VA Software Announces Third Consecutive Quarter of Profitability on 43% Annual Year-Over-Year Revenue Growth

VA Software Corporation (NASDAQ: LNUX), the online media, software and e-commerce leader in community-driven Open Source innovation, today announced financial results for its fourth quarter and fiscal year ended July 31, 2006.

"We are pleased to report our third consecutive quarter and first full fiscal year of profitability, while executing ambitious site architecture initiatives within OSTG and collaborative development capabilities within our SourceForge Enterprise Edition software business," said Ali Jenab, president and CEO. "With our third quarter of profitability, we clearly have reached momentum as a profitable and growing enterprise committed to serving the needs of our online media clients through site enhancements for the user community as well as innovative marketing programs for the advertisers reaching out to that community, and to expanding the customer base of SourceForge Enterprise Edition."

Total fourth quarter fiscal 2006 revenue from continuing operations grew 35% to $10.5 million, compared to fourth quarter fiscal 2005 total revenue of $7.8 million. For the year ended July 31, 2006, total revenue grew 43% to $43.6 million, compared to $30.6 million for the year ended July 31, 2005.

On a GAAP basis, the fourth quarter fiscal 2006 net income from continuing operations was $0.7 million, or $0.01 per share, compared to the fourth quarter of fiscal 2005 GAAP net loss of ($1.2) million, or ($0.02) per share. For the year ended July 31, 2006, the company's net income on a GAAP basis was $11.0 million, or $0.17 per diluted share, compared to a net loss of ($4.7) million, or ($0.08) per diluted share, for the year ended July 31, 2005. For the year ended July 31, 2006, excluding the gain on the sale of Animation Factory, Inc., which was completed during the second quarter of fiscal 2006, the company's net income on a GAAP basis was $1.3 million, or $0.02 per share, compared to a net loss of ($5.6) million, or ($0.09) per share, for the year ended July 31, 2005. During the fourth quarter of fiscal 2006, the company's cash and investment balances grew by $4.4 million to $54.0 million as of July 31, 2006.

As specified in the attached reconciliation of net income (loss) as reported to pro forma net income (loss), the fourth quarter fiscal 2006 net income was $1.0 million, or $0.01 per share, compared to the fourth quarter fiscal 2005 net loss of ($1.2) million, or ($0.02) per share. The fiscal 2006 net income before non-cash charges was $2.0 million, or $0.03 per share, compared to fiscal 2005 net loss before non-cash charges of ($5.7) million, or ($0.09) per share.

A conference call to review results will be held at 5:00 pm (ET) today. The live call may be accessed via webcast on the company's investor relations page at http://www.vasoftware.com or by dialing (877) 407-0782 or (201) 689-8567. Archives of the webcast and telephonic replay will be available for 60 days and may be accessed by dialing (877) 660-6853 or (201) 612-7415 (Replay 286; ID 210594) or via the company's web site.

Recent Highlights

--  Customers.  Through the fourth quarter of fiscal 2006, VA Software
    sold the SourceForge Enterprise Edition solution to a total of 164
    customers.  During the quarter, Cambrian House, IGN Entertainment, Inc.,
    Beta Systems Software, AG, and WPS Parking Systems, B.V. were added to the
    installed base.  In addition, existing customers including Lawrence
    Livermore National Laboratories, MetaSolv Software, Inc., Myrio
    Corporation, TNO-FEL, and Verisign, Inc. purchased additional SourceForge
    licenses or services.

--  SourceForge® Enterprise Edition. During the quarter, the Company
    announced the SourceForge Enterprise Edition Download. This is a free full-
    featured evaluation version of SourceForge Enterprise Edition with access
    for 15 users. This product provides prospective customers a convenient way
    to evaluate and test SourceForge for proprietary development projects.
    Additionally, new enhancements were made to SourceForge Enterprise Edition
    to make it more scalable, secure and easier to use.

--  SourceForge.net.® As part of an ongoing site re-architecture to
    optimize the user experience, the world's largest Open Source collaborative
    technology site has further enhanced its site and project search
    capabilities.  SourceForge.net community members are now better able to
    navigate among the site's nearly 128,000 Open Source projects. We enhanced
    sorting and filtering options available on SourceForge.net, which, coupled
    with advanced project and tool search capabilities, enable visitors to
    quickly search the site's vast content.

The addition of the new search capabilities is the latest change in a series of new services and upgrades to the site performed this year. In May, the SourceForge.net team upgraded the mailing list management software that powers more than 1.2 million community e-mails daily. In February, SourceForge.net launched its Subversion software configuration management (SCM) service. The use of SourceForge.net's Subversion offering has grown dramatically, attracting nearly 8,000 projects. Recent enhancements to the Subversion service enable projects to link to external repositories not hosted on the SourceForge.net site. This new linking capability will soon be extended to enable project administrators to offer users access to external tools or services, including documentation Wikis.