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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-relatedexpense 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.comor 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
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 Enterprise Edition, and the ongoing improvements to SourceForge.net, withexpected 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 sitewww.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
[email protected]
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 |
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 |