Interwoven Announces Record Fourth Quarter and Year-End Financial Results

On November 1, 2007, Interwoven completed the acquisition of Optimost LLC and the results of Optimost have been included in the company’s financial statements since that date. Since November 1, Optimost’s subscription revenues were $1.5 million, with an operating loss of approximately $250,000.

In the fourth quarter of 2007, net income in accordance with GAAP includes a tax benefit of approximately $4.2 million resulting from the reversal of a portion of the company's valuation allowance against its deferred tax assets.

As of December 31, 2007, cash, cash equivalents and investments totaled $157.3 million and deferred revenues totaled $62.0 million.

“Across the board, we turned in a tremendous fourth quarter and full-year performance,” said Joe Cowan, CEO at Interwoven. “Our fourth quarter and full-year revenues and earnings were the highest we’ve ever recorded, and add to our strong foundation for continued growth. Now more than ever, organizations are putting Interwoven at the core of their efforts to grow their business, increase profitability and business agility, and improve customer relationships.”

Customer Success Highlights

During the quarter, Interwoven added 108 customers, bringing the company’s total to over 4,200 customers worldwide.
Notable customer orders included: adidas, American Medical Association, Bank of America, Bobcat Corporation, CalPERS, Canadian Broadcasting Corporation, Cendant, Chunghwa Telecom, CNBC, Cummins Inc, Drinker Biddle & Reath LLP, Digi-Key, DLA Piper, Education Management Corporation, Edward Nathan Sonnenbergs, ENI, Macy’s, Northrop Grumman, Philips International, Plesner Svane Gronborg, Postecom, Qantas Airways, Reed Smith LLP, Rohm & Haas, Royal Bank of Canada, State of New South Wales, T. Rowe Price, and Wachovia.
Recent Company Highlights

Interwoven Acquires Optimost and Builds Market Momentum – On November 1, Interwoven announced that it completed the acquisition of Optimost LLC, a pioneer of software and services for Website optimization. The acquisition combines Optimost’s real-time multivariable testing and Website optimization capabilities with Interwoven’s Content Management solutions to provide marketers with the industry’s most complete set of capabilities for creating, deploying, testing, analyzing, and optimizing targeted content to Website visitors. In the two months following the acquisition, Interwoven generated strong momentum and demand for the Optimost solution, with key wins at Amnesty International, Butlins, and Digi-Key.
NASDAQ Selects Interwoven to Join New Internet Index – During the fourth quarter, Interwoven announced that it was selected by NASDAQ for inclusion in its recently launched Internet Index (NASDAQ: QNET). The Index tracks the performance of companies engaged in a broad range of internet-related services including internet access providers, internet Search engines, web hosting, website design, and internet retail commerce. Other companies selected for the index include Amazon, eBay, Google, Priceline.com, and Shutterfly.
Product News and Industry Leadership Highlights

Interwoven Composite Application Provisioning Solution Enhanced – In the fourth quarter, Interwoven announced an enhanced version of the Interwoven Composite Application Provisioning (CAP) solution. The Interwoven CAP solution is designed to allow businesses to automate and standardize the deployment of custom Web applications, resulting in improved efficiency and time-to-market. The new version, Interwoven CAP 3.0, provides improved end-to-end automation, graphical reporting, and a more Intuitive user interface.
Interwoven Universal Search Gains Traction with Key Customer Wins – During the fourth quarter, sales of the recently launched Interwoven Universal Search – Professional Services Edition gained momentum with several customer transactions. For example, DLA Piper, a leading international law firm, selected Interwoven Universal Search to enable staff in Europe, the Middle East, and Asia to Search the organization’s knowledge repositories, and to provide fee-earners with immediate and highly accurate results for ensuring optimal sharing of firm expertise.
Interwoven Recognized in the Forrester Wave: Marketing Asset Management, Q1 2008 – In January 2008, the independent research firm Forrester released a new report evaluating providers of marketing asset management solutions. The report names Interwoven a “strong performer” and states “Interwoven brings together a unique and compelling set of offerings.” The report also states “Interwoven’s recent acquisition of Optimost, a Website testing and optimization company, offers a tantalizing glimpse of how different parts of the marketing content Supply Chain can integrate.”

Non-GAAP Financial Information
To supplement the company’s consolidated financial statements presented in accordance with generally accepted accounting principles, Interwoven uses measures of operating results, net income, net income per share, and shares used in the net income per share calculation, which are adjusted to exclude restructuring charges, retirement benefit costs associated with the retirement of the company’s former chief executive officer recorded in the first quarter of 2006, stock-based compensation, amortization of intangible assets and the related tax impact of these adjustments, and the costs associated with the company’s voluntary review of historical stock option grant procedures and related accounting. These non-GAAP results are not in accordance with, or an alternative for, results prepared in accordance with accounting principles generally accepted in the United States of America, and the company's non-GAAP measures may be different from non-GAAP measures used by other companies. Interwoven believes that the Presentation of non-GAAP results provides useful information to management and investors regarding underlying trends in its consolidated financial condition and results of operations. Interwoven also believes that where the adjustments used in calculating non-GAAP net income and non-GAAP net income per share are based on specific, identified charges that impact different line items in the consolidated statements of operations (including cost of revenues-license, cost of revenues-support and service, sales and marketing, research and development, and general and administrative expenses), it is useful to investors to know how these specific line items in the consolidated statements of operations are affected by these adjustments. For its internal budgets, Interwoven’s management uses consolidated financial statements that do not include restructuring and excess facilities charges, retirement benefit costs associated with retirement of the company’s former chief executive officer, stock-based compensation, amortization of intangible assets, and the related tax impact of these adjustments, and the costs associated with the company’s voluntary review of historical stock option grant procedures and related accounting. Interwoven uses these non-GAAP measures in assessing corporate performance and determining incentive compensation. Readers are advised to review and consider carefully the financial information prepared in accordance with accounting principles generally accepted in the United States of America contained in this press release and Interwoven’s periodic filings with the Securities and Exchange Commission.

Conference Call Information
Interwoven's 2007 fourth quarter and full-year results and its financial outlook for the first quarter of 2008 will be discussed today, January 31, 2008 at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time).

Conference Call Details:
Date: Thursday, January 31, 2008
Time: 2:00 p.m. PT (5:00 p.m. ET)
Live Dial-in #: 888-747-4632 or 913-312-0969
Replay Dial-in #: 888-203-1112 or 719-457-0820
Replay Passcode: 1410918

Audio Webcast instructions will be available on Interwoven's Website at http://www.interwoven.com/investors. The call replay will be available starting on January 31, 2008 at approximately 5:00 p.m. Pacific Time for a limited time period.

About Interwoven
Interwoven is a global leader in Content Management solutions. Interwoven's software and services enable organizations to effectively leverage content to drive business growth by improving the customer experience, increasing collaboration, and streamlining business processes in dynamic environments. Our unique approach combines user-friendly simplicity with robust IT performance and scalability to unlock the value of content. Today, more than 4,200 enterprise and professional services organizations worldwide have chosen Interwoven, including: adidas, Airbus, Avaya, Cisco, DLA Piper, the Federal Reserve Bank, FedEx, HSBC, LexisNexis, Microsoft, Samsung, Shell, Samsonite, White & Case, and Yamaha. Over 20,000 developers and over 300 partners enrich and extend Interwoven's offerings. To learn more about Interwoven, please visit www.interwoven.com.