Ariba Reports Results for the First Quarter of Fiscal Year 2007.

Company Posts Year-Over-Year Growth in Total Revenues With Subscription Software Up 17%

SUNNYVALE, Calif. -- Ariba, Inc. (Nasdaq:ARBA), the leading spend management solutions provider, today announced results for the first quarter of fiscal year 2007 ended December 31, 2006.

Financial Results

Total revenues for the first quarter of fiscal year 2007 were $77.2 million, as compared to $76.2 million for the first quarter of fiscal year 2006. Subscription and maintenance revenues for the quarter were $34.0 million, as compared to $33.1 million for the first quarter of fiscal year 2006. Within subscription and maintenance revenues, subscription software revenue was $15.2 million for the quarter, as compared to $12.9 million for the first quarter of fiscal year 2006. Services and other revenues for the quarter were $43.2 million, as compared to $43.1 million for the first quarter of fiscal year 2006.

Net loss for the first quarter of fiscal year 2007 was $4.1 million, or $0.06 per share, as compared to a net loss for the first quarter of fiscal year 2006 of $3.7 million, or $0.06 per share. The net loss for the first quarter of fiscal year 2007 included charges of $3.9 million for amortization of intangible assets and $9.7 million for stock-based compensation. Excluding these items, non-GAAP net income was $9.5 million, or $0.13 per diluted share.

"Spend management is becoming a strategic function and Ariba is consistently recognized by the market and industry analysts as the provider of choice," said Bob Calderoni, CEO, Ariba. "During the quarter, we saw demand for our solutions from enterprises expanding their spend management and operational excellence initiatives to accelerate the results they achieve. With our comprehensive range of offerings that support companies of all sizes and our ongoing commitment to innovation, we remain solidly positioned for growth as spend management continues to evolve."

Paving the Way to Excellence

Spend management is among the fastest, most efficient ways to reduce costs and improve profits and companies of all types and sizes rely on Ariba to help them do this. But spend management isn't just about savings. During the first quarter, an increasing number of companies expanded their portfolio of Ariba([R]) Spend Management([TM]) solutions and extended their use to strategic activities outside traditional procurement to help drive additional value across their operations.

"Spend management is a critical piece of the process we use to evaluate acquisitions and enhance the value of our portfolio companies," said Shant Mardirossian, Principal and Chief Financial Officer of Kohlberg & Company, L.L.C., one of the leading middle-market private equity firms in the United States. "With Ariba, we have access to a global services organization that helps us identify opportunities for savings as part of our diligence efforts as well as technology and commodity expertise we can leverage to drive them to the bottom line."

Driving Strategic Spend Management

Companies around the world continue to invest in spend management solutions to drive consistent global procurement processes and standards through technology, category expertise and services. During the first quarter of fiscal year 2007, more than 180 companies purchased Ariba solutions to power their spend management programs, including: Adidas AG, Accenture LLP, Altran Group, AstraZeneca, Booz Allen Hamilton, ConocoPhillips, Fairfield Manufacturing Company, Inc., Ingram Micro Inc., Kohlberg & Company, LLC, Onex Corporation, MeadWestvaco Corporation, Nova Southeastern University, Pfizer, Inc., Singer SVP Worldwide and RTE, among others.

"When we launched our strategic sourcing program, we knew we needed a sophisticated tool that could be quickly implemented to improve our cost structure and enhance the value we deliver to customers," said Peter Nguyen, Sourcing Operations Manager, Ingram Micro Inc., a Fortune 500 company that is the world's largest technology distributor. "With Ariba Sourcing([TM]) On-Demand, we not only have access to leading technology that's easy to roll out, but category expertise and services we can leverage to drive savings and efficiencies that translate into bottom-line results."

Charting a Course for the Future

As the creator and leader of spend management, Ariba continues to focus on identifying and addressing emerging issues that companies are facing as they transform procurement and sourcing functions to help them achieve strategic goals. During the first quarter, Ariba released the results of a global survey of more than 550 of its customers which found that delivering measurable results and accessing and analyzing spend data remain the greatest priorities and challenges among procurement executives and professionals worldwide (http://www.ariba.com/go/priorities).

During the first quarter, Ariba released its latest on-demand offerings, which combine technology, category expertise, best practices and supporting services to help companies focus on their priorities and establish effective global procurement processes that deliver fast, measurable results.

Conference Call Information

Ariba will hold a conference call today at 2:00 p.m. PT / 5:00 p.m. ET to discuss its results for the first quarter of fiscal year 2007. To join the call, please dial [phone] in the United States and Canada, or [phone] if calling internationally. There will also be a live web broadcast available on the investor relations section of Ariba's website at www.ariba.com or logging in at www.vcall.com.

A replay of the conference will be available at approximately 5:00 p.m. PT / 8:00 p.m. ET today through Wednesday, January 31, 2007 by calling [phone] in the United States and Canada or [phone] internationally and entering account number: 286 and conference ID number: 225524.

About Ariba, Inc.

Ariba, Inc. is the leading provider of spend management solutions to help companies realize rapid and sustainable bottom line results. Companies around the world in every industry use Ariba Spend Management[TM] software and services. Ariba can be contacted in the U.S. at 1.650.390.1000 or at www.ariba.com.

Copyright [c] 1996 - 2007 Ariba, Inc.

Ariba, the Ariba logo, AribaLIVE and SupplyWatch are registered trademarks of Ariba, Inc. Ariba Spend Management, Ariba Spend Management. Find it. Get it. Keep it., Ariba. This is Spend Management, Ariba Solutions Delivery, Ariba Analysis, Ariba Buyer, Ariba Category Management, Ariba Category Procurement, Ariba Contract Compliance, Ariba Contracts, Ariba Contract Management, Ariba Contract Workbench, Ariba Data Enrichment, Ariba eForms, Ariba Electronic Invoice Presentment and Payment, Ariba Invoice, Ariba Sourcing, Ariba Spend Visibility, Ariba Travel and Expense, Ariba Procure-to-Pay, Ariba Workforce, Ariba Supplier Network, Ariba Supplier Connectivity, Ariba Supplier Performance Management, Ariba PunchOut, Ariba QuickSource, PO-Flip, Ariba Settlement, Ariba Spend Management Knowledge Base, Ariba Ready, Ariba Supply Lines, Ariba Supply Manager, Ariba LIVE and It's Time for Spend Management are trademarks or service marks of Ariba, Inc. All other trademarks are property of their respective owners.

Ariba Safe Harbor

Safe Harbor Statement under the Private Securities Litigation Reform Act 1995: Information and announcements in this release involve Ariba's expectations, beliefs, hopes, plans, intentions or strategies regarding the future and are forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to Ariba as of the date of the release, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to Ariba's operating and financial results to differ materially from current expectations include, but are not limited to: delays in development or shipment of new versions of Ariba's products and services; lack of market acceptance of Ariba's existing or future products or services; inability to continue to develop competitive new products and services on a timely basis; introduction of new products or services by major competitors; the ability to attract and retain qualified employees; difficulties in assimilating acquired companies; long and unpredictable sales cycles and the deferrals of anticipated orders; declining economic conditions; inability to control costs; changes in the company's pricing or compensation policies; significant fluctuations in our stock price; the outcome of and costs associated with pending or potential future regulatory or legal proceedings; the impact of our acquisitions, including the disruption or loss of customer, business partner, supplier or employee relationships; and the level of costs and expenses incurred by Ariba as a result of such transactions. A detailed discussion of these factors and other risks associated with Ariba's business are discussed in Ariba's SEC filings, including its most recent report on Form 10-K filed December 1, 2006.

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Non-GAAP Financial Measures

The accompanying press release dated January 24, 2007 contains non-GAAP financial measures. The following table reconciles the non-GAAP financial measures in the press release to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP measures include non-GAAP cost of revenues, gross profit, operating expenses, (loss) income from operations, net (loss) income and net (loss) income per share amounts.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, GAAP financial measures, which should be considered as the primarily financial metrics for evaluating our financial performance. Significantly, non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. Instead, they are based on subjective determinations by management designed to supplement our GAAP financial measures. They are subject to a number of important limitations and should be considered only in conjunction with our consolidated financial statements prepared in accordance with GAAP. For example, our non-GAAP financial measures have the effect of excluding costs and expenses from our operating results that should be properly considered under a system of accrual accounting. In addition, our non-GAAP financial measures differ from GAAP measures with the same names, may vary over time and may differ from non-GAAP financial measures with the same or similar names used by other companies. Accordingly, investors should exercise caution when evaluating our non-GAAP financial measures.

Despite these limitations, we believe our non-GAAP financial measures provide meaningful supplemental information about our operating results, primarily because they exclude costs and expenses that we do not believe are indicative of the ongoing operating performance of our business and our senior management. Although these costs should properly be considered in our GAAP financial measures, we believe they should be excluded when evaluating our current operating performance. The non-GAAP financial measures disclosed in the accompanying press release are used by our Board of Directors and senior management to evaluate our current operating performance, are used in evaluating the performance of our senior management, and are used in our budget and planning processes. We believe that our non-GAAP financial measures are helpful to investors by facilitating comparisons of our current and prior operating results and by facilitating comparisons of our operating results with those of other software companies.

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Discussion of Specific Items Excluded From Non-GAAP Financial Measures

Our non-GAAP financial measures generally exclude costs and expenses for (i) amortization of intangible assets related to acquisitions, (ii) stock-based compensation and (iii) restructuring and integration charges. We exclude these costs and expenses because we believe they are not closely related to the ongoing operating performance of our businesses and the performance of our senior management and are generally excluded from our budget and planning process. In addition to these reasons, we believe our non-GAAP financial measures are also helpful to investors by facilitating comparisons of our operating results over different time periods and by facilitating comparisons of our financial performance with that of other companies. In addition, except for restructuring and integration costs, these costs and expenses are non-cash items that do not affect cash flows.

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