VA Software Reports Fourth Quarter and Fiscal Year 2005 Results

Market Wire, August, 2005

VA Software Corporation (NASDAQ: LNUX), a leading provider of software, information and community support for IT and development professionals, today announced financial results for its fourth quarter and fiscal year 2005, ended July 31, 2005.

Total fourth quarter fiscal 2005 revenue grew to $8.4 million, compared to fourth quarter fiscal 2004 total revenue of $7.3 million. Software revenue increased 34% to $2.2 million in fourth quarter fiscal 2005 from $1.6 million in fourth quarter fiscal 2004. For the year ending July 31, 2005, total revenue grew to $32.9 million, compared to $29.3 million for the year ending July 31, 2004, while software revenue grew 51% to $7.6 million for the year ending July 31, 2005 compared to $5.0 million for the year ending July 31, 2004.

On a GAAP basis, the fourth quarter fiscal 2005 net loss was $1.0 million, or $0.02 per share, compared to last year's fourth quarter fiscal 2004 GAAP net loss of $0.9 million, or $0.01 per share. For the year ended July 31, 2005, the company's GAAP net loss was $4.7 million, or $0.08 per share, compared to $7.6 million, or $0.13 per share, for the year ended July 31, 2004.

As specified in the attached reconciliation of net loss as reported to pro forma net loss, the fourth quarter fiscal 2005 net loss was $0.9 million, or $0.01 per share, compared to the fourth quarter fiscal 2004 net loss of $0.9 million, or $0.01 per share. The fiscal 2005 net loss before non-recurring charges was $4.7 million, or $0.08 per share, compared to fiscal 2004 net loss before non-recurring charges of $6.0 million, or $0.10 per share. Cash and investments remain strong at $39.4 million as of July 31, 2005.

"We are pleased with our performance this quarter. Our software revenue grew by 34% year-over-year as we saw new and current customers purchase more seats. Our media sales team is fully staffed as we enter the first quarter of FY 06. Our gross margin improved and our reported loss was comparable to last year despite an expense of $0.9 million for Sarbanes Oxley compliance-related expense that impacted the quarter," said Ali Jenab, president and CEO. "We are excited about our prospects for FY 06. The new version of SourceForge Enterprise Edition released in April 2005 is a much stronger collaborative tool that meets the needs of enterprises. We are making significant improvements to SourceForge.net that will benefit both the user community as well as the advertisers reaching out to that community. Our other media properties offer solutions that meld advertiser branding with site editorial. We enter fiscal 2006 with these product improvements and strong sales pipelines."

A conference call to review results will be held at 5:00 pm (Eastern) today. The call may be accessed via webcast at http://www.vasoftware.com or by dialing (800) 862-9098 or (785) 424-1051. A replay of the call will be available for 30 days by dialing (888) 562-0857 or (402) 220-7341.

Recent Highlights

--  Customers. Through the fourth quarter of fiscal 2005, VA Software has
    sold the SourceForge solution to a total of 130 customers. During the
    quarter, Applied Biosystems, British Telecom, Aeroflex, Doner Advertising
    and E*Trade were added to the installed base. In addition, existing
    customers including Los Alamos National Laboratories, ETAS, Eli Lilly,
    Hewlett-Packard and Metasolv purchased additional SourceForge licenses or
    services.

--  SourceForge® Enterprise Edition added in-depth, out-of-the-box
    integration with Perforce, the Fast Software Configuration Management
    System, as well as a new, simplified SCM Adapter that enables other
    Software Configuration Management (SCM) tools to be rapidly integrated with
    SourceForge Enterprise Edition. SourceForge Enterprise Edition also
    supports out-of-the-box integration with CVS and Subversion.

--  SourceForge.net. In order to improve the user experience on
    SourceForge.net and offer new opportunities to advertisers, OSTG commenced
    a re-architecture of SourceForge.net, the world's leading development and
    download repository of open source code and applications.  OSTG also
    launched Eclipse.TechForge.com, a community site focused on the Eclipse
    Open Source platform, plug-ins and associated technology from
    SourceForge.net. TechForge channels provide IT professionals and developers
    with in-depth resources and information about specific vertical
    technologies.  SourceForge.net now offers "Real time Statistics," which
    allows site subscribers to view traffic statistics with hourly granularity
    for the past 48 hours. SourceForge.net's new Advanced Search service
    includes Boolean searching, pervasive search and near-real time search data
    updates.

--  OSTG. In an effort to better meet the needs of advertisers and provide
    the community with better navigation, OSTG introduced a new and innovative
    marketing program that provides advertisers and visitors with a
    contextually relevant content integration program. OSTG's latest Integrated
    Marketing Solutions include SourceForge.net category sponsorships.
    Integrated into site navigation, this program enables vendors to create
    awareness, consideration and adoption of their products and services in a
    targeted environment. Limited to three sponsors per category, this program
    provides significant share of voice for advertisers in their desired
    technology category.

--  The OSTG network as a whole serves more than 290 million page views
    and nearly 19 million unique visitors monthly.* This ranks OSTG among the
    top technology networks both in terms of size and purchasing power.
    Advertisers and sponsors of the network include Microsoft, Vonage, AMD,
    Rackspace, IBM, HP and Sun Microsystems.