Ariba Reports Results for Fourth Quarter and Fiscal Year 2008

Company Posts 78% Year-over-Year Increase in Subscription Software
Revenue
SUNNYVALE, Calif.--(Business Wire)--
Ariba, Inc. (Nasdaq: ARBA), the leading spend management solutions
provider, today announced results for the fourth quarter and fiscal
year ended September 30, 2008.

Quarterly Financial and Operational Highlights:

-- Total Non-GAAP revenues of $86.4 million and EPS of $0.15

-- GAAP revenues of $85.5 million and EPS of ($0.08)

-- Non-GAAP subscription software revenue of $33.5 million, up
78% year-over-year

-- 12-month subscription software backlog up 78% year-over-year
to $117 million.

-- Number of subscription software transactions up 243%
year-over-year

"As the global financial crisis continues, companies are facing
even greater pressure to cut costs and manage working capital," said
Bob Calderoni, Chairman and CEO, Ariba. "As the leading spend
management solutions provider, Ariba is well-positioned to help them,
and as evidenced by our results for the fourth quarter and fiscal year
2008, we continue to execute well to maximize this opportunity. Sales
of our subscription software again reached record levels and our
backlog continues to grow. Together, these assets give us strength in
the face of economic uncertainty."

Results for the Fourth Quarter of Fiscal Year 2008

Revenue:

Total GAAP revenues for the fourth quarter of fiscal year 2008
were $85.5 million, as compared to $75.5 million for the fourth
quarter of fiscal year 2007. Subscription and maintenance revenues for
the quarter were $51.0 million, as compared to $37.5 million for the
fourth quarter of fiscal year 2007. Within subscription and
maintenance revenues, subscription software revenue was $32.6 million
for the quarter, as compared to $18.8 million for the fourth quarter
of fiscal year 2007. Services and other revenues for the quarter were
$34.5 million, as compared to $38.1 million for the fourth quarter of
fiscal year 2007. On a Non-GAAP basis, total revenues for the fourth
quarter of fiscal year 2008 were $86.4 million with subscription
software revenue at $33.5 million. The difference between GAAP and
Non-GAAP is approximately $0.9 million of revenue that was not
recognized due to the impact of purchase accounting on contracts
acquired through the acquisition of Procuri, Inc.

Earnings Per Share:

Net loss for the fourth quarter of fiscal year 2008 was $6.1
million, or $0.08 per share, as compared to a net loss for the fourth
quarter of fiscal year 2007 of $3.8 million, or $0.05 per share. In
addition to the revenue that was not recognized due to the impact of
purchase accounting on contracts acquired through the acquisition of
Procuri, the net loss for the fourth quarter of fiscal year 2008
included charges of $1.6 million for amortization of intangible
assets, $10.0 million for stock-based compensation, a $5.1 million net
real estate restructuring charge primarily related to the abandonment
of additional space in the Company's Sunnyvale campus and $1.2 million
for severance primarily related to reorganization of our global
engineering function. Excluding these items, Non-GAAP net income was
$12.7 million, or $0.15 per diluted share.

Balance Sheet and Cash:

Total cash, cash equivalents, marketable securities, and
investments were $137 million at September 30, 2008, down $46 million
from September 30, 2007. The primary reason for the decrease in cash
was due to cash payments made for the acquisition of Procuri. Net cash
flow from operations for the three months ended September 30, 2008 was
$10.2 million, as compared to $6.6 million for the three months ended
September 30, 2007. Accounts receivable, on a days-sales-outstanding
basis, were 30 days for the fourth quarter of fiscal 2008, as compared
to 38 days for the fourth quarter of fiscal 2007, and down one day
from the previous quarter. Total deferred revenues were $101.9 million
at September 30, 2008, up $17.9 million from September 30, 2007.

Customer Acquisition and Transactions for the Quarter:

During the quarter, 224 companies of all sizes purchased Ariba
solutions to drive their spend management strategies, including:
Arizona Public Service, BP Plc, Emerson Electric Co., MetLife, Inc.,
National Grid Transco Plc, Pfizer, Inc., and PPG Industries, Inc. The
company also added 33 new customers and closed 26 transactions over $1
million, including 16 software deals over $1 million. On-demand
product deals totalled 185.

More than 1,000 companies worldwide, including more than half of
the companies on the Fortune 500, currently use Ariba solutions to
manage their spend from sourcing and orders through invoicing and
payment.

Results for the Fiscal Year 2008

Revenue:

Total GAAP revenues for fiscal year 2008 were $328.1 million, as
compared to $301.7 million for fiscal year 2007. Subscription and
maintenance revenues for the year were $187.2 million, as compared to
$142.3 million for fiscal year 2007. Within subscription and
maintenance revenues, subscription software revenue was $112.3 million
for the year, as compared to $67.6 million for fiscal year 2007.
Services and other revenues for the year were $140.9 million, as
compared to $159.4 million for the prior year. On a Non-GAAP basis,
total revenues for fiscal year 2008 were $333.1 million with
subscription software revenue at $117.3 million. The difference
between GAAP and Non-GAAP is approximately $5 million of revenue that
was not recognized due to the impact of purchase accounting on
contracts acquired through the acquisition of Procuri, Inc.

Earnings Per Share:

Net loss for fiscal year 2008 was $41.1 million, or $0.53 per
share, as compared to a net loss in fiscal year 2007 of $15.0 million,
or $0.21 per share. In addition to the revenue that was not recognized
due to the impact of purchase accounting on contracts acquired through
the acquisition of Procuri, the net loss for fiscal year 2008 included
charges of $15.0 million for amortization of intangible assets, $40.9
million for stock-based compensation, $7.4 million for real-estate
lease restructuring, $2.7 million of severance and a $5.9 million
charge related to a legal settlement. Excluding these items, Non-GAAP
net income was $35.8 million, or $0.44 per diluted share.

Conference Call Information

Ariba will hold a conference call today at 2:00 p.m. PT / 5:00
p.m. ET to discuss its results for the fourth quarter and fiscal year
2008. To join the call, please dial (877) 407-8031 in the United
States and Canada, or (201) 689-8031 if calling internationally. The
conference call also will be webcast live, and can be accessed on the
investor relations section of the company's website at www.ariba.com
or by logging in at www.vcall.com.

A replay of the conference call will be available for two weeks by
calling (877) 660-6853 in the United States and Canada or (201)
612-7415 internationally and entering account number: 286 and
conference ID number: 299118.

Ariba, Inc.

Ariba, Inc. is the leading provider of on-demand spend management
solutions. Our mission is to transform the way companies of all sizes,
across all industries, and geographies operate by delivering software,
service, and network solutions that enable them to holistically
source, contract, procure, pay, manage, and analyze their spend and
supplier relationships. Delivered on demand, our enterprise-class
offerings empower companies to achieve control of their spend and
drive continuous improvements in financial and supply chain
performance. More than 1,000 companies, including more than half of
the companies on the Fortune 500, use Ariba solutions to manage their
spend from sourcing and orders through invoicing and payment. For more
information, visit www.ariba.com

Copyright (C) 1996 - 2008 Ariba, Inc.

Ariba, the Ariba logo, AribaLIVE, SupplyWatch, Ariba.com,
Ariba.com Network and Ariba Spend Management. Find it. Get it. Keep
it. are registered trademarks of Ariba, Inc. Ariba Spend Management,
Ariba. This is Spend Management, Ariba Solutions Delivery, Ariba
Analysis, Ariba Buyer, Ariba Category Management, Ariba Category
Procurement, Ariba Contract Compliance, Ariba Contracts, Ariba
Contract Management, Ariba Contract Workbench, Ariba Data Enrichment,
Ariba eForms, Ariba Invoice, Ariba Payment, Ariba Sourcing, Ariba
Spend Visibility, Ariba Travel and Expense, Ariba Procure-to-Pay,
Ariba Workforce, Ariba Supplier Network, Ariba Supplier Connectivity,
Ariba Supplier Performance Management, Ariba Content Procurement,
Ariba PunchOut, Ariba QuickSource, PO-Flip, Ariba Spend Management
Knowledge Base, Ariba Ready, Ariba Supply Lines, Ariba Supply Manager,
Ariba LIVE, It's Time for Spend Management and Supplier Lifecycle
Management are trademarks or service marks of Ariba, Inc. All other
brand or product names may be trademarks or registered trademarks of
their respective companies or organizations in the United States
and/or other countries.

Ariba Safe Harbor

Safe Harbor Statement under the Private Securities Litigation
Reform Act 1995: Information and announcements in this release involve
Ariba's expectations, beliefs, hopes, plans, intentions or strategies
regarding the future and are forward-looking statements that involve
risks and uncertainties. All forward-looking statements included in
this release are based upon information available to Ariba as of the
date of the release, and we assume no obligation to update any such
forward-looking statements. These statements are not guarantees of
future performance and actual results could differ materially from our
current expectations. Factors that could cause or contribute to
Ariba's operating and financial results to differ materially from
current expectations include, but are not limited to: the impact of
the credit crises on Ariba's results of operations and financial
condition; delays in development or shipment of new versions of
Ariba's products and services; lack of market acceptance of Ariba's
existing or future products or services; inability to continue to
develop competitive new products and services on a timely basis;
introduction of new products or services by major competitors; the
ability to attract and retain qualified employees; difficulties in
assimilating acquired companies, long and unpredictable sales cycles
and the deferrals of anticipated orders; declining economic
conditions, including the impact of a recession; inability to control
costs; changes in the company's pricing or compensation policies;
significant fluctuations in our stock price; the outcome of and costs
associated with pending or potential future regulatory or legal
proceedings; the impact of our acquisitions, including the disruption
or loss of customer, business partner, supplier or employee
relationships; and the level of costs and expenses incurred by Ariba
as a result of such transactions. Factors and risks associated with
its business, including a number of the factors and risks described
above, are discussed in Ariba's Form 10-Q filed with the SEC on August
6, 2008.

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Ariba, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited; in thousands)

September 30, September 30,
2008 2007
------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 86,804 $ 61,311
Marketable securities - 83,667
Restricted cash - 820
Accounts receivable, net 28,968 29,130
Prepaid expenses and other current
assets 7,859 10,743
------------- -------------
Total current assets 123,631 185,671

Property and equipment, net 19,773 20,230
Long-term investments 20,525 8,048
Restricted cash, less current portion 29,641 29,200
Goodwill 406,507 326,101
Other intangible assets, net 23,965 10,461
Other assets 3,419 3,875
------------- -------------
Total assets $ 627,461 $ 583,586
============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 12,202 $ 10,882
Accrued compensation and related
liabilities 21,480 24,192
Accrued liabilities 15,677 18,976
Restructuring obligations 19,925 19,065
Deferred revenue 95,519 76,110
Deferred income - Softbank - 566
------------- -------------
Total current liabilities 164,803 149,791

Deferred rent obligations 18,174 22,628
Restructuring obligations, less current
portion 41,121 52,106
Deferred revenue, less current portion 6,396 7,917
Other long-term liabilities 5,949 -
------------- -------------
Total liabilities 236,443 232,442
------------- -------------

Stockholders' equity:
Common stock 172 157
Additional paid-in capital 5,154,139 5,067,993
Accumulated other comprehensive
(loss) income (3,094) 1,112
Accumulated deficit (4,760,199) (4,718,118)
------------- -------------
Total stockholders' equity 391,018 351,144
------------- -------------
Total liabilities and
stockholders' equity $ 627,461 $ 583,586
============= =============
*T

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Ariba, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited; in thousands, except per share data)

Three Months Ended Year Ended
September 30, September 30,
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues:
Subscription and
maintenance $ 51,048 $ 37,458 $187,150 $142,309
Services and other 34,484 38,059 140,910 159,358
--------- --------- --------- ---------
Total revenues 85,532 75,517 328,060 301,667
--------- --------- --------- ---------

Cost of revenues:
Subscription and
maintenance 10,665 8,175 40,088 32,709
Services and other 21,865 26,599 94,189 114,615
Amortization of acquired
technology and customer
intangible assets 1,388 3,288 14,257 14,074
--------- --------- --------- ---------
Total cost of
revenues 33,918 38,062 148,534 161,398
--------- --------- --------- ---------
Gross profit 51,614 37,455 179,526 140,269
--------- --------- --------- ---------

Operating expenses:
Sales and marketing 27,608 24,443 110,834 93,904
Research and development 11,392 12,314 52,270 51,159
General and
administrative 11,909 10,672 48,919 39,780
Other income - Softbank - (3,391) (566) (13,564)
Amortization of other
intangible assets 210 100 739 525
Restructuring and
integration costs 6,274 (389) 10,108 (4,194)
Litigation provision - - 5,900 -
--------- --------- --------- ---------
Total operating
expenses 57,393 43,749 228,204 167,610
--------- --------- --------- ---------

Loss from operations (5,779) (6,294) (48,678) (27,341)
Interest and other
income, net (201) 2,839 8,359 14,301
--------- --------- --------- ---------
Loss before income taxes (5,980) (3,455) (40,319) (13,040)
Provision for income
taxes 77 329 743 1,937
--------- --------- --------- ---------

Net loss $ (6,057) $ (3,784) $(41,062) $(14,977)
========= ========= ========= =========

Net loss per share - basic and
diluted $ (0.08) $ (0.05) $ (0.53) $ (0.21)
Weighted average shares -
basic and diluted 79,835 71,657 77,318 70,106
*T

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Ariba, Inc. and Subsidiaries
Cash Flows
(Unaudited; in thousands)

Three Months Ended Year Ended
September 30, September 30,
2008 2007 2008 2007
------------------------------ --------- --------- --------- ---------
Operating activities:
Net loss $ (6,058) $ (3,784) $(41,062) $(14,977)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Provision for (recovery of)
doubtful accounts 396 18 506 (267)
Depreciation 2,013 1,824 7,903 7,010
Amortization of intangible
assets 1,598 3,388 14,996 14,599
Stock-based compensation 9,989 6,190 40,859 32,449
Restructuring charge
(benefit) 6,274 (389) 10,108 (4,194)
Realized gain - currency
translation adjustment - - - (2,625)
Changes in operating assets
and liabilities:
Accounts receivable (691) 5,361 3,609 2,801
Prepaid expense and other
assets 584 (1,189) 5,948 (945)
Accounts payable 914 842 1,225 1,019
Accrued compensation and
related liabilities 184 4,117 (3,687) (502)
Accrued liabilities (714) (231) (7,914) (3,554)
Deferred income - Softbank - (3,391) (566) (13,564)
Deferred revenue 1,633 (782) 13,258 18,351
Restructuring obligations (5,946) (5,366) (23,592) (19,028)

--------- --------- --------- ---------
Net cash provided by
operating activities 10,176 6,608 21,591 16,573
--------- --------- --------- ---------

Investing activities:
Cash paid for acquisitions,
net of cash acquired - - (55,638) -
Purchases of property and
equipment (2,463) (2,257) (7,657) (7,410)
Sales of investments, net of
purchases 778 32,473 68,185 (5,456)
Allocation from restricted
cash, net 287 - 1,022 1,830

--------- --------- --------- ---------
Net cash (used in) provided
by investing activities (1,398) 30,216 5,912 (11,036)
--------- --------- --------- ---------

Financing activities:
Proceeds from issuance of
common stock, net 2,658 2,261 6,394 6,570
Repurchase of common stock (2,689) (1,302) (7,203) (3,558)

--------- --------- --------- ---------
Net cash (used in) provided
by financing activities (31) 959 (809) 3,012
--------- --------- --------- ---------

Effect of exchange rates on
cash and cash equivalents (488) 262 (1,201) 765

Net change in cash and cash
equivalents 8,259 38,045 25,493 9,314

Cash and cash equivalents at
beginning of period 78,545 23,266 61,311 51,997

--------- --------- --------- ---------
Cash and cash equivalents at
end of period $ 86,804 $ 61,311 $ 86,804 $ 61,311
========= ========= ========= =========
*T

Non-GAAP Financial Measures

The accompanying press release dated October 23, 2008 contains
non-GAAP financial measures. The following table reconciles the
non-GAAP financial measures in the press release to the most directly
comparable financial measures prepared in accordance with Generally
Accepted Accounting Principles (GAAP). These non-GAAP measures include
non-GAAP revenues, non-GAAP cost of revenues, gross profit, operating
expenses, (loss) income from operations, net (loss) income and net
(loss) income per share amounts.

Non-GAAP financial measures should not be considered as a
substitute for, or superior to, GAAP financial measures, which should
be considered as the primary financial metrics for evaluating our
financial performance. Significantly, non-GAAP financial measures are
not based on a comprehensive set of accounting rules or principles.
Instead, they are based on subjective determinations by management
designed to supplement our GAAP financial measures. They are subject
to a number of important limitations and should be considered only in
conjunction with our consolidated financial statements prepared in
accordance with GAAP. For example, our non-GAAP financial measures
have the effect of excluding a purchase accounting adjustment, costs
and expenses from our operating results that should be properly
considered under a system of accrual accounting. In addition, our
non-GAAP financial measures differ from GAAP measures with the same
names, may vary over time and may differ from non-GAAP financial
measures with the same or similar names used by other companies.
Accordingly, investors should exercise caution when evaluating our
non-GAAP financial measures.

Despite these limitations, we believe our non-GAAP financial
measures provide meaningful supplemental information about our
operating results, primarily because they exclude a purchase
accounting adjustment and costs and expenses that we do not believe
are indicative of the ongoing operating performance of our business
and our senior management. Although these items should properly be
considered in our GAAP financial measures, we believe they should be
excluded when evaluating our current operating performance. The
non-GAAP financial measures disclosed in the accompanying press
release are used by our Board of Directors and senior management to
evaluate our current operating performance, are used in evaluating the
performance of our senior management, and are used in our budget and
planning processes. We believe that our non-GAAP financial measures
are helpful to investors by facilitating comparisons of our current
and prior operating results and by facilitating comparisons of our
operating results with those of other software companies.

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Ariba, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Operating Results
(Unaudited; in thousands, except per share data)

The following tables reconcile the specific items excluded from GAAP
in the calculation of non-GAAP operating results for the period
indicated below:

Three Months Ended Three Months Ended
September 30, 2008 September 30, 2007
------------------ -------------------
Revenue reconciliation:
--------------------------------
GAAP revenue $ 85,532 $ 75,517
Purchase accounting
adjustment 904 -
------------------ -------------------
Total non-GAAP revenues $ 86,436 $ 75,517
================== ===================

Three Months Ended Three Months Ended
September 30, 2008 September 30, 2007
------------------ -------------------
Expense reconciliation:
--------------------------------
GAAP revenue $ 85,532 $ 75,517
GAAP net loss 6,057 3,784
------------------ -------------------
Total GAAP expenses 91,589 79,301

Amortization of intangible
assets (1,598) (3,388)
Stock-based compensation (9,989) (6,190)
Restructuring and integration (6,274) 389
------------------ -------------------
Total non-GAAP operating
expenses $ 73,728 $ 70,112
================== ===================

Three Months Ended Three Months Ended
September 30, 2008 September 30, 2007
------------------ -------------------
Net income (loss)
reconciliation:
--------------------------------
GAAP net loss $ (6,057) $ (3,784)
Purchase accounting
adjustment 904 -
Amortization of intangible
assets 1,598 3,388
Stock-based compensation 9,989 6,190
Restructuring and
integration 6,274 (389)
------------------ -------------------
Non-GAAP net income $ 12,708 $ 5,405
================== ===================

Three Months Ended Three Months Ended
September 30, 2008 September 30, 2007
------------------ -------------------
Net income (loss) per share
reconciliation:
--------------------------------
GAAP net loss per share -
basic $ (0.08) $ (0.05)
Purchase accounting
adjustment 0.01 -
Amortization of intangible
assets 0.02 0.05
Stock-based compensation 0.13 0.09
Restructuring and
integration 0.08 (0.01)
------------------ -------------------
Non-GAAP net income per share
- basic $ 0.16 $ 0.08
================== ===================

Non-GAAP net income per share
- diluted $ 0.15 $ 0.07

Weighted average shares - basic 79,835 71,657
Weighted average shares -
diluted 85,033 76,315
*T

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Ariba, Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Operating Results
(Unaudited; in thousands, except per share data)

The following tables reconcile the specific items excluded from GAAP
in the calculation of non-GAAP operating results for the period
indicated below:

Year Ended Year Ended
September 30, 2008 September 30, 2007
------------------ -------------------
Revenue reconciliation:
--------------------------------
GAAP revenue $ 328,060 $ 301,667
Purchase accounting
adjustment 5,007 -
------------------ -------------------
Total non-GAAP revenues $ 333,067 $ 301,667
================== ===================

Year Ended Year Ended
September 30, 2008 September 30, 2007
------------------ -------------------
Expense reconciliation:
--------------------------------
GAAP revenue $ 328,060 $ 301,667
GAAP net loss 41,062 14,977
------------------ -------------------
Total GAAP expenses 369,122 316,644

Amortization of intangible
assets (14,996) (14,599)
Stock-based compensation (40,859) (32,449)
Restructuring and integration (10,108) 4,194
Litigation provision (5,900) -
------------------ -------------------
Total non-GAAP operating
expenses $ 297,259 $ 273,790
================== ===================

Year Ended Year Ended
September 30, 2008 September 30, 2007
------------------ -------------------
Net income (loss)
reconciliation:
--------------------------------
GAAP net loss $ (41,062) $ (14,977)
Purchase accounting
adjustment 5,007 -
Amortization of intangible
assets 14,996 14,599
Stock-based compensation 40,859 32,449
Restructuring and
integration 10,108 (4,194)
Litigation provision 5,900 -
------------------ -------------------
Non-GAAP net income $ 35,808 $ 27,877
================== ===================

Year Ended Year Ended
September 30, 2008 September 30, 2007
------------------ -------------------
Net income (loss) per share
reconciliation:
--------------------------------
GAAP net loss per share -
basic $ (0.53) $ (0.21)
Purchase accounting
adjustment 0.06 -
Amortization of intangible
assets 0.19 0.21
Stock-based compensation 0.53 0.46
Restructuring and
integration 0.13 (0.06)
Litigation provision 0.08 -
------------------ -------------------
Non-GAAP net income per share
- basic $ 0.46 $ 0.40
================== ===================

Non-GAAP net income per share
- diluted $ 0.44 $ 0.37

Weighted average shares - basic 77,318 70,106
Weighted average shares -
diluted 82,250 74,677
*T

Discussion of Specific Items Excluded From Non-GAAP Financial
Measures

Our non-GAAP financial measures include a purchase accounting
adjustment related to deferred revenues and generally exclude costs
and expenses for (i) amortization of intangible assets related to
acquisitions, (ii) stock-based compensation and (iii) restructuring
and integration. We exclude these items because we believe they are
not closely related to the ongoing operating performance of our
business and the performance of our senior management and are
generally excluded from our budget and planning process. In addition
to these reasons, we believe our non-GAAP financial measures are also
helpful to investors by facilitating comparisons of our operating
results over different time periods and by facilitating comparisons of
our financial performance with that of other companies. In addition,
except for costs and expenses related to restructuring and
integration, these items are non-cash items that do not affect cash
flows.

(1) Purchase accounting adjustment - deferred revenue. As
announced on December 17, 2007, Ariba acquired Procuri, Inc. In
accordance with the fair value provisions of EITF 01-3, Accounting in
a Business Combination for Deferred Revenue of an Acquiree, acquired
deferred revenue of approximately $4.5 million was recorded on the
opening balance sheet, which was approximately $5.9 million lower than
the historical carrying value. Although this purchase accounting
requirement has no impact on the Company's business or cash flow, it
adversely impacts the Company's reported GAAP revenue primarily for
the first twelve months post-acquisition. In order to provide
investors with financial information that facilitates comparison of
both historical and future results, the Company has provided non-GAAP
financial measures which exclude the impact of the purchase accounting
adjustment. The Company believes that this non-GAAP financial
adjustment is useful to investors because it allows investors to (a)
evaluate the effectiveness of the methodology and information used by
management in its financial and operational decision-making and (b)
compare past and future reports of financial results of the Company as
the revenue reduction related to acquired deferred revenue will not
recur when related subscription terms are renewed in future periods.

(2) Amortization of Acquired Intangible Assets. In accordance with
GAAP, we amortize intangible assets acquired in connection with
acquisitions over the estimated useful lives of the assets. We exclude
these amortization costs in our non-GAAP financial measures because
they (i) result from prior acquisitions, rather than the ongoing
operating performance of our business, and (ii) absent additional
acquisitions, are expected to decline over time as the remaining
carrying amounts of these assets are amortized. We believe excluding
these costs helps investors compare our financial performance with
that of other companies with different acquisition histories. However,
as with impairment charges, we recognize that amortization costs
provide a helpful measure of the financial impact and performance of
prior acquisitions and consider our non-GAAP financial measures in
conjunction with our GAAP financial results that include amortization
costs.

(3) Stock-Based Compensation Expenses. We exclude stock-based
compensation expense associated with stock options and stock granted
to employees and non-executive directors in our non-GAAP financial
measures. While stock-based compensation is a significant component of
our expenses, we believe that investors wish to be able to exclude the
effects of stock-based compensation expense in comparing our financial
performance with that of other companies.

(4) Restructuring and integration. We recorded restructuring
related to lease abandonment accruals and severance and related
benefits in the three months and twelve months ended September 30,
2008. We exclude this from our non-GAAP financial measures because it
is unrelated to our ongoing operations and is significantly impacted
by factors outside our control. We believe excluding restructuring and
integration helps investors compare our operating performance with
that of other companies. We recognize, however, that restructuring and
integration will impact cash flows and that we and investors should
carefully consider the impact of these costs on future cash flows.

Ariba, Inc.
John Duncan, 650-390-1200 (Investors)
Investor@ariba.com
Karen Master, 412-297-8177 (Media)
kmaster@ariba.com

Copyright Business Wire 2008