"We continued to win major new customers while expanding relationships with the world's leading global enterprises and governments. More and more enterprises are looking to Saba for unified people management solutions that drive business performance by aligning, engaging, developing, and mobilizing their people while fostering collaboration across their value chain," said Bobby Yazdani, Chairman and CEO of Saba. "Our record of profitable growth and momentum in winning new customers while expanding existing customer relationships underscores the validity of our growth strategy."

Second Quarter Financial Results

• Total revenues for the quarter ended November 30, 2009 were $27.5 million, up 6.4%, from $25.8 million in the same period of the prior year.
• Saba Performance and Talent Management products achieved record high product bookings in the quarter, representing 12% of total product bookings in the quarter.
• Gross margin for the quarter ended November 30, 2009 was 65.7% compared to 59.6% for the same period of the prior year.
• GAAP net income for the quarter ended November 30, 2009 was $666,000, or $0.02 per share on a fully diluted basis, compared to a loss of $355,000, or $0.01 per share, for the same period last year.
• Non-GAAP net income for the quarter ended November 30, 2009 was $2.1 million, or $0.07 per share on a fully diluted basis, compared to non-GAAP net income of $1.1 million, or $0.04 per share on a fully diluted basis, for the same period of the prior year. Non-GAAP net income excludes non-cash amortization of intangibles and charges related to stock-based compensation.
• Cash balance for the quarter ended November 30, 2009 was $22.9 million compared to $12.9 million at the end of the same period in the prior fiscal year. Saba repurchased 1,384,920 outstanding shares of common stock for approximately $4.9 million in the first quarter of fiscal 2010.
• Saba invoiced $29.4 million in the quarter ended November 30, 2009, up 10%, compared to $26.7 million in the same period last year.

Customers

• Added 30 new enterprise customers bringing total new customers up to 50 during the first six months of Fiscal 2010, up from 39 new customers in first half fiscal 2009.
• Strengthened leading base of Global 2000 customers during the quarter with wins at Baker Hughes, Bayer Healthcare, Banco Itau, McDonalds, Mars, Owens and Minor, Unicredit Group, Santander, and Saudi Aramco.
• Expanded relationships with a number of existing large enterprise and public sector customers including 3M, Bose Corp, Synthes, Trillium Health Centre, UNUM Group, Varian Medical Systems, Kwik-Fit Group Limited, Les Hopitaux Universitaires, Blackbaud, Brinker International, Lincoln Electric Holdings, Westat, and Westinghouse Electric.
• Saba OnDemand solutions reached a user base of over 3.6 million users, including such customers as Addison Avenue Federal Credit Union, the California Public Employees' Retirement System (CalPERS) and the University of Tennessee, Knoxville (UT Knoxville).

• Announced major new platform release, Saba Enterprise 5.5, as the industry's first truly unified people management platform. Saba 5.5 delivers an updated, engaging, and easy-to-use Web 2.0 user interface that visually unifies information so that, whether a user is trying to create a succession pool, start a performance review, or manage a team of employees, the view of the employee information is consistent. Users at all levels are able to make better decisions with more complete and consistent people intelligence.
• Announced availability of Saba People Management Cloud(TM), delivering Saba's people management solutions on Amazon Web Services. The Saba People Management Cloud will give companies the elasticity to use as little or as many of Saba's services as they need, while paying only for what they use, with no up-front expenses.

• Recognized in Bersin & Associates Talent Management Systems 2010: Market Realities, Implementation Experiences, and Solution Provider Profiles as the market leader for enterprises with over 10,000 employees. The study touted Saba Enterprise's extensive configurability, embedded collaboration for talent management adoption and its integrated, sophisticated, workforce planning application.
• Recognized in the 2009 Gartner Magic Quadrant for Social Software in the Workplace based on completeness of vision and ability to execute. Saba was the only vendor in the people management solutions market to receive recognition in this report.
• Recognized for growing momentum in social software by Chief Learning Officer Magazine who bestowed a Learning in Practice Award for "Excellence in Social Networks" to the company. The Excellence in Social Networks Award recognizes providers that have deployed wikis, blogs, communities of practice, social networks and/or any other employee communication and collaboration platforms for a client in the past year.

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 2010, Saba is maintaining prior guidance and anticipates GAAP net earnings per share to range from $0.07 to $0.11 on a fully diluted basis and non-GAAP net earnings per share to range from $0.26 to $0.30 on a fully diluted basis.

The fiscal year 2010 non-GAAP outlook excludes non-cash amortization of intangibles and charges related to stock-based compensation expenses.

Saba Software, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
					November 30,					May 31,
					2009					2009
					(unaudited)
ASSETS
Current assets:
Cash and cash equivalents					$	22,854				$	25,978
Restricted cash						120					100
Accounts receivable, net						19,578					20,010
Prepaid expenses and other current assets						2,136					2,245
Total current assets						44,688					48,333
Property and equipment, net						3,892					4,755
Goodwill						36,095					36,095
Purchased intangible assets, net						6,885					8,743
Restricted cash						260					260
Other assets						1,474					1,537
Total assets					$	93,294				$	99,723
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable					$	3,332				$	2,620
Accrued compensation and related expenses						6,241					5,867
Accrued expenses						3,071					3,137
Deferred revenue						27,612					32,611
Current portion of debt and lease obligations						452					630
Total current liabilities						40,708					44,865
Deferred revenue						2,891					2,728
Other long-term liabilities						1,259					1,354
Accrued rent						2,008					2,211
Total liabilities						46,866					51,158
Stockholders' equity:
Common stock						28					30
Additional paid-in capital						254,124					258,128
Treasury stock						(232	)				(232	)
Accumulated deficit						(207,543	)				(209,230	)
Accumulated other comprehensive loss						51					(131	)
Total stockholders' equity						46,428					48,565
Total liabilities and stockholders' equity					$	93,294				$	99,723

Saba Software, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
		Three months ended										Six months ended
		November 30,				November 30,						November 30,				November 30,
		2009				2008						2009				2008
Revenues:
License		$	6,352			$	2,971					$	12,064			$	5,928
License updates and product support			8,859				8,773						17,614				17,415
OnDemand			5,276				5,325						10,521				10,243
Professional services			6,995				8,756						13,093				17,539
Total revenues			27,482				25,825						53,292				51,125
Cost of revenues:
Cost of license			223				231						434				444
Cost of license updates and product support			2,080				1,984						4,117				4,192
Cost of OnDemand			2,038				2,455						4,046				4,881
Cost of professional services			4,798				5,475						9,350				11,391
Amortization of acquired developed technology			295				295						589				589
Total cost of revenues			9,434				10,440						18,536				21,497
Gross profit			18,048				15,385						34,756				29,628
Operating expenses:
Research and development			4,725				4,606						8,946				8,892
Sales and marketing			8,526				6,821						15,314				13,928
General and administrative			3,613				3,871						7,455				8,235
Restructurings			(2	)			-						(38	)			(24	)
Amortization of purchased intangible assets			634				634						1,269				1,269
Total operating expenses			17,496				15,932						32,946				32,300
Income (loss) from operations			552				(547	)					1,810				(2,672	)
Interest income and other, net			54				330						33				410
Interest expense			(2	)			(11	)					(5	)			(21	)
Income (loss) before provision for income taxes			604				(228	)					1,838				(2,283	)
Provision for income taxes			62				(127	)					(152	)			(286	)
Net income (loss)		$	666			$	(355	)				$	1,686			$	(2,569	)
Basic and diluted net income (loss) per share		$	0.02			$	(0.01	)				$	0.06			$	(0.09	)
Shares used in computing net income (loss) per share:
Basic			27,851				29,164						28,540				29,157
Diluted			28,855				29,164						29,458				29,157

Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
The following table reflects Saba's non-GAAP results reconciled to GAAP results as included in this release.
		Three months ended										Six months ended
		November 30,				November 30,						November 30,				November 30,
		2009				2008						2009				2008
GAAP net income (loss)		$	666			$	(355	)				$	1,686			$	(2,569	)
Plus:
Share-based compensation expense			472				493						736				1,083
Amortization of acquired developed technology and purchased intangible assets			929				929						1,858				1,858
Non-operating costs			-				-						-				672
Restructurings			(2	)			-						(38	)			-
Non-GAAP net income		$	2,065			$	1,067					$	4,242			$	1,044
Net income (loss) per share:
GAAP net income (loss) per share		$	0.02			$	(0.01	)				$	0.06			$	(0.09	)
Plus:
Share-based compensation expense			0.02				0.02						0.03				0.04
Amortization of acquired developed technology and purchased intangible assets			0.03				0.03						0.07				0.06
Non-operating costs			0.00				0.00						0.00				0.02
Restructurings			0.00				0.00						0.00				0.00
Non-GAAP net income per share		$	0.07			$	0.04					$	0.14			$	0.04
Shares used in computing net income (loss) per share:
Basic			27,851				29,164						28,540				29,157
Diluted			28,855				29,166						29,458				29,160

Non-GAAP Financial Information:

To supplement the company's condensed consolidated financial statements presented on a GAAP basis, Saba uses non-GAAP financial measures. These measures are the result of adjustments made to exclude certain charges and expenses for which the company believes that the disclosure of such non-GAAP financial measures is appropriate to enhance an overall understanding of its historical financial performance. The company believes that the inclusion of these non-GAAP financial measures provides consistency and comparability with its historical financial results. In addition, the presentation allows investors to see how management views the operating performance of the company. This non-GAAP information is subject to material limitations and is not intended to be used in isolation or as a substitute for results prepared in accordance with U.S. generally accepted accounting principles.

The adjustments and the basis for their exclusion are as follows:

Share-based Compensation Expense

The company's non-GAAP financial measures exclude share-based compensation expenses, which consist of expenses for grants of stock options, awards of restricted stock units and purchases of common stock under its Employee Stock Purchase Plan, which Saba began recording under SFAS 123(R) in the first quarter of fiscal 2007. The Company excludes share-based compensation expenses from our non-GAAP financial measures because the company believes that the information is not a meaningful indicator of the company's operating performance. Weighted average dilutive shares is computed using the method required by SFAS 123(R) for both GAAP and non-GAAP diluted net income per share.

Amortization of Acquired Developed Technology and Purchased Intangible Assets

As a result of various acquisitions of companies and technologies, the company has incurred charges for amortization of acquired developed technology and purchased intangible assets. Management excludes these items from our non-GAAP financial measures when evaluating its operating performance because it believes that it provides for better comparability between periods and provides results that are more reflective of the operating performance of the business. Additionally, management believes that excluding these items facilitates comparisons to the results of other companies in our industry, which have their own unique acquisition histories.

Non-Operating Costs

During the first quarter of fiscal year 2009, the company incurred non-operating costs primarily related to legal and accounting fees associated with the evaluation of strategic transactions. These costs relate to events which, in the company's view, are not incurred in the ordinary course of operations. These costs include the legal and accounting fees as well as other costs incurred in connection with the evaluation of strategic transactions. The company's management excludes these costs when evaluating its ongoing performance and/or predicting its earning trends, and therefore excludes these costs when presenting non-GAAP financial measures.

Restructurings

During the third quarter of fiscal year 2009, the company implemented a restructuring program to reduce headcount by approximately 5%. During the first quarter of fiscal year 2010, the company adjusted its estimates related to severance costs. The adjustment is classified as restructuring expense in the statement of operations. Management excludes these items from our non-GAAP financial measures when evaluating its operating performance because it believes that it provides for better comparability between periods and provides results that are more reflective of the operating performance of the business.

SOURCE: Saba