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Taleo Announces Record Third Quarter 2005 Financial Results

• Total revenue grows 30% to $19.9 million
• 70 customers added during the third quarter
• Number of active users grows to 500,000

San Francisco, CA — November 2, 2005Taleo Corporation (Nasdaq: TLEO), the leading provider of on demand talent management solutions, today announced financial results for its third quarter of fiscal year 2005.

For the quarter ended September 30, 2005, Taleo reported total revenue of $19.9 million, an increase of 30% compared with the third quarter of 2004. Application revenue increased 25% to $16.0 million, while consulting revenue increased 56% to $3.9 million.

Michael Gregoire, President and Chief Executive Officer of Taleo stated, “We are very pleased with our third quarter results, which were highlighted by record revenues and expanding profitability.” Gregoire added, “The talent management market continues to grow in awareness and importance, and Taleo has emerged as the clear leader from a critical mass and technology perspective. In addition, our leadership position continues to grow due to our momentum with blue chip customer wins, our comprehensive and innovative talent management solutions for businesses of all sizes, and our growing partnership channels.”

Divesh Sisodraker, Chief Financial Officer of Taleo, stated, “The operating leverage inherent in our on demand business model has helped us to scale our profitability while we continue to grow the top line at a rapid pace.” Sisodraker added, “In addition to growing profitability, the combination of our business momentum and recurring revenue model also provides us with significant visibility as we approach the next calendar year.”

Income from operations, determined in accordance with United States generally accepted accounting principles (GAAP), was $853,000 and $379,000 for the three months ended September 30, 2005 and 2004, respectively. Determined in accordance with GAAP, net loss was $1.6 million for the three months ended September 30, 2005, compared to net income of $260,000 in the same period last year. Loss per share, determined in accordance with GAAP, was $15.48 and $7.12 for the three months ended September 30, 2005 and 2004, respectively. This loss per share is calculated based upon net loss attributable to Class A common stockholders and Class A common stock outstanding.

Non-GAAP income from operations, which excludes amortization of acquired intangibles, restructuring charges and stock compensation expense, was $1.1 million for the three months ended September 30, 2005, compared to $593,000 in the same period last year. Non-GAAP net income, which excludes amortization of acquired intangibles, restructuring charges, stock compensation expense, fees for early retirement of indebtedness and accretion of dividends, and issuance costs on preferred stock, was $170,000 for the three months ended September 30, 2005, compared to $474,000 in the same period last year. Earnings per diluted share on a non-GAAP basis were $0.01 for the three months ended September 30, 2005, compared with $0.02 in the same period last year. Non-GAAP earnings per diluted share is calculated using non-GAAP net income and fully diluted shares, including Class A common stock, Class B common stock, options and warrants.

A reconciliation of GAAP to non-GAAP results has been provided in the financial statement tables included in the press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures.”

Additional Third Quarter Business Highlights: 

  • Taleo began trading on NASDAQ in an initial public offering that closed in October and raised approximately $70 million in net proceeds.
  • Taleo added 70 new customers in the quarter across multiple verticals. 
  • High profile customers added during the third quarter were: Praxair, Weyerhaeuser, RadioShack, DirecTV, Revlon, Sumitomo Trust & Banking Co, SEGA of America, Bankers Life and Casualty Co., Atari and Infosys Consulting among others.
  • Taleo expanded the number of active users during the third quarter to 500,000; up from 475,000 in the second quarter of 2005.
  • Taleo entered into a strategic relationship with Alexander Mann Solutions, a recognized market leader in international recruitment process outsourcing. As part of this arrangement Alexander Mann will deliver Taleo’s talent management solutions for both permanent and contingent labor to its customers seeking to outsource recruiting and talent management processes throughout Europe and Asia Pacific.
  • Taleo Contingent 7.0 was introduced, providing significant usability, infrastructure and global enhancements to help customers manage their large and growing contingent workforce. This new release was named the winner in the “2005 Recruiting & Staffing Best in Class Awards” by HR IQ, a division of the International Quality & Productivity Center (IQPC).
  • Taleo and Xerox, a Taleo Contingent Customer, were presented with an award for Best Practices in Category Spend Management for Contract Labor by the Aberdeen Group, an industry analyst firm. This award recognized the increased value and business performance that Xerox achieved through its innovative contingent workforce management programs, underpinned by Taleo’s solutions. 
Taleo Business Edition 6.1 was introduced, adding further momentum to Taleo’s efforts to penetrate the SMB segment of the talent management market. The new release includes several new features and enhanced functionality – including interview, task, event, and calendar management – in addition to new configurability options and an expanded version of Taleo’s Web Services API.