Ariba Reports Results for Third Quarter of Fiscal Year 2009

Company posts 20% year-over-year growth in 12-month subscription software
backlog

SUNNYVALE, Calif.--(Business Wire)--
Ariba, Inc. (Nasdaq: ARBA), the leading spend management solutions provider,
today announced results for the third quarter of fiscal year 2009 ended June 30.

Quarterly Financial and Operational Highlights:

* Total revenues of $83.9 million
* GAAP EPS of $0.05 and non-GAAP EPS of $0.17
* Subscription software revenue of $37.9 million, up 25% year-over-year
* 12-month subscription software backlog of $128.6 million, up 20%
year-over-year
* Cash flow from operations of $20.0 million, ending cash and investments of
$177.2 million

"Despite a continued weak macroeconomic environment, Ariba posted another solid
quarter," said Bob Calderoni, Chairman and CEO, Ariba. "Our spend management
strategy has proven to be effective even in these challenging times, and our
business model is generating excellent earnings and cash flow."

Results for the Third Quarter of Fiscal Year 2009

Revenue:

Total revenues for the third quarter of fiscal year 2009 were $83.9 million, as
compared to $85.0 million for the third quarter of fiscal year 2008.
Subscription and maintenance revenues for the current quarter were $55.4
million, as compared to $49.3 million for the third quarter of fiscal year 2008.
Within subscription and maintenance revenues, subscription software revenue was
$37.9 million for the current quarter, as compared to $30.3 million for the
third quarter of fiscal year 2008. Services and other revenues for the current
quarter were $28.5 million, as compared to $35.7million for the third quarter of
fiscal year 2008.

Earnings Per Share:

Net income for the third quarter of fiscal year 2009 was $3.9 million, or $0.05
per share, as compared to a net loss for the third quarter of fiscal year 2008
of $4.3 million, or $0.05 per share. Net income for the third quarter of fiscal
year 2009 included charges of $1.6 million for amortization of intangible
assets, $7.6 million for stock-based compensation, and a $1.4 million charge for
severance and termination benefit costs. Excluding these items, Non-GAAP net
income for the current quarter was $14.6 million, or $0.17 per diluted share, as
compared to non-GAAP net income for the third quarter of fiscal year 2008 of
$10.9 million, or $0.13 per share.

Balance Sheet and Cash:

Total cash, investments and restricted cash were $177.2 million at June 30,
2009, up $17.5 million from March 31, 2009. Net cash flow from operations for
the three months ended June 30, 2009 was $20.0 million, as compared to $8.7
million for the three months ended June 30, 2008. Accounts receivable, on an
average days-sales-outstanding basis, were 25 days for the third quarter of
fiscal year 2009, as compared to 31 days for the third quarter of fiscal year
2008, and down one day from the previous quarter. Total deferred revenues were
$116.3 million at June 30, 2009, up $5.1 million from March 31, 2009.

Customer Acquisition and Transactions for the Quarter:

During the quarter, 226 companies of all sizes purchased Ariba solutions to
drive their spend management strategies, including: Apria Healthcare,
Commonwealth Bank of Australia, Credit Suisse Group, Dollar Tree Stores, Inc.,
Hewlett-Packard Company, Kohls, Inc., KONE Corporation, Morgan Stanley, Nestle
S.A., Novo Nordisk, Republic Services, Inc., The PNC Financial Services Group,
and Telefonica, S.A. Ariba added 39 new customers in the third quarter and
closed 12 transactions over $1 million, including four software deals. On-demand
product deals totalled 171.

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 third quarter of fiscal year 2009. 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.

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:327389.

About 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 technology, 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 greater 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 100, use Ariba solutions to manage their spend from
sourcing and orders through invoicing and payment. For more information, visit
www.ariba.com

Copyright © 1996 - 2009 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 and related
economic downturn 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 May 6, 2009.

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

June 30, September 30,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 112,186 $ 86,804
Short-term investments 16,746 -
Accounts receivable, net 22,596 28,968
Prepaid expenses and other current assets 11,775 7,859
Total current assets 163,303 123,631

Property and equipment, net 14,474 19,773
Long-term investments 19,036 20,525
Restricted cash, less current portion 29,241 29,641
Goodwill 406,507 406,507
Other intangible assets, net 19,172 23,965
Other assets 3,210 3,419
Total assets $ 654,943 $ 627,461

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,529 $ 12,202
Accrued compensation and related liabilities 21,111 21,480
Accrued liabilities 16,153 15,677
Restructuring obligations 18,147 19,925
Deferred revenue 107,461 95,519
Total current liabilities 170,401 164,803

Deferred rent obligations 15,476 18,174
Restructuring obligations, less current portion 35,945 41,121
Deferred revenue, less current portion 8,842 6,396
Other long-term liabilities 6,322 5,949
Total liabilities 236,986 236,443

Stockholders' equity:
Common stock 177 174
Additional paid-in capital 5,179,361 5,154,137
Accumulated other comprehensive loss (3,967 ) (3,094 )
Accumulated deficit (4,757,614 ) (4,760,199 )
Total stockholders' equity 417,957 391,018
Total liabilities and stockholders' equity $ 654,943 $ 627,461

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

Three Months Ended Nine Months Ended
June 30, June 30,
2009 2008 2009 2008
Revenues:
Subscription and maintenance $ 55,411 $ 49,278 $ 164,348 $ 136,102
Services and other 28,463 35,738 90,306 106,426
Total revenues 83,874 85,016 254,654 242,528

Cost of revenues:
Subscription and maintenance 12,158 10,101 35,638 29,423
Services and other 18,551 23,689 56,873 72,324
Amortization of acquired technology and customer intangible assets 1,388 4,675 4,163 12,869
Total cost of revenues 32,097 38,465 96,674 114,616
Gross profit 51,777 46,551 157,980 127,912

Operating expenses:
Sales and marketing 25,515 28,682 79,019 83,226
Research and development 10,787 13,617 32,142 40,878
General and administrative 9,301 11,702 33,116 37,010
Other income - Softbank - - - (566 )
Insurance reimbursement - - (7,527 ) -
Amortization of other intangible assets 210 210 630 529
Restructuring and integration costs (benefit) 1,438 (694 ) 10,837 3,834
Litigation provision - - - 5,900
Total operating expenses 47,251 53,517 148,217 170,811

Income (loss) from operations 4,526 (6,966 ) 9,763 (42,899 )
Interest and other (expense) income, net (265 ) 2,353 (6,020 ) 8,560
Income (loss) before income taxes 4,261 (4,613 ) 3,743 (34,339 )
Provision for income taxes 367 (326 ) 1,158 666

Net income (loss) $ 3,894 $ (4,287 ) $ 2,585 $ (35,005 )

Net income (loss) per share - basic $ 0.05 $ (0.05 ) $ 0.03 $ (0.46 )
Net income (loss) per share - diluted $ 0.05 $ (0.05 ) $ 0.03 $ (0.46 )
Weighted average shares - basic 83,444 78,585 82,269 76,479
Weighted average shares - diluted 85,447 78,585 84,712 76,479

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

Three Months Ended
June 30,
2009 2008
Operating activities:
Net income (loss) $ 3,894 $ (4,286 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for doubtful accounts 493 167
Depreciation 1,932 2,022
Amortization of intangible assets 1,598 4,885
Stock-based compensation 7,640 9,552
Restructuring and integration costs (benefit) 1,438 (694 )
Changes in operating assets and liabilities:
Accounts receivable 399 1,007
Prepaid expense and other assets (704 ) 83
Accounts payable 619 1,296
Accrued compensation and related liabilities 3,739 (1,768 )
Accrued liabilities (460 ) (2,039 )
Deferred revenue 5,284 5,166
Restructuring obligations (5,847 ) (6,670 )

Net cash provided by operating activities 20,025 8,721

Investing activities:
Cash paid for acquisitions, net of cash acquired - (163 )
Purchases of property and equipment (1,352 ) (2,512 )
Purchases of investments, net of sales (17,995 ) 1,758
Allocation from restricted cash, net 14 (53 )

Net cash used in investing activities (19,333 ) (970 )

Financing activities:
Proceeds from issuance of common stock, net 162 836
Repurchase of common stock (1,015 ) (1,883 )

Net cash used in financing activities (853 ) (1,047 )

Effect of exchange rates on cash and cash equivalents (289 ) (690 )

Net change in cash and cash equivalents (450 ) 6,014

Cash and cash equivalents at beginning of period 112,636 72,529

Cash and cash equivalents at end of period $ 112,186 $ 78,543

Non-GAAP Financial Measures

The accompanying press release dated July 30, 2009 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
financial measures include non-GAAP revenues, non-GAAP cost of revenues, gross
profit, operating expenses, income (loss) from operations, net income (loss) and
net income (loss) 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.

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
June 30, 2009 June 30, 2008
Revenue reconciliation:
GAAP revenue $ 83,874 $ 85,016
Purchase accounting adjustment - 1,440
Total non-GAAP revenues $ 83,874 $ 86,456

Three Months Ended Three Months Ended
June 30, 2009 June 30, 2008
Expense reconciliation:
GAAP revenue $ 83,874 $ 85,016
Less: GAAP net income (loss) 3,894 (4,287 )
Total GAAP expenses 79,980 89,303

Amortization of intangible assets (1,598 ) (4,885 )
Stock-based compensation (7,640 ) (9,552 )
Restructuring and integration (1,438 ) 694
Total non-GAAP operating expenses $ 69,304 $ 75,560

Three Months Ended Three Months Ended
June 30, 2009 June 30, 2008
Net income (loss) reconciliation:
GAAP net income (loss) $ 3,894 $ (4,287 )
Purchase accounting adjustment - 1,440
Amortization of intangible assets 1,598 4,885
Stock-based compensation 7,640 9,552
Restructuring and integration 1,438 (694 )
Non-GAAP net income $ 14,570 $ 10,896

Three Months Ended Three Months Ended
June 30, 2009 June 30, 2008
Net income (loss) per share reconciliation:
GAAP net income (loss) per share - basic $ 0.05 $ (0.05 )
Purchase accounting adjustment - 0.02
Amortization of intangible assets 0.02 0.06
Stock-based compensation 0.09 0.12
Restructuring and integration 0.02 (0.01 )
Non-GAAP net income per share - basic $ 0.17 $ 0.14

Non-GAAP net income per share - diluted $ 0.17 $ 0.13

Weighted average shares - basic 83,444 78,585
Weighted average shares - diluted 85,447 81,394

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:

Nine Months Ended Nine Months Ended
June 30, 2009 June 30, 2008
Revenue reconciliation:
GAAP revenue $ 254,654 $ 242,528
Purchase accounting adjustment 355 4,103
Total non-GAAP revenues $ 255,009 $ 246,631

Nine Months Ended Nine Months Ended
June 30, 2009 June 30, 2008
Expense reconciliation:
GAAP revenue $ 254,654 $ 242,528
Less: GAAP net income (loss) 2,585 (35,005 )
Total GAAP expenses 252,069 277,533

Amortization of intangible assets (4,793 ) (13,398 )
Stock-based compensation (25,262 ) (30,870 )
Restructuring and integration (10,837 ) (3,834 )
Litigation provision - (5,900 )
Other-than-temporary impairment of long-term investment (1,414 ) -
Total non-GAAP operating expenses $ 209,763 $ 223,531

Nine Months Ended Nine Months Ended
June 30, 2009 June 30, 2008
Net income (loss) reconciliation:
GAAP net income (loss) $ 2,585 $ (35,005 )
Purchase accounting adjustment 355 4,103
Amortization of intangible assets 4,793 13,398
Stock-based compensation 25,262 30,870
Restructuring and integration 10,837 3,834
Litigation provision - 5,900
Other-than-temporary impairment of long-term investment 1,414 -
Non-GAAP net income $ 45,246 $ 23,100

Nine Months Ended Nine Months Ended
June 30, 2009 June 30, 2008
Net (loss) income per share reconciliation:
GAAP net loss per share - basic $ 0.03 $ (0.46 )
Purchase accounting adjustment 0.00 0.05
Amortization of intangible assets 0.06 0.18
Stock-based compensation 0.31 0.40
Restructuring and integration 0.13 0.05
Litigation provision - 0.08
Other-than-temporary impairment of long-term investment 0.02 -
Non-GAAP net income per share - basic $ 0.55 $ 0.30

Non-GAAP net income per share - diluted $ 0.53 $ 0.28

Weighted average shares - basic 82,269 76,479
Weighted average shares - diluted 84,712 81,332

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, (iii) restructuring and integration, (iv) litigation provision and
(v) other-than-temporary impairment of long-term investments. 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/(or) severance and related benefits in the three and
nine months ended June 30, 2009 and 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.

(5) Litigation provision. We recorded a litigation provision related to a patent
infringement matter in the nine months ended June 30, 2008. We exclude this from
our non-GAAP financial measures because it is unrelated to our ongoing
operations. We believe excluding the litigation provision helps investors
compare our operating performance with that of other companies. We recognize,
however, that the litigation provision will impact cash flows and that we and
investors should carefully consider the impact of these costs on future cash
flows.

(6) Other-than-temporary impairment of long-term investments. We recorded an
other-than temporary impairment of a long-term investment in the nine months
ended June 30, 2009. We exclude this from our non-GAAP financial measures
because it is unrelated to our ongoing operations. We believe excluding the
other-than-temporary impairment helps investors compare our operating
performance with that of other companies. We recognize, however, that the
other-than-temporary impairment may 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 (Investor)
Investor@ariba.com
Karen Master, 412-297-8177 (Media)
kmaster@ariba.com

Copyright Business Wire 2009

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