BroadVision, Inc. Announces 57% Sequential License Growth and Non-GAAP Profit in Fourth Quarter of 2004

BroadVision, Inc. Announces 57% Sequential License Growth and Non-GAAP Profit in Fourth Quarter of 2004

Company Also Reports Strengthened Balance Sheet

REDWOOD CITY, Calif., Jan. 26 /PRNewswire-FirstCall/ -- BroadVision, Inc. (NASDAQ:BVSN), a global provider of self-service web applications, today reported financial results for its fourth quarter ended December 31, 2004. Revenue for the quarter was $19.8 million, compared with revenue of $17.2 million for the third quarter ended September 30, 2004 and $23.3 million for the fourth quarter of 2003. License revenue for the quarter totaled $7.3 million versus $4.7 million in the third quarter of 2004 and $10.4 million in the comparable quarter of 2003.

In the fourth quarter, BroadVision posted a net loss on a generally accepted accounting principles (GAAP) basis of $386,000, or $0.01 per share, as compared with GAAP net income of $23.4 million, or $0.69 per diluted share, for the third quarter of 2004, and a GAAP net loss of $18.9 million, or $0.57 per share, in the fourth quarter of 2003. The GAAP loss in the most recent quarter included a restructuring charge of $660,000 attributable largely to the revaluing of excess lease accruals to actual or anticipated settlement amounts. Similarly, the GAAP net income for the third quarter of 2004 included a $25.5 million restructuring credit related primarily to the reduction of excess lease accruals to actual or anticipated settlement amounts.

Pro forma net income for the fourth quarter of 2004 was $274,000, or $0.01 per diluted share, compared with a pro forma net loss of $2.1 million, or $0.06 per share, in the third quarter of 2004 and pro forma net income of $3.0 million, or $0.09 per diluted share, in the fourth quarter of 2003. The preceding pro forma results exclude a $660,000 restructuring charge in the fourth quarter of 2004, a $25.5 million restructuring credit in the third quarter of 2004 and a $22.0 million restructuring charge in the fourth quarter of 2003. A reconciliation of pro forma results to GAAP results is provided in the financial information attached to this press release. The Company believes its pro forma results provide useful information because they reflect the Company's financial performance excluding certain charges, credits, gains and losses that the Company believes are not indicative of its ongoing operations.

"We are pleased to report fourth quarter revenue that was at the top end of our range of guidance and a return to pro forma profitability," said Dr. Pehong Chen, BroadVision president and CEO. "We increased license revenue by 57% sequentially as a number of new and repeat customers committed to BroadVision technology. Also in recent weeks, we exited nearly all of our excess real estate lease obligations and completed a $16 million convertible debt financing. These transactions enable us now to focus on execution against our 2005 growth and profit goals."

During the fourth quarter of 2004, BroadVision closed new and repeat business in all key vertical markets with customers such as ENI, Exempla Healthcare, HP Shopping, Iberia Airlines, Japan Airlines, Saudi Aramco, Telecom Italia, and the United States Air Force. The Company also acquired 7 new BroadVision Process(TM) license customers. This solution enables organizations to transform people-intensive processes into high-touch, self- service applications that can be deployed into existing websites.

Conference Call

BroadVision will hold a conference call to discuss this press release and related matters at 5:00 pm Eastern Time, January 26, 2005. The call, hosted by Dr. Pehong Chen, can be accessed live by dialing 866-761-0749; pass code 21414601 or live and thereafter by visiting the investor relations section of the Company's website at www.broadvision.com/ir.

Information Concerning Forward-Looking Statements

Information in this release that involves expectations, beliefs, hopes, plans, intentions or strategies regarding the future are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which forward-looking statements involve risk and uncertainties. All forward-looking statements included in this release, including, but not limited to, our ability to finalize revenue transactions in future quarters and our ability to generate growth, earnings and positive cash flows in 2005, are based upon information available to BroadVision as of the date of this release, and BroadVision assumes no obligation to update or correct any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from BroadVision's current expectations. Factors which could cause or contribute to such differences include, but are not limited to: lack of market acceptance of BroadVision's existing and new products or services; BroadVision's inability to continue to develop competitive new products and services on a timely basis; introduction of new products or services by competitors; general economic conditions and BroadVision's inability to attract and retain qualified employees. These and other factors and risks associated with BroadVision's business are discussed in its most recent annual report on Form 10-K and in BroadVision's quarterly reports on Form 10-Q as filed with the Securities and Exchange Commission.

About BroadVision

BroadVision is a global provider of personalized self-service web applications. Our integrated suite of process, commerce, portal, and content solutions helps customers rapidly increase revenues and reduce costs. Over 1,000 organizations -- including Circuit City, Vodafone, Cardinal Health, Hewlett-Packard, Toyota, Japan Airlines and the U.S. Air Force -- serving nearly 60 million registered users, rely on BroadVision's open solutions to power and personalize their mission-critical web initiatives

For more information about BroadVision, Inc., call 650-542-5100, email info@broadvision.com or visit www.broadvision.com.

NOTE: BroadVision and BroadVision Process are trademarks or registered trademarks of BroadVision, Inc. in the United States and other countries.

BROADVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)

December 31,
2004 2003
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $41,851 $78,776
Accounts receivable, less allowance for
doubtful accounts and reserves of $1,409
and $3,022 as of December 31, 2004 and 2003,
respectively 14,370 15,380
Restricted cash and investments, current
portion 21,933 --
Prepaids and other 2,232 5,346
Total current assets 80,386 99,502

Property and equipment, net 3,566 15,400
Restricted cash and investments, net of current
portion 2,323 19,827
Equity investments 574 1,565
Goodwill 53,421 53,421
Other intangibles, net 3,013 3,013
Other assets 1,370 2,354
Total assets $144, 653 $195,082

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank borrowings and current portion of
long-term debt $28,104 $27,977
Accounts payable 7,470 9,186
Accrued expenses 40,650 34,761
Warrant liability 4,898 --
Unearned revenue 3,966 7,596
Deferred maintenance 15,972 19,234
Total current liabilities 101,060 98,754
Long-term debt, net of current portion 7,872 969
Other noncurrent liabilities 5,311 87,409
Total liabilities 114,243 187,132
Commitments and contingencies
Stockholders' equity 30,410 7,950
Total liabilities and stockholders'
equity $144,653 $195,082


BROADVISION, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)

Three Months Ended Twelve Months Ended
Dec. 31, Sep. 30, Dec. 31, December 31,
2004 2004 2003 2004 2003
Revenues:
Software licenses $7,292 $4,654 $10,355 $26,883 $30,230
Services 12,471 12,570 12,897 51,121 57,851
Total revenues 19,763 17,224 23,252 78,004 88,081
Cost of revenues:
Cost of software
licenses 156 256 1,012 1,303 2,561
Cost of services 6,008 6,391 6,058 24,978 25,708

Total cost of
revenues 6,164 6,647 7,070 26,281 28,269

Gross profit 13,599 10,577 16,182 51,723 59,812

Operating expenses:
Research and
development 4,027 4,600 4,386 18,024 21,067
Sales and marketing 6,975 6,020 6,809 27,340 26,394
General and
administrative 2,386 2,335 2,203 9,538 9,790
Litigation settlement
costs -- -- -- -- 4,250
Goodwill and
intangible
amortization -- -- -- -- 886
Restructuring
(credit) charge 660 (25,454) 21,995 (23,545) 35,356

Total operating
(credit) expenses 14,048 (12,499) 35,393 31,357 97,743

Operating income
(loss) (449) 23,076 (19,211) 20,366 (37,931)

Interest and other
income (expense), net (387) 315 446 (40) 2,899

Income (loss)
before
(provision)/
benefit for
income taxes (836) 23,391 (18,765) 20,326 (35,032)
(Provision)/benefit
for income taxes 450 (11) (184) 309 (439)

Net income
(loss) $(386) $23,380 $(18,949) $20,635 $(35,471)

Basic income (loss)
per share $(0.01) $0.70 $(0.57) $0.62 $(1.08)

Diluted income (loss)
per share $(0.01) $0.69 $(0.57) $0.60 $(1.08)

Shares used in
computing basic
income (loss) per
share 33,768 33,599 33,080 33,539 32,800

Shares used in
computing diluted
income (loss) per
share 33,768 34,052 33,080 34,321 32,800

PRO FORMA FINANCIAL INFORMATION(1):

Net income (loss) $274 $(2,074) $3,046 $(2,910) $1,070
Basic income (loss)
per share $0.01 $(0.06) $0.09 $(0.09) $0.03
Diluted income (loss)
per share $0.01 $(0.06) $0.09 $(0.09) $0.03

(1) Pro forma net loss and the related per share amounts exclude
restructuring charges, impairment of equity investments and impairment of
assets. Pro forma net loss and pro forma cost of revenues and operating
expenses reconcile to the comparable amounts under generally accepted
accounting principles as follows (unaudited, in thousands):

Three Months Ended Twelve Months Ended
Dec. 31, Sep. 30, Dec. 31, December 31,
2004 2004 2003 2004 2003
Net income (loss),
generally accepted
accounting principles $(386) $23,380 $(18,949) $20,635 $(35,471)
Pro forma adjustments:
Restructuring charges
(credits) 660 (25,454) 21,995 (23,545) 35,356
Amortization of
acquired technology -- -- -- -- 887
Impairment of equity
investments -- -- -- -- 298

Pro forma net income
(loss) $274 $(2,074) $3,046 $(2,910) $1,070

Cost of revenues and
operating expenses,
generally accepted
accounting principles $20,211 $(5,852) $42,463 $57,638 $126,012
Pro forma adjustments:
Restructuring
(charges) credits (660) 25,454 (21,995) 23,545 (35,356)
Amortization of
acquired technology -- -- -- -- (887)
Pro forma cost of
revenues and
operating expenses $19,551 $19,602 $20,468 $81,183 $89,769



Source: BroadVision, Inc.

CONTACT: Bill Herrick, Investor Relations of BroadVision, Inc.,
+1-650-542-3865, or ir1@broadvision.com

Web site: http://www.broadvision.com/


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