RightNow Technologies Reports Financial Results for Full Year and Fourth Quarter 2004

RightNow Technologies Reports Financial Results for Full Year and Fourth Quarter 2004

Annual Revenue Increases 72 Percent Over Prior Year; Annual Earnings Increase 184 Percent

BOZEMAN, Mont., Jan. 31 /PRNewswire-FirstCall/ -- RightNow(R) Technologies, Inc. (NASDAQ:RNOW), a leading provider of on demand CRM software solutions, today announced results for the fourth quarter and fiscal year ended December 31, 2004. RightNow reported consolidated revenue of $17.7 million for the fourth quarter of 2004, an increase of 67 percent from the fourth quarter of 2003. Revenue for the year ended December 31, 2004 was $61.8 million, an increase of 72 percent from $35.9 million for the year ended December 31, 2003.

Fourth quarter 2004 net income was $1.3 million, or $0.04 per diluted share, compared to a loss of $(1.4) million, or $(0.09) per diluted share, in the fourth quarter of 2003. Net income for the year ended December 31, 2004 was $3.4 million, or $0.12 per diluted share, compared to a loss of $(4.1) million, or $(0.28) per diluted share for the year ended December 31, 2003.

"Our 28 consecutive quarters of revenue growth reflect RightNow's unrelenting focus on customer success and the strength of our business model," Greg Gianforte, founder and chief executive officer of RightNow, said. "In 2004 our growing success in the contact center and the launch of our industry leading on demand CRM suite spurred revenue growth of more than 70 percent. We are also heartened that our products provided the backbone for one-half billion interactions on behalf of our customers and we bolstered our balance sheet through our IPO.

"We enter 2005 with market leading technology, a strong and loyal customer base, a growing and productive sales team, and a solid financial foundation. We are well positioned to further grow our business and market share in the coming years."

During the fourth quarter, the company added 80 new customers and renewed or expanded relationships with others, including Alaska Airlines, Cisco Systems, CNET Networks, Columbia University, Crane Telecommunications, Dunn & Bradstreet- France, Experian, IBM, Logitech International, Pinnacle Systems, Sharper Image, Specialized Bicycles, Swiss Airlines, Travelocity and Vodafone Group Plc.

Susan Carstensen, chief financial officer, said, "We closed the year with a strong balance sheet including cash and investments of more than $50 million. Our cash from operations was $6.7 million for the year, and deferred revenue grew by $4.6 million for the quarter and $13.6 million for the year to $49.1 million at December 31, 2004."

Guidance
* For the first quarter of 2005, revenue is anticipated to be in the
range of $18.0 to $18.5 million and EPS in the range of $0.03 to $0.04.
* For the year ended 2005, revenue is anticipated to be in the range of
$81 to $85 million and EPS in the range of $0.15 to $0.19.

Quarterly Conference Call


RightNow Technologies will discuss its quarterly results via teleconference at 4:30 p.m. (ET)/2:30 p.m. (MT) today, January 31, 2005. To access the call, please dial (800) 810-0924 with confirmation code 3747791 at least five minutes prior to the start time. A live audio webcast of the call will also be available at www.shareholder.com/rnow/medialist.cfm. A replay of today's conference call will be available on the company Web site at www.shareholder.com/rnow/, under the Investor Webcasts menu, from 5:00 p.m. (MT) on January 31, 2005 until 5:00 p.m. February 7, 2005 (MT).

About RightNow Technologies, Inc.

RightNow (NASDAQ:RNOW) provides organizations with industry-leading on demand CRM solutions to build customer-focused businesses. RightNow's acclaimed technology, comprehensive services and commitment to customer success deliver high returns on investment for its customers. More than 1,200 organizations worldwide use RightNow solutions including British Airways, British Telecom, Cisco Systems, Continental Tire North America, The Dow Chemical Company, John Deere, Nikon and the Social Security Administration. Founded in 1997, RightNow is headquartered in Bozeman, Montana, with additional offices in North America, Europe and Asia. For further information, please visit www.rightnow.com.

RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark of the NASDAQ Stock Market.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words, and include, but are not limited to, statements regarding projected results of operations and management's future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. The risks and uncertainties referred to above include, but are not limited to; risks associated with our business model; our ability to develop or acquire, and gain market acceptance for new products, including our new sales and marketing automation products, in a cost-effective and timely manner; the gain or loss of key customers; competitive pressures and other factors such as the availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; the rate at which our present and future customers adopt our existing and future products and services; our ability to expand operations; fluctuations in our operating results due to changes in our mix of revenues, and our rate of growth; interruptions or delays in our hosting operations; breaches of our security measures; our ability to expand, retain and motivate our employees and manage our growth; and the impact of potential acquisitions, if any. Further information on potential factors that could affect our financial results is included in our registration statement on Form S-1 and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

FRNOW



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

December 31,
2004 2003
Assets
Cash and cash equivalents $23,015 $8,360
Short-term investments 27,117 --
Accounts receivable 16,939 10,415
Term receivables, current 10,090 4,926
Allowance for doubtful accounts (1,581) (902)
Net receivables 25,448 14,439
Prepaid expenses 1,255 509
Total current assets 76,835 23,308

Property and equipment, net 4,393 2,942
Term receivables, non-current 5,756 2,278
Intangible assets, net 1,113 623
Other 212 235
Total Assets $88,309 $29,386

Liabilities, Redeemable Convertible
Preferred Stock and Stockholders'
Equity (Deficit)
Accounts payable $1,720 $1,025
Commissions and bonuses payable 2,648 1,636
Other accrued liabilities 3,715 2,154
Current portion of long-term debt -- 1,390
Current portion of deferred revenue 36,020 26,127
Total current liabilities 44,103 32,332

Long-term debt, net of current portion -- 484
Deferred revenue, net of current portion 13,105 9,426

Redeemable convertible preferred stock -- 32,398

Stockholders' equity (deficit):
Common stock 29 15
Warrants 291 --
Additional paid-in capital 72,367 (912)
Accumulated other comprehensive income (loss) (605) 73
Accumulated deficit (40,981) (44,430)
Total stockholders' equity (deficit) 31,101 (45,254)
Total Liabilities, Redeemable
Convertible Preferred Stock and
Stockholders' Equity (Deficit) $88,309 $29,386



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

Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
Revenue:
Software, hosting and
support $14,359 $8,627 $49,764 $29,300
Professional services 3,360 1,981 12,000 6,579
Total revenue 17,719 10,608 61,764 35,879

Cost of revenue:
Software, hosting and
support 1,797 1,359 6,741 5,263
Professional services 2,344 1,272 7,206 3,740
Total cost of revenue 4,141 2,631 13,947 9,003

Gross profit 13,578 7,977 47,817 26,876

Operating expenses:
Sales and marketing 9,046 6,322 31,986 20,809
Research and development 2,167 1,507 7,807 5,915
General and administrative 1,288 979 4,621 3,518
Total operating expenses 12,501 8,808 44,414 30,242

Income (loss) from operations 1,077 (831) 3,403 (3,366)

Interest and other income
(expense), net 226 2 146 (215)

Income (loss) before
income taxes 1,303 (829) 3,549 (3,581)
Provision for income taxes (8) (536) (100) (539)
Net income (loss) $1,295 $(1,365) $3,449 $(4,120)

Net income (loss) per share:
Basic $.04 $(.09) $.17 $(.28)
Diluted $.04 $(.09) $.12 $(.28)

Shares used in the computation:
Basic 29,005 14,704 20,738 14,560
Diluted 33,411 14,704 28,940 14,560



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

Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003
Operating activities:
Net income (loss) $1,295 $(1,365) $3,449 $(4,120)
Non-cash adjustments:
Depreciation and amortization 709 598 2,790 2,474
Provisions for losses on
accounts receivable (62) (34) 489 477
Changes in operating accounts:
Receivables (3,563) (2,405) (14,657) (6,678)
Prepaid expenses (23) 24 (1,164) (156)
Accounts payable 362 (170) 729 587
Commissions and bonuses payable 390 414 988 520
Other accrued liabilities 63 56 1,246 453
Deferred revenue 4,103 3,265 13,320 10,655
Other 46 425 (452) 107
Cash provided by operating
activities 3,320 808 6,738 4,319

Investing activities:
Net purchases of short-term
investments (21,004) -- (27,117) --
Acquisition of property and
equipment (957) (491) (3,580) (1,584)
Acquisition of intangible
assets (190) -- (691) (150)
Other 2 -- 3 18
Cash used for investing
activities (22,149) (491) (31,385) (1,716)

Financing activities:
Proceeds from long-term debt -- 135 1,675 4,700
Proceeds from issuance of
common stock:
Initial public offering,
less offering costs paid (715) -- 39,972 --
Employee stock options and
stock purchase plan 870 13 1,176 88
Repurchase of common stock -- -- (2) --
Payments on long-term debt (15) (394) (3,588) (7,133)
Cash provided (used) for
financing activities 140 (246) 39,233 (2,345)

Effect of foreign exchange
rates on cash and cash
equivalents 68 (5) 69 64

Increase (decrease) in cash
and cash equivalents (18,621) 66 14,655 322

Cash and cash equivalents
at beginning of period 41,636 8,294 8,360 8,038
Cash and cash equivalents
at end of period $23,015 $8,360 $23,015 $8,360



RightNow Technologies, Inc.
Metrics

Dec 31, Sep 30, Jun 30, Mar 31,
2004 2004 2004 2004
New clients 80 88 74 69
Active clients 1,232 1,185 1,159 1,089
Percentage of clients hosting 87% 86% 85% 85%
Number of employees 407 387 354 322



Three Months Ended Year Ended
December 31, December 31,
2004 2003 2004 2003

Revenues by type:
Recurring (term licenses,
hosting & support) 55% 63% 59% 67%
Perpetual 26 18 22 15
Professional services 19 19 19 18

Revenues by geography:
Americas 71% 77% 73% 76%
Europe 20 16 21 18
Asia Pacific 9 7 6 6

Customer interactions
(in millions) 150 77 502 249



Source: RightNow Technologies, Inc.

CONTACT: Investor Relations, Todd Friedman of The Blueshirt Group,
+1-415-217-5869, todd@blueshirtgroup.com, for RightNow Technologies; or
Corporate Communications, Jason Treu of RightNow Technologies,
+1-972-232-3977, or cell, +1-214-893-3096, jtreu@rightnow.com

Web site: http://www.shareholder.com/rnow/medialist.cfm

Web site: http://www.shareholder.com/rnow

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


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