8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) October 28, 2010

RIGHTNOW TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Charter)

DELAWARE	000-31321		81-0503640
(State or Other Jurisdiction	(Commission		(IRS Employer
of Incorporation)	File Number)		Identification No.)
136 ENTERPRISE BOULEVARD, BOZEMAN, MT		59718
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code (406) 522-4200

N/A

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

      o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

      o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

      o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

      o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On October 28, 2010, RightNow Technologies, Inc. (the “Company”) issued a press release announcing its financial results for the third quarter ended September 30, 2010. A copy of the press release is furnished herewith as Exhibit 99.1. The Company also has posted on its website supplemental financial data, as of October 28, 2010, which is furnished herewith as Exhibit 99.2.

     The information contained under Item 2.02 in this report and in Exhibits 99.1 and 99.2 attached to this report is being furnished to the Securities and Exchange Commission and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section, or incorporated by reference in any filing under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

	(a)	Financial statements of business acquired.
		Not Applicable
	(b)	Pro forma financial information.
		Not applicable
	(c)	Shell company transactions.
		Not applicable
	(d)	Exhibits.
Exhibit No.			Description of Exhibit
99.1			Press Release dated October 28, 2010 announcing RightNow Technologies, Inc.’s financial results for the third quarter ended September 30, 2010 (furnished herewith but not filed pursuant to Item 2.02).
99.2			Supplemental financial data of RightNow Technologies, Inc. as of October28, 2010 (furnished herewith but not filed pursuant to Item 2.02).

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	RIGHTNOW TECHNOLOGIES, INC.
	(Registrant)
Dated: October 28, 2010	/s/ Jeffrey C. Davison
	Jeffrey C. Davison
	Chief Financial Officer, Vice President and Treasurer

EXHIBIT INDEX

Exhibit No.	Description of Exhibit
99.1	Press Release dated October 28, 2010 announcing RightNow Technologies, Inc.’s financial results for the third quarter ended September 30, 2010 (furnished herewith but not filed pursuant to Item 2.02).
99.2	Supplemental financial data of RightNow Technologies, Inc. as of October 28, 2010 (furnished herewith but not filed pursuant to Item 2.02).

EX-99

Exhibit 99.1

For Further Information, Contact:

Investor Relations:	Corporate Communications:
Todd Friedman or Stacie Bosinoff	Jaia Zimmerman
The Blueshirt Group	RightNow Technologies
415.217.7722	650.653.4441 Office
todd@blueshirtgroup.com	650.464.8462 Cell
stacie@blueshirtgroup.com	jzimmerman@rightnow.com

RightNow Reports Third Quarter 2010 Financial Results

30% Recurring Revenue Growth Drives Results Ahead of Guidance

BOZEMAN, Mont. (October 28, 2010) — RightNow (NASDAQ: RNOW) today announced results for the third quarter ended September 30, 2010.

Third quarter 2010 financial highlights included:

·   Total revenue was $48.6 million, an increase of 25% over Q3 2009

·   Recurring revenue was $38.6 million, an increase of 30% over Q3 2009

·   Non-GAAP operating margin was 13%, an increase of 300 basis points over Q3 2009

·   Non-GAAP earnings per share were $0.15

·   17 transactions greater than $1 million including two of the largest deals in our company history

Total revenue was $48.6 million in the third quarter of 2010, compared to $38.7 million in the third quarter of 2009, reflecting a 25% increase.  Recurring revenue in the third quarter of 2010 increased 30% to $38.6 million from $29.8 million in the third quarter of 2009.

Net income in the third quarter of 2010 was $2.9 million or $0.09 per share, compared to net income of $2.0 million, or $0.06 per share, in the third quarter of 2009.  Non-GAAP net income in the third quarter of 2010, which excludes stock-based compensation charges of $2.2 million, was $5.1 million, or $0.15 per share, compared to non-GAAP net income of $3.8 million or $0.12 per share, in the third quarter of 2009.

New, renewed and expanded customer relationships during the third quarter of 2010 included Barclaycard U.S., CyberDefender, Enterprise Holdings, HSN, JAJAH Inc., Jawbone, Lifelock, Meijer Inc., Nikon Corp, Sony Online Entertainment, and USDA Food Safety and Inspection Services.

“We had a strong quarter, delivering solid execution and driving continued momentum across our business. Our innovative multi-channel solutions are setting new standards for how high volume B2C organizations interact with their customers creating a large opportunity in the emerging customer experience market,” said Greg Gianforte, CEO and founder.  “At our recent user conference where we brought together customers and partners from around the world, we announced the appointment of Wayne Huyard as President and COO.  Wayne has more than 25 years of experience and he will play an instrumental role leading the business as we take advantage of the growth opportunities that lie ahead.”

Jeff Davison, CFO, said, “We are pleased with our performance in the third quarter, which reflects continued growth in the business. RightNow continues to gain momentum in the market as we focus on profitable growth.” 

Guidance

·   For the full year 2010, the company is raising guidance for revenue and earnings per share.  Total revenue is expected to be approximately $183.5 million, with recurring revenue growth of approximately 26%.  Net income per share for the full year 2010 is expected to be approximately $0.24.  Non-GAAP net income per share, which excludes stock-based compensation, is expected to be approximately $0.46 for the full year 2010.  The company expects approximately 34 million diluted shares outstanding for the full year 2010.

·   For the fourth quarter of 2010, total revenue is expected to be approximately $49.3 million.  Fourth quarter net income per share is expected to be approximately $0.09. Fourth quarter non-GAAP net income per share, which excludes stock-based compensation, is expected to be approximately $0.15.  The company expects approximately 35.5 million diluted shares outstanding for the fourth quarter of 2010.

Quarterly Conference Call

RightNow Technologies will discuss its quarterly results today via teleconference at 2:30 p.m. Mountain Time (4:30 p.m. Eastern Time) today.To access the call, please dial (877) 638-9569, or outside the U.S. (914) 495-8536, at least five minutes prior to the 2:30 p.m. MT start time.  A live webcast of the call will also be available at http://investor.rightnow.com/index.cfm under the Events & Presentations menu. An audio replay will be available 5:30 p.m. MT October 28, 2010 and 9:59 p.m. MT November 11, 2010 by calling (800) 642-1687 or (706) 645-9291, with Conference ID 16293024. The replay will also be available on the Company’s website at http://investor.rightnow.com.

About RightNow Technologies

RightNow is helping rid the world of bad experiences one consumer interaction at a time, eight million times a day. RightNow CX, the customer experience suite, helps organizations deliver exceptional customer experiences across the web, social networks and contact centers, all delivered via the cloud. With more than eight billion customer interactions delivered, RightNow is the customer experience fabric for nearly 2,000 organizations around the globe. To learn more about RightNow, go to www.rightnow.com.

RightNow is a registered trademark of RightNow Technologies, Inc. NASDAQ is a registered trademark of The NASDAQ Stock Market LLC.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements.  These forward-looking statements are based on our current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by us, all of which are subject to change.  Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management’s future strategic plans.  These forward-l ooking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to, general economic conditions; our success in transitioning to a new President and Chief Operating Officer; fluctuations in foreign currency exchange; our business model; our ability to develop or acquire and gain market acceptance for new products and enhancements to existing products in a cost-effective and timely manner; fluctuations in our earnings as a result of potential changes to our valuation allowance(s) on our deferred tax assets; the gain or loss of key customers; competitive pressures and other similar factors such as the availability and pricing of competing products and technologies and the resulting effects on sales and pricing of our products; our ability to expand or cont ract operations, manage expenses and grow profitability; the rate at which our present and future customers adopt our existing and future products and services; fluctuations in our operating results including our revenue mix and our rate of growth; fluctuations in backlog; the risk that our investments in partner relationships and additional employees will not achieve expected results; interruptions or delays in our hosting operations; breaches of our security measures; our ability to protect our intellectual property from infringement, and to avoid infringing on the intellectual property rights of third parties; any unanticipated ambiguities in fair value accounting standards; the amount and timing of any stock repurchases under our stock repurchase program; fluctuations in our operating results from the impact of stock-based compensation expense; our ability to manage and expand our partner relationships; our ability to hire, retain and mot ivate our employees and manage our growth; the impact of potential future acquisitions, if any; and various other factors.  Further information on potential factors that could affect our financial results is included in our Annual Report on Form 10-K, quarterly reports of Form 10-Q, and in other filings with the Securities and Exchange Commission.  The forward-looking statements in this release speak only as of the date they are made.  We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

FRNOW

RightNow Technologies, Inc.

Consolidated Balance Sheets

(In thousands) (Unaudited)

	Sept. 30,			Dec. 31,
	2010			2009
Assets
Cash and cash equivalents	$	77,728		$	41,546
Short-term investments		31,287			54,977
Accounts receivable		36,738			34,267
Allowance for doubtful accounts		(1,867	)		(1,914	)
Net receivables		34,871			32,353
Deferred commissions		5,215			6,394
Prepaid and other current assets		3,601			2,434
Total current assets		152,702			137,704
Property and equipment, net		11,063			10,122
Intangible assets, net		13,382			11,141
Deferred commissions, non-current		3,917			3,461
Other		1,125			2,007
Total Assets	$	182,189		$	164,435
Liabilities and Stockholders’ Equity
Accounts payable	$	9,165		$	5,427
Commissions and bonuses payable		6,142			6,271
Other accrued liabilities		14,260			11,146
Current debt		--			22
Current portion of deferred revenue		88,669			88,603
Total current liabilities		118,236			111,469
Deferred revenue, net of current portion		5,394			12,724
Stockholders’ equity:
Common stock		34			34
Additional paid-in capital		125,416			112,439
Treasury stock, at cost		(15,007	)		(15,007	)
Accumulated other comprehensive income		1,581			1,125
Accumulated deficit		(53,465	)		(58,349	)
Total stockholders’ equity		58,559			40,242
Total Liabilities and Stockholders’ Equity	$	182,189		$	164,435

RightNow Technologies, Inc.

Consolidated Operating Statements

(In thousands, except per share amounts) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Revenue:
Recurring revenue	$	38,613		$	29,754		$	106,368		$	83,223
Professional services		9,980			8,977			27,781			27,885
Total revenue		48,593			38,731			134,149			111,108
Cost of revenue:
Recurring revenue		5,923			5,232			17,754			15,135
Professional services		8,395			6,365			23,105			19,719
Total cost of revenue		14,318			11,597			40,859			34,854
Gross profit		34,275			27,134			93,290			76,254
Operating expenses:
Sales and marketing		20,006			16,175			57,507			47,046
Research and development		5,160			5,100			15,089			14,907
General and administrative		4,975			4,018			13,598			11,671
Total operating expenses		30,141			25,293			86,194			73,624
Income from operations		4,134			1,841			7,096			2,630
Interest and other income, net		454			342			656			1,094
Income before income taxes		4,588			2,183			7,752			3,724
Provision for income taxes		(1,693	)		(218	)		(2,868	)		(460	)
Net income	$	2,895		$	1,965		$	4,884		$	3,264
Net income per share:
Basic	$	0.09		$	0.06		$	0.15		$	0.10
Diluted	$	0.09		$	0.06		$	0.15		$	0.10
Shares used in the computation:
Basic		32,128			31,733			32,020			31,731
Diluted		33,659			32,424			33,515			32,249
Supplemental information of stock-based compensation expense included in:
Cost of software, hosting and support	$	127		$	120		$	357		$	358
Cost of professional services		128			138			364			480
Sales and marketing		818			761			2,295			2,335
Research and development		254			285			751			924
General and administrative		875			548			1,951			2,007
Total stock-based compensation	$	2,202		$	1,852		$	5,718		$	6,104

RightNow Technologies, Inc.

Consolidated Statements of Cash Flow

(In thousands) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
Operating activities:
Net income	$	2,895		$	1,965		$	4,884		$	3,264
Non-cash adjustments:
Depreciation and amortization		1,812			1,797			5,749			5,410
Stock-based compensation		2,202			1,852			5,718			6,104
Provision for losses on accounts receivable		50			30			131			117
Changes in operating accounts:
Receivables		(963	)		2,333			(1,424	)		10,731
Prepaid and other current assets		552			(628	)		(1,316	)		(735	)
Deferred commissions		(263	)		(65	)		726			(142	)
Accounts payable		566			(1,397	)		3,710			(567	)
Commissions and bonuses payable		1,451			(132	)		(122	)		(941	)
Other accrued liabilities		382			(30	)		2,946			415
Deferred revenue		(2,887	)		(569	)		(7,661	)		(12,036	)
Other		176			(247	)		157			255
Cash provided by operating activities		5,973			4,909			13,498			11,875
Investing activities:
Net change in investments		6,935			(13,081	)		23,700			(21,391	)
Acquisition of property and equipment		(1,639	)		(1,240	)		(5,475	)		(3,665	)
Intangible asset additions		(1,120	)		(144	)		(3,459	)		(244	)
Business acquisition		--			(5,906	)		--			(5,906	)
Cash provided (used) in investing activities		4,176			(20,371	)		14,766			(31,206	)
Financing activities:
Proceeds from issuance of common stock		3,068			167			4,636			396
Excess tax benefit of stock options exercised		1,491			95			2,621			232
Common stock repurchased		--			--			--			(1,798	)
Payments on current and long-term debt		--			(12	)		(22	)		(34	)
Cash provided (used) by financing activities		4,559			250			7,235			(1,204	)
Effect of foreign exchange rates on cash and cash equivalents		1,808			613			683			1,518
Increase (decrease) in cash and cash equivalents		16,516			(14,599	)		36,182			(19,017	)
Cash and cash equivalents at beginning of period		61,212			46,987			41,546			51,405
Cash and cash equivalents at end of period	$	77,728		$	32,388		$	77,728		$	32,388

RightNow Technologies, Inc.

Reconciliation of Non-GAAP Measurements

 (Amounts in thousands, except per share amounts) (Unaudited)

Earnings Per Share Reconciliation

	Three Months Ended September 30,				Nine Months Ended September 30,
	2010		2009		2010		2009
Net income as reported	$	2,895	$	1,965	$	4,884	$	3,264
Add stock-based compensation (“SBC”)		2,202		1,852		5,718		6,104
Net income before SBC	$	5,097	$	3,817	$	10,602	$	9,368
Net income per share, as reported (basic)	$	0.09	$	0.06	$	0.15	$	0.10
Net income per share, as reported (diluted)	$	0.09	$	0.06	$	0.15	$	0.10
Net income per share, before SBC (basic)	$	0.16	$	0.12	$	0.33	$	0.30
Net income per share, before SBC (diluted)	$	0.15	$	0.12	$	0.32	$	0.29
Shares outstanding (basic), as reported		32,128		31,733		32,020		31,731
Shares outstanding (diluted), as reported		33,659		32,424		33,515		32,249

Forward-Looking Guidance Reconciliation

	GAAP		Adjustment			Non-GAAP
Fourth quarter ending December 31, 2010
Net income (approximately)	$	3,150	$	2,000	[a]	$	5,150
Net income per share (approximately)	$	0.09				$	0.15
Shares (diluted)		35,500					35,500
Year ending December 31, 2010
Net income	$	8,000	$	7,700	[a]	$	15,700
Net income per share	$	0.24				$	0.46
Shares (diluted)		34,000					34,000

[a] Estimated stock-based compensation expense to be recorded for the periods indicated in accordance with FASB Accounting Standards Codification, Topic 718, Compensation-Stock Compensation, which is effective for periods beginning January 1, 2006.

About Non-GAAP Financial Measures

Non-GAAP net income and diluted net income per share are supplemental measures of our performance that are not required by, or presented in accordance with GAAP.  These non-GAAP financial measures are not intended to be used in isolation and should not be considered a substitute for net income and net income  per share or any other performance measure determined in accordance with GAAP.  We present non-GAAP net income and net income per share because we consider each to be an important supplemental measure of our performance.

Management uses these non-GAAP financial measures to make operational decisions, evaluate the Company’s performance, prepare forecasts and determine compensation.  Further, management believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company’s performance when planning, forecasting and analyzing future periods.  Our stock-based compensation expenses are expected to vary depending on the number of new grants issued, changes in our stock price, stock market volatility, expected option lives and risk-free rates of return, all of which are difficult to estimate.  In calculating non-GAAP net income and net income per share, management excludes stock-based compensation expenses to facilitate its review of the comparability of the Company’s operating performance on a period-to-period basis because such expenses are not, in management’s view, related to the Company’s ongoing operating performance.  Management uses this view of its operating performance for purposes of comparison with its business plan and individual operating budgets and resource allocation.

Management further believes that these non-GAAP financial measures are useful to investors in providing greater transparency to the information used by management in its operational decision making.  We believe that the use of non-GAAP net income and net income per share also facilitate a comparison of RightNow’s underlying operating performance with that of other companies in our industry, which use similar non-GAAP financial measures to supplement their GAAP results.

Calculating non-GAAP net income and net income per share have limitations as an analytical tool, and readers should not consider these measures in isolation or as substitutes for GAAP net income and GAAP net income per share.  In the future, we expect to incur additional stock-based compensation expenses and the exclusion of these expenses in the presentation of our non-GAAP financial measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.  Investors and potential investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool, which include:

·   Other companies inside and outside of our industry may calculate non-GAAP net income and net income per share differently than we do, limiting their usefulness as a comparative tool; and

·   The Company’s income tax expense or benefit will be ultimately based on its GAAP taxable income and actual tax rates in effect, which may differ significantly from the effective tax rate used in our non-GAAP financial measures.

In addition, the adjustments to our GAAP financial measures reflect the exclusion of stock-based compensation expenses that are recurring and will be reflected in the Company’s financial results for the foreseeable future.  The Company compensates for these limitations by providing specific information regarding the GAAP amount excluded from the non-GAAP financial measures.  The Company further compensates for the limitations of our use of non-GAAP financial measures by presenting comparable GAAP measures more prominently.  The Company evaluates the non-GAAP financial measures together with the most directly comparable GAAP financial measures.

Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with our GAAP net income and net income per share.  For more information, see the consolidated operating statements and reconciliation of non-GAAP measurements contained in this press release.

***

EX-99

Exhibit 99.2

Supplemental Data Sheet		Amounts in thousands (except customers, interactions and employees)
	Unaudited
	Last updated October 28, 2010		Q1			Q2			Q3			Q4		FY				Q1			Q2			Q3			Q4		YTD				Q1			Q2			Q3		YTD
			2008			2008			2008			2008		2008				2009			2009			2009			2009		2009				2010			2010			2010		2010
Revenue
Revenue			32,898			35,221			36,237			36,079			140,435			36,037			36,340			38,731			41,579			152,687			42,102			43,454			48,593			134,149
	YoY Growth		28	%		33	%		24	%		18	%		25	%		10	%		3	%		7	%		15	%		9	%		17	%		20	%		25	%		21	%
Recurring Revenue			24,412			25,459			25,917			26,476			102,264			25,955			27,393			29,741			32,161			115,250			33,025			34,730			38,613			106,368
	YoY Growth		27	%		25	%		19	%		12	%		20	%		6	%		8	%		15	%		21	%		13	%		27	%		27	%		30	%		28	%
Pro Service Revenue			8,342			9,648			10,281			9,588			37,859			9,992			8,916			8,977			9,407			37,292			9,077			8,724			9,980			27,781
	YoY Growth		42	%		67	%		49	%		46	%		51	%		20	%		-8	%		-13	%		-2	%		-1	%		-9	%		-2	%		10	%		0	%
North America Revenue %			67	%		67	%		70	%		74	%		69	%		75	%		72	%		72	%		71	%		72	%		71	%		70	%		69	%		70	%
EMEA Revenue %			25	%		25	%		22	%		19	%		23	%		18	%		19	%		19	%		19	%		19	%		19	%		19	%		19	%		19	%
APAC Revenue %			8	%		8	%		8	%		7	%		8	%		7	%		9	%		9	%		10	%		9	%		10	%		11	%		12	%		11	%
Bookings Metrics
Total Bookings			37,112			43,416			39,037			46,215			165,780			23,746			48,653			51,733			55,527			179,659			60,449			63,547			85,235			209,231
% of Bookings Billed in Quarter			72	%		74	%		76	%		77	%					75	%		55	%		60	%		54	%					40	%		40	%		37	%
Average Term (months)			21			20			19			21			20			19			27			21			25			23			32			31			37			34
Total Backlog			138,629			147,052			145,088			150,872						138,000			152,424			166,305			179,892						196,225			211,911			252,338
	Current Backlog		88,419			95,498			95,044			101,995						96,546			103,984			115,944			121,275						120,606			121,011			134,174
	Non-Current Backlog		50,210			51,554			50,044			48,877						41,454			48,440			50,361			58,617						75,619			90,900			118,164
	Current Backlog-Software Only		69,737			75,766			77,478			84,103						82,186			89,138			96,650			104,983						103,264			106,275			117,628
Average Selling Price (ASP)			90			107			98			96			98			74			99			112			95			102			91			95			105			97
Deal Size Distribution
	> $1M		4			6			4			7			21			1			10			7			8			26			14			11			17			42
	$100K-$1M		73			86			76			91			326			59			60			83			90			292			91			106			112			309
	<$100K		464			470			528			527			1,989			443			421			388			435			1,687			423			436			436			1,295
Top 5 industry sales-TTM
	High-Tech		18	%		21	%		22	%		23	%					21	%		21	%		22	%		20	%					22	%		22	%		22	%
	Public Sector		13	%		12	%		12	%		14	%					14	%		15	%		18	%		16	%					15	%		17	%		22	%
	Retail/CPG		14	%		15	%		15	%		14	%					15	%		14	%		13	%		15	%					15	%		15	%		13	%
	Entertainment/Media		4	%		5	%		6	%		6	%					6	%		12	%		10	%		11	%					10	%		8	%		13	%
	Telecom		19	%		15	%		13	%		13	%					12	%		10	%		13	%		16	%					15	%		15	%		12	%
	All other		32	%		32	%		32	%		30	%					32	%		28	%		24	%		22	%					23	%		23	%		18	%
Margin & Earnings Metrics (Non-GAAP)*
Gross Margin %			63	%		64	%		64	%		67	%		64	%		67	%		70	%		71	%		70	%		70	%		69	%		70	%		71	%		70	%
	Software Margin %		80	%		81	%		80	%		81	%		80	%		81	%		82	%		83	%		82	%		82	%		83	%		83	%		85	%		84	%
	Professional Services Margin %		15	%		21	%		22	%		26	%		21	%		31	%		31	%		31	%		28	%		30	%		20	%		17	%		17	%		18	%
Operating expense as % of Revenue			72	%		69	%		65	%		63	%		67	%		60	%		63	%		61	%		62	%		62	%		63	%		61	%		58	%		61	%
Operating Margin %			-9	%		-5	%		-1	%		4	%		-3	%		7	%		7	%		10	%		8	%		8	%		6	%		9	%		13	%		9	%
Operating Margin			(2,976	)		(1,759	)		(444	)		1,267			(3,912	)		2,531			2,510			3,693			3,408			12,142			2,490			3,987		$	6,336			12,813
Non-GAAP EPS (Diluted)		$	(0.06	)	$	(0.04	)	$	-		$	0.06		$	(0.04	)	$	0.09		$	0.09		$	0.12		$	0.10		$	0.39		$	0.07		$	0.09		$	0.15		$	0.32
Other Metrics
Headcount			718			765			777			737			737			742			756			792			797			797			836			871			887			887
New Customer			64			73			68			59			264			26			53			82	**		51			212			46			38			66			150
Total Customers			1,800			1,900			1,900			1,900			1,900			1,900			1,900			1,900			1,900			1,900			1,900			1,900			1,900			1,900
Interactions (in millions)			463			477			576			583			2,099			584			586			620			704			2,494			765			801			786			2,352

* Excludes stock-based compensation and Q4'09 excludes stock-based compensation and $1M settlement gain ** Q3'09 customer count includes acquired customers from HiveLive acquisition Note: The supplemental data sheet refers to certain non-GAAP financial results. Please refer to our reconciliations of GAAP, which can be found in our Company's earnings release(s), which is posted on the Investor Relations portion of our website.

Consolidated Balance Sheets	Amounts in thousands
Unaudited
Last updated October 28, 2010
	Mar 31,			Jun 30,			Sep 30,			Dec 31,			Mar 31,			Jun 30,			Sep 30,			Dec 31,			Mar 31,			Jun 30,			Sep 30,
	2008			2008			2008			2008			2009			2009			2009			2009			2010			2010			2010
Assets
Current assets:
Cash and cash equivalents		44,591			52,781			51,145			51,405			51,462			46,987			32,388			41,546			43,114			61,212			77,728
Short-term investments		36,585			41,540			46,444			34,412			36,517			42,808			60,634			54,977			55,293			38,228			31,287
Accounts receivable		27,503			26,722			27,820			36,770			24,220			31,670			31,034			31,850			29,723			33,020			36,367
Term receivables		9,616			8,814			6,875			5,752			4,810			4,107			3,011			2,417			1,762			1,271			371
Less allowance for doubtful accounts		(2,056	)		(2,177	)		(2,148	)		(2,277	)		(1,901	)		(1,910	)		(1,701	)		(1,914	)		(1,794	)		(1,697	)		(1,867	)
Prepaid & other current assets		6,773			7,082			7,497			7,531			7,593			7,815			8,689			8,828			9,620			9,178			8,816
Total current assets		123,012			134,762			137,633			133,593			122,701			131,477			134,055			137,704			137,718			141,212			152,702
Long-term investments		17,810			11,925			4,612			4,963			4,980			4,792			-			-			-			-			-
Property and equipment, net		10,807			10,798			10,377			10,141			9,187			9,775			9,781			10,122			10,154			10,850			11,063
Term receivables, noncurrent		8,059			5,728			4,420			3,547			2,804			2,159			1,447			1,105			810			537			82
Intangible and other assets, net		10,016			10,025			10,268			10,093			9,274			9,379			14,991			15,504			16,181			17,270			18,342
Total assets		169,704			173,238			167,310			162,337			148,946			157,582			160,274			164,435			164,863			169,869			182,189
Liabilities, Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities		18,146			17,919			17,405			16,223			14,309			17,847			16,601			16,573			19,967			22,013			23,425
Commissions and bonuses payable		3,531			4,279			4,351			5,665			3,084			4,958			4,838			6,271			4,964			4,597			6,142
Current portion of long-term debt		44			44			45			46			46			45			34			22			10			-			-
Deferred revenue		77,410			83,625			81,959			85,416			78,755			85,176			89,161			88,603			86,395			86,933			88,669
Total current liabilities		99,131			105,867			103,760			107,350			96,194			108,026			110,634			111,469			111,336			113,543			118,236
Deferred revenue, noncurrent		34,244			32,357			27,250			27,782			24,452			18,908			14,780			12,724			9,300			7,894			5,394
Long-term debt		57			45			34			22			10			-			-			-			-			-			-
Stockholders' equity (deficit):
Common stock		34			34			34			34			34			34			34			34			34			34			34
Additional paid-in capital		97,107			99,187			101,337			102,662			104,345			107,281			109,394			112,439			115,680			118,652			125,416
Treasury stock, at cost		-			-			-			(13,209	)		(15,007	)		(15,007	)		(15,007	)		(15,007	)		(15,007	)		(15,007	)		(15,007	)
Other comprehensive income (loss)		(536	)		(787	)		(193	)		1,916			1,875			1,260			1,394			1,125			1,284			1,113			1,581
Accumulated deficit		(60,333	)		(63,465	)		(64,912	)		(64,220	)		(62,957	)		(62,920	)		(60,955	)		(58,349	)		(57,764	)		(56,360	)		(53,465	)
Total stockholders' equity		36,272			34,969			36,266			27,183			28,290			30,648			34,860			40,242			44,227			48,432			58,559
Total liabilities, preferred stock and
stockholders' equity		169,704			173,238			167,310			162,337			148,946			157,582			160,274			164,435			164,863			169,869			182,189

Consolidated Statements of Operations                                                                 Amounts in thousands (except per share amounts)
Unaudited
Last updated October 28, 2010
	2007					2008					2009					2010
	Q1	Q2	Q3	Q4	FY	Q1	Q2	Q3	Q4	YTD	Q1	Q2	Q3	Q4	YTD	Q1	Q2	Q3	YTD
Revenue:
Software, hosting and support	19,819	20,693	22,366	24,105	86,983	24,556	25,573	25,956	26,491	102,576	26,045	27,424	29,754	32,172	115,395	33,025	34,730	38,613	106,368
Professional services	5,883	5,772	6,880	6,559	25,094	8,342	9,648	10,281	9,588	37,859	9,992	8,916	8,977	9,407	37,292	9,077	8,724	9,980	27,781
Total revenue	25,702	26,465	29,246	30,664	112,077	32,898	35,221	36,237	36,079	140,435	36,037	36,340	38,731	41,579	152,687	42,102	43,454	48,593	134,149
Cost of revenue:
Software, hosting and support	4,394	4,565	4,604	4,848	18,411	5,035	5,043	5,305	5,014	20,397	4,949	4,954	5,232	5,813	20,948	5,879	5,952	5,923	17,754
Professional services	5,171	5,036	5,667	6,138	22,012	7,285	7,810	8,133	7,212	30,440	7,008	6,346	6,365	6,891	26,610	7,332	7,378	8,395	23,105
Total cost of revenue	9,565	9,601	10,271	10,986	40,423	12,320	12,853	13,438	12,226	50,837	11,957	11,300	11,597	12,704	47,558	13,211	13,330	14,318	40,859
Gross profit	16,137	16,864	18,975	19,678	71,654	20,578	22,368	22,799	23,853	89,598	24,080	25,040	27,134	28,875	105,129	28,891	30,124	34,275	93,290
Operating expenses:
Sales and marketing	15,727	15,788	16,516	17,087	65,118	16,818	17,627	16,889	16,294	67,628	14,863	16,008	16,175	17,705	64,751	18,724	18,777	20,006	57,507
Research and development	4,296	4,343	4,308	4,137	17,084	4,486	4,507	4,671	4,628	18,292	4,756	5,051	5,100	5,314	20,221	5,132	4,797	5,160	15,089
General and administrative	2,860	3,178	2,680	2,782	11,500	3,516	3,890	3,215	2,994	13,615	3,446	4,207	4,018	4,130	15,801	4,299	4,324	4,975	13,598
Total operating expenses	22,883	23,309	23,504	24,006	93,702	24,820	26,024	24,775	23,916	99,535	23,065	25,266	25,293	27,149	100,773	28,155	27,898	30,141	86,194
Operating income (loss)	(6,746)	(6,445)	(4,529)	(4,328)	(22,048)	(4,242)	(3,656)	(1,976)	(63)	(9,937)	1,015	(226)	1,841	1,726	4,356	736	2,226	4,134	7,096
Interest and other income, net	828	885	1,004	966	3,683	938	519	552	687	2,696	401	351	342	1,000	2,094	183	19	454	656
Income (loss) before income taxes	(5,918)	(5,560)	(3,525)	(3,362)	(18,365)	(3,304)	(3,137)	(1,424)	624	(7,241)	1,416	125	2,183	2,726	6,450	919	2,245	4,588	7,752
(Provision) benefit for income taxes	(84)	(181)	(59)	48	(276)	(92)	5	(23)	68	(42)	(153)	(89)	(218)	(119)	(579)	(334)	(841)	(1,693)	(2,868)
Net income (loss)	(6,002)	(5,741)	(3,584)	(3,314)	(18,641)	(3,396)	(3,132)	(1,447)	692	(7,283)	1,263	36	1,965	2,607	5,871	585	1,404	2,895	4,884
Net income (loss) per share:
Basic	$  (0.18)	$  (0.17)	$  (0.11)	$  (0.10)	$   (0.56)	$  (0.10)	$  (0.09)	$  (0.04)	$    0.02	$   (0.22)	$    0.04	$    0.00	$    0.06	$    0.08	$     0.18	$    0.02	$    0.04	$    0.09	$     0.15
Diluted	$  (0.18)	$  (0.17)	$  (0.11)	$  (0.10)	$   (0.56)	$  (0.10)	$  (0.09)	$  (0.04)	$    0.02	$   (0.22)	$    0.04	$    0.00	$    0.06	$    0.08	$     0.18	$    0.02	$    0.04	$    0.09	$     0.15
Shares used in the computation:
Basic	32,858	32,983	33,094	33,371	33,078	33,532	33,582	33,640	32,692	33,362	31,784	31,677	31,733	31,815	31,752	31,929	32,000	32,128	32,020
Diluted	32,858	32,983	33,094	33,371	33,078	33,532	33,582	33,640	33,204	33,362	32,249	32,160	32,424	33,047	32,336	33,431	33,427	33,659	33,515
Supplemental information of stock-based
compensation expense included in:
Cost of software, hosting and support	58	79	84	67	288	77	79	87	80	323	96	142	120	102	460	113	117	127	357
Cost of professional services	125	149	217	156	647	153	165	158	162	638	133	209	138	132	612	114	122	128	364
Sales and marketing	658	731	542	333	2,264	538	595	738	583	2,454	622	952	761	694	3,029	751	726	818	2,295
Research and development	226	289	166	206	887	235	242	252	240	969	262	377	285	254	1,178	257	240	254	751
General and administrative	235	743	199	208	1,385	263	816	297	265	1,641	403	1,056	548	500	2,507	520	556	875	1,951
Total stock-based compensation	1,302	1,991	1,208	970	5,471	1,266	1,897	1,532	1,330	6,025	1,516	2,736	1,852	1,682	7,786	1,755	1,761	2,202	5,718

Consolidated Statements of Cash Flow                                                                                         Amounts in thousands
	Unaudited
	Last updated October 28, 2010
		2007					2008					2009					2010
		Q1	Q2	Q3	Q4	FY	Q1	Q2	Q3	Q4	YTD	Q1	Q2	Q3	Q4	YTD	Q1	Q2	Q3	YTD
Operating activities
Net income (loss)		(6,002)	(5,741)	(3,584)	(3,314)	(18,641)	(3,396)	(3,132)	(1,447)	692	(7,283)	1,263	36	1,965	2,607	5,871	585	1,404	2,895	4,884
Noncash adjustments:
	Depreciation and amortization	1,675	1,880	1,869	1,842	7,266	1,954	1,956	1,956	1,905	7,771	1,887	1,726	1,797	2,081	7,491	2,065	1,872	1,812	5,749
	Provision for losses on accounts receivable	(69)	13	401	39	384	89	26	64	33	212	57	30	30	40	157	50	31	50	131
	Stock-based compensation expense			1,208	970	5,471	1,266	1,897	1,532	1,330	6,025	1,516	2,736	1,852	1,682	7,786	1,755	1,761	2,202	5,718
Changes in operating accounts:
	Receivables	15,427	8,224	6,933	(3,032)	27,552	7,447	4,062	1,143	(7,878)	4,774	13,569	(5,171)	2,333	524	11,255	2,449	(2,910)	(963)	(1,424)
	Prepaid and other current assets	(1,471)	(1,612)	(803)	(1,143)	(5,029)	(852)	(804)	(1,168)	(900)	(3,724)	399	(583)	(693)	(614)	(1,491)	(1,054)	175	289	(590)
	Accounts payable and accrued liabilities	1,748	810	89	1,041	3,688	2,292	(257)	42	(720)	1,357	(1,823)	3,099	(1,427)	(35)	(186)	3,556	2,152	948	6,656
	Commissions and bonuses payable	(1,171)	(1)	(47)	2,176	957	(1,523)	742	166	1,545	930	(2,553)	1,743	(132)	1,393	451	(1,244)	(329)	1,451	(122)
	Deferred revenue	(6,056)	(814)	(2,143)	8,407	(606)	(3,434)	4,001	(3,566)	7,168	4,169	(9,429)	(2,038)	(569)	(2,880)	(14,916)	(4,614)	(160)	(2,887)	(7,661)
	Other	(23)	13	(130)	132	(8)	(173)	83	(52)	635	493	-	503	(247)	(577)	(321)	(38)	19	176	157
	Cash provided (used) by operating activities	5,360	4,763	3,793	7,118	21,034	3,670	8,574	(1,330)	3,810	14,724	4,886	2,081	4,909	4,221	16,097	3,510	4,015	5,973	13,498
Investing activities
Acquistion of property and equipment		(1,987)	(1,351)	(1,426)	(2,436)	(7,200)	(1,522)	(1,536)	(1,309)	(1,425)	(5,792)	(584)	(1,841)	(1,240)	(1,912)	(5,577)	(1,640)	(2,196)	(1,639)	(5,475)
Business acquisitions		-	-	-	-	-	-	-	-	-	-	-	-	(5,906)	-	(5,906)	-	-	-	-
Intangible asset additions												(100)		(144)	(410)	(654)	(1,034)	(1,305)	(1,120)	(3,459)
Change in investments, net		1,549	(15,333)	(3,912)	4,179	(13,517)	(1,970)	748	2,218	12,435	13,431	(2,251)	(6,059)	(13,081)	5,558	(15,833)	(342)	17,107	6,935	23,700
Other		(29)	(32)	1	17	(42)	-	-	-	-	-	-	-	-	-	-	-	-	-	-
Cash provided (used) for investing activities		(467)	(16,716)	(5,337)	1,760	(20,759)	(3,492)	(788)	909	11,010	7,639	(2,935)	(7,900)	(20,371)	3,236	(27,970)	(3,016)	13,606	4,176	14,766
Financing activities
Net proceeds from (payments on) long-term debt		(7)	(8)	(10)	(10)	(35)	(11)	(11)	(11)	(10)	(43)	(12)	(11)	(12)	(11)	(46)	(12)	(10)	-	(22)
Proceeds from issuance of stock:
	Common stock issued under employee benefit plans	643	536	509	1,966	3,653	414	234	618	130	1,396	78	151	167	1,352	1,748	1,159	409	3,068	4,636
Common stock repurchase (Treasury)												(1,798)	-	-	-	(1,798)	-	-	-	-
Other		49	160	19	(45)	183	51	(53)	-	(133)	(135)	89	48	95	11	243	328	802	1,491	2,621
Cash provided (used) by financing activities		685	688	518	1,911	3,801	454	170	607	(13,222)	(11,991)	(1,643)	188	250	1,352	147	1,475	1,201	4,559	7,235
Effect of foreign exchange rates		113	208	293	(217)	397	278	234	(1,822)	(1,338)	(2,648)	(251)	1,156	613	349	1,867	(400)	(725)	1,808	683
Net change in cash and cash equivalents		5,691	(11,057)	(733)	10,572	4,473	910	8,190	(1,636)	260	7,724	57	(4,475)	(14,599)	9,158	(9,859)	1,568	18,098	16,516	36,182
Cash and cash equivalents at beginning of period		39,208	44,899	33,842	33,109	39,208	43,681	44,591	52,781	51,145	43,681	51,405	51,462	46,987	32,388	51,405	41,546	43,114	61,212	41,546
Cash and cash equivalents at end of period		44,899	33,842	33,109	43,681	43,681	44,591	52,781	51,145	51,405	51,405	51,462	46,987	32,388	41,546	41,546	43,114	61,212	77,728	77,728

Currency Component Data Sheet
	Unaudited
	As of October 28, 2010
		Currency Component of Total Revenue-TTM as of September 30, 2010	Currency exchange rate into USD as of October 27, 2010	Impact of 1 percent change in fx exchange rate per 100M in revenue
	GBP	10%	1.5848	158,480
	EUR	5%	1.3827	69,135
	AUD	7%	0.9716	68,013
	USD and other	78%	n/a
	Total	100%		295,628
		Currency Component of Total Expense-TTM as of September 30, 2010	Currency exchange rate into USD as of October 27, 2010	Impact of 1 percent change in fx exchange rate per 100M in expense
	GBP	12%	1.5848	190,176
	EUR	1%	1.3827	13,827
	AUD	4%	0.9716	38,864
	USD and other	83%	n/a
	Total	100%		242,867
	TTM=Trailing Twelve Months