant liability -- -- 1,566 --
Interest and other, net 170 30 1,801 845
-------- -------- -------- --------
Net loss $ (861) $ (2,383) $ (7,640) $(13,798)
======== ======== ======== ========
Basic and diluted net loss per share $ (0.01) $ (0.04) $ (0.13) $ (0.25)
======== ======== ======== ========
Weighted-average shares outstanding:
Basic and diluted 61,141 54,895 59,684 54,110
======== ======== ======== ========
Reconciliation of net loss as reported
to pro forma net loss:
Three Months Ended Twelve Months Ended
------------------------------ ----------------------------
July 31, 2004 July 31, 2003 July 31, 2004 July 31, 2003
------------- ------------- ------------- -------------
Net loss as reported $ (861) $ (2,383) $ (7,640) $(13,798)
Non recurring charges:
Restructuring cost and other special charges -- (229) 3,209 (316)
Restructuring costs classified as cost of goods (12) (6) (12) (432)
Amortization of deferred stock compensation -- 28 20 144
Amortization of intangible assets 3 217 12 2,149
Amortization of intangible assets, and
other long-term assets -- 239 -- 239
Remeasurement of warrant liability -- -- (1,566) --
-------- -------- -------- --------
Net loss before non cash charges $ (870) $ (2,134) $ (5,977) $(12,014)
======== ======== ======== ========
Basic and diluted net loss per share - pro forma $ (0.01) $ (0.04) $ (0.10) $ (0.22)
======== ======== ======== ========
Weighted-average shares outstanding:
Basic and diluted 61,141 54,895 59,684 54,110
======== ======== ======== ========
VA Software Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 31, 2004 July 31, 2003
------------- -------------
ASSETS
Current assets:
Cash, cash equivalents, and current marketable securities $ 28,560 $ 34,617
Accounts receivable, net 3,909 1,928
Inventories 1,069 388
Prepaid expenses and other assets 1,045 1,231
--------- ---------
Total current assets 34,583 38,164
Long-term marketable securities 16,933 5,130
Property and equipment, net 1,208 4,267
Intangible assets, net 13 21
Other assets 942 913
--------- ---------
Total assets $ 53,679 $ 48,495
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,674 $ 863
Accrued restructuring liabilities 3,440 4,117
Accrued liabilities and other 3,602 4,360
--------- ---------
Total current liabilities 8,716 9,340
Accrued restructuring liabilities, net of current portion 7,843 10,772
Other long-term liabilities 1,349 1,181
--------- ---------
Total liabilities 17,908 21,293
--------- ---------
Stockholders' equity:
Common stock 62 56
Additional paid-in capital 783,242 766,761
Deferred stock compensation -- (20)
Accumulated other comprehensive income/(loss) (171) 128
Accumulated deficit (747,362) (739,723)
--------- ---------
Total stockholders' equity 35,771 27,202
--------- ---------
Total liabilities and stockholders' equity $ 53,679 $ 48,495
========= =========