Opsware Inc. (Nasdaq:OPSW): -- Q2 non-EDS revenue totals $19.9
million, up 121% year-over-year -- Q2 revenue grows to $25.1
million, up 78% year-over-year -- Annual revenue growth rate
accelerating to 67% this year vs. 62% last year Opsware Inc.
(Nasdaq:OPSW), the leading provider of IT automation software,
today reported results for its second quarter ended July 31, 2006,
highlighted by 121% year-over-year growth in non-EDS revenue. Net
revenue for the second quarter ended July 31, 2006, totaled $25.1
million, up 78% from the same quarter last year and above the
company's previous guidance of $23.0 to $23.5 million. Non-EDS
revenue grew to $19.9 million in the second quarter, a 121%
increase over the same quarter last year. A chart depicting
Opsware's historical non-EDS revenue growth is included in this
release. Non-EDS Derived Bookings (which equals net revenue, plus
the change in deferred revenue, plus the change in advances from
customers, all excluding the impact of EDS) totaled $17.0 million
in the second quarter, a 59% increase from the same quarter last
year. Non-EDS Derived Bookings increased 14% sequentially. A chart
depicting Opsware's historical non-EDS derived bookings growth is
included in this release. Non-GAAP net income in the second quarter
was $1.0 million or $0.01 per share, above the company's guidance
of $0.00 per share. GAAP net loss in the second quarter was $(3.8)
million or $(0.04) per share. Non-GAAP net income in the second
quarter excludes non-cash charges of approximately $0.7 million
relating to previous acquisitions and $4.0 million of non-cash
stock-based compensation. A reconciliation between net income
(loss) on GAAP and non-GAAP bases is provided in a table
immediately following the Condensed Consolidated Statements of
Operations attached to this release. The company raised its full
year revenue expectation to $102 million. "Q2 was a strong quarter
and I'm pleased with our results. We grew non-EDS revenue by 121%,
far outpacing the competition, and we reached the key milestone of
non-GAAP profitability," said Ben Horowitz, president and CEO of
Opsware Inc. "During Q2 we also shipped the Opsware System 6 suite,
the most important release in our company's history." Financial
Outlook Management provides the following guidance for its third
quarter ending October 31, 2006: -- Net revenue is expected to
range between $25 and $26 million. -- Non-GAAP EPS is expected to
be $0.00. Management provides the following guidance for its fiscal
year ending January 31, 2007: -- Net revenue is expected to be $102
million. -- Non-GAAP EPS is expected to be $0.03. The company will
provide additional detail on its financial results on the
conference call referenced below. About the Conference Call and
Webcast Opsware management will host a conference call today,
August 24, 2006, beginning at 5:00 a.m. PT (8:00 a.m. ET) to
discuss today's announcement. Interested parties may access the
conference call by dialing (800) 810-0924. A live audio version and
replay of the conference call will be available on the Investor
Relations section of Opsware's web site at
http://investor.opsware.com. About Non-GAAP Financial Information
When used in connection with historical results or forward-looking
guidance, non-GAAP net income (loss), non-GAAP profitability and
non-GAAP EPS each exclude non-cash stock-based compensation expense
and non-cash charges relating to past acquisitions. With respect to
historical results, a reconciliation between both net income (loss)
and net income (loss) per share on GAAP and non-GAAP bases is
provided in a table immediately following the Condensed
Consolidated Statement of Operations attached to this release. With
respect to forward-looking guidance, a reconciliation between EPS
on GAAP and non-GAAP bases has not been provided because EPS on a
GAAP basis depends in part upon the amount of stock based
compensation expense, which expense is dependent upon our future
stock price and other factors that cannot be determined at this
time. To supplement our consolidated financial statements presented
on a GAAP basis, we believe that these non-GAAP measures better
reflect our core operating results and thus are appropriate to
enhance the overall understanding of our past financial performance
and our prospects for the future. These adjustments to our GAAP
results are made with the intent of providing both management and
investors a more complete understanding of our underlying
operational results and trends and our performance. Management uses
these non-GAAP measures to evaluate its financial results, develop
budgets and manage expenditures. The presentation of additional
information is not meant to be considered in isolation or as a
substitute for net loss or net loss per share prepared in
accordance with GAAP. About Opsware Inc. (Nasdaq:OPSW) Opsware Inc.
is the world's leading IT automation and utility computing software
company. The growth of the Internet is driving a shift from
client/server computing to Web architecture. With this shift comes
an overwhelming proliferation of servers, network devices and
applications, creating massive complexity that makes an automated
IT model a necessity. The Opsware System automates the complete IT
lifecycle and delivers utility computing by enabling IT to
automatically provision, patch, configure, secure, change, scale,
audit, recover, consolidate, migrate, and reallocate servers,
network devices and applications. Over 350 of the world's largest
companies, outsourcers and government agencies use Opsware to
deliver this new, automated model of IT. For more information on
Opsware Inc., please visit our web site at www.opsware.com. This
press release contains forward-looking statements within the
meaning of the federal securities laws, including forecasts of our
expected revenue and earnings per share and the "Financial Outlook"
section. These forward-looking statements are based on current
information and expectations, and are subject to risks and
uncertainties that could cause actual events or results to differ
materially from these statements, including without limitation:
that the IT automation software market is relatively new and may
not develop as we expect, that our market is highly competitive and
subject to rapid and significant change, that enterprise software
spending and budgets may fluctuate depending on economic conditions
and that our revenue and operating results may vary significantly
from period to period, including due to the timing of signing
contracts with customers, delays in product releases, and our
dependence on closing a small number of relatively large
transactions each quarter. In addition, please see the section
entitled "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in our Form 10-Q
for the quarter ended April 30, 2006 that we filed with the
Securities and Exchange Commission, and subsequent filings with the
SEC. We assume no obligation to update the information in this
press release or to revise any forward-looking statements. The
graphics displaying non-EDS revenue and derived bookings in this
press release solely present historical data, and are not
necessarily indicative of results in future periods. Continued
growth is subject to several risks and uncertainties, including
those described in our SEC filings as referenced in the preceding
paragraph. Opsware is a service mark and trademark of Opsware Inc.
-0- *T OPSWARE INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands, unaudited) July January 31, 2006 31, 2006 ----------
---------- ASSETS Current assets: Cash and cash equivalents $
96,765 $ 101,898 Accounts receivable, net 21,058 17,867 Prepaid
expenses and other current assets 5,997 6,546 --------- ---------
Total current assets 123,820 126,311 Property and equipment, net
5,208 3,944 Restricted cash 2,274 2,296 Prepaid rent 1,190 1,540
Other assets 433 380 Intangibles, net 6,135 7,613 Goodwill 27,523
27,668 --------- --------- Total assets $ 166,583 $ 169,752
========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 2,381 $ 1,217 Other accrued
liabilities 13,108 11,389 Advances from customers -- 721 Deferred
revenue, current portion 25,126 29,473 Accrued restructuring costs,
current portion 298 298 Capital lease obligations, current portion
16 14 --------- --------- Total current liabilities 40,929 43,112
Capital lease obligations, net of current portion 65 74 Deferred
revenue, net of current portion 1,117 1,838 Accrued restructuring
costs, net of current portion 1,029 1,190 --------- --------- Total
liabilities 43,140 46,214 --------- --------- Stockholders' equity:
Common stock 100 100 Additional paid-in capital 616,414 609,455
Deferred stock compensation -- (2,606) Accumulated deficit
(492,835) (483,270) Accumulated other comprehensive loss (236)
(141) --------- --------- Total stockholders' equity 123,443
123,538 --------- --------- Total liabilities and stockholders'
equity $ 166,583 $ 169,752 ========= ========= OPSWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands,
except per share amounts, unaudited) Three Months Six Months Ended
Ended July 31, July 31, ----------------- ------------------- 2006
2005 2006 2005 -------- -------- --------- --------- Revenue:
License revenue $17,907 $ 9,888 $ 33,268 $ 18,037 Services revenue
7,227 4,235 13,862 8,701 -------- -------- --------- --------- Net
revenue 25,134 14,123 47,130 26,738 -------- -------- ---------
--------- Cost and expenses: Cost of license revenue 360 260 866
340 Cost of services revenue(a) 5,096 3,222 10,079 6,164 Cost of
developed technology 412 412 824 816 Research and development(a)
7,614 5,644 14,956 11,336 Sales and marketing(a) 11,946 5,747
22,852 10,824 General and administrative(a) 4,457 3,100 8,703 5,767
Restructuring recoveries, net -- -- -- (18) Amortization of other
acquisition-related intangibles 327 327 654 648 In-process research
and development charges -- -- -- 1,190 -------- -------- ---------
--------- Total cost and expenses 30,212 18,712 58,934 37,067
-------- -------- --------- --------- Loss from operations (5,078)
(4,589) (11,804) (10,329) Loss on sale of assets and liabilities
from Managed Services Business -- (11) -- (44) Interest and other
income, net 1,311 686 2,293 1,332 -------- -------- ---------
--------- Loss before income taxes (3,767) (3,914) (9,511) (9,041)
Provision for income taxes -- 10 54 12 -------- -------- ---------
--------- Net loss $(3,767) $(3,924) $ (9,565) $ (9,053) ========
======== ========= ========= Basic and diluted net loss per share $
(0.04) $ (0.04) $ (0.10) $ (0.09) ======== ======== =========
========= Shares used in computing basic and diluted net loss per
share 99,686 97,912 99,525 97,729 ======== ======== =========
========= (a) Includes stock-based compensation expense of the
following: Cost of services revenue $ 366 $ 2 $ 702 $ 5 Research
and development 1,287 274 2,494 592 Sales and marketing 1,311 58
2,492 151 General and administrative 1,079 288 2,001 28 --------
-------- --------- --------- Total stock-based compensation expense
$ 4,043 $ 622 $ 7,689 $ 776 ======== ======== ========= ========= A
reconciliation between GAAP and non-GAAP net income (loss) is as
follows: (unaudited) Three Months Six Months Ended Ended July 31,
2006 July 31, 2006 ------------- ------------- GAAP net loss $
(3,767) $ (9,565) Non-cash charge related to equity transactions
4,043 7,689 Cost of developed technology 412 824 Amortization of
other acquisition- related intangibles 327 654 -------------
------------- Non-GAAP net income (loss) $ 1,015 $ (398)
============= ============= GAAP diluted net loss per share $
(0.04) $ (0.10) ============= ============= Non-GAAP diluted net
income per share $ 0.01 $ 0.00 ============= ============= Shares
used in computing non-GAAP diluted net income per share 106,214
99,525 ============= ============= *T
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