WEBM Webmediabrands (MM)

Announces Record Profits and Operating Margin FAIRFAX, Va., Oct. 25 /PRNewswire-FirstCall/ -- webMethods, Inc. (NASDAQ:WEBM), a leading provider of business integration and optimization software, today announced financial results for its fiscal second quarter ended September 30, 2005. Total revenue for the fiscal second quarter was approximately $49.2 million, compared to $50.8 million in the prior year period. License revenue for the fiscal second quarter was approximately $19.4 million, compared to $23.9 million in the prior year period. Under U.S. generally accepted accounting principles (GAAP), the company's net income for the September 2005 quarter was $2.6 million, or earnings of $0.05 per share, compared to net loss of $4.1 million, or a loss of $0.08 per share, in the prior year period. Adjusting the financial results as described below in "Non- GAAP Financial Measures," the company reported non-GAAP net income of $2.9 million, or earnings of $0.05 per share in the September 2005 quarter, compared to non-GAAP net income of $659,000, or earnings of $0.01 per share, in the prior year period. Important information regarding these results is provided below under "Non-GAAP Financial Measures" and should be read to better understand the charges excluded in results and why this information is presented. "The continued focus on our cost structure has resulted in our reporting the lowest quarterly expenses since the company's initial public offering in February 2000. By aligning our resources more closely with our objective of improving the yield on our sales and marketing investments, we also delivered the best quarterly bottom line performance in the company's history," said David Mitchell, president and CEO, webMethods, Inc. "During the September 2005 quarter many of our significant transactions were won due to the strength of our solution selling model and the uniqueness of webMethods Fabric 6.5," continued Mr. Mitchell. "As we enter the traditionally stronger part of our fiscal year, we are encouraged that demand for our total business integration solutions continues to grow." Additional September 2005 Quarterly Financial Highlights: * Operating margin was 4% and non-GAAP operating margin was 7%. * Cash and marketable securities at September 30, 2005 increased by approximately $4.3 million to approximately $148 million from $143.7 million at June 30, 2005. * Days Sales Outstanding (DSOs) decreased by 8 days from the prior quarter to 75 days. * Total deferred revenue at September 30, 2005 decreased by $1.7 million to $44.6 million from $46.2 million at June 30, 2005. * International revenue accounted for approximately 37% of total revenue in the September 2005 quarter, consistent with the prior quarter. Financial Outlook: Based on currently available information, webMethods anticipates total revenue in the quarter ending December 31, 2005 will be in the range of $50 million to $53 million, which includes license revenue in the range of $20 million to $23 million. GAAP net income per share for the December 2005 quarter is anticipated to be in the range of $0.03 to $0.07. Non-GAAP net income per share for the December 2005 quarter is anticipated to be in the range of $0.04 to $0.07. Non-GAAP net income for the December 2005 quarter is expected to exclude amortization of warrant charge of approximately $661,000 and amortization of acquired intangible assets of approximately $599,000 and includes an income tax provision assuming a 35% effective tax rate. Important information regarding the use of this non-GAAP financial measure is provided below under "Non-GAAP Financial Measures" and should be read to better understand the charges excluded in results and why this non- GAAP information is presented. Technology Highlights: webMethods extended our suite of new business process productivity solutions with the introduction of webMethods for Payments Monitoring. These webMethods Fabric-based solutions address unique industry-specific requirements through process-specific management, monitoring and professional services methodologies. webMethods for Compliance, released in the fiscal first quarter, was subsequently recognized by Forrester Research in their report Controls Monitoring Solutions Gaining Momentum, Forrester Research, Inc., August 2005 as one of six software solutions recognized for meeting its criteria for continuous controls monitoring, which was identified as a key component for achieving sustainable regulatory compliance. During the quarter, webMethods also extended its product capabilities for mainframe integration and product information management (PIM) via partnerships with NEON Systems and GXS, respectively. Additionally, webMethods was recognized by Intelligent Enterprise magazine with its 2005 Reader's Choice Award for the "Best Business Activity Monitoring System" in the publication's October 1st issue. Global Customer Wins: webMethods won new and additional business in the September 2005 quarter with strategic customers worldwide. The company continued momentum in several vertical industries, with particular strength in financial services and government. The following companies represent important new and follow-on business that closed during the September 2005 quarter: Adobe, Agos, Amtrak, Baxter Healthcare, Cabela's, Cable & Wireless, Chartered SemiConductor, CNRS (Centre Nationale de la Recherche Scientifique), Dean Foods, U.S. Department of the Navy, Eastman Kodak, Fonterra, Fujitsu Social Sciences Lab, GXS, Haemonetics, Henkel KGaA, Hiscox, Idaho Power, ING North America, J.D. Irving, Juniper Networks, Matsushita Electric, Medtronic, National Commerce Bank, National Reconnaissance Office, NE Chemcat, Office Depot, Progress Energy, Societe Generale, T-Systems, U.S. Forest Service, and Wales and West Utilities Limited, among others. Record Number of Customer Projects Move Into Production: In the September 2005 quarter, webMethods documented over 170 global customer projects that moved into production, including: 3M, Actebis Holding GmbH, Adobe Systems, AEP Energy Services Inc., AFLAC, AGCO Corporation, Alcatel, All Nippon Airways, Applera, Cadence Design Systems, Colgate-Palmolive Company, Coors Brewing Company, Corporate Express, Dade Behring, Inc., Fosters Group Limited, France Telecom, Gates Corporation, Hewlett-Packard Company, Iceland Air, International Paper, Johnson and Johnson, Koninklijke Ahold NV, Lafarge North America, Level 3 Communications, Liberty Mutual Insurance Company, Massachusetts Mutual Life, Medtronic, National City Corporation, Nationale Bank of Belgium, Nomura Research Institute Ltd., Robert Bosch GmbH, Solectron, Sony Australia Limited, Standard Register Company, Staples, Toshiba Corporation, Trane Company and Worldwide Technologies, Inc., among others. Conference Call Information: webMethods will host a conference call at 5:00 p.m. Eastern Standard Time today to discuss the company's fiscal second quarter financial results and its future guidance. The conference call will be available via webcast at http://www.webmethods.com/investors. A replay of this call will be available through November 1, 2005. Please dial 1-(800) 642-1687 in North America and 1-(706) 645-9291 outside North America, confirmation number 1209334. Non-GAAP Financial Measures In accordance with the Rules and Regulations of the Securities and Exchange Commission, webMethods prepares financial statements in accordance with GAAP. In addition to evaluating webMethods' GAAP-based financial information, management evaluates the performance of, and operates, the core business of the company using certain non-GAAP financial measures. While these non-GAAP financial measures are not a substitute for results reported under GAAP, management relies upon the non-GAAP measures in operating the business because management feels these measures provide additional information regarding the operational and performance indicators that more closely reflect the operations of the company's core business. This press release contains operating results for the quarters and six- month periods ended September 2005 and September 2004, and anticipated operating results for the quarter ending December 31, 2005, that are not in accordance with GAAP because they exclude certain non-cash amortization charges and unusual or infrequent items outside webMethods' core business operations, and include a provision for income taxes assuming a 35% effective tax rate. Non-GAAP results for the quarters and six-month periods ended September 2005 and 2004 exclude (1) amortization of deferred warrant charges, (2) amortization of acquired intangible asset charges, (3) restructuring costs in the September 2005 and 2004 and June 2005 quarters and (4) impairment of equity investment in a private company in the September 2004 quarter. The financial information attached to this press release reconciles the non-GAAP operating results given above to GAAP for the quarters and six-month periods ended September 2005 and 2004. Investors are encouraged to review that reconciliation of non-GAAP operating results to the most directly comparable GAAP financial measures provided in the attached financial information. webMethods believes that non-GAAP financial measures that exclude those non-cash amortization charges and unusual or infrequent items outside its core business operations provide a more useful assessment of the company's performance of its core operations. webMethods' management excludes those items in analyzing the performance of, and operating, the company's core business, in part for the following reasons: * The amortization of deferred warrant charge relates to a single warrant granted by the company in March 2001 in connection with an original equipment manufacturer (OEM) Agreement entered into by the company at that time. The company believes the issuance of that warrant was unusual in its sales and marketing practices and that there is no direct correlation between the non-cash amortization of the deferred warrant charge and the financial results achieved under the OEM Agreement. Amortization of the deferred warrant charge is expected to end in April 2006. * The amortization of acquired intangible assets is a non-cash amortization charge relating to three acquisitions completed by the company in fiscal year 2004. This amortization charge is a fixed, non- cash charge that relates to prior-year acquisitions rather than current- period operations. As a result, management does not include this charge in its internal review of the company's current period operations. * Restructuring costs include severance and other costs relating to restructurings undertaken to align the company's cost structure with changing market conditions. The company believes each of the restructuring charges is a discrete, unusual event and unrelated to another. The company does not believe that these restructuring charges reflect its core business operations. * The impairment of equity investment in private company is a non-cash write-off of the carrying value of an investment made by the company in April 2000. The recording of the other-than-temporary decline in value in investment relates to prior-year investing activities and is a non- recurring item unrelated to current-period operations. Non-GAAP operating results should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and may be different from non-GAAP financial measures used by others. webMethods' management uses these non-GAAP measures to better understand and manage operations and to evaluate the performance of the company's core operations, in comparisons of the company's historical results of core operations and in comparisons to competitors' core operating results. webMethods believes that these non-GAAP measures are useful to investors in evaluating our operating performance and allows investors and management to compare the results of core operations from period to period by removing these unusual or infrequent items and certain non-cash amortization charges from our operating results. webMethods also believes that these non-GAAP measures enhance comparability of webMethods' results of operations to those of other enterprise software companies, to non-GAAP operating results webMethods historically has reported, to financial guidance provided by webMethods and to financial models and expectations of certain investors and securities analysts. About webMethods, Inc. webMethods (NASDAQ:WEBM) provides business integration software to integrate, assemble and optimize available IT assets to drive business process productivity. webMethods delivers an innovative, enterprise-class business integration platform that incorporates proven integration technology with next generation capabilities into one interoperable set of tools that delivers a unique combination of efficiency, agility and control. webMethods combines industry leadership with a zealous commitment to customers to deliver tangible business value to more than 1,300 global customers. webMethods is headquartered in Fairfax, Va., with offices throughout the U.S., Europe, Asia Pacific and Japan. More information about the company can be found at http://www.webmethods.com/. The webMethods name and logo are registered trademarks of webMethods, Inc. in the United States and certain other countries. All other marks mentioned are trademarks or service marks of their respective companies. This press release and the conference call announced in it may contain various remarks about the future expectations, plans and prospects of webMethods that constitute forward-looking statements for purposes of the safe harbor provisions of U.S. securities laws. Specific forward-looking statements relate to future market opportunities for webMethods' solutions, webMethods' products and services and their performance, the size and strength of our markets, the size and quality of our pipeline, expected future financial performance (including total revenue, license revenue, level of cash and marketable securities, non-cash or non-recurring charges, expenses, net earnings or loss, earnings or loss per share), and non-GAAP operating results per share, expected financial metrics, webMethods' future cost savings and expense levels, the anticipated result of marketing and selling models and approaches, the anticipated contributions to webMethods' future financial performance of certain products or geographic regions of its business, demand for some or all of its products and the contribution to webMethods' revenue of business partners or webMethods' products or services. Actual results of webMethods may differ materially from those indicated by these forward-looking statements as a result of various risks and uncertainties, including the impact of economic conditions, geopolitical factors, seasonal factors, competitive and pricing pressures, terrorism and related uncertainties in the U.S. and abroad on the company's customers and prospects and their IT spending budgets and priorities; impact upon operations of legal compliance matters or internal controls review, improvement and remediation; difficulties in achieving or maintaining anticipated expense levels and controlling major expenses; variations in the size and timing of customer orders and demand for software offered by webMethods; impact of compliance programs and claims for alleged violations of requirements and duties; impact of changes in management or staff levels; variations in revenue influenced by software vendor or systems integrator partners; impact of rapid technological change; and these and other risks and uncertainties discussed more fully in webMethods' SEC filings, including those discussed under the heading "Factors That May Affect Future Operating Results" in the Business section of webMethods' Form 10-K for the year ended March 31, 2005 and webMethods' Form 10-Q for the period ended June 30, 2005, which are on file with the U.S. Securities and Exchange Commission and may be accessed at http://www.sec.gov/ or webMethods' investor relations web page at http://www.webmethods.com/investors/. webMethods disclaims any obligation to update or correct any forward-looking statements made herein due to the occurrence of events after the issuance of this press release. webMethods, Inc. Condensed Consolidated Statements of Operations (in thousands, except shares and per share data) (Unaudited) Three Months Ended Six Months Ended September 30, September 30, 2005 2004 2005 2004 Revenue License $19,390 $23,851 $37,857 $38,657 Professional services 11,326 12,077 23,009 24,601 Maintenance 18,452 14,838 36,037 29,445 Total revenue 49,168 50,766 96,903 92,703 Cost of revenue Amortization of intangibles 599 599 1,198 1,198 License 271 245 485 865 Professional services and maintenance 13,481 14,280 27,035 28,553 Total cost of revenue 14,351 15,124 28,718 30,616 Gross profit 34,817 35,642 68,185 62,087 Operating expenses Sales and marketing 17,051 20,587 34,326 42,362 Research and development 10,126 10,820 21,244 21,870 General and administrative 5,401 4,868 11,615 9,941 Restructuring and other related charges 431 2,756 719 2,756 Total operating expenses 33,009 39,031 67,904 76,929 Operating income (loss) 1,808 (3,389) 281 (14,842) Interest income and other, net 993 387 2,148 1,025 Impairment of equity investment in private company - (1,057) - (1,057) Net income (loss) before taxes $2,801 $(4,059) $2,429 $(14,874) Provision for income taxes 243 65 385 69 Net income (loss) $2,558 $(4,124) $2,044 $(14,943) Basic and fully diluted net income (loss) per share $0.05 $(0.08) $0.04 $(0.28) Shares used in computing per share amount Basic 53,609,637 53,088,527 53,492,483 52,958,538 Fully Diluted 54,304,756 53,088,527 53,854,784 52,958,538 webMethods, Inc. Condensed Consolidated Balance Sheets (in thousands) (Unaudited) September 30, March 31, 2005 2005 ASSETS Current assets: Cash and cash equivalents $89,130 $57,209 Marketable securities available for sale 58,891 78,332 Accounts receivable, net 41,213 47,326 Prepaid expenses and other current assets 6,219 6,401 Total current assets 195,453 189,268 Marketable securities available for sale - 14,513 Property and equipment, net 10,762 10,342 Goodwill 46,704 46,704 Intangibles assets, net 7,192 8,390 Other assets 4,686 6,127 Total assets $264,797 $275,344 LIABILITIES & STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $7,835 $8,673 Accrued expenses 12,431 16,506 Accrued salaries and commissions 9,381 12,219 Deferred revenue 39,847 43,055 Current portion of capital lease 406 475 Total current liabilities 69,900 80,928 Capital lease obligations, net of current portion 113 139 Other long term liabilities 3,133 3,374 Long term deferred revenue 4,714 6,371 Total liabilities 77,860 90,812 Total stockholders' equity 186,937 184,532 Total liabilities and stockholders' equity $264,797 $275,344 webMethods, Inc. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) Six Months Ended September 30, 2005 2004 Cash flows from operating activities: Net income (loss) $2,044 $(14,943) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 2,776 3,243 Provision for (recovery of) doubtful accounts (376) 241 Amortization of deferred stock compensation related to employee stock options and non-employee stock warrants 1,352 1,322 Amortization of acquired intangibles 1,198 1,198 Deferred rent (229) - Impairment of equity investment in private company - 1,057 Increase (decrease) in cash resulting from changes in assets and liabilities: Accounts receivable 5,514 952 Prepaid expenses and other current assets 85 (1,598) Other assets 1,315 980 Accounts payable (523) (1,866) Accrued expenses and other liabilities (3,875) (1,851) Accrued salaries and commissions (2,613) 149 Deferred revenue (3,725) 911 Other liabilities (73) - Net cash provided by (used in) operating activities 2,870 (10,205) Cash flows from investing activities: Purchases of property and equipment (3,039) (2,660) Net maturities of marketable securities available for sale 34,091 874 Net cash provided by (used in) investing activities 31,052 (1,786) Cash flows from financing activities: Short-term borrowings - 3,533 Payments on short-term borrowings - (4,284) Payments on capital leases (336) (547) Proceeds from exercise of stock options and stock issued under the ESPP 1,438 1,882 Net cash provided by financing activities 1,102 584 Effect of the exchange rate on cash (3,103) (473) Net increase/(decrease) in cash and cash equivalents 31,921 (11,880) Cash and cash equivalents at beginning of period 57,209 75,462 Cash and cash equivalents at end of period $89,130 $63,582 webMethods, Inc. Non-GAAP Condensed Consolidated Statements of Operations (in thousands, except shares and per share data) (Unaudited) Three Months Ended September 30, 2005 As Reported Adjustments* Non-GAAP Revenues License $19,390 $- $19,390 Professional services 11,326 - 11,326 Maintenance 18,452 - 18,452 Total revenues 49,168 - 49,168 Cost of revenues Amortization of intangibles(1) 599 (599) - License 271 - 271 Professional services and maintenance 13,481 - 13,481 Total cost of revenues 14,351 (599) 13,752 Gross profit 34,817 599 35,416 Operating expenses Sales and marketing(2) 17,051 (661) 16,390 Research and development 10,126 - 10,126 General and administrative 5,401 - 5,401 Restructuring costs(3) 431 (431) - Total operating expenses 33,009 (1,092) 31,917 Operating income (loss) 1,808 1,691 3,499 Interest income and other, net 993 - 993 Impairment of equity investment in private company(4) - - - Net income (loss) before taxes 2,801 1,691 4,492 Provision for income taxes(5) 243 1,329 1,572 Net income (loss) $2,558 $362 $2,920 Net income (loss) per share Basic $0.05 $0.05 Fully Diluted $0.05 $0.05 Shares used in computing per share amount Basic 53,609,637 53,609,637 Fully Diluted 54,304,756 54,304,756 Three Months Ended September 30, 2004 As Reported Adjustments* Non-GAAP Revenues License $23,851 $- $23,851 Professional services 12,077 - 12,077 Maintenance 14,838 - 14,838 Total revenues 50,766 - 50,766 Cost of revenues Amortization of intangibles 599 (599) - License 245 - 245 Professional services and maintenance 14,280 - 14,280 Total cost of revenues 15,124 (599) 14,525 Gross profit 35,642 599 36,241 Operating expenses Sales and marketing 20,587 (661) 19,926 Research and development 10,820 - 10,820 General and administrative 4,868 - 4,868 Restructuring and excess facilities costs 2,756 (2,756) - Total operating expenses 39,031 (3,417) 35,614 Operating income (loss) (3,389) 4,016 627 Interest income and other, net 387 - 387 Impairment of equity investment in private company (1,057) 1,057 - Net income (loss) before taxes (4,059) 5,073 1,014 Provision for income taxes 65 290 355 Net income (loss) $(4,124) $4,783 $659 Net income (loss) per share Basic $0.01 $0.01 Fully Diluted $0.01 $0.01 Shares used in computing per share amount Basic 53,088,527 53,088,527 Fully Diluted 53,456,078 53,456,078 * webMethods' management uses non-GAAP measures to better understand and manage operations and to evaluate the performance of the company's core operations, in comparisons of the company's historical results of core operations and in comparisons to competitors' core operating results. webMethods' believes that these non-GAAP measures are useful to investors in evaluating our operating performance it allows investors and management to compare the results of core operations from period to period by removing these unusual or infrequent items and certain non-cash amortization charges from our operating results. webMethods also believes that these non-GAAP measures enhance comparability of webMethods' results of core operations to those of other enterprise software companies, to non-GAAP operating results webMethods historically has reported, to financial guidance provided by webMethods and to financial models and expectations of certain investors and securities analysts. (1) Non-GAAP financial measures exclude amortization of acquired intangible asset charges of approximately $599,000 per quarter. (2) Non-GAAP financial measures exclude amortization of deferred warrant charges of approximately $661,0000 per quarter. (3) Non-GAAP financial measures exclude restructuring costs of approximately $431,000 in the September 2005 quarter and approximately $2,756,000 in the September 2004 quarter (4) Non-GAAP financial measures exclude impairment of equity investment in private company of $1,057,000 in the September 2004 quarter. (5) Non-GAAP financial measures include a provision for income taxes assuming a 35% effective tax rate. Operating Margin was 3.7% on a GAAP basis and 7.1% on a non-GAAP basis for the three months ended September 30, 2005 and (6.7%) on a GAAP basis and 1.2% on a non-GAAP basis for the three months ended September 30, 2004. Operating Margin is the percentage derived by dividing operating income by total revenue. Six Months Ended September 30, 2005 As As Reported Adjustments* Adjusted Revenue License $37,857 $- $37,857 Professional services 23,009 - 23,009 Maintenance 36,037 - 36,037 Total revenue 96,903 - 96,903 Cost of revenue Amortization of intangibles(1) 1,198 (1,198) - License 485 - 485 Professional services and maintenance 27,035 - 27,035 Total cost of revenue 28,718 (1,198) 27,520 Gross profit 68,185 1,198 69,383 Operating expenses Sales and marketing(2) 34,326 (1,322) 33,004 Research and development 21,244 - 21,244 General and administrative 11,615 - 11,615 Restructuring costs(3) 719 (719) - Total operating expenses 67,904 (2,041) 65,863 Operating income (loss) 281 3,239 3,520 Interest income and other, net 2,148 - 2,148 Impairment of equity investment in private company(4) - - - Net income (loss) before taxes 2,429 3,239 5,668 Provision for income taxes(5) 385 1,599 1,984 Net income (loss) $2,044 $1,640 $3,684 Net income (loss) per share Basic $0.07 $0.07 Fully Diluted $0.07 $0.07 Shares used in computing per share amount Basic 53,492,483 53,492,483 Fully Diluted 53,854,784 53,854,784 Six Months Ended September 30, 2004 As As Reported Adjustments* Adjusted Revenue License $38,657 $- $38,657 Professional services 24,601 - 24,601 Maintenance 29,445 - 29,445 Total revenue 92,703 - 92,703 Cost of revenue Amortization of intangibles 1,198 (1,198) - License 865 - 865 Professional services and maintenance 28,553 - 28,553 Total cost of revenue 30,616 (1,198) 29,418 Gross profit 62,087 1,198 63,285 Operating expenses Sales and marketing 42,362 (1,322) 41,040 Research and development 21,870 - 21,870 General and administrative 9,941 - 9,941 Restructuring costs 2,756 (2,756) - In-process research and development - - - Settlement of intellectual property matter - - - Total operating expenses 76,929 (4,078) 72,851 Operating income (loss) (14,842) 5,276 (9,566) Interest income and other, net 1,025 - 1,025 Impairment of equity investment in private company (1,057) 1,057 - Net income (loss) before taxes (14,874) 6,333 (8,541) Provision for income taxes 69 - 69 Net income (loss) $(14,943) $6,333 $(8,610) Net income (loss) per share Basic $(0.16) $(0.16) Fully Diluted $(0.16) $(0.16) Shares used in computing per share amount Basic 52,958,538 52,958,538 Fully Diluted 52,958,538 52,958,538 * webMethods' management uses non-GAAP measures to better understand and manage operations and to evaluate the performance of the company's core operations, in comparisons of the company's historical results of core operations and in comparisons to competitors' core operating results. webMethods' believes that these non-GAAP measures are useful to investors in evaluating our operating performance it allows investors and management to compare the results of core operations from period to period by removing these unusual or infrequent items and certain non-cash amortization charges from our operating results. webMethods also believes that these non-GAAP measures enhance comparability of webMethods' results of core operations to those of other enterprise software companies, to non-GAAP operating results webMethods historically has reported, to financial guidance provided by webMethods and to financial models and expectations of certain investors and securities analysts. (1) Non-GAAP financial measures exclude amortization of acquired intangible asset charges of approximately $1,198,000 per six-month period. (2) Non-GAAP financial measures exclude amortization of deferred warrant charges of approximately $1,322,000 per six-month period. (3) Non-GAAP financial measures exclude restructuring costs of approximately $719,000 for the six months ending September 2005 and approximately $2,756,000 for the six months ending September 2004. (4) Non-GAAP financial measures exclude impairment of equity investment in private company of $1,057,000 in the six months ended September 2004. (5) Non-GAAP financial measures include a provision for income taxes assuming a 35% effective tax rate. Operating Margin was 0.3% on a GAAP basis and 3.6% on a non-GAAP basis for the six months ended September 30, 2005 and (16.0%) on a GAAP basis and (10.3%) on a non-GAAP basis for the six months ended September 30, 2004. DATASOURCE: webMethods, Inc. CONTACT: Christopher Martin, Investor Relations, +1-703-460-6609, , or John Conley, Public Relations, +1-703-460-5996, , both of webMethods, Inc. Web site: http://www.webmethods.com/

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