VA Software Reports Second Quarter Fiscal Year 2004 Results
Second quarter revenue increases 35% and net loss decreases 61% yearoveryear
FREMONT, CA February 24, 2004 VA Software Corporation (Nasdaq: LNUX), provider of the award-winning SourceForge™ global development platform, and parent company of OSDN™ , the leading network of media and commerce sites serving the Open Source, developer and IT communities, today announced financial results for its second quarter of fiscal year 2004, ended January 31, 2004.
Total second quarter fiscal 2004 revenue grew 35% to $8.9 million, compared to second quarter fiscal 2003 total revenue of $6.6 million. Revenue from the ongoing software and online businesses increased 39% to $8.8 million in second quarter fiscal 2004 from $6.3 million in second quarter fiscal 2003. Total revenue for the six months ended January 31, 2004 was $14.7 million, up 26% compared to $11.6 million for the six months ended January 25, 2003.
On a GAAP basis, the second quarter fiscal 2004 net loss was $1.4 million, or $0.02 per share, compared to last year's second quarter fiscal 2003 GAAP net loss of $3.7 million, or $0.07 per share. The second quarter fiscal 2004 GAAP net loss includes a $641,000 remeasurement of warrant liability credit, $18,000 in restructuring credits and a $3,000 charge for amortization of intangible assets. For the six months ended January 31, 2004, the company's GAAP net loss was $2.7 million, or $0.05 per share, compared to $7.8 million, or $0.15 per share, for the six months ended January 25, 2003.
As specified in the attached reconciliation of net loss as reported to pro forma net loss, the second quarter fiscal 2004 net loss before non-recurring charges was $2.1 million, or $0.03 per share, compared to last year's second quarter fiscal 2003 net loss before non-recurring charges of $3.4 million, or $0.06 per share. Cash and investments remain strong at $50.3 million as of January 31, 2004.
"We are very pleased with second quarter results. Software revenue grew by 71% over last year's second quarter as we increased our SourceForge Enterprise Edition installed base to 75 customers. OSDN posted record revenues at $7.7 million, up 35% yearoveryear in the seasonally strong second fiscal quarter," said Ali Jenab, President and CEO. "In addition to improving our financial results, we continue to enhance and add new functionality to our products. We released SourceForge Enterprise Edition 3.5 to address key challenges related to offshore application development, which we believe is a megatrend. The newly introduced subscription program for OSDN's SourceForge.net provides powerful premium services and enhanced functionality to deliver more manageability and control for development projects on the site."
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 (888) 428-4470 or (612) 332-0923. A replay of the call will be available for 30 days by dialing (800) 475-6701 or (320) 365-3844; passcode 718795.
Use of NonGAAP Financial Information
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, VA Software uses nonGAAP financial results. NonGAAP net income and earnings per share exclude amortization of intangible assets and deferred stock compensation, impairment of goodwill, intangible assets and other longterm assets, remeasurement of warrant liability, as well as restructuring costs and other special charges. These nonGAAP adjustments are provided to enhance the user's overall understanding of current financial performance and prospects for the future. Specifically, VA believes the nonGAAP results provide useful information to both management and investors by excluding certain expenses that VA believes are not indicative of core operating results. In addition, because VA has historically reported nonGAAP results to the investment community, VA believes the inclusion of nonGAAP numbers provides consistency in financial reporting. Further, these nonGAAP results are one of the primary indicators management uses for planning and forecasting in future periods. The method VA uses to produce nonGAAP 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 the provider of SourceForge Enterprise Edition, the webbased application that significantly increases a company's return on its investment in software development. SourceForge improves communication, collaboration, and synchronization amongst multisite team members and gives managers realtime visibility and control over their projects, regardless of location. SourceForge enables higher developer productivity and faster project completion whether teams are inhouse, outsourced, onshore or offshore. Major Fortune 1000 firms and more than 750,000 developers use SourceForge technology to power their global development efforts.
OSDN, the Open Source Development Network, Inc., a subsidiary of VA Software, is the most dynamic communitydriven IT media network on the web. The cornerstone of the Open Source community, OSDN attracts every level of IT decision maker and buyer, from CTOs to project managers. Technologists, developers and system administrators turn to OSDN sites to create, debate, and make or break IT news, tools, technologies and techniques. OSDN is the home of several popular web sites, including the award winning news discussion site, Slashdot.org, and the world's largest collaborative software development site, SourceForge.net.
Note Regarding ForwardLooking Statements: This press release contains forwardlooking statements that involve risks and uncertainties, including statements regarding VA's anticipated financial performance and continued progress as a company as well as future trends in software application development (as described, without limitation, in a quotation from management contained in this press release) and the benefits of our products to our customers. Actual results may differ materially from those expressed or implied in such forwardlooking statements due to various factors, including: VA's success in expanding its SourceForge enterprise software business; VA's success in meeting scheduled product availability dates; 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 enterpriselevel 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 10K for the fiscal year ended July 31, 2003 and Form 10Q for the fiscal quarter ended October 31, 2003, 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 forwardlooking information contained in this news release.
Note to editors: VA Software, SourceForge and OSDN are trademarks or registered trademarks of VA Software Corporation in the United States and other countries. Slashdot is a registered trademark of the Open Source Development Network, Inc., in the United States and other countries. All other trademarks are property of their respective owners.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Reconciliation of net loss as reported to pro forma net loss
CONDENSED CONSOLIDATED BALANCE SHEETS
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