Human Resources: Salary.com™ Reports Strong First Quarter 2008 Financial Results

WALTHAM, Mass (July 31, 2007) Salary.com, Inc. (NASDAQ: SLRY), a leading provider of on-demand compensation management solutions, today announced financial results for its first quarter of fiscal 2008, which ended June 30, 2007. First quarter revenue was $7.5 million, an increase of 46% from the first quarter of fiscal 2007 and 18% sequentially.

Cash flow from operations was $1.6 million for the first quarter of 2008, compared to negative $0.7 million in the prior year and $1.1 million in the prior quarter. Bookings (defined as change in deferred revenue added to revenue) were $8.1 million for the quarter compared to $5.9 million in the prior year and $7.4 million in the prior quarter.

“We’re very pleased with our first quarter results” stated Kent Plunkett, founder and chief executive officer. “We exceeded financial expectations and continued our record of strong revenue growth and positive operating cash flow. We substantially grew our customer base and increased our footprint with many existing customers through wider deployments across our enterprise product portfolio. Additionally, we continued to execute on plans to expand our proprietary datasets and capabilities in the talent management market through strategic acquisitions and partnerships. Our growth and momentum in the first quarter, together with our strong financial results, underscore the leadership position we have secured in the compensation category.”

Financial Highlights

·     Revenue of $7.5 million

·     Cash flow from operations of $1.6 million

·     Bookings of $8.1 million

·     On a GAAP basis, Salary.com reported a net loss attributable to common stockholders of $1.4 million in the first quarter of fiscal 2008, compared to a net loss of $963,000 in the first quarter of fiscal 2007

·     On a non-GAAP basis, excluding the impact of stock-based compensation expense, amortization of intangibles, and accretion of preferred stock, Salary.com reported a net loss attributable to common stockholders of $556,000 in the first quarter of fiscal 2008, compared to a net loss of $538,000 in the first quarter of fiscal 2007

·     Cash and equivalents of at the end of the first quarter of 2008 were $39.9 million, compared to $49.0 million at the end of fiscal 2007, primarily due to cash flow generated in the quarter offset by the $10.3 million paid for the acquisition of ICR Limited, L.C. in May 2007

·     Current deferred revenue grew to $16.1 million at the end of the first quarter, an increase from $15.5 million at the end of fiscal 2007. Total deferred revenue was $17.0 million at the end of the first quarter, which represented an increase from $16.4 million at the end of fiscal 2007

Ken Goldman, Salary.com’s senior vice president and chief financial officer said, “Strong order activity and synergies from our acquisition of ICR helped us achieve revenue that was better than anticipated in the first quarter. Our operating cash flow results also benefited from this activity, providing an accent on our record of positive operating cash flow. Because of our high-visibility subscription revenue model and market dynamics that are working in our favor, we believe this momentum can continue.”

Business Highlights

·     As announced on May 15, 2007, Salary.com acquired ICR Limited, L.C. and ICR International Ltd. (ICR), a premier provider of specialty consumer goods and global technology compensation data and software – thereby expanding Salary.com’s global reach with proprietary datasets across over 70 countries worldwide.

·     During the first quarter 225 net new enterprise subscribers were added, not including new customer additions from the ICR acquisition or small and medium business customers; bringing the total enterprise subscriber count to more than 2,100 and total subscription customers to above 4,100.

·     New customer additions in the first quarter included marquee names such as AmerisourceBergen Corporation; Comcast Corporation; CSX Corporation; Elizabeth Arden, Inc.; Expedia, Inc.; Hitachi Computer Products (America), Inc.; John Hancock Life Insurance Company; The Motley Fool, Inc.; The Pepsi Bottling Group, Inc.; The Rockefeller Foundation; and Sony Ericsson Mobile Communications (USA), Inc.

“Market demand and awareness is building in the compensation management market as increased recruiting pressure forces companies to take new approaches to attracting and retaining talent. Salary.com is benefiting from positive market momentum due to our leadership position, domain expertise, proprietary data sets and on-demand technology, and this success is reflected in our financial and business results”, commented Plunkett.

“We also announced strategic agreements earlier today that expand our capabilities in the emerging talent management segment”, he continued. “With the acquisition of ITG Competency Group and the licensing agreement with Schoonover Associates, Salary.com will significantly broaden the capabilities and advantages of its talent management suite, developing one of the most robust competency offerings in the industry and providing the content foundation to support competency-driven human resources and talent management products and services.”

Business Outlook

Salary.com expects total revenue in fiscal 2008 to be in the range of $33.7 million to $34.9 million, an increase from prior guidance. Cash flow from operations is expected to be in the range of $7.8 million to $8.2 million for the full fiscal year, also an increase from prior guidance. Non-GAAP loss, which excludes the non-cash impact of stock-based compensation expense and amortization of intangibles, is expected to be in the range of $5.0 million to $5.4 million. On a GAAP basis, net loss for fiscal 2008 is expected to be in the range of $8.8 to $9.2 million. Weighted average basic shares for the year are estimated to be approximately 13.7 million shares.

For the second quarter of fiscal 2008, Salary.com expects total revenue in the range of $7.7 million to $8.1 million. Non-GAAP loss, which excludes the non-cash impact of stock-based compensation expense and amortization of intangibles, is expected to be in the range of $1.3 million to $1.7 million. GAAP loss for the second quarter of fiscal 2008, is expected to be in the range of $2.3 million to $2.7 million. Weighted average shares for the quarter are estimated to be approximately 13.6 million shares.

Conference call

What:      Salary.com first quarter 2008 financial results conference
           call and webcast
When:      Tuesday, July 31, 2007
Time:      5:00 PM ET
Live Call: (800) 819-9193, domestic
           (913) 981-4911, international
Replay:    (888) 203-1112, conference ID 3594155
           (719) 457-0820, conference ID 3594155, international
Webcast:   http://investor.salary.com/events.cfm (live and replay)

About Salary.com, Inc.

Salary.com is a leading provider of on-demand compensation management solutions helping businesses and individuals manage pay and performance. Salary.com provides companies of all sizes comprehensive on-demand software applications that are tightly integrated with its own proprietary compensation data sets, thereby automating the essential elements of the compensation management process and significantly improving the effectiveness of its client’s compensation spend. For more information, visit www.salary.com.

Safe Harbor Statement

This release contains "forward-looking" statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These are statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as "may," "will," "expects," "projects," "anticipates," "estimates," "believes," "intends," "plans," "should," "seeks," and similar expressions. This press release contains forward-looking statements relating to, among other things, Salary.com’s expectations and assumptions concerning future financial performance. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements. Forward-looking statements may be significantly impacted by certain risks and uncertainties described in Salary.com’s filings with the Securities and Exchange Commission. The risks and uncertainties referred to above include, but are not limited to, risks associated with possible fluctuations in our operating results and rate of growth, our history of operating losses, the possibility that we will not achieve GAAP profitability, our ability to close the ITG acquisition on a timely basis, interruptions or delays in our service or our Web hosting, our business model, breach of our security measures, the emerging market in which we operate, our ability to hire, retain and motivate our employees and manage our growth, competition, our ability to continue to release and gain customer acceptance of new and improved versions of our service, successful customer deployment and utilization of our services, fluctuations in the number of shares outstanding, foreign currency exchange rates and interest rates.