Business News

Interwoven Announces Record Fourth Quarter and Year-End Financial Results

Friday 01. February 2008 - Fourth Quarter License Revenue Growth of 19%; Full Year Non-GAAP Net Income Growth of 47%

Interwoven, Inc. (NASDAQ:IWOV), a global leader in content management solutions, today announced financial results for the three months and year ended December 31, 2007.

Interwoven reported total revenues of $62.9 million for the fourth quarter of 2007, an increase of 17% from total revenues of $53.9 million for the fourth quarter of 2006. Net income for the fourth quarter of 2007, calculated in accordance with generally accepted accounting principles, was $10.7 million, or $0.23 per share, compared to net income of $4.3 million, or $0.10 per share, for the same period in 2006. On a non-GAAP basis, Interwoven reported a net income of $8.2 million for the fourth quarter of 2007, or $0.18 per share, compared to non-GAAP net income of $6.3 million, or $0.14 per share, for the fourth quarter of 2006.

For the year ended December 31, 2007, Interwoven reported total revenues of $225.7 million, an increase of 13% from total revenues of $200.3 million for 2006. Net income for the year ended December 31, 2007, calculated in accordance with generally accepted accounting principles, was $23.7 million, or $0.51 per share, compared to a net income of $6.4 million, or $0.15 per share, for 2006. On a non-GAAP basis, Interwoven reported net income of $28.3 million for the year ended December 31, 2007, or $0.61 per share, compared to non-GAAP net income of $19.3 million, or $0.44 per share, for 2006.

Reconciliations of net income and net income per share calculated in accordance with generally accepted accounting principles and non-GAAP net income and non-GAAP net income per share are provided in the tables immediately following the consolidated statements of operations. Additional information about the company’s non-GAAP financial measures can be found under the caption “Non-GAAP Financial Information” below.

On November 1, 2007, Interwoven completed the acquisition of Optimost LLC and the results of Optimost have been included in the company’s financial statements since that date. Since November 1, Optimost’s subscription revenues were $1.5 million, with an operating loss of approximately $250,000.

In the fourth quarter of 2007, net income in accordance with GAAP includes a tax benefit of approximately $4.2 million resulting from the reversal of a portion of the company’s valuation allowance against its deferred tax assets.

As of December 31, 2007, cash, cash equivalents and investments totaled $157.3 million and deferred revenues totaled $62.0 million.

“Across the board, we turned in a tremendous fourth quarter and full-year performance,” said Joe Cowan, CEO at Interwoven. “Our fourth quarter and full-year revenues and earnings were the highest we’ve ever recorded, and add to our strong foundation for continued growth. Now more than ever, organizations are putting Interwoven at the core of their efforts to grow their business, increase profitability and business agility, and improve customer relationships.”

Customer Success Highlights

— During the quarter, Interwoven added 108 customers, bringing the
company’s total to over 4,200 customers worldwide.
— Notable customer orders included: adidas, American Medical Association,
Bank of America, Bobcat Corporation, CalPERS, Canadian Broadcasting
Corporation, Cendant, Chunghwa Telecom, CNBC, Cummins Inc, Drinker
Biddle & Reath LLP, Digi-Key, DLA Piper, Education Management
Corporation, Edward Nathan Sonnenbergs, ENI, Macy’s, Northrop Grumman,
Philips International, Plesner Svane Gronborg, Postecom, Qantas
Airways, Reed Smith LLP, Rohm & Haas, Royal Bank of Canada, State of
New South Wales, T. Rowe Price, and Wachovia.


Recent Company Highlights

— Interwoven Acquires Optimost and Builds Market Momentum — On November
1, Interwoven announced that it completed the acquisition of Optimost
LLC, a pioneer of software and services for Website optimization. The
acquisition combines Optimost’s real-time multivariable testing and
Website optimization capabilities with Interwoven’s content management
solutions to provide marketers with the industry’s most complete set of
capabilities for creating, deploying, testing, analyzing, and
optimizing targeted content to Website visitors. In the two months
following the acquisition, Interwoven generated strong momentum and
demand for the Optimost solution, with key wins at Amnesty
International, Butlins, and Digi-Key.
— NASDAQ Selects Interwoven to Join New Internet Index — During the
fourth quarter, Interwoven announced that it was selected by NASDAQ for
inclusion in its recently launched Internet Index. The Index tracks
the performance of companies engaged in a broad range of
internet-related services including internet access providers, internet
search engines, web hosting, website design, and internet retail
commerce. Other companies selected for the index include Amazon, eBay,
Google, Priceline.com, and Shutterfly.


Product News and Industry Leadership Highlights

— Interwoven Composite Application Provisioning Solution Enhanced — In
the fourth quarter, Interwoven announced an enhanced version of the
Interwoven Composite Application Provisioning (CAP) solution. The
Interwoven CAP solution is designed to allow businesses to automate and
standardize the deployment of custom Web applications, resulting in
improved efficiency and time-to-market. The new version, Interwoven
CAP 3.0, provides improved end-to-end automation, graphical reporting,
and a more intuitive user interface.
— Interwoven Universal Search Gains Traction with Key Customer Wins —
During the fourth quarter, sales of the recently launched Interwoven
Universal Search — Professional Services Edition gained momentum with
several customer transactions. For example, DLA Piper, a leading
international law firm, selected Interwoven Universal Search to enable
staff in Europe, the Middle East, and Asia to search the organization’s
knowledge repositories, and to provide fee-earners with immediate and
highly accurate results for ensuring optimal sharing of firm expertise.
— Interwoven Recognized in the Forrester Wave: Marketing Asset
Management, Q1 2008 — In January 2008, the independent research firm
Forrester released a new report evaluating providers of marketing asset
management solutions. The report names Interwoven a “strong performer”
and states “Interwoven brings together a unique and compelling set of
offerings.” The report also states “Interwoven’s recent acquisition of
Optimost, a Website testing and optimization company, offers a
tantalizing glimpse of how different parts of the marketing content
supply chain can integrate.”


Non-GAAP Financial Information


To supplement the company’s consolidated financial statements presented in accordance with generally accepted accounting principles, Interwoven uses measures of operating results, net income, net income per share, and shares used in the net income per share calculation, which are adjusted to exclude restructuring charges, retirement benefit costs associated with the retirement of the company’s former chief executive officer recorded in the first quarter of 2006, stock-based compensation, amortization of intangible assets and the related tax impact of these adjustments, and the costs associated with the company’s voluntary review of historical stock option grant procedures and related accounting. These non-GAAP results are not in accordance with, or an alternative for, results prepared in accordance with accounting principles generally accepted in the United States of America, and the company’s non-GAAP measures may be different from non-GAAP measures used by other companies. Interwoven believes that the presentation of non-GAAP results provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Interwoven also believes that where the adjustments used in calculating non-GAAP net income and non-GAAP net income per share are based on specific, identified charges that impact different line items in the consolidated statements of operations (including cost of revenues-license, cost of revenues-support and service, sales and marketing, research and development, and general and administrative expenses), it is useful to investors to know how these specific line items in the consolidated statements of operations are affected by these adjustments. For its internal budgets, Interwoven’s management uses consolidated financial statements that do not include restructuring and excess facilities charges, retirement benefit costs associated with retirement of the company’s former chief executive officer, stock-based compensation, amortization of intangible assets, and the related tax impact of these adjustments, and the costs associated with the company’s voluntary review of historical stock option grant procedures and related accounting. Interwoven uses these non-GAAP measures in assessing corporate performance and determining incentive compensation. Readers are advised to review and consider carefully the financial information prepared in accordance with accounting principles generally accepted in the United States of America contained in this press release and Interwoven’s periodic filings with the Securities and Exchange Commission.