Exhibit 99.1
Keynote's Preliminary Second Quarter 2006 Revenue Below Expectations
SAN MATEO, Calif.--(BUSINESS WIRE)--April 3, 2006--Keynote Systems
(Nasdaq:KEYN):
-- Shortfall in Customer Experience Management (CEM) Revenue
-- SLM Subscription Business Remains Stable
-- Patrick Quirk, Executive Vice President of Worldwide Customer
Operations, Resigns; Jeff Kraatz Promoted to VP of Sales,
Americas and Asia Pacific
Keynote Systems (Nasdaq:KEYN), the worldwide leader in services
that improve online business performance and communications
technologies, today announced that it expects total revenue for the
period ended March 31, 2006, to be between $12.5 million and $13.0
million, as compared to the Company's total revenue guidance range
between $13.5 million and $14.0 million.
Management expects the second quarter 2006 revenue to be impacted
by fewer customer experience management (CEM) engagement sales than
anticipated. While load-testing engagements were down somewhat,
service level management (SLM) subscription revenue remained stable as
compared to the first quarter 2006 and grew compared to second quarter
2005.
"The long-term company fundamentals remain strong. In fact, today
we announced the exciting acquisition of SIGOS, a German-based
technology leader in mobile data network testing and active service
monitoring solutions, expanding our position in the mobile space,"
said Umang Gupta, chairman and CEO of Keynote. (See separate
acquisition press release issued today.)
"The expected shortfall in our CEM revenue will cause the company
to miss its guidance for the first time in Keynote's history. We are
taking decisive action to reverse this decline and grow at the levels
we originally targeted. First, we intend to separate the CEM and SLM
consulting businesses and concentrate all CEM consulting, subscription
and competitive intelligence (CI) products and resources under a
single business unit chief with the responsibility to resume overall
CEM revenue growth. Until we have filled that position, the business
unit will report to me. The upcoming release of WebEffective 4.5 will
support these efforts, as our CEM offering continues to become more
self-service-oriented, potentially enabling us to reduce the cost of
CEM services and to emphasize CEM subscription license sales. Also, we
believe we can increase product margins by greater focus on
competitive intelligence studies that can be sold as a packaged
product, in addition to custom consulting engagements."
Keynote also announced a series of executive changes:
-- Patrick Quirk, executive vice president of worldwide customer
operations, has resigned from the company.
-- Jeff Kraatz, Keynote's vice president of Asia Pacific Sales,
has been promoted to vice president of sales, the Americas and
Asia Pacific. He was previously vice president and managing
director of Asia Pacific operations. Mr. Kraatz has over 25
years executive and general management experience with U.S.
and Asia Pacific-based organizations including long-term
stints at Octel, Lucent and 10 years at Sprint growing a
division of the company from start-up mode to $60 million in
sales. Kraatz also has served as the CEO of two B2B e-commerce
start-ups.
-- Don Aoki, senior vice president, engineering and operations,
has been appointed to the position of senior vice president of
corporate development and will be responsible for
acquisitions integration and will also assist Mr. Gupta in
management of the CEM business.
Keynote expects to hold its regularly scheduled call to announce
final second quarter results on May 2, 2006 at 2:00 p.m. pacific time.
Further details regarding that call will be announced shortly.
Keynote will host a conference call and simultaneous Web cast at
8:30 a.m. (EDT) today, April 3, 2006, to discuss this news. To listen
to the live conference call in the U.S. and Canada dial (866)
271-6293. Outside the U.S. and Canada dial (706) 679-4457. The
conference ID is #7027756. The Web cast of the call will be available
at the Investor Relations section of Keynote's Web site at
www.keynote.com under 'Investors.'
Playback of the conference call will be available at 9:30 a.m.
(EDT) on Monday, April 3, 2006. To access the replay in the U.S. and
Canada dial (800) 642-1687. To access the replay outside the U.S. and
Canada dial (706) 645-9291. The passcode is #7027756.
About Keynote
Founded in 1995, Keynote Systems (Nasdaq:KEYN) is the worldwide
leader in services that improve online business performance and
communications technologies. Keynote helps approximately 2,300
corporate customers and 11,000 individual subscribers become "the best
of the best" online. The business premise supporting Keynote's mission
is: "Online businesses can't manage what they don't measure." As an
independent and trusted third-party, Keynote provides IT and marketing
executives with unbiased benchmarking data, competitive analysis and
operational metrics from the customer perspective. This data measures
service levels and customer experience of Web sites, broadband
services and mobile communications.
Known as The Internet Performance Authority(R), Keynote manages a
market-leading infrastructure of 1,600+ measurement computers and
mobile devices in over 114 locations and 66+ metropolitan areas
worldwide that assess service levels and a panel of over 160,000
consumers who participate in interactive Web site tests that assess
user experience. These online user experience tests capture customer
attitude and behavior to answer the critical "why" behind the "what."
Keynote's geographically distributed measurement services, on-site
monitoring appliances, competitive intelligence and custom studies
ensure that its customers outpace their competitors in online service
levels and overall user experience.
Keynote Systems, Inc. is headquartered in San Mateo, California,
and can be reached at www.keynote.com or by phone in the U.S. at
650-403-2400.
Forward-Looking Statements
This press release contains forward-looking statements that are
not purely historical regarding Keynote or management's intentions,
hopes, beliefs, expectations and strategies for the future. Because
such statements deal with future events, they are subject to various
risks and uncertainties, and actual results could differ materially
from Keynote's current expectations.
Forward-looking statements in this release include, but are not
limited to, those related to future financial results, the effects of
future organizational changes, benefits of the acquisition of Sigos
and future growth of Keynote's services. It is important to note that
actual outcomes and Keynote's actual results could differ materially
from those in such forward-looking statements. Factors that could
cause actual results to differ materially include risks and
uncertainties such as financial results for the quarter are estimates
and have not finally reviewed for the quarter and therefore remain
subject to additional adjustments, the risks related to the Sigos
acquisition described in the press release issued by Keynote today,
Keynote's ability to attract and retain qualified personnel to fill
open positions, particularly given the substantial competition for
qualified personnel in Internet-related industries, pricing pressure
with respect to services, competition, and Keynote's ability to
develop and introduce new services in a timely manner and customer
acceptance of new services. Readers should also refer to the risks
outlined in Keynote's reports filed with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for its fiscal
year ended September 30, 2005, and its quarterly reports on Form 10-Q
and any current reports on Form 8-K filed during the fiscal year.
All forward-looking statements and reasons why results might
differ included in this release are made as of the date of this press
release, based on information available to Keynote as of the date of
this press release, and Keynote assumes no obligation to update any
such forward-looking statement or reasons why results might differ.
Keynote and The Internet Performance Authority are registered
trademarks of Keynote Systems, Inc. Other trademarks are the property
of their respective owners. (C) 2006 Keynote Systems, Inc.
CONTACT: Keynote Systems
Dan Berkowitz, 650-403-3305 (Media/Investor Relations)
Mobile: 415-518-7870
dberkowitz@keynote.com