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PRESS RELEASE
VA SOFTWARE REPORTS FOURTH QUARTER AND FISCAL YEAR 2005 RESULTS
Fiscal year software revenue grows 51% year-over-year
FREMONT, CA--August 30, 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 fourth quarter and
fiscal year 2005, ended July 31, 2005.
Total fourth quarter fiscal 2005 revenue grew to $8.4 million, compared to
fourth quarter fiscal 2004 total revenue of $7.3 million. Software revenue
increased 34% to $2.2 million in fourth quarter fiscal 2005 from $1.6 million in
fourth quarter fiscal 2004. For the year ending July 31, 2005, total revenue
grew to $32.9 million, compared to $29.3 million for the year ending July 31,
2004, while software revenue grew 51% to $7.6 million for the year ending July
31, 2005 compared to $5.0 million for the year ending July 31, 2004.
On a GAAP basis, the fourth quarter fiscal 2005 net loss was $1.0 million, or
$0.02 per share, compared to last year's fourth quarter fiscal 2004 GAAP net
loss of $0.9 million, or $0.01 per share. For the year ended July 31, 2005, the
company's GAAP net loss was $4.7 million, or $0.08 per share, compared to $7.6
million, or $0.13 per share, for the year ended July 31, 2004.
As specified in the attached reconciliation of net loss as reported to pro forma
net loss, the fourth quarter fiscal 2005 net loss was $0.9 million, or $0.01 per
share, compared to the fourth quarter fiscal 2004 net loss of $0.9 million, or
$0.01 per share. The fiscal 2005 net loss before non-recurring charges was $4.7
million, or $0.08 per share, compared to fiscal 2004 net loss before
non-recurring charges of $6.0 million, or $0.10 per share. Cash and investments
remain strong at $39.4 million as of July 31, 2005.
"We are pleased with our performance this quarter. Our software revenue grew by
34% year-over-year as we saw new and current customers purchase more seats. Our
media sales team is fully staffed as we enter the first quarter of FY 06. Our
gross margin improved and our reported loss was comparable to last year despite
an expense of $0.9 million for Sarbanes Oxley compliance-related expense that
impacted the quarter," said Ali Jenab, president and CEO. "We are excited about
our prospects for FY 06. The new version of SourceForge Enterprise Edition
released in April 2005 is a much stronger collaborative tool that meets the
needs of enterprises. We are making significant improvements to SourceForge.net
that will benefit both the user community as well as the advertisers reaching
out to that community. Our other media properties offer solutions that meld
advertiser branding with site editorial. We enter fiscal 2006 with these product
improvements and strong sales pipelines."
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) 562-0857 or (402) 220-7341.
Recent Highlights
o Customers. Through the fourth quarter of fiscal 2005, VA Software has sold
the SourceForge solution to a total of 130 customers. During the quarter,
Applied Biosystems, British Telecom, Aeroflex, Doner Advertising and
E*Trade were added to the installed base. In addition, existing customers
including Los Alamos National Laboratories, ETAS, Eli Lilly, Hewlett
Packard and Metasolv purchased additional SourceForge licenses or services.
o SourceForge(R) Enterprise Edition added in-depth, out-of-the-box
integration with Perforce, the Fast Software Configuration Management
System, as well as a new, simplified SCM Adapter that enables other
Software Configuration Management (SCM) tools to be rapidly integrated with
SourceForge Enterprise Edition. SourceForge Enterprise Edition also
supports out-of-the-box integration with CVS and Subversion.
o SourceForge.net. In order to improve the user experience on SourceForge.net
and offer new opportunities to advertisers, OSTG commenced a
re-architecture of SourceForge.net, the world's leading development and
download repository of open source code and applications. OSTG also
launched Eclipse.TechForge.com, a community site focused on the Eclipse
Open Source platform, plug-ins and associated technology from
SourceForge.net. TechForge channels provide IT professionals and developers
with in-depth resources and information about specific vertical
technologies. SourceForge.net now offers "Real time Statistics," which
allows site subscribers to view traffic statistics with hourly granularity
for the past 48 hours. SourceForge.net's new Advanced Search service
includes Boolean searching, pervasive search and near-real time search data
updates.
o OSTG. In an effort to better meet the needs of advertisers and provide the
community with better navigation, OSTG introduced a new and innovative
marketing program that provides advertisers and visitors with a
contextually relevant content integration program. OSTG's latest Integrated
Marketing Solutions include SourceForge.net category sponsorships.
Integrated into site navigation, this program enables vendors to create
awareness, consideration and adoption of their products and services in a
targeted environment. Limited to three sponsors per category, this program
provides significant share of voice for advertisers in their desired
technology category.
The OSTG network as a whole serves more than 290 million page views and
nearly 19 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, Vonage, AMD, Rackspace, IBM,
HP and Sun Microsystems.
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 loss and loss 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 unusual
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 more than
100,000 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 290 million page views and nearly
19 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 business and sales pipeline, our prospects for our
fiscal year 2006, expected benefits of the latest version of SourceForge
Enterpirse Edition, and the ongoing improvements to SourceForge.net with
expected benefits therefrom. 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; the size and timing of execution of enterprise-level licenses; VA's
reliance upon strategic relationships with other companies; VA's success in
designing and offering inovative online advertising programs; decreases or
delays in online advertising spending; VA's ability to achieve and sustain
higher levels of revenue; VA's ability to protect and defend its intellectual
property rights; 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 April 30, 2005, 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)
(Unaudited)
Three Months Ended Year Ended
----------------------------------------- ---------------------------------------
July 31, 2005 July 31, 2004 July 31, 2005 July 31, 2004
-------------------- ----------------- ----------------- ------------------
Software revenues $ 2,175 $ 1,618 $ 7,555 $ 4,995
Online Media revenues 2,221 2,666 8,130 9,728
E-Commerce revenues 3,383 2,527 14,918 12,567
Online Images revenues 572 506 2,284 1,922
Other revenues - - - 49
-------------------- ----------------- ----------------- ------------------
Net revenues 8,351 7,317 32,887 29,261
Software cost of revenues 254 364 1,028 1,860
Online Media cost of revenues 811 780 3,320 2,969
E-commerce cost of revenues 2,548 2,197 11,591 10,225
Online Images cost of revenues 109 131 495 495
Other cost of revenues - (12) - (12)
-------------------- ----------------- ----------------- ------------------
Cost of revenues 3,722 3,460 16,434 15,537
-------------------- ----------------- ----------------- ------------------
Gross margin 4,629 3,857 16,453 13,724
Operating Expenses:
Sales and marketing 2,514 2,470 10,060 10,093
Research and development 1,481 1,522 6,122 6,732
General and administrative 1,792 893 5,925 4,665
Restructuring costs and other special
charges - - (101) 3,209
Amortization of deferred stock
compensation - - - 20
Amortization of intangible assets 1 3 12 12
-------------------- ----------------- ----------------- ------------------
Total operating expenses 5,788 4,888 22,018 24,731
-------------------- ----------------- ----------------- ------------------
Loss from operations (1,159) (1,031) (5,565) (11,007)
Remeasurement of warrant liability - - - 1,566
Interest and other, net 159 170 871 1,801
-------------------- ----------------- ----------------- ------------------
Net loss $ (1,000) $ (861) $ (4,694) $ (7,640)
==================== ================= ================= ==================
Basic and diluted net loss per share $ (0.02) $ (0.01) $ (0.08) $ (0.13)
==================== ================= ================= ==================
Weighted-average shares outstanding:
Basic and diluted 61,586 61,141 61,454 59,684
==================== ================= ================= ==================
Reconciliation of net loss as reported
to pro forma net loss: Three Months Ended Year Ended
----------------------------------------- ---------------------------------------
July 31, 2005 July 31, 2004 July 31, 2005 July 31, 2004
-------------------- ----------------- ----------------- ------------------
Net loss as reported $ (1,000) $ (861) $ (4,694) $ (7,640)
Non recurring charges:
Restructuring cost and other special
charges - (12) (101) 3,197
Amortization of deferred stock
compensation - - - 20
Amortization of intangible assets 1 3 12 12
Impairment of goodwill and intangible
assets and other long-term assets 87 - 87 -
Remeasurement of warrant liability - - - (1,566)
-------------------- ----------------- ----------------- ------------------
Pro forma net loss $ (912) $ (870) $ (4,696) $ (5,977)
==================== ================= ================= ==================
Basic and diluted net loss per share - pro
forma $ (0.01) $ (0.01) $ (0.08) $ (0.10)
==================== ================= ================= ==================
Weighted-average shares outstanding:
Basic and diluted 61,586 61,141 61,454 59,684
==================== ================= ================= ==================
VA Software Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 31, 2005 July 31, 2004
--------------------- ---------------------
ASSETS
Current assets:
Cash, cash equivalents and short-term investments $ 36,614 $ 28,559
Accounts receivable, net 4,306 3,909
Inventories 773 1,069
Prepaid expenses and other assets 1,014 1,046
--------------------- ---------------------
Total current assets 42,707 34,583
Long-term investments and long-term restricted cash 2,806 16,933
Property and equipment, net 736 1,208
Other assets 1,132 955
--------------------- ---------------------
Total assets $ 47,381 $ 53,679
===================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,574 $ 1,674
Accrued restructuring liabilities 1,748 3,440
Deferred revenue 2,134 1,750
Accrued liabilities and other 2,882 1,853
--------------------- ---------------------
Total current liabilities 8,338 8,717
Accrued restructuring liabilities, net of current portion 6,107 7,843
Other long-term liabilities 1,271 1,349
--------------------- ---------------------
Total liabilities 15,716 17,909
--------------------- ---------------------
Stockholders' equity:
Common stock 62 62
Additional paid-in capital 783,891 783,242
Accumulated other comprehensive gain (231) (171)
Accumulated deficit (752,057) (747,363)
--------------------- ---------------------
Total stockholders' equity 31,665 35,770
--------------------- ---------------------
Total liabilities and stockholders' equity $ 47,381 $ 53,679
===================== =====================