KANA Software Reports Fourth Quarter and Year-End 2007 Financial Results

Business Wire, Feb 19, 2008

Posts Highest Total Revenue in 19 Quarters

MENLO PARK, Calif. -- KANA Software, Inc. (OTCBB: KANA.OB), a world leader in multi-channel customer service, today announced financial results for the fourth quarter and year ended December 31, 2007.

Q4 and 2007 Financial Highlights

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"2007 marked a critical year for KANA. We laid a foundation for growth by executing on our strategic plan," stated Michael Fields, KANA CEO. "In 2007, we successfully streamlined our processes, strengthened our management team, acquired a strategic services firm, and invested in our products to drive growth to the next level. We are confident that we have positioned the company for sustainable profitability and positive cash flow from operations in 2008."

The Company reported net income in accordance with accounting principles generally accepted in the United States (GAAP) of $539,000, or $0.01 per diluted share, for the quarter ended December 31, 2007 versus a GAAP net loss of $2.0 million, or $(0.06) per share, for the quarter ended December 31, 2006. The Company reported a GAAP net loss of $8.0 million, or $(0.22) per share, for the year ended December 31, 2007 versus a GAAP net loss of $2.4 million, or $(0.07) per share, for the year ended December 31, 2006.

For the fourth quarter 2007, KANA reported non-GAAP net income of $1.4 million, or $0.03 per diluted share, as compared to a non-GAAP loss of $627,000, or $(0.02) per share, for the quarter ended December 31, 2006. KANA's fourth quarter non-GAAP net income/loss for 2007 and 2006 was calculated by adjusting KANA's GAAP net income/loss by adding back certain accounting charges for stock-based compensation expense measured in accordance with SFAS 123R, restructuring, and amortization of intangibles.

KANA's non-GAAP net loss for the year ended December 31, 2007 was $4.3 million, or $(0.12) per share, as compared to a net profit of $3.2 million, or $0.09 per share, for the year ended December 31, 2006. KANA's year ended non-GAAP net income/loss for 2007 and 2006 was calculated by adjusting the Company's GAAP net income/loss by adding back certain accounting charges for stock-based compensation expense measured in accordance with SFAS 123R, restructuring, amortization of intangibles, registration rights penalty paid in common stock, and warrant liability expense.

Fourth Quarter 2007 Company Highlights

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2007 Company Highlights

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Investor Conference Call Information:

KANA's management team will host a conference call February 19, 2008 at 1:30 pm PST where they will discuss the Company's reported financial results and financial outlook. The live webcast can be accessed by visiting the investor relations section of KANA's website at www.kana.com.

About KANA

KANA is a world leader in multi-channel customer service. KANA's integrated solutions allow companies to deliver consistent, managed service across all channels, including email, chat, call centers and Web self-service, so customers have the freedom to choose the service they want, how and when they want it. KANA's clients report double-digit increases in customer satisfaction, while reducing call volumes by an average of 20%. KANA's award-winning solutions are proven in more than 600 companies worldwide, including approximately half of the world's largest 100 companies. For more information visit www.kana.com.

Non-GAAP Financial Measures

To help understand KANA's past financial performance and future results, KANA has supplemented its financial results that it provides in accordance with accounting principles generally accepted in the United States, or GAAP, with non-GAAP financial measures. The method KANA uses to produce non-GAAP financial results is not computed according to GAAP and may differ from the methods used by other companies. KANA's reference to these non-GAAP financial results should be considered in addition to results that are prepared under current accounting standards but should not be considered as a substitute for, or superior to, the financial results that are presented as consistent with GAAP. KANA's management uses the supplemental non-GAAP financial measures internally to understand, manage and evaluate KANA's business and make operating decisions. These non-GAAP financial measures are among one of the factors KANA's management uses in planning for and forecasting future periods. These non-GAAP financial measures have been reconciled to the nearest GAAP measure as required under the Securities and Exchange Commission rules.

Cautionary Note Regarding Forward-looking Statements Under the Private Securities Litigation Reform Act of 1995:

Information in this release regarding KANA's forecasts, projections, expectations, beliefs, and intentions are forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to KANA as of the date of this release, which may likely change, and we assume no obligation to update any such forward-looking statement. These statements include statements about anticipated growth, profitability and cash flow; market demand for multi-channel customer service solutions; and customers' expected benefits and results from KANA applications. 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 such differences include, but are not limited to: competition in our marketplace, including introductions of new products or services, or reductions in prices, by competitors; risks associated with lack of market acceptance of KANA's products or services; inability to enhance and develop our products and services within budget and on schedule; inability to attract and retain qualified employees, to manage cash and expenditures or to expand sales; KANA's history of losses; the effect of potential military action and terrorist activities; and slow economic conditions, particularly as they affect spending by our prospective customers on multi-channel customer service and similar enterprise software products. These and other factors are risks associated with our business that may affect our operating results and are discussed in KANA's filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q.