RightNow Technologies Announces Third Quarter 2008 Financial Results

BOZEMAN, Mont., Oct. 23 /PRNewswire-FirstCall/ -- RightNow(R)
Technologies, Inc. (Nasdaq: RNOW) today announced results for the third
quarter ended September 30, 2008. Total revenue in the third quarter of 2008
was $36.2 million, compared to $29.2 million in the comparable period of 2007,
reflecting 24% growth in revenue. Net loss in the third quarter of 2008 was
$(1.4) million or $(0.04) per share, compared to a net loss of $(3.6) million
or $(0.11) per share, in the third quarter of 2007. Non-GAAP net income in
the third quarter of 2008, which excludes stock-based compensation charges of
$1.5 million, was $85,000 or $0.00 per share, as compared to non-GAAP net loss
of $(2.4) million or $(0.07) per share, in the same quarter last year.
Revenue for the nine months ended September 30, 2008 was $104.4 million,
compared to $81.4 million for the comparable period in 2007, reflecting a 28%
growth in revenue. Net loss for the nine months ended September 30, 2008 was
$(8.0) million or $(0.24) per share, as compared to $(15.3) million or $(0.46)
per share, for the same period in 2007. Non-GAAP net loss for the nine months
ended September 30, 2008, which excludes stock-based compensation charges of
$4.7 million, was $(3.3) million or $(0.10) per share, as compared to non-GAAP
net loss of $(10.8) million or $(0.33) per share, for the comparable period in
2007.
New, renewed and expanded customer relationships during the third quarter
of 2008 included Air Force Personnel Center, Black and Decker, British
Airways, Casual Male Retail Group, Center for Medicare and Medicaid, Commvault
Systems, DeVry, Energy Australia, Restoration Hardware, Sony Computer
Entertainment, USDA-Forest Service, and Virgin America.
"Our customers represent many of the largest consumer-facing companies in
the world," stated Greg Gianforte, CEO and founder. "We believe clients will
prioritize their spending, looking for solutions that will reduce costs and
retain customers. Across many industries and geographies, our solutions
enable our clients to retain and enhance relationships with existing
customers, provide great customer experiences, and demonstrate a quick and
measurable return on investment. We look forward to helping our customers
succeed in the current environment and in the long-term."
"We used $1.3 million of cash in operations during the third quarter,
consistent with our October 6th preannouncement. We believe our balance sheet
stands strong with over $100 million in cash and investments," said Jeff
Davison, CFO. "We achieved non-GAAP profitability in the third quarter as we
continue to execute on our land and expand strategy. This was our seventh
consecutive quarter of operating margin improvement, representing 21
percentage points of improvement."
Guidance
-- For the fourth quarter of 2008, revenue is expected to be in the range
of $36.5 to $37.5 million. Fourth quarter net loss per share is
expected to be in the range of $(0.04) to $(0.03). Non-GAAP net income
per share, which excludes stock-based compensation, is expected to be
in the range of $0.00 to $0.01 for the fourth quarter of 2008. This
would equate to full year revenue of approximately $141 million, net
loss per share of approximately $(0.28) and non-GAAP net loss per share
of approximately $(0.10).
-- Cash from operations for the full year 2008 is expected to be in the
range of $12 to $15 million.

Quarterly Conference Call
RightNow Technologies will discuss its quarterly results today via
teleconference at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time.) To access
the call, please dial (877) 675-4753, or outside the U.S. (719) 325-4875, at
least five minutes prior to the 2:30 p.m. MT start time. A live webcast of
the call will also be available at http://investor.rightnow.com/index.cfm
under the Events & Presentations menu. An audio replay will be available
between 5:30 p.m. MTOctober 23, 2008 and 10:00 p.m. MTNovember 6, 2008 by
calling (888) 203-1112 or (719) 457-0820, with passcode 4119951. The replay
will also be available on the Company's website at
http://investor.rightnow.com.
About RightNow Technologies
RightNow (Nasdaq: RNOW) delivers the high-impact technology solutions and
services organizations need to cost-efficiently deliver a consistently
superior customer experience across their frontline service, sales and
marketing touch-points. Approximately 1,900 corporations and government
agencies worldwide depend on RightNow to achieve their strategic objectives
and better meet the needs of those they serve. RightNow is headquartered in
Bozeman, Montana. For more information, please visit http://www.rightnow.com.
RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ
is a registered trademark of The NASDAQ Stock Market LLC.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995:
All statements included in this press release, other than statements or
characterizations of historical fact, are forward-looking statements. These
forward-looking statements are based on our current expectations, estimates
and projections about our industry, management's beliefs, and certain
assumptions made by us, all of which are subject to change. Forward-looking
statements can often be identified by words such as "anticipates," "expects,"
"intends," "plans," "predicts," "believes," "seeks," "estimates," "may,"
"will," "should," "would," "could," "potential," "continue," "ongoing,"
similar expressions, and variations or negatives of these words and include,
but are not limited to, statements regarding projected results of operations
and management's future strategic plans. These forward-looking statements are
not guarantees of future results and are subject to risks, uncertainties and
assumptions that could cause our actual results to differ materially and
adversely from those expressed in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited
to, risks associated with general economic conditions; our business model; our
ability to develop or acquire, and gain market acceptance for, new products in
a cost-effective and timely manner; the gain or loss of key customers;
competitive pressures; our ability to expand or contract operations;
fluctuations in our earnings as a result of the impact of stock-based
compensation expense; interruptions or delays in our hosting operations;
breaches of our security measures; our ability to protect our intellectual
property from infringement, and to avoid infringing on the intellectual
property rights of third parties; our ability to manage and expand our partner
relationships; any unanticipated ambiguities in fair value accounting
standards; fluctuations in foreign currency exchange; the amount and timing of
any stock repurchases under our stock repurchase program; and our ability to
expand, retain and motivate our employees. Further information on potential
factors that could affect our financial results is included in our Annual
Report on Form 10-K, quarterly reports of Form 10-Q, and in other filings with
the Securities and Exchange Commission. The forward-looking statements in
this release speak only as of the date they are made. We undertake no
obligation to revise or update publicly any forward-looking statement for any
reason.

FRNOW

RightNow Technologies, Inc.
Consolidated Balance Sheets
(In thousands) (Unaudited)

Sep 30, Dec 31,
2008 2007
Assets
Cash and cash equivalents $51,145 $43,681
Short-term investments 46,444 52,644

Accounts receivable 27,820 29,480
Term receivables, current 6,875 13,069
Allowance for doubtful accounts (2,148) (1,918)
Net receivables 32,547 40,631

Deferred commissions 4,493 3,336
Prepaid and other current assets 3,004 2,643
Total current assets 137,633 142,935

Long-term investments 4,612 --
Property and equipment, net 10,377 10,856
Term receivables, non-current 4,420 9,859
Intangible assets, net 6,803 7,996
Deferred commissions, non-current 2,557 1,680
Other 908 460
Total Assets $167,310 $173,786

Liabilities and Stockholders' Equity
Accounts payable $5,329 $4,386
Commissions and bonuses payable 4,351 5,044
Other accrued liabilities 12,076 11,404
Current portion of long-term debt 45 43
Current portion of deferred revenue 72,008 76,995
Total current liabilities 93,809 97,872

Long-term debt, less current portion 34 68
Deferred revenue, net of current portion 37,201 37,665

Stockholders' equity:
Common stock 34 33
Additional paid-in capital 101,337 95,377
Accumulated other comprehensive loss (193) (292)
Accumulated deficit (64,912) (56,937)
Total stockholders' equity 36,266 38,181
Total Liabilities and Stockholders' Equity $167,310 $173,786

RightNow Technologies, Inc.
Consolidated Operating Statements
(In thousands, except per share amounts) (Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Revenue:
Software, hosting and support
Recurring* $25,917 $21,813 $75,788 $61,379
Perpetual 39 553 297 1,499
Professional services 10,281 6,880 28,271 18,535
Total revenue 36,237 29,246 104,356 81,413

Cost of revenue:
Software, hosting and support 5,305 4,604 15,383 13,563
Professional services 8,133 5,667 23,228 15,874
Total cost of revenue 13,438 10,271 38,611 29,437

Gross profit 22,799 18,975 65,745 51,976

Operating expenses:
Sales and marketing 16,889 16,516 51,334 48,031
Research and development 4,671 4,308 13,664 12,947
General and administrative 3,215 2,680 10,621 8,718
Total operating expenses 24,775 23,504 75,619 69,696

Loss from operations (1,976) (4,529) (9,874) (17,720)

Interest and other income, net 552 1,004 2,009 2,717

Loss before income taxes (1,424) (3,525) (7,865) (15.003)
Provision for income taxes (23) (59) (110) (324)
Net loss $(1,447) $(3,584) $(7,975) $(15,327)

Net loss per share:
Basic $(0.04) $(0.11) $(0.24) $(0.46)
Diluted $(0.04) $(0.11) $(0.24) $(0.46)

Shares used in the computation:
Basic 33,640 33,094 33,585 32,979
Diluted 33,640 33,094 33,585 32,979

Supplemental information of
stock-based compensation
expense included in:
Cost of software, hosting
and support $87 $84 $243 $221
Cost of professional services 158 217 476 491
Sales and marketing 738 542 1,871 1,931
Research and development 252 166 729 681
General and administrative 297 199 1,376 1,177
Total stock-based
compensation $1,532 $1,208 $4,695 $4,501

* Recurring revenue includes software, hosting and support revenue from
term license and subscription agreements, and post contract support
services.

RightNow Technologies, Inc.
Consolidated Statements of Cash Flow
(In thousands) (Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Operating activities:
Net loss $(1,447) $(3,584) $(7,975) $(15,327)
Non-cash adjustments:
Depreciation and
amortization 1,956 1,869 5,866 5,424
Stock-based
compensation 1,532 1,208 4,695 4,501
Provision for losses
on accounts receivable 64 401 179 345
Changes in operating accounts:
Receivables 1,143 6,933 12,652 30,584
Prepaid expenses (211) 891 (654) (999)
Deferred commissions (957) (1,694) (2,170) (2,887)
Accounts payable (523) 1,001 1,061 (192)
Commissions and bonuses
payable 166 (47) (615) (1,219)
Other accrued liabilities 565 (912) 1,016 2,839
Deferred revenue (3,566) (2,143) (2,999) (9,013)
Other (52) (130) (142) (140)
Cash provided (used) by
operating activities (1,330) 3,793 10,914 13,916

Investing activities:
Net change in short-term
investments 2,218 (3,912) 996 (17,696)
Acquisition of property
and equipment (1,311) (1,426) (4,344) (4,764)
Other 2 1 (25) (60)
Cash provided (used) by
investing activities 909 (5,337) (3,373) (22,520)

Financing activities:
Proceeds from issuance
of common stock 618 509 1,266 1,688
Excess tax benefit of
stock options exercised - 19 - 228
Payments on long-term debt (11) (10) (33) (25)
Cash provided by financing
activities 607 518 1,233 1,891

Effect of foreign exchange
rates on cash and cash
equivalents (1,822) 293 (1,310) 614

Increase (decrease) in cash
and cash equivalents (1,636) (733) 7,464 (6,099)

Cash and cash equivalents
at beginning of period 52,781 33,842 43,681 39,208
Cash and cash equivalents
at end of period $51,145 $33,109 $51,145 $33,109

RightNow Technologies, Inc.
Reconciliation of Non-GAAP Measurements
(Amounts in thousands, except per share amounts) (Unaudited)

Diluted Earnings Per Share Reconciliation

Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007

Net loss as reported $(1,447) $(3,584) $(7,975) $(15,327)
Add stock-based
compensation ("SBC") 1,532 1,208 4,695 4,501
Net income (loss)
before SBC $85 $(2,376) $(3,280) $(10,826)

Net loss per share,
as reported $(0.04) $(0.11) $(0.24) $(0.46)
Net income (loss) per
share, before SBC
(basic and diluted) $0.00 $(0.07) $(0.10) $(0.33)

Shares outstanding
(basic), as reported 33,640 33,094 33,585 32,979
Shares outstanding
(diluted), excluding
the effect of SBC 34,432 33,094 33,585 32,979

Forward-Looking Guidance Reconciliation

Fourth quarter ending GAAP Guidance Non-GAAP Guidance
December 31, 2008 From To Adjustment From To

Net income (loss) $(1,400) $(1,100) $1,400[a] $0 $300
Net income (loss)
per share $(0.04) $(0.03) $0.00 $0.01
Shares 33,900 33,900 33,900 34,500

Year ending
December 31, 2008
Net loss $(9,300) $(9,000) $6,100[a] $(3,200) $(2,900)
Net loss per share $(0.28) $(0.27) $(0.10) $(0.09)
Shares 33,600 33,600 33,600 33,600

[a] Estimated stock-based compensation expense to be recorded for the
periods indicated in accordance with Statement of Financial Accounting
Standards No. 123R, Share-Based Payments, ("SFAS 123R") which is
effective for periods beginning January 1, 2006.

About Non-GAAP Financial Measures
Non-GAAP net income (loss) and diluted net income (loss) per share are
supplemental measures of our performance that are not required by, or
presented in accordance with GAAP. These non-GAAP financial measures are not
intended to be used in isolation and should not be considered a substitute for
net income (loss) and net income (loss) per share or any other performance
measure determined in accordance with GAAP. We present non-GAAP net income
(loss) and net income (loss) per share because we consider each to be an
important supplemental measure of our performance.
Management uses these non-GAAP financial measures to make operational
decisions, evaluate the Company's performance, prepare forecasts and determine
compensation. Further, management believes that both management and investors
benefit from referring to these non-GAAP financial measures in assessing the
Company's performance when planning, forecasting and analyzing future periods.
Our stock-based compensation expenses are expected to vary depending on the
number of new grants issued, changes in our stock price, stock market
volatility, expected option lives and risk-free rates of return, all of which
are difficult to estimate. In calculating non-GAAP net income (loss) and net
income (loss) per share, management excludes stock-based compensation expenses
to facilitate its review of the comparability of the Company's operating
performance on a period-to-period basis because such expenses are not, in
management's view, related to the Company's ongoing operating performance.
Management uses this view of its operating performance for purposes of
comparison with its business plan and individual operating budgets and
resource allocation.
Management further believes that these non-GAAP financial measures are
useful to investors in providing greater transparency to the information used
by management in its operational decision making. We believe that the use of
non-GAAP net income (loss) and net income (loss) per share also facilitate a
comparison of RightNow's underlying operating performance with that of other
companies in our industry, which use similar non-GAAP financial measures to
supplement their GAAP results.
Calculating non-GAAP net income (loss) and net income (loss) per share
have limitations as an analytical tool, and readers should not consider these
measures in isolation or as substitutes for GAAP net income (loss) and GAAP
net income (loss) per share. In the future, we expect to incur additional
stock-based compensation expenses and the exclusion of these expenses in the
presentation of our non-GAAP financial measures should not be construed as an
inference that these costs are unusual, infrequent or non-recurring.
Investors and potential investors are cautioned that there are material
limitations associated with the use of non-GAAP financial measures as an
analytical tool, which include: -- Other companies inside and outside of
our industry may calculate
non-GAAP net income (loss) and net income (loss) per share differently
than we do, limiting their usefulness as a comparative tool; and
-- The Company's income tax expense or benefit will be ultimately based on
its GAAP taxable income and actual tax rates in effect, which may
differ significantly from the effective tax rate used in our non-GAAP
financial measures.

In addition, the adjustments to our GAAP financial measures reflect the
exclusion of stock-based compensation expenses that are recurring and will be
reflected in the Company's financial results for the foreseeable future. The
Company compensates for these limitations by providing specific information
regarding the GAAP amount excluded from the non-GAAP financial measures. The
Company further compensates for the limitations of our use of non-GAAP
financial measures by presenting comparable GAAP measures more prominently.
The Company evaluates the non-GAAP financial measures together with the most
directly comparable GAAP financial measures.
Investors and potential investors are encouraged to review the
reconciliation of non-GAAP financial measures contained within this press
release with our GAAP net income (loss) and net income (loss) per share. For
more information, see the consolidated operating statements and reconciliation
of non-GAAP measurements contained in this press release.
SOURCE RightNow Technologies, Inc.

Corporate Communications, Kathleen O'Boyle of RightNow Technologies, Inc.,
+1-406-556-3428, cell, +1-415-407-8308, kathleen.oboyle@rightnow.com; or
Investor Relations, Todd Friedman, todd@blueshirtgroup.com, or Stacie
Bosinoff, stacie@blueshirtgroup.com, both of The Blueshirt Group,
+1-415-217-7722, for RightNow Technologies, Inc.