Taleo Reports Strong Fourth Quarter and Fiscal Year End 2006 Financial Results

Taleo Corporation, the provider of on demand talent management solutions, today announced financial results for its fourth quarter and fiscal year ended December 31, 2006.

Business Highlights Include:

- Record new customer acquisition; doubling the number of customers from the previous year

- Record revenues of $97.0 million for 2006, an increase of 24% year-over-year

- Q4 2006 GAAP net income of $892,000

- Improved balance sheet strength

2006 was a pivotal year for Taleo as we continued to build a solid foundation and expanded our market share as the leader in Talent Management solutions. We remain focused on execution and are pleased with our strong organic growth, record quarterly customer acquisition, financial progress and ability to deliver increased customer value and improved business performance to our customers, stated Michael Gregoire, president and CEO of Taleo.

Looking ahead to 2007, we will broaden and deepen our solutions toward a full Talent Management Suite of integrated applications built on our leading platform. We are very encouraged by the business trends that we are witnessing in both the enterprise and SMB end markets. We intend to capitalize on our technology leadership, strong channel relationships and international investments to take advantage of the opportunity at hand, concluded Gregoire.

Taleo delivered the following results for the fourth quarter and year ended December 31, 2006:

Revenue: Total revenue for the fourth quarter was $26.5 million, representing an increase of 26% on a year-over-year basis. Recurring application revenue for the fourth quarter was $21.6 million, an increase of 26% on a year-over-year basis. For the year ended December 31, 2006, total revenue was $97.0 million, an increase of 24%, while recurring application revenue was $79.1 million, an increase of 25% over the prior year.

Net Income/Loss and Income/(Loss) Per Share to Common Stockholders:

Net income in accordance with accounting principles generally accepted in the United States, or GAAP, was $0.9 million for the fourth quarter, compared to a net loss of $77,000 for the same period last year. Net income for the fourth quarter and year ended December 31, 2006 includes share-based compensation expense of $1.1 million and $4.5 million, respectively, pursuant to the adoption on January 1, 2006 of Financial Accounting Standards Board (FASB) Statement No. 123R, Share-Based Payment (SFAS 123R), which requires companies to expense the fair value of employee stock options and similar stock based compensation awards. Net income per fully diluted share was $0.03 for the fourth quarter of 2006 based on 25.8 million weighted average shares outstanding compared to net loss per fully diluted share of $(0.00) for the same period in 2005 based on 18.2 million weighted average shares outstanding. For the year ended December 31, 2006, net loss was $2.3 million, compared to a net loss of $5.5 million for the year ended December 31, 2005. Net loss per fully diluted share was $(0.11) for the year ended December 31, 2006 based on 20.0 million weighted average shares outstanding compared to net loss per fully diluted share of $(1.19) for the year ended December 31, 2005 based on 4.6 million weighted average shares outstanding.

- Non-GAAP Net Income/(Loss) and Non-GAAP Income/Loss Per Share: Non-GAAP net income, which excludes restructuring costs and other charges, loss on disposal of fixed assets, stock compensation expense, share-based compensation expense pursuant to SFAS 123R, amortization of acquired intangibles, fees for early retirement of indebtedness, write off of unamortized indebtedness fees, net adjustment for tax valuation allowances, and accretion of dividends and issuance costs on preferred stock, was $1.9 million for the fourth quarter of 2006, compared to a non-GAAP net income of $1.3 million in the same period last year. Non-GAAP net income per fully diluted share was $0.07 for the fourth quarter of 2006 based on 25.8 million weighted average shares outstanding compared to non-GAAP net income per fully diluted share of $0.05 for the same period in 2005 based on 24.7 million weighted average shares outstanding.

For the year ended December 31, 2006, non-GAAP net income was $3.3 million, compared to non-GAAP net income of $1.9 million for the year ended December 31, 2005. Non-GAAP net income per fully diluted share was $0.13 for the year ended December 31, 2006 based on 25.6 million weighted average shares outstanding compared to non-GAAP net income per fully diluted share of $0.09 for the year ended December 31, 2005 based on 20.3 million weighted average shares outstanding.

Additional Fourth Quarter Highlights:

- In November 2006, Taleo was positioned in the coveted Leaders Quadrant of Gartner Groupís E-Recruitment Software Magic Quadrant based on the companyís innovation and execution.

- Taleo added more than 150 new customers, including a record 23 enterprise customers.

- New enterprise customers included: Armstrong Holdings, Blue Cross Blue Shield of Tennessee, The Cheesecake Factory, Gordon Food Service, Health Alliance, Hewitt, Newell Rubbermaid, TeleTech, US Bancorp, and Yellow Pages.

- Taleo entered into a partnership with IBM to provide global HRO services and together closed their first two joint customers.

- Taleo announced the availability of its Taleo Business Edition 7.5 eRecruiting Solution, providing enhancements to its solution for small and medium-sized businesses.

- In December 2006, IDC released its report on Worldwide HCM market share ranking Taleo as the worldwide market share leader in eRecruitment software and the worldwide market share leader in On Demand HCM Software.

- During the fourth quarter of 2006, Taleo received IDGís InfoWorld 100 Award for its innovative on-demand infrastructure.

- Greg Santora, former CFO of Shopping.com and Intuit, joined the Board of Directors bringing strong financial insights, operations experience and software expertise to the Companyís Board.

2006 Business Highlights:

- Taleo ended the year with more than 850 customers.

- Since the launch of Taleo Business Edition in the spring of 2005, the Company has more than 600 Taleo Business Edition customers with 400 new customers signed in 2006 alone.

- Taleo added 30 Fortune 1000 and 6 Fortune 100 companies in 2006, and now serves 104 of the Fortune 1000 and 32 of the Fortune 100 companies.

- During 2006 alone, Taleo processed over 4 billion customer transactions, nearly 30 million applications and more than 850,000 hires.

- The Company launched Taleo Business Edition in the UK, France, Australia, New Zealand, and Singapore.

- Taleo was recognized with 10 industry awards for its products, the Companyís on demand infrastructure, and Taleoís growth, including HR Executive Product of the Year award.