VA Software Reports Fourth Quarter and Fiscal Year 2003 Results
Fourth Quarter Fiscal 2003 Revenue Increases 42% Compared To Fourth Quarter Fiscal 2002
FREMONT, CA August 27, 2003 VA Software Corporation (Nasdaq: LNUX), provider of the awardwinning SourceForge™ collaborative application 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 fourth quarter and fiscal year 2003, ended July 31, 2003.
Total fourth quarter fiscal 2003 revenue grew 42% to $6.6 million, compared to fourth quarter fiscal 2002 total revenue of $4.6 million. Total revenue for the year ended July 31, 2003 was $24.2 million, compared to $20.4 million for the year ended July 27, 2002. Revenue associated with the exited hardware business was $0.2 million in both the fourth quarters of fiscal 2003 and fiscal 2002; revenue associated with the exited hardware business declined to $0.7 million for the year ended July 31, 2003 compared to $3.3 million for the year ended July 27, 2002. Revenue from the ongoing software and online businesses increased 47% to $6.4 million in the fourth quarter of fiscal 2003 from $4.4 million in the fourth quarter of fiscal 2002. Revenue from the ongoing software and online businesses grew 38% to $23.5 million for fiscal 2003 from $17.1 million for fiscal 2002.
On a GAAP basis, the fourth quarter fiscal 2003 net loss was $2.4 million, or $0.04 per share, compared to last year's fourth quarter fiscal 2002 GAAP net loss of $18.8 million, or $0.35 per share. The fourth quarter fiscal 2003 GAAP net loss includes $0.2 million in restructuring credits and a $0.5 million charge for amortization of intangible assets and deferred stock compensation and impairment of long-term assets. For the year ended July 31, 2003, the company's GAAP net loss was $13.8 million, or $0.25 per share, compared to $91.0 million, or $1.72 per share, for the year ended July 27, 2002.
The fourth quarter fiscal 2003 net loss before nonrecurring charges, which excludes restructuring and other special charges, amortization of intangible assets and deferred stock compensation and impairment of long-term assets, improved to $2.1 million, or $0.04 per share, compared to last year's fourth quarter fiscal 2002 net loss, before nonrecurring charges, of $3.7 million, or $0.07 per share. Cash and investments remain strong at $39.7 million as of July 31, 2003.
"We have made great progress as a company during fiscal 2003. Sales of SourceForge Enterprise Edition increased by over 150% compared to fiscal 2002 as we added 31 new customers to bring our installed base to 55 customers. Our recently announced sale to IBM for their internal use is one of many customer validations of the value of our product," said Ali Jenab, President and CEO. "Fourth quarter financial results exceeded our expectations on all counts. Our software revenue increased by 56% and online revenue grew a strong 45% compared to last year's fourth quarter. Advertising revenue achieved record levels during July. As we enter fiscal 2004, we are well positioned to continue the significant progress we have made as a company."
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) 450-0785 or (612) 332-0632. A replay of the call will be available for 30 days by dialing (800) 475-6701 or (320) 365-3844; passcode 692527.
Use of Non-GAAP 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, 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 awardwinning collaborative application development and project management platform. SourceForge is an integrated webbased application that enables IT and software engineering organizations to reduce risk and costs by managing application development more effectively. SourceForge centralizes project information into a searchable database while integrating software development and collaboration tools with the ability to track, measure, and report on software project activity in realtime. With SourceForge, organizations with distributed teams and offshore development centers realize improved productivity, communication, coordination, collaboration, project clarity and insight. The result is significantly improved project manageability and operational efficiency. Today, SourceForge technology is at work in major Fortune 1000 companies in financial services, defense and aerospace, manufacturing, transportation, communications and government, and is in use by over 700,000 developers worldwide. Information on how SourceForge aligns IT and business is available at www.vasoftware.com.
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 forward-looking statements that involve risks and uncertainties, including statements regarding VA's anticipated financial performance and continued progress as a company (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; the possibility of further deterioration in the general economy; 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 27, 2002 and Form 10-Q for the fiscal quarter ended April 26, 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 net loss before nonrecurring charges:
CONDENSED CONSOLIDATED BALANCE SHEETS
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