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SuccessFactors(NYSE: SFSF) the global leader in cloud-based business execution software, today announced results for its second quarter which ended June 30, 2011.

"With 42 percent, SuccessFactors had outstanding growth in Q2. It's an acceleration of 19 percent sequentially from Q1, which caps the fastest last 10 quarters of growth of any public cloud company with more than $100 million in sales," said Lars Dalgaard, founder and CEO of SuccessFactors. "The market we have created is mostly unsaturated, and it is as if we have created a tipping point in demand, brand and offering. Both our organically built products and major acquisitions are performing above expectations, and every geography and market segment is growing. Despite aggressive hiring, pipeline is growing faster than we can hire sales people to absorb it, the teams are gelling globally, our customers are seeing real results in executing better on their businesses, and they want to do a lot more business with SuccessFactors.”

Results for the Second Quarter Fiscal 2011:

Q2 FY11 Non-GAAP Revenue: For the quarter ended June 30, 2011, non-GAAP revenue was approximately $73.2 million, compared to the company's prior guidance of $69 million to $70 million, and compared to approximately $49.5 million in the quarter ended June 30, 2010, an increase of approximately 48 percent year-over-year and an increase of 8 percent sequentially from Q111.

Q2 FY11 Non-GAAP Operating Income: For the quarter ended June 30, 2011, the company recognized non-GAAP operating income of $2.4 million and GAAP operating loss from operations of $25.9 million. The non-GAAP operating income excludes $17.7 million in stock-based compensation expense, amortization of intangibles, future cash consideration of acquisitions and deal related costs and a loss of approximately $10.3 million revaluation of contingent consideration for the quarter ended June 30, 2011.

Q2 FY11 Total Deferred Revenue: Total deferred revenue as of June 30, 2011 was $241.7 million, compared to $234.4 million at December 31, 2010 and up approximately 28 percent year-over-year from $188.2 million at June 30, 2010. The acquisition of Plateau Systems, which closed on June 28, 2011, contributed approximately $10.3 million to the deferred revenue balances as of that date.

Q2 FY11 Cash Flow Generated from Operations: For the quarter ended June 30, 2011, cash flow generated from operating activities was $8.2 million, compared to $6.8 million in the quarter ended June 30, 2010.

Q2 FY11 Net Income per Common Share: For the quarter ended June 30, 2011, on a GAAP basis, net loss per common share basic and diluted was $0.09. On a non-GAAP basis, net income per common share, basic and diluted, was $0.03. Non-GAAP net income per common share, both basic and diluted, excludes $17.7 million in stock-based compensation expense, amortization of intangibles, future cash consideration of acquisitions and deal related costs, approximately $10.3 million revaluation loss of contingent consideration related to business combinations, $1.0 million unrealized foreign exchange gain on an intercompany acquisition loan related to Inform, and approximately $18.0 million tax benefit related to Plateau Systems. This compares to non-GAAP net income per common share basic and diluted of $0.01 in the first quarter of 2011 which excluded approximately $11.0 million of stock-based compensation expense, amortization of intangibles, future cash consideration of acquisitions and deal related costs, a $11.7 million revaluation gain of contingent consideration related to business combinations and $0.5 million unrealized foreign exchange gain on an intercompany acquisition loan related to Inform, and non-GAAP net income per common share basic and diluted of $0.04 and $0.03, respectively in the second quarter of 2010 which excluded approximately $4.5 million of stock-based compensation. For the second quarter of 2011, GAAP net loss per common share calculation assumed a weighted average share count of approximately 78.9 million, and non-GAAP net income per share calculation assumed a weighted basic average share count of 78.9 million and a weighted average diluted share count of 83.6 million. For the second quarter of 2010, GAAP net loss per common share calculation assumed a weighted average share count of approximately 72.6 million, and non-GAAP net income per share assumed a weighted average basic share count of 72.6 million and a weighted average diluted share count of 78.4 million.

For Additional Second Quarter Fiscal 2011 Highlights please visit: http://www.successfactors.com/press-releases/.

Guidance:
SuccessFactors is initiating guidance for its third quarter fiscal 2011 and updating its outlook for the full fiscal year 2011, as of August 2, 2011.

Q3 FY11: Non-GAAP revenue for the company's third fiscal quarter is projected to be in the range of approximately $83.0 million to $84.0 million, or an increase of approximately 55 percent when compared to the same period in the prior year. Non-GAAP revenue includes the effect of deferred revenue from acquired companies that is required to be written down for GAAP purposes under purchase accounting rules. Non-GAAP net income per common share, basic and diluted, is expected to be above breakeven. Non-GAAP net income per common share estimates exclude the effects of estimated stock-based compensation expense, amortization of intangible assets, future cash consideration of acquisitions, deal related costs and revaluation of contingent consideration related to business combinations and any unrealized foreign exchange gains/losses on an intercompany acquisition loan and assumes average weighted basic and diluted share counts of approximately 83.1 million shares and 95.1 million shares, respectively.

Full Year 2011: Non-GAAP revenue for the company's full fiscal 2011 is now expected to be in the approximate range of $310 million to $315 million, which is an increase of approximately 50 percent when compared to fiscal 2010. The company expects non-GAAP net income per common share for fiscal 2011 to be above breakeven. Non-GAAP net income per common share estimates exclude the effects of estimated stock-based compensation expense, amortization of intangible assets, future cash consideration of acquisitions, deal related costs and revaluation of contingent consideration related to business combinations and any unrealized foreign exchange gains/losses on an intercompany acquisition loan and assumes average weighted basic and diluted share counts of approximately 83.6 million shares and 95.6 million shares, respectively.

Q2 FY11 Financial Results Conference Call:

SuccessFactors will host a conference call today at 2 p.m. PDT/ 5 p.m. EDT to discuss the second quarter and fiscal 2011 financial results with the investment community. A live webcast of the event will be available on SuccessFactors' Investor Relations website at http://www.successfactors.com/investor. A live domestic dial-in is available at (888) 895-8076 or +1 (973) 200-3188 internationally. A domestic replay will be available at (800) 642-1687 or +1 (706) 645-9291 internationally, passcode 78431668, and available via webcast replay until August 16, 2011.

Use of Non-GAAP Financial Information:

SuccessFactors provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). To help understand SuccessFactors' past financial performance and future results, SuccessFactors has supplemented its financial results that it provides in accordance with GAAP, with non-GAAP financial measures. The method SuccessFactors uses to produce non-GAAP financial results is not computed according to GAAP and may differ from the methods used by other companies. The non-GAAP measures used by SuccessFactors in this press release exclude the impact of stock-based compensation expense, the amortization of intangible assets, integration costs, future cash consideration of acquisition and deal related costs, revaluation of contingent consideration or write-downs for fair value accounting related to business combinations, any unrealized foreign exchange gain/loss on an intercompany loan related to the acquisition of Inform, and a tax benefit related to the acquisition of Jambok and Plateau Systems. The company defines billings as revenue plus change in total deferred revenue. Non-GAAP revenue includes revenue from acquired companies that is required to be written down for GAAP purposes under purchase accounting rules.

About SuccessFactors

SuccessFactors is the leading provider of cloud-based Business Execution Software, which delivers business alignment, team execution, people performance, and learning management solutions to organizations of all sizes across more than 60 industries. With approximately 15 million subscription seats globally, we strive to delight our customers by delivering innovative solutions, content and analytics, process expertise and best practices insights from serving our broad and diverse customer base. Today, we have more than 3,500 customers in more than 168 countries using our application suite in 34 languages.

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Join us for SuccessConnect in Sydney, AustraliaAug. 24-25: http://www.successfactors.com/successconnect/.

"Safe harbor" statement under the Private Securities Litigation Reform Act of 1995:

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are SuccessFactors' current expectations and beliefs.

These forward-looking statements include statements about future financial results and prospects. Factors that could cause actual results to differ materially from those contemplated by these forward-looking statements include: our ability to retain customers and to experience high customer renewal rates; whether customers renew their agreements for additional modules or users; pricing pressures; our ability to sell our applications to customers of acquired companies; our ability to sell applications of acquired companies to our customers; the uncertain impact of the overall global economic conditions, including on customers, prospective customers and partners, renewal rates and length of sales cycles; the fact that the business execution market is at an early stage of development, and may not develop as rapidly as we anticipate; risks related to the integration of the acquisitions, including retaining customers and employees and managing geographically-dispersed operations and incurring liabilities of the acquired business; competitive factors; outages or security breaches; our ability to develop, and market acceptance of, new services; the impact of any discovered product defects or outages; our ability to continue to sell our services outside the HR area; our ability to manage our growth; our ability to successfully expand our sales force and its effectiveness; whether our resellers and other partners will be successful in marketing our products; our ability to continue to manage expenses; the impact of unforeseen expenses, including as a result of integrating acquisitions; and general economic conditions worldwide. If any such risks or uncertainties materialize or if any of the assumptions proves incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make.

Further information on these and other factors that could affect these forward-looking statements is included in the section entitled "Risk Factors" in our Annual Report on Form 10-K and in our most recent report on Form 10-Q and in other filings we make with the Securities and Exchange Commission from time to time.

Contact:
Vanessa Land
Devonshire Marketing
Tel: 01276 675 571
Email: vanessa@devonshiremarketing.com



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