eLoyalty Reports Improved First Quarter 2008 Results

eLoyalty Corporation (NASDAQ: ELOY), a leading enterprise customer relationship management (CRM) services and solutions company, today announced financial results for the first quarter ended March 29, 2008.

For the first quarter of 2008, total revenue was $23.9 million and the net loss was $4.2 million. The net loss available to common shareholders was $0.49 per share. eLoyalty realized "Adjusted Earnings(1)" of $0.7 million for the first quarter of 2008. Adjusted Earnings is a non-GAAP measure. For a reconciliation of Adjusted Earnings income to operating loss, see the accompanying schedule.

The following is a summary of revenue by major component:

                                 Three Months Ended
                                 ------------------
   (000's)                     3/29/2008    3/31/2007
                              ----------   ----------
Revenue:
  Consulting services         $   10,581   $   13,346
  Managed services                10,771        8,831
                              ----------   ----------
Services revenue                  21,352       22,177
  Product                          1,778        4,407
                              ----------   ----------
Net revenue                       23,130       26,584
  Reimbursed expenses                738        1,338
                              ----------   ----------
Total revenue                 $   23,868   $   27,922
                              ==========   ==========

First Quarter Highlights

Highlights for the first quarter of 2008 include:

--  6% sequential increase in Services Revenue
--  11% sequential increase in Total Revenue
--  $719 thousand of Adjusted Earnings
--  $2.5 million sequential improvement in Adjusted Earnings
--  Record $10.8 million of Managed Services Revenue
    

As compared to Q4, Adjusted Earnings were positively impacted by an incremental $342 thousand from the expanded Salary Replacement Program.

Outlook

eLoyalty provides guidance for Services revenue only. Product revenue from the sale of third-party software and hardware can fluctuate substantially between periods and is not a primary focus of the Company's business.

During the second quarter, the Company expects lower CRM consulting revenue due to budget pressures at several large consulting accounts and to experience the one-time impact of a contract modification on one of its Behavioral Analytics(TM) contracts. Based on these factors, the Company currently expects to achieve second quarter Services revenue of $19.0 million and not exceed or fall below the target by more than 5%.

Conference Call Information

eLoyalty management will host a conference call at 5:00 p.m. ET on Wednesday, May 7, 2008. A webcast of the conference call and slide presentation will be available live via the Internet at the Investor Relations section of eLoyalty's web site at http://www.eloyalty.com/investor/ where this press release, as well as other financial information that will be discussed on that call, is also available. For those who cannot access the live broadcast, or the continued availability on eLoyalty's website, a replay of the conference call will also be available beginning approximately two hours after the call is completed until May 21, 2008, by dialing (800) 642-1687 or, for international callers, (706) 645-9291. To access the replay, participants will be required to enter the Conference ID of 42181474.

About eLoyalty

eLoyalty helps its customers achieve breakthrough results with revolutionary analytics and advanced technologies that drive continuous business improvement. With a long track record of delivering proven solutions for many of the Fortune 1000, eLoyalty's offerings include Behavioral Analytics(TM), Integrated Contact Solutions and Consulting Services, aligned to enable focused business transformation.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding anticipated financial results and other matters that are not strictly historical in nature. These forward-looking statements are based on current management expectations, forecasts and assumptions, and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. The risks, uncertainties and other factors that might cause such a difference include those described under "Forward-Looking Statements" and "Risk Factors" in eLoyalty's Form 10-K, Form 10-Q and other filings with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance on forward-looking statements. They reflect opinions, assumptions and estimates only as of the date they are made, and eLoyalty Corporation undertakes no obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events or circumstances or otherwise.