Opsware Inc. Beats High End of Q1 Revenue Guidance by $1.3 Million

  
    
  
  
    
      Opsware Inc. (NASDAQ:OPSW), the leading provider of Data Center 
      Automation software, today reported results for its first quarter ended 
      April 30, 2007.
    
    
      Opsware Inc.’s net revenue for its first 
      quarter ended April 30, 2007 totaled $28.3 million, up 29% from the same 
      quarter last year and exceeding the company’s 
      previously guided range.
    
    
      Non-EDS revenue totaled $23.1 million in the first quarter, a 38% 
      increase over the same quarter last year.
    
    
      Non-EDS derived bookings (which equals net revenue, plus the sequential 
      change in deferred revenue and advances from customers, all excluding 
      the impact of EDS) totaled $20.5 million in the first quarter, up 38% 
      from the same quarter last year.
    
    
      Non-GAAP net loss in the first quarter was $(1.4) million or $(0.01) per 
      share, meeting the company’s guidance.
    
    
      GAAP net loss in the first quarter was $(10.6) million or $(0.10) per 
      share. Non-GAAP net loss in the first quarter excludes non-cash charges 
      of approximately $3.7 million relating to previous acquisitions and $5.5 
      million of non-cash stock-based compensation. A reconciliation between 
      net loss on GAAP and non-GAAP bases is provided in a table immediately 
      following the Condensed Consolidated Statements of Operations attached 
      to this release.
    
    
      Cash flow from operations in the first quarter was $3.3 million.
    
    
      “We are starting the year strong and I am 
      pleased with our performance in Q1,” said Ben 
      Horowitz, president and CEO of Opsware Inc. “Opsware 
      continues to benefit from the predominant trends in enterprise software: 
      virtualization, Linux, and services oriented architectures. The 
      complexity of adopting these technologies creates strong demand for our 
      data center automation suite. Our pipeline is up 50% from this time last 
      quarter and we are on track to grow bookings by 60% this year.”
    
    
      Financial Outlook
    
    
      Management provides the following guidance for its second quarter ending 
      July 31, 2007:
    
    
      
        Net revenue is expected to total approximately $31 – 
        32 million.
      
      
        Non-GAAP loss per share is expected to be $(0.01), reflecting an 
        incremental $2 million of operating expenses from its previously 
        announced and completed acquisition of iConclude Co.
      
    
    
      Management reaffirms the following guidance for its fiscal year ending 
      January 31, 2008:
    
    
      
        Non-EDS derived bookings growth is expected to be at least 60% 
        compared to fiscal year 2007.
      
      
        Net revenue is expected to total $142 – 
        $147 million.
      
      
        Non-GAAP operating margin is expected to be 5 – 
        8%.
      
      
        Non-GAAP EPS is expected to be $0.09 – 0.13.
      
    
    
      The company will provide additional details on its financial results and 
      outlook on the conference call referenced below.
    
    
      About the Conference Call and Webcast
    
    
      Opsware management will host a conference call today, May 30, 2007, 
      beginning at 5:30 a.m. PT (8:30 a.m. ET) to discuss today's 
      announcement. Interested parties may access the conference call by 
      dialing [phone]. 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 loss, non-GAAP operating margin 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 loss and net 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 both operating margin and EPS on GAAP and non-GAAP bases has not 
      been provided because each of operating margin and 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, the world’s leading IT automation 
      company, unlocks the promise of technology by accelerating IT to zero 
      latency. The company’s software, the Opsware 
      System, automates the entire data center, from provisioning to patching, 
      configuration to compliance and discovery to deployment, turning data 
      center operations into a competitive advantage for business. Opsware’s 
      technology is used by hundreds of companies worldwide including banks, 
      service providers, retailers, manufacturers and Internet companies with 
      IT environments ranging from hundreds to tens of thousands of servers, 
      network devices, storage devices and IT processes. 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, non-EDS derived bookings, non-GAAP operating margin 
      and earnings per share, the financial impact of our acquisition of 
      iConclude, the statement by our president and chief executive officer 
      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 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, the timing of our satisfaction of 
      revenue recognition criteria, 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-K for the year ended January 31, 2007 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 non-EDS derived bookings in 
      this press release solely present historical data, and are not 
      necessarily indicative of results in future periods. The term “non-EDS” 
      excludes the impact of the license and maintenance agreement that we 
      signed with EDS in August 2002 and extended in August 2004. 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.
    
    
      
        
          OPSWARE INC.
        
      
      
        
          CONDENSED CONSOLIDATED BALANCE SHEETS
        
      
      
        
          (in thousands, unaudited)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          April 30, 2007
        
        
        
        
          January 31, 2007
        
      
      
        
          ASSETS
        
        
        
        
        
        
        
        
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Cash and cash equivalents
        
        
        
        
          $
        
        
          73,546 
        
        
        
        
          $
        
        
          90,940 
        
      
      
        
          Accounts receivable, net
        
        
        
        
        
        
          23,234 
        
        
        
        
        
        
          31,748 
        
      
      
        
          Prepaid expenses and other current assets
        
        
        
        
           
        
        
          5,986 
        
        
        
        
           
        
        
          6,431 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total current assets
        
        
        
        
        
        
          102,766 
        
        
        
        
        
        
          129,119 
        
      
      
        
          Property and equipment, net
        
        
        
        
        
        
          7,052 
        
        
        
        
        
        
          5,898 
        
      
      
        
          Restricted cash
        
        
        
        
        
        
          2,279 
        
        
        
        
        
        
          2,279 
        
      
      
        
          Prepaid rent
        
        
        
        
        
        
          838 
        
        
        
        
        
        
          1,001 
        
      
      
        
          Other assets
        
        
        
        
        
        
          929 
        
        
        
        
        
        
          797 
        
      
      
        
          Intangibles, net
        
        
        
        
        
        
          19,055 
        
        
        
        
        
        
          9,705 
        
      
      
        
          Goodwill
        
        
        
        
           
        
        
          70,392 
        
        
        
        
           
        
        
          33,246 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total assets
        
        
        
        
          $
        
        
          203,311 
        
        
        
        
          $
        
        
          182,045 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS’ EQUITY
        
        
        
        
        
        
        
        
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable
        
        
        
        
          $
        
        
          3,781 
        
        
        
        
          $
        
        
          2,612 
        
      
      
        
          Accrued compensation and other accrued liabilities
        
        
        
        
        
        
          22,510 
        
        
        
        
        
        
          17,174 
        
      
      
        
          Deferred revenue, current portion
        
        
        
        
        
        
          25,559 
        
        
        
        
        
        
          28,924 
        
      
      
        
          Accrued restructuring costs, current portion
        
        
        
        
        
        
          373 
        
        
        
        
        
        
          345 
        
      
      
        
          Capital lease obligations, current portion
        
        
        
        
           
        
        
          50 
        
        
        
        
           
        
        
          19 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total current liabilities
        
        
        
        
        
        
          52,273 
        
        
        
        
        
        
          49,074 
        
      
      
        
          Capital lease obligations, net of current portion
        
        
        
        
        
        
          50 
        
        
        
        
        
        
          55 
        
      
      
        
          Deferred revenue, net of current portion
        
        
        
        
        
        
          1,590 
        
        
        
        
        
        
          1,323 
        
      
      
        
          Accrued restructuring costs, net of current portion
        
        
        
        
           
        
        
          717 
        
        
        
        
           
        
        
          817 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities
        
        
        
        
           
        
        
          54,630 
        
        
        
        
           
        
        
          51,269 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Stockholders’ equity:
        
        
        
        
        
        
        
        
        
      
      
        
          Common stock
        
        
        
        
        
        
          105 
        
        
        
        
        
        
          102 
        
      
      
        
          Additional paid-in capital
        
        
        
        
        
        
          658,838 
        
        
        
        
        
        
          630,282 
        
      
      
        
          Accumulated deficit
        
        
        
        
        
        
          (509,983)
        
        
        
        
        
        
          (499,339)
        
      
      
        
          Accumulated other comprehensive loss
        
        
        
        
           
        
        
          (279)
        
        
        
        
           
        
        
          (269)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total stockholders’ equity
        
        
        
        
           
        
        
          148,681 
        
        
        
        
           
        
        
          130,776 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total liabilities and stockholders’ equity
        
        
        
        
          $
        
        
          203,311 
        
        
        
        
          $
        
        
          182,045 
        
      
    
    
    
    
      
        
          OPSWARE INC.
        
      
      
        
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
        
      
      
        
          (in thousands, except per share amounts, unaudited)
        
      
      
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          Three Months EndedApril 30,
        
      
      
        
        
        
        
        
           
        
        
          2007 
        
        
        
        
           
        
        
          2006 
        
      
      
        
        
        
        
        
           
        
      
      
        
          Revenue:
        
        
        
        
        
        
        
        
        
      
      
        
          License revenue
        
        
        
        
          $
        
        
          19,383 
        
        
        
        
          $
        
        
          15,361 
        
      
      
        
          Services revenue
        
        
        
        
           
        
        
          8,945 
        
        
        
        
           
        
        
          6,635 
        
      
      
        
          Net revenue
        
        
        
        
           
        
        
          28,328 
        
        
        
        
           
        
        
          21,996 
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Cost and expenses:
        
        
        
        
        
        
        
        
        
      
      
        
          Cost of license revenue
        
        
        
        
        
        
          733 
        
        
        
        
        
        
          506 
        
      
      
        
          Cost of services revenue(a)
        
        
        
        
        
        
          6,115 
        
        
        
        
        
        
          4,983 
        
      
      
        
          Cost of developed technology
        
        
        
        
        
        
          761 
        
        
        
        
        
        
          412 
        
      
      
        
          Research and development(a)
        
        
        
        
        
        
          10,098 
        
        
        
        
        
        
          7,342 
        
      
      
        
          Sales and marketing(a)
        
        
        
        
        
        
          14,839 
        
        
        
        
        
        
          10,906 
        
      
      
        
          General and administrative(a)
        
        
        
        
        
        
          4,482 
        
        
        
        
        
        
          4,246 
        
      
      
        
          Amortization of other acquisition-related intangibles
        
        
        
        
        
        
          338 
        
        
        
        
        
        
          327 
        
      
      
        
          In-process research and development charges
        
        
        
        
           
        
        
          2,650 
        
        
        
        
           
        
        
          - 
        
      
      
        
          Total cost and expenses
        
        
        
        
           
        
        
          40,016 
        
        
        
        
           
        
        
          28,722 
        
      
      
        
          Loss from operations
        
        
        
        
        
        
          (11,688)
        
        
        
        
        
        
          (6,726)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Interest and other income, net
        
        
        
        
           
        
        
          1,140 
        
        
        
        
           
        
        
          982 
        
      
      
        
          Loss before income taxes
        
        
        
        
        
        
          (10,548)
        
        
        
        
        
        
          (5,744)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Provision for income taxes
        
        
        
        
           
        
        
          96 
        
        
        
        
           
        
        
          54 
        
      
      
        
          Net loss
        
        
        
        
          $
        
        
          (10,644)
        
        
        
        
          $
        
        
          (5,798)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic and diluted net loss per share
        
        
        
        
          $
        
        
          (0.10)
        
        
        
        
          $
        
        
          (0.06)
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Shares used in computing basic and diluted net loss per share
        
        
        
        
           
        
        
          101,929 
        
        
        
        
           
        
        
          99,352 
        
      
      
        
           
        
        
        
        
        
        
        
        
        
      
      
        
          (a) Includes stock-based compensation expense of the following:
        
        
        
        
        
        
        
        
        
      
      
        
          Cost of services revenue
        
        
        
        
          $
        
        
          555 
        
        
        
        
          $
        
        
          336 
        
      
      
        
          Research and development
        
        
        
        
        
        
          1,881 
        
        
        
        
        
        
          1,207 
        
      
      
        
          Sales and marketing
        
        
        
        
        
        
          1,804 
        
        
        
        
        
        
          1,181 
        
      
      
        
          General and administrative
        
        
        
        
           
        
        
          1,277 
        
        
        
        
           
        
        
          922 
        
      
      
        
          Total stock-based compensation expense
        
        
        
        
          $
        
        
          5,517 
        
        
        
        
          $
        
        
          3,646 
        
      
    
    
      A reconciliation between GAAP net loss and non-GAAP net loss is as 
      follows: (in thousands, except per share amounts, unaudited)
    
    
      
        
        
        
        
        
          Three Months EndedApril 30, 2007
        
      
      
        
        
        
        
        
           
        
      
      
        
          GAAP net loss
        
        
        
        
          $
        
        
          (10,644)
        
      
      
        
          Non-cash charge related to equity transactions
        
        
        
        
        
        
          5,517 
        
      
      
        
          Cost of developed technology
        
        
        
        
        
        
          761 
        
      
      
        
          Amortization of other acquisition-related intangibles
        
        
        
        
        
        
          338 
        
      
      
        
          In-process research and development charges
        
        
        
        
           
        
        
          2,650 
        
      
      
        
          Non-GAAP net loss
        
        
        
        
          $
        
        
          (1,378)
        
      
      
        
        
        
        
        
           
        
      
      
        
          GAAP basic and diluted net loss per share
        
        
        
        
          $
        
        
          (0.10)
        
      
      
        
          Non-GAAP basic and diluted net loss per share
        
        
        
        
          $
        
        
          (0.01)
        
      
      
        
        
        
        
        
           
        
      
      
        
          Shares used in computing non-GAAP basic and diluted net loss per 
          share
        
        
        
        
        
        
          101,929