Kenexa Announces Acquisition of PSL

Kenexa, a provider of software, services and proprietary content that enable organisations to more effectively recruit and retain employees, today announced the acquisition of Psychometric Services Limited (PSL), a privately-owned, London-based provider of assessment solutions. Founded in 1989, PSL publishes personality questionnaires, ability tests and screening, selection and development tools. Under the terms of the agreement, Kenexa paid an aggregate purchase price of approximately $7.6 million for PSL.

Kenexaís Chief Executive Officer, Rudy Karsan, stated, ìPSL has been in the assessment solutionsí business for approximately 17 years, and we expect that the addition of their solid library of content and team of psychologists will extend Kenexaís value proposition and further differentiate our company from a domain expertise perspective. In addition, the acquisition of PSL advances Kenexaís efforts to build out our international infrastructure, while adding an attractive customer list of commercial and government entities in the UK.î


PSLís assessment solutions are both powerful and extremely easy to use, and they can be used across a broad range of occupational sectors. In addition to its breadth of application, PSL has also developed assessment solutions for specific job roles. Oriented around the needs of a role - such as retail sales assistant, branch manager or customer services agent ñ PSLís solutions measure just those attributes that predict success and failure. The reports that result are tailored to the specific needs of employers in the sector and the products are supported by a wealth of relevant validation data.

Updated Fourth Quarter 2007 Financial Outlook
Kenexa also announced that it is updating its previously issued financial guidance to take into consideration the closing of the BrassRing transaction on November 13, 2006, and todayís announced acquisition of PSL.

The company currently expects to include approximately a month and a half of BrassRing and PSLís operating results into its consolidated financial results for the quarter ending December 31, 2006. As such, the company currently expects the two acquisitions to add approximately $5.2 million to its previously issued financial guidance for the fourth quarter 2006. The company does not currently expect the consolidated stub period of the acquisitions to have a material impact on its previously issued non-GAAP EPS guidance for the fourth quarter 2006. Non-GAAP EPS guidance excludes the impact of stock-based compensation and amortization of intangibles associated with acquisitions, including BrassRing and PSL. The company provides a reconciliation table between GAAP and non-GAAP EPS in each of its quarterly financial statements.
In summary, the companyís updated fourth quarter financial guidance and preliminary 2007 financial guidance is as follows:

Fourth Quarter 2006: The Company now expects revenue to be $34.0 to $34.4 million, compared to its previously issued guidance of $28.9 to $29.3 million. Assuming a 22% tax rate (due to Kenexaís NOL carryforwards) and 21.2 million shares outstanding, Kenexa continues to expect non-GAAP diluted earnings per share to be $0.29 to $0.31.
Preliminary Full Year 2007: Previously issued preliminary guidance for 2007 already included the expected impact of BrassRing. Including the expected incremental impact of the PSL acquisition, the Company expects revenue to be $183 million to $187 million, an increase from its previously issued guidance of $177 million to $181 million. Assuming a 30% tax rate and 21.3 million shares outstanding, Kenexa has increased its non-GAAP diluted earnings per share guidance to $1.15 to $1.22, an increase from its previously issued guidance of $1.14 to $1.21.

Forward-Looking Statements
This press release includes certain ìforward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as expects, anticipates, intends, plans, believes, seeks, estimates or words of similar meaning.

These statements may concern, among other things, guidance as to future revenue and earnings, operations, expected benefits from the BrassRing transaction, prospects of the business generally, intellectual property and the development of products. These statements are based on our current beliefs or expectations and are inherently subject to various risks and uncertainties, including those set forth under the caption Risk Factors in Kenexaís most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission and as revised or supplemented by Kenexaís quarterly reports on Form 10-Q.

Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors, Kenexaís ability to implement business and acquisition strategies or to complete or integrate acquisitions (including BrassRing and PSL). Kenexa does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.