Exhibit 99.1
VA SOFTWARE
PRESS RELEASE
VA SOFTWARE REPORTS SECOND QUARTER FISCAL YEAR 2005 RESULTS
Second quarter software revenue grows 29% year-over-year
FREMONT, CA--February 22, 2005--VA Software Corporation (Nasdaq: LNUX), a
leading provider of software, information and community support for IT and
development professionals, today announced financial results for its second
quarter fiscal year 2005, ended January 31, 2005.
Total second quarter fiscal 2005 revenue grew 12% to $9.9 million, compared to
second quarter fiscal 2004 total revenue of $8.9 million. Revenue from the
software business increased 29% to $1.5 million in second quarter fiscal 2005
from $1.2 million in second quarter fiscal 2004. For the six months ending
January 31, 2005, total revenue grew 16% to $16.9 million, compared to $14.7
million for the six months ending January 31, 2004, while software revenue grew
73% to $3.5 million for the six months ending January 31, 2005 compared to $2.0
million for the six months ending January 31, 2004.
On a GAAP basis, the second quarter fiscal 2005 net loss was $0.7 million, or
$0.01 per share, compared to last year's second quarter fiscal 2004 GAAP net
loss of $1.4 million, or $0.02 per share. For the six months ended January 31,
2005, the company's GAAP net loss was $2.3 million, or $0.04 per share, compared
to $2.7 million, or $0.05 per share, for the six months ended January 31, 2004.
As specified in the attached reconciliation of net loss as reported to pro forma
net loss, the second quarter fiscal 2005 net loss before non-recurring charges
was $0.8 million, or $0.01 per share, compared to last year's second quarter
fiscal 2004 net loss before non-recurring charges of $2.1 million, or $0.03 per
share. Cash and investments remain strong at $42.7 million as of January 31,
2005.
"We are pleased with our financial performance this quarter. We reduced the net
loss by 50% and our cash usage during the quarter was only $0.9 million. Our
E-commerce business had record sales in its traditionally strong second quarter.
We added eight new customers for our software business," said Ali Jenab,
president and CEO. "We continue to position our Online Media business for
accelerating growth later in the year by investing in sales and marketing
initititives as well as improving our editorial content."
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 (888) 566-0191 or (402) 351-0790.
Recent Highlights
o Customers. During the second quarter of fiscal 2005, VA Software added
eight new SourceForge(R) Enterprise Edition accounts, including Raytheon
and Pixelworks to its installed base. In addition, existing customers
including Verisign, HP, General Atomics, Booz Allen Hamilton, JP Morgan,
Lockheed Martin and Sandia National Laboratories purchased additional
SourceForge licenses or services. The SourceForge solution has been sold to
116 enterprises to date.
o SourceForge Enterprise Edition 4.2. The company announced SourceForge
Enterprise Edition Version 4.2, which is scheduled for release in April
2005. The new release adds SourceForge Explorer, a new Microsoft(R) .NET
Framework-based application that allows SourceForge-held data to be
accessed from a familiar Windows(R) desktop environment; integration with
Subversion, the Open Source change management system; bi-directional
synchronization with Microsoft Project; and LDAP support for improved
access control and single sign-on for SourceForge users. In addition, the
company announced Tapestry(TM), a secure portal for use by SourceForge
Enterprise Edition customers and partners. Tapestry enables customers and
partners to view, learn about, and benefit from the innovations and
integrations other users have made with SourceForge Enterprise Edition. By
leveraging the work of other users, customers can minimize the cost and
time spent on integration between SourceForge Enterprise Edition and other
tools, such as Software Configuration Management (SCM), project management
or customer support applications, greatly reducing the time to adoption.
o ThinkGeek.com. ThinkGeek.com reached record sales level in the
traditionally strong second fiscal quarter, with sales growing 16% and
gross margins improving by 5 points. Best sellers included the James Bond
Stealth Digital Camera, a Swiss Army Knife with a USB Drive and Shower
Shock Caffeinated Soap.
o OSTG. OSTG is the leading network of news, community and information sites
for IT professionals. For the twelfth-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 Winter 2004/2005 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,
announced its millionth registered user earlier this month and is now
hosting over 95,000 projects.
The network as a whole serves more than 288 million page views and 18
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 Sun Microsystems, IBM, Vonage, Microsoft,
Rackspace, Dell, Barracuda and Sybase.
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, 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), and the creator of SourceForge.
SourceForge.net is the global nexus for the Open Source community with 95,000+
Open Source projects and over 1 million 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 288 million page views and nearly
18 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 our Online Media business' anticipated online advertising
growth and the expected April 2005 release of SourceForge Enterprise Edition
Version 4.2. 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, 2004 and Form 10-Q for the fiscal quarter ended
October 31, 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.
SourceForge.net, Slashdot and freshmeat are registered trademarks of OSTG, Inc.,
in the United States and other countries. ThinkGeek is a registered trademark of
ThinkGeek, 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 Six Months Ended
----------------------------------------- ---------------------------------------
January 31, 2005 January 31, 2004 January 31, 2005 January 31, 2004
-------------------- ----------------- ----------------- ------------------
(unaudited)
Software revenues $ 1,531 $ 1,183 $ 3,462 $ 1,998
Online Media revenues 2,008 2,223 3,857 4,499
E-commerce revenues 5,820 5,000 8,514 7,242
Online Images revenues 568 435 1,092 868
Other revenues -- 15 -- 46
-------------------- ----------------- ----------------- ------------------
Net revenues 9,927 8,856 16,925 14,653
Software cost of revenues 288 541 520 1,136
Online Media cost of revenues 838 689 1,640 1,451
E-commerce cost of revenues 4,359 3,974 6,714 5,751
Online Images cost of revenues 126 110 256 226
-------------------- ----------------- ----------------- ------------------
Cost of revenues 5,611 5,314 9,130 8,564
-------------------- ----------------- ----------------- ------------------
Gross margin 4,316 3,542 7,795 6,089
Operating Expenses:
Sales and marketing 2,405 2,592 4,816 4,984
Research and development 1,585 1,716 3,056 3,543
General and administrative 1,340 1,558 2,805 2,282
Restructuring costs and other special (101) (18) (101) (35)
charges
Amortization of deferred stock -- -- -- 20
compensation
Amortization of intangible assets 5 3 8 6
-------------------- ----------------- ----------------- ------------------
Total operating expenses 5,234 5,851 10,584 10,800
-------------------- ----------------- ----------------- ------------------
Loss from operations (918) (2,309) (2,789) (4,711)
Remeasurement of warrant liability -- 641 - 641
Interest and other, net 216 237 471 1,416
-------------------- ----------------- ----------------- ------------------
Net loss $ (702) $ (1,431) $ (2,318) $ (2,654)
==================== ================= ================= ==================
-------------------- ----------------- ----------------- ------------------
Basic and diluted net loss per share $ (0.01) $ (0.02) $ (0.04) $ (0.05)
==================== ================= ================= ==================
Weighted-average shares outstanding:
-------------------- ----------------- ----------------- ------------------
Basic and diluted 61,412 60,355 61,403 58,357
==================== ================= ================= ==================
Reconciliation of net loss as reported
to pro forma net loss: Three Months Ended Six Months Ended
----------------------------------------- ---------------------------------------
January 31, 2005 January 31, 2004 January 31, 2005 January 31, 2004
-------------------- ----------------- ----------------- ------------------
(unaudited)
Net loss as reported $ (702) $ (1,431) $ (2,318) $ (2,654)
Non recurring charges:
Restructuring cost and other special (101) (18) (101) (35)
charges
Amortization of deferred stock -- -- -- 20
compensation
Amortization of intangible assets 5 3 8 6
Remeasurement of warrant liability -- (641) -- (641)
-------------------- ----------------- ----------------- ------------------
Net loss before non cash charges $ (798) $ (2,087) $ (2,411) $ (3,304)
==================== ================= ================= ==================
-------------------- ----------------- ----------------- ------------------
Basic and diluted net loss per share - pro $ (0.01) $ (0.03) $ (0.04) $ (0.06)
forma
==================== ================= ================= ==================
Weighted-average shares outstanding:
-------------------- ----------------- ----------------- ------------------
Basic and diluted 61,412 60,355 61,403 58,357
-------------------- ----------------- ----------------- ------------------
VA Software Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
January 31, July 31,
2005 2004
--------- ---------
(unaudited)
ASSETS
Current assets:
Cash, cash equivalents, and short-term investments $ 34,406 $ 28,559
Accounts receivable, net 2,704 3,909
Inventories 909 1,069
Prepaid expenses and other assets 1,459 1,046
--------- ---------
Total current assets 39,478 34,583
Long-term investments 8,288 16,933
Property and equipment, net 1,084 1,208
Other assets 729 955
--------- ---------
Total assets $ 49,579 $ 53,679
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 839 $ 1,674
Accrued restructuring liabilities 2,216 3,440
Deferred revenue 2,463 1,750
Accrued liabilities and other 2,189 1,853
--------- ---------
Total current liabilities 7,707 8,717
Accrued restructuring liabilities, net of current portion 6,903 7,843
Other long-term liabilities 1,315 1,349
--------- ---------
Total liabilities 15,925 17,909
--------- ---------
Stockholders' equity:
Common stock 62 62
Additional paid-in capital 783,554 783,242
Accumulated other comprehensive gain (281) (171)
Accumulated deficit (749,681) (747,363)
--------- ---------
Total stockholders' equity 33,654 35,770
--------- ---------
Total liabilities and stockholders' equity $ 49,579 $ 53,679
========= =========