Taleo Announces Fourth Quarter and Year Ended 2005 Financial Results

SAN FRANCISCO, CA ó Taleo Corporation (Nasdaq: TLEO), provider of on demand talent management solutions, today announced financial results for its fiscal fourth quarter and year ended December 31, 2005.

ìWe are very pleased with the companyís performance for the fourth quarter and full year 2005, which was highlighted by record revenue and customer acquisition results,î said Michael Gregoire, president and CEO, Taleo. ìThe demand for talent management is building, and our leadership position and proven track record of customer success sets Taleo apart in the market place.î

Gregoire added, ìWe are encouraged by the level of demand we see, and we are continuing to invest to capitalize on what we believe is a large, rapidly growing market opportunity. We recently announced a major new product release and several new solutions including a Taleo branded background and identity verification solution that we are delivering with a partner. We have increased our R&D efforts to further extend our leadership position and expand our addressable market.î

Taleo delivered the following results for the fourth quarter and year ended December 31, 2005:

Revenue: Total revenue for the fourth quarter was $21.0 million, an increase of 39% on a year-over-year basis. Recurring application revenues for the fourth quarter were $17.2 million, an increase of 36% on a year-over-year basis.

For the year ended December 31, 2005, total revenue was $78.4 million, an increase of 34%, while recurring application revenue was $63.3 million, an increase of 29%.

Net Income and Earnings per Share: Net income (loss) in accordance with Generally Accepted Accounting Principles in the United States, or GAAP, was $0.3 million for the fourth quarter, compared to a net loss of $2.0 million for the same period last year. For the year ended December 31, 2005, net loss was $2.5 million, compared to a net loss of $5.7 million in 2004.

Normalized Net Income and Earnings Per Share: Normalized net income (a non-GAAP financial measure), which excludes amortization of acquired intangibles, fees for early retirement of indebtedness, write-off of unamortized indebtedness fees, and accretion of dividends and issuance costs on preferred stock, was $1.3 million for the three months ended December 31, 2005, compared to normalized net loss of $1.8 million in the same period last year. normalized diluted earnings per share was $0.05 for the fourth quarter of 2005 based on 24.7 million average shares outstanding compared to normalized loss per share of $27.58 for the same period in 2004 based on 64 thousand average shares outstanding.

Normalized net income (loss), which excludes amortization of acquired intangibles, restructuring charges, stock compensation expense, fees for early retirement of indebtedness, write-off of unamortized indebtedness fees, and accretion of dividends, and issuance costs on preferred stock, was $1.9 million for the year ended December 31, 2005, compared to normalized net loss of $4.9 million in the same period in 2004. Normalized diluted earnings per share (a non-GAAP financial measure) was $0.09 for the year ended December 31, 2005 based on 20.3 million average shares outstanding compared to normalized loss per share of $87.00 for the same period in 2004 based on 56 thousand average shares outstanding.

Additional Fourth Quarter Business Highlights:

Taleo added a record number 73 new customers in the quarter, to end the year with 421 customers. New Taleo customers include leading companies across a wide variety of industries: BNP Paribas, MBNA, Public Storage, Dollar General Corp., Eagle Global Logistics, Weatherford International, University of Toronto, AstraZeneca, Abitibi Consolidated, Seagate Technology, North Shore Long Island Jewish Health System, Veritude, Corel Corporation, Inc., and Pacific Medical Centers.

Taleo ended the fourth quarter with 28% of the Fortune 100 as customers, demonstrating strong adoption of Taleo within the enterprise market segment.

Taleo had record sales in the SMB market segment with the addition of 147 new Taleo Business Edition customers in 2005.

Taleo expanded the number of active users during the fourth quarter to a total of more than 527,000; up from 500,000 in the third quarter of 2005.

Taleo customers have used the Taleo solution to process over 35.5 million candidates since inception, and supported over 578,000 hires for its clients in 2005.

Taleo launched Taleo Contingent 7 in the quarter.