Human Resources: SumTotal Systems Reports Record Fourth Quarter and Full Year 2007 Revenue

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Feb. 5, 2008--SumTotal(R)
Systems (Nasdaq:SUMT), a global provider of learning, performance, and
talent management solutions, announced its financial results for the
fourth quarter and full year ended December 31, 2007.

Fourth Quarter 2007 Results

On a Generally Accepted Accounting Principles (GAAP) basis, total
revenue for the fourth quarter 2007 was $33.3 million, an increase of
12% from the $29.6 million in the fourth quarter 2006. GAAP net loss
was $2.4 million, or $0.07 per share on a basic and diluted basis,
compared to a net loss of $2.5 million, or $0.10 per share on a basic
and diluted basis, in the fourth quarter 2006.

Non-GAAP revenue for the fourth quarter increased by 12% to $33.5
million from $30.0 million in the fourth quarter 2006. Non-GAAP net
income was $1.7 million, or $0.05 per share on a diluted basis,
compared to non-GAAP net income of $2.2 million, or $0.08 per share on
a diluted basis, a year ago.

Deferred revenue on a GAAP basis at the end of the fourth quarter
increased 20% year-over-year to $36.8 million compared to $30.7
million for the same quarter of the previous year.

Full Year 2007 Results

On a GAAP basis, total revenue for the full year 2007 was $121.9
million, an increase of 15% from $106.0 million in the full year 2006.
GAAP net loss was $7.7 million, or $0.25 per share on a basic and
diluted basis, compared to a net loss of $12.0 million, or $0.47 per
share on a basic and diluted basis, for the full year 2006.

Non-GAAP revenue for the year increased by 12% to $123.1 million
from revenue of $110.3 million in the full year of 2006. Non-GAAP net
income for the year was $7.1 million, or $0.23 per share on a diluted
basis, compared to non-GAAP net income of $6.6 million, or $0.25 per
share on a diluted basis, for the prior year.

Non-GAAP results exclude the impact of certain one-time charges
primarily related to restructuring activities, if any, and non-cash
accounting adjustments and charges primarily related to acquisition
accounting, stock-based compensation, and any related income tax
effects. A reconciliation to the GAAP results is provided in the
attached statements.

"I am pleased that we were able to achieve record revenue for both
the fourth quarter and the full year 2007," said Don Fowler,
SumTotal's chief executive officer. "During the quarter, we saw
strength in North America where the team continued to exceed
expectations and we saw great progress from our international team. We
are also pleased with the progress of our performance management
business.

    "During 2007, our on-demand subscriptions bookings grew
approximately 38% to $29 million," Fowler continued. "As a result, our
recurring revenue stream, which also includes support revenue,
increased to over 50% of our total revenue in 2007 from 47% in 2006,
42% in 2005, and 37% in 2004. As we continue to add resources to our
small- and medium-sized business (SMB) efforts, our on-demand revenue
should continue to increase as a percentage of our total business,
thereby providing us with better visibility into our future revenue
streams."

Business Highlights

-- During the fourth quarter, demonstrated strength in North
        America, signing contracts with new and existing customers
        including BEA Systems, Deluxe Corporation, Alticor, and
        Advocate Health.

-- Also in the fourth quarter, saw significant improvement in its
        international results, winning contracts including a large
        European financial services company, Pemex, Abbott Brasil,
        Axtel, and an automobile manufacturer in China; expanded its
        partnership with NEC in Japan; announced new partnership with
        Key Logic in China.

    -- In performance management, signed 26 deals, including SickKids
        Foundation, Unified Grocers, and a large, U.K.-based
        investment bank.

-- Throughout the year, continued to grow its on-demand
        subscription business, signing contracts with companies
        including the American Management Association, Arizona Federal
        Credit Union, Hawker Pacific Aerospace, and Uponor.

-- In 2007, released SumTotal Enterprise Suite(TM) 7.6,
        SumTotal's newest version of its talent management suite as
        well as provided on-going updates to ResultsonDemand(R).

-- Recognized as a leader in the Gartner's Marketscope for
        Employee Performance Management, 2007; awarded the Deloitte
        Fast 50, and recognized as a Bersin & Associates' Learning
        Leader 2007 for Innovative Initiatives around internal talent
        management programs; earned a place on the Military Training
        Technology 2007 Top 100 List for the fourth consecutive year.

First Quarter Guidance

For the first quarter 2008, SumTotal Systems estimates its GAAP
revenue will be between $32.9 million and $34.9 million. GAAP net
income (loss) is estimated to be between ($0.7) million and $0.3
million, or between ($0.02) and $0.01 per share on both a basic and
diluted basis.

On a non-GAAP basis, revenue is estimated to be between $33.0
million and $35.0 million. Non-GAAP net income is estimated to be
between $2.5 million, or $0.07 per share on a diluted basis, and $3.5
million, or $0.10 per share on a diluted basis. The reconciling items
between GAAP and non-GAAP income (loss) are estimated to be a $0.1
million adjustment to revenue, $1.7 million for amortization of
intangibles, $0.1 million for restructuring charges, and $1.3 million
for stock-based compensation.

Conference Call

SumTotal will host an investor conference call and webcast on
February 5, 2008, at 5:00 p.m. ET/ 2:00 p.m. PT. SumTotal plans to
make a live audio webcast available to investors and the public at
http://investor.sumtotalsystems.com.

In addition to the webcast, SumTotal plans to make available a
telephone replay of the call on February 5, 2008, beginning at
approximately 5:00 p.m. PT through the close of business on February
12, 2008. Interested parties can access the replay by dialing
800-642-1687 within the US or 706-645-9291 outside the US and entering
the access code 30025951.

About SumTotal Systems, Inc.

SumTotal Systems, Inc. (NASDAQ: SUMT) is a global provider of
learning, performance, and talent management solutions. SumTotal
deploys mission-critical solutions designed to align goals, develop
skills, assess performance, plan for succession and set compensation.
SumTotal's solutions aim to accelerate performance and profits for
more than 1,500 companies and governments of all sizes, including six
of the world's 10 biggest pharmaceutical makers, six of the 10 largest
automotive companies in the world, four of the five branches of the
U.S. Armed Forces, three of the world's top five airlines, five of the
six largest U.S. commercial banks, and two of the world's top five
specialty retailers. Mountain View, Calif.-based SumTotal has offices
across Asia, Australia, Europe and North America. For more information
about SumTotal's products and services, visit www.sumtotalsystems.com.

SumTotal, ResultsonDemand, and SumTotal Enterprise Suite are
registered trademarks or trademarks of SumTotal Systems, Inc. and/or
its affiliates in the United States and/or other countries. Other
names may be trademarks of their respective owners.
Safe Harbor / Forward-Looking Statements

Information in this press release and the accompanying conference
call contain forward-looking statements and management's estimation
regarding future performance of the company, including without
limitation, financial estimates for the first quarter ending March 31,
2008 and the 2008 fiscal year. These statements represent the
company's current expectations or beliefs concerning its future
results, and include statements, among others, regarding its financial
guidance, including revenue, loss, and income; growth of recurring
revenue base; the company's competitive position and business model,
including its market share and its ability to grow its subscriptions
and support business, including internationally and in the performance
management markets; and, the company's ability to execute and the
strength and scale of its business model. These statements are not
historical facts or guarantees of future performance or events; are
based on current expectations, estimates, beliefs, assumptions, goals
and objectives; and involve known and unknown risks, uncertainties and
other factors that may cause actual results to be materially different
from the results expressed or implied by these statements. Readers of
this press release and listeners to the accompanying conference call
are cautioned not to place undue reliance on any forward-looking
statement or statements. Additional factors that could cause actual
results to differ include, but are not limited to (i) additional
information regarding the audit for the quarter and year ended
December 31, 2007; (ii) inability of the company's executive team,
including its new hire in field operations, to execute on its plans,
causing the company to miss its financial forecasts or not grow the
company's business at or above the forecasts; (iii) underestimating
the cost reductions necessary to maintain profitability, or making
cuts that aversely impact the company's ability to execute;
(iv) inability to recruit or retain key personnel, including
management, especially in light of the company's reorganization;
(v) ability to successfully manage and increase growth internationally
and in the performance and learning management markets; (vi) increased
competition, especially in the performance management market, causing
the loss of deals, material reductions in prices or acceptance of
terms the company otherwise would not accept; (vii) inaccurately
estimating the speed, ability or cost of the company transitioning its
product offerings to on-demand subscriptions and a recurring revenue
model; (viii) customer dissatisfaction with the company's products or
services, causing the return of product or refusal to pay for product
or services; (ix) the company's ability to protect its intellectual
property rights and claims that the company has infringed the
intellectual property rights of others; (x) the lengthening of the
company's sales cycle and increased difficulties in negotiating sales
contracts on terms favorable to us and the uncertain timing of such
sales; (xi) the level of corporate spending and changes in general
economic conditions that affect demand for computer software and
services in general which may disproportionately affect the market for
our products or services; (xii) other market conditions that include
risks and uncertainties such as risks associated with financial,
economic, political, terrorist activity and other uncertainties
associated with operating a global business; and (xiii) other events
and other important factors disclosed previously and from time to time
in the company's filings with the Securities and Exchange Commission,
including the company's annual report for fiscal year 2006 on Form
10-K filed on March 16, 2007, its quarterly report on Form 10-Q filed
on November 8, 2007, its Prospectus Supplement on Form 424B2 filed on
May 21, 2007 and its Form 8-Ks. The company assumes no obligation to
update the information in this press release or in the accompanying
conference call.