Saba Announces Third Quarter Fiscal Year 2009 Results

REDWOOD SHORES, Calif. —(BUSINESS WIRE) — Saba (NASDAQ: SABA), the premier people management software and services provider, today reported financial results for its third quarter of fiscal year 2009 ended February 28, 2009.

Third Quarter Results
Total revenues in the third quarter of fiscal 2009 were $26.1 million compared to $27.4 million in the same quarter last year. OnDemand revenue increased to $5.3 million in the third quarter of fiscal 2009 from $4.6 million in the prior year while license revenue of $4.7 million was $1.3 million below the prior year, product support of $8.5 million approximated prior year levels and consulting revenue at $7.6 million was $0.7 million below the prior year.

On a GAAP basis, net earnings increased to $1.3 million, or $0.05 per share, in the third quarter of fiscal 2009 compared to net earnings of $158,000, or $0.01 per share, in the same quarter last year. On a non-GAAP basis, net income in the third quarter of fiscal 2009 increased to $3.2 million, or $0.11 per share, from net income of $1.7 million, or $0.06 per share, in the third quarter of fiscal 2008.

Non-GAAP results are computed by adjusting GAAP results to exclude the impact of certain restructuring activity and non-cash charges related to acquisition accounting and share-based compensation. A reconciliation of GAAP to non-GAAP results is included in the financial statements accompanying this press release.

“During the third quarter, we continued to improve the overall profitability of the company as well as our operating cash flow,” said Bobby Yazdani, Chairman and CEO of Saba. “Our focus remains profitable growth, customer success and building our distribution channels worldwide.”

Third Quarter Highlights
During the third quarter of fiscal year 2009, Saba added or expanded relationships with a number of organizations worldwide, including: Allianz, Athens Technology Center, BDO Stoy Hayward, Canada School of Public Service, HP, Gwinnett County, L-3 Communications, McDonald’s, Medtronic, Ministerio De Defensa Spain, Nomura Research Institute and the Queensland Government Department of Education.

Saba also announced that Saba OnDemand now serves more than three million users globally and continues to demonstrate superior scalability through 15 global deployments with more than 50,000 users, seven of which have more than 100,000 users. Customers include Internal Revenue Service, AstraZeneca, Kaiser Permanente and Cisco.

Saba also received several accolades during the third quarter. The company received a Bersin & Associates Learning Leaders Award for vendor innovation, which recognized the Saba Knowledge Center for its ability to deliver Web 2.0 collaboration. Saba was also positioned in the Visionaries Quadrant of the 2009 Gartner Magic Quadrant for Employee Performance Management Software.

Business Outlook
The following statements are based on current expectations as of the date of this release. These statements are forward-looking, and actual results may differ materially. Saba does not undertake to update these forward-looking statements in any way or for any reason.

For fiscal year 2009, prior GAAP net earnings guidance will be impacted by a restructuring charge estimated at $0.01 per share for fiscal 2009 and a charge to non-cash compensation of $0.02 per share in connection with an amendment to existing stock options to extend the term of the options from six years to ten years. GAAP guidance including these charges will range from a loss of $0.05 to $0.10 per share. Saba is maintaining its prior non-GAAP net earnings guidance range of $0.18 per share to $0.23 per share.

The fiscal year 2009 non-GAAP outlook excludes the estimated non-cash amortization of intangibles (approximately $3.7 million), estimated charges related to share-based compensation expenses including the impact of extending the life of underwater options (approximately $2.7 million), costs incurred related to potential strategic transactions that were not completed (approximately $0.7 million), costs incurred for a restructuring (approximately $0.4 million) and estimated non-cash acquisition-related tax expenses (approximately $0.6 million).

Conference Call
Saba will host a teleconference Tuesday, March 31, 2009, commencing at 2:00 p.m. Pacific Time, to discuss the third quarter of fiscal year 2009 financial results. All interested parties may listen by dialing 877-209-0397 or +1-612-332-0819 , access code 974622, or by tuning into the webcast at http://investor.saba.com.

A replay of the call is scheduled to be available by calling 800-475-6701 or +1-320-365-3844 , access code 974622, after 4:00 p.m. Pacific Time on March 31, 2009.

Safe Harbor
This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation: statements regarding Saba’s business outlook, including anticipated GAAP and non-GAAP net earnings per share, non-cash amortization of intangibles, restructuring charges, costs incurred related to potential strategic transactions that were not completed, charges related to share-based compensation expenses including the impact of extending the life of stock options from six to ten years, non-operating costs and estimated non-cash acquisition related tax expense, as well as Saba’s ability to manage its business to meet profitability, customer success and channel development objectives. Saba's actual results could differ materially from those expressed in any forward-looking statements. Risks and uncertainties Saba faces that could cause results to differ materially include risks associated with: dependence on growth of the markets for Saba's products, general business contraction, dependence on acceptance of Saba's products by customers and channel partners, the success of Saba’s alliances, fluctuation in customer spending, any changes in the length of Saba's sales cycle, new product offerings or pricing changes introduced by our competitors, technological changes that could make our products less attractive to customers or require a new product development investments, dependence on new product introductions and enhancements in order to meet the changing needs of our customers and markets, significant currency fluctuations, the ability of our customers to finance software purchases and potential software defects. Readers should also refer to the section entitled "Risk Factors” on pages 11 through 21 of Saba's Annual Report on Form 10-K for the fiscal year ended May 31, 2008 and similar disclosures in our Quarterly Reports on Form 10-Q for the quarters ended August 31, 2008 and November 30, 2008 respectively and our current reports on Form 8-K filed with the SEC. The forward-looking statements and risks stated in this press release are based on information available to Saba today. Saba assumes no obligation to update them.

Non-GAAP Financial Information
Saba has provided its non-GAAP net income and net income per share data in this press release as additional information for investors. In the Reconciliation of Non-GAAP Financial Measures, Saba excludes certain items related to non-cash compensation, amortization of acquired intangibles, restructuring charges, acquisition accounting related tax expense and non-core business operating expenses. This measure is not in accordance with, or an alternative to, generally accepted accounting principles ("GAAP"), is intended to supplement GAAP financial information and may be different from non-GAAP measures used by other companies. Saba believes that the presentation of non-GAAP financial measures provides useful information to investors regarding its results of operations. Saba believes it also provides an alternative method of assessing Saba’s operating results that Saba believes is focused on its core on-going operations and may allow investors to perform additional meaningful period-to-period comparisons of its operating results. In addition, Saba’s management team uses these measures for reviewing its financial results and for budget and planning purposes.

About Saba
Founded in 1997, Saba (NASDAQ: SABA) is the premier global provider of strategic human capital management (HCM) software and services. Saba’s people management solutions are used by more than 1,300 organizations and over 17 million end users worldwide. Saba’s solutions increase organizational performance by aligning workforce goals with organizational strategy; developing, managing and rewarding their people; and improving collaboration.

Saba product offerings address all aspects of strategic HCM and are available both on-premise and OnDemand (www.saba.com/products). To ensure long-term customer success, our global services capabilities and partnerships provide strategic consulting, comprehensive implementation services, and ongoing worldwide support.

Saba customers include Alcatel-Lucent; Bank of Tokyo-Mitsubishi UFJ; BMW; Caterpillar; CEMEX; Cisco Systems; Daimler; Dell; Deloitte Touche Tohmatsu; EDS, an HP company; EMC Corporation; FedEx Office; Insurance Australia Group; Kaiser Permanente; Lockheed Martin; Medtronic; National Australia Bank; Novartis; Petrobras; Procter & Gamble; Renault; Royal Bank of Scotland; Scotiabank; Singapore Ministry of Finance; Sprint; Standard Chartered Bank; Stanford University; Swedbank; Tata Consultancy Services; Wyndham International; Weyerhaeuser; Underwriters Laboratories; and the U.S. Army, U.S. Department of Health & Human Services, U.S. Department of Treasury/Internal Revenue Service, and U.S. Navy.