VA Software Reports Fourth Quarter And Fiscal Year 2004 Results
Fourth quarter software revenue grows by 92% year-over-year and total fiscal year 2004 company revenue increases 21% compared to fiscal year 2003
FREMONT, CA August 26, 2004 VA Software Corporation (Nasdaq: LNUX), provider of the award-winning SourceForge® Global Development Platform™ for optimizing distributed development, and parent company of OSTG, the leading online network of news and information sites for IT managers and development professionals, today announced financial results for its fourth quarter and fiscal year 2004, ended July 31, 2004.
Total fourth quarter fiscal 2004 revenue grew 12% to $7.3 million, compared to fourth quarter fiscal 2003 total revenue of $6.6 million. Revenue from the software business increased 92% to $1.6 million in fourth quarter fiscal 2004 from $0.8 million in fourth quarter fiscal 2003. Total revenue for the year ended July 31, 2004 was $29.3 million, up 21% compared to $24.2 million for the year ended July 31, 2003. Revenue from the software business increased 71% to $5.0 million for the year ended July 31, 2004 compared to $2.9 million for the year end July 31, 2003.
On a GAAP basis, the fourth quarter fiscal 2004 net loss was $0.9 million, or $0.01 per share, compared to last year's fourth quarter fiscal 2003 GAAP net loss of $2.4 million, or $0.04 per share. The fourth quarter fiscal 2004 GAAP net loss includes a $12,000 restructuring credit classified in cost of sales due to the release of remaining warranty reserve associated with the pre-existing hardware business and a $3,000 charge for amortization of intangible assets. For the year ended July 31, 2004, the company's GAAP net loss was $7.6 million, or $0.13 per share, compared to $13.8 million, or $0.25 per share, for the year July 31, 2003.
As specified in the attached reconciliation of net loss as reported to pro forma net loss, the fourth quarter fiscal 2004 net loss before non-recurring charges was $0.9 million, or $0.01 per share, compared to last year's fourth quarter fiscal 2003 net loss before non-recurring charges of $2.1 million, or $0.04 per share. For the year ended July 31, 2004, the net loss before non-recurring charges was $6.0 million, or $0.10 per share, compared to $12.0 million, or $0.22 per share, for the year ended July 31, 2003. Cash and investments remain strong at $45.5 million as of July 31, 2004.
"Our financial results for the fourth quarter and for the year reflect our emphasis on execution. Software revenue increased to $1.6 million during the fourth quarter driven by the addition of 11 new accounts as well as purchases by our installed base. We enter fiscal year 2005 having sold our SourceForge solution to 97 customers," said Ali Jenab, President and CEO. "We have also positioned our online business, OSTG for growth in fiscal year 2005. OSTG, with its focused emphasis on providing up-to-the-minute news about Linux and other open source technologies to the IT community, is poised to capitalize on the growing interest in open source solutions. In addition, OSTG's recently announced strategic relationships with IDG and Yahoo! expand OSTG's reach beyond our historical advertisers."
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 (800) 934-3942 or (402) 220-1162.
Use of NonGAAP 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, impairment of goodwill, intangible assets and other long-term assets, remeasurement of warrant liability, 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), formerly OSDN, and the creator of SourceForge. SourceForge.net is the global nexus for the Open Source community with 85,000+ Open Source projects and 900,000+ 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 230 million page views and nearly 16 million unique visitors every single month.
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 VA's anticipated financial performance and continued progress as a company, including OSTG's anticpated online advertising growth and ability to capitalize on interest in open source solutions. 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, 2003 and Form 10-Q for the fiscal quarter ended April 30, 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. Slashdot is a registered trademark of the OSTG, 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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