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IONA Announces First Quarter Results.

Business/Technology Editors

DUBLIN, Ireland--(BUSINESS WIRE)--April 17, 2002

IONA(R), the leading e-Business Platform provider for Web Services Integration (NASDAQ: IONA), today announced first quarter revenues of $39.5 million and a pro forma loss of $2.4 million, or $0.08 per share.

Pro forma losses exclude amortization of purchased intangible assets, as well as stock compensation and the associated tax effect. On a U.S. GAAP basis, after taking into account the foregoing items, IONA reported a loss per share of $0.23 for the first quarter of 2002. For full details regarding IONA's reported results, reference the financial tables at the end of this release.

"Our core integration and application server platforms showed continued strength in the first quarter, and the momentum for our Web Services Integration solutions increased as evidenced by key customer and partner wins," said Barry Morris, IONA's Chief Executive Officer. "Over the last 12 months, IONA has gained market share relative to the independent Enterprise Application Integration (EAI) vendors."

"We executed well in a tough environment and we strengthened our balance sheet with a successful follow-on offering," added Dan Demmer, IONA's Chief Financial Officer. "Our results this quarter demonstrate the strength of our strategy, our solutions and our customer base."

Looking forward, the company assumes a continued difficult economic environment for the software sector during the first half of 2002. The company therefore expects revenue for the second quarter of 2002 to be in the range of $40 - $43 million, and a pro forma loss per share in the range of $0.02 - $0.06.

Highlights from IONA's first quarter 2002 included:
- Compaq NSD Selected IONA's Application Server Platform - Compaq Non-Stop
Division selected IONA's Application Server Platform as the standard for
high-end, mission-critical applications running on the Compaq Non-Stop
platform.

- IONA Delivered Orbix E2A to Global 2000 - Organizations including Alcatel,
Business Objects, CIBC Worldwide Markets, Ericsson, Lehman Brothers,
Lexis-Nexis, Manugistics, MetaSolv, Telefonica, and Telstra entered into new or
expanded license agreements with IONA in the first quarter.

- IONA Signed Key Partnerships During the First Quarter of 2002

- Compaq Global Services Established Integration Practice Using Orbix E2A -
Compaq Global Services announced a Global Consulting Practice to provide
next-generation Web services collaboration and integration to customers
worldwide based on Orbix E2A.

- IONA and HP Partnered to Deliver Orbix E2A on HP-UX - IONA and HP established
an alliance to create new business through combined hardware, software, and
services offerings. In addition, the companies agreed to optimize product
performance on HP platforms.

- IONA Signed KPMG Consulting and CSC to Alliance Program - IONA is now working
with more than 20 of the world's leading systems integrators, including KPMG
Consulting, CSC, PwC Consulting, SAIC, Ciber, Tata Infotech, and Toshiba.

- IONA Received Major Industry Awards for Web Services Integration Products

- Orbix E2A Wins eWeek eXcellence Award -- eWEEK analysts and corporate
partners selected IONA's Orbix E2A as the leading Web Services Integration
Platform.

- Orbix E2A Awarded "World Class" Product Seal -- Web Services Journal magazine
awarded Orbix E2A Web Services Integration Platform its "World Class Product"
Award, noting several innovative features and citing it as "a leading contender
in the family of Web Service Integration platforms."

- Orbix E2A Selected as "Best of Show" -- Attendees at the XML & Web Services
2002 conference in London chose Orbix E2A Web Services Integration Platform as
the "Best Overall Solution based on XML."

- IONA Introduced Industry's First Web Services Security Framework - One of the
most significant obstacles to the adoption of Web services has been the need
for security. IONA's Security Services framework allows Web services developers
to easily tie into existing security systems, without resorting to proprietary
or non-standard approaches.

- IONA Extended Product Leadership - IONA announced enhancements to the Orbix
E2A product line extending its leadership in usability, enterprise features and
support for the latest Web services standards.


- Winterthur, one of the largest insurance companies in

the world and a long-time user of IONA's Application

Server Platform and mainframe integration technologies,

expanded their use of those products and standardized on

IONA's Orbix E2A Web Services Integration Platform.


- Compaq NSD Selected IONA's Application Server Platform - Compaq Non-Stop
Division selected IONA's Application Server Platform as the standard for
high-end, mission-critical applications running on the Compaq Non-Stop
platform.

- IONA Delivered Orbix E2A to Global 2000 - Organizations including Alcatel,
Business Objects, CIBC Worldwide Markets, Ericsson, Lehman Brothers,
Lexis-Nexis, Manugistics, MetaSolv, Telefonica, and Telstra entered into new or
expanded license agreements with IONA in the first quarter.

- IONA Signed Key Partnerships During the First Quarter of 2002

- Compaq Global Services Established Integration Practice Using Orbix E2A -
Compaq Global Services announced a Global Consulting Practice to provide
next-generation Web services collaboration and integration to customers
worldwide based on Orbix E2A.

- IONA and HP Partnered to Deliver Orbix E2A on HP-UX - IONA and HP established
an alliance to create new business through combined hardware, software, and
services offerings. In addition, the companies agreed to optimize product
performance on HP platforms.

- IONA Signed KPMG Consulting and CSC to Alliance Program - IONA is now working
with more than 20 of the world's leading systems integrators, including KPMG
Consulting, CSC, PwC Consulting, SAIC, Ciber, Tata Infotech, and Toshiba.

- IONA Received Major Industry Awards for Web Services Integration Products

- Orbix E2A Wins eWeek eXcellence Award -- eWEEK analysts and corporate
partners selected IONA's Orbix E2A as the leading Web Services Integration
Platform.

- Orbix E2A Awarded "World Class" Product Seal -- Web Services Journal magazine
awarded Orbix E2A Web Services Integration Platform its "World Class Product"
Award, noting several innovative features and citing it as "a leading contender
in the family of Web Service Integration platforms."

- Orbix E2A Selected as "Best of Show" -- Attendees at the XML & Web Services
2002 conference in London chose Orbix E2A Web Services Integration Platform as
the "Best Overall Solution based on XML."

- IONA Introduced Industry's First Web Services Security Framework - One of the
most significant obstacles to the adoption of Web services has been the need
for security. IONA's Security Services framework allows Web services developers
to easily tie into existing security systems, without resorting to proprietary
or non-standard approaches.

- IONA Extended Product Leadership - IONA announced enhancements to the Orbix
E2A product line extending its leadership in usability, enterprise features and
support for the latest Web services standards.


IONA will host a conference call to discuss the company's first quarter 2002 results on Wednesday, April 17, 2002 at 10:00 am Eastern Daylight Time. Investors and other interested parties may dial into the call using the toll free number (800) 450-5192 in the United States or (706) 634-0918 for International callers.

This call is being Webcast by CCBN and can be accessed through the Investor Relations section of IONA's Web site at www.iona.com. Following the conclusion of the call, a rebroadcast will be available at IONA's Website or by calling (800) 642-1687 in the U.S. or (706) 645-9291 outside the U.S., with reservation number 3769490 until April 24, 2002.

About IONA

IONA is the leading e-Business Platform provider for Web Services Integration with more than 4,500 customers worldwide. IONA Orbix E2A(TM), which consists of the award-winning Orbix E2A Web Services Integration Platform and Orbix E2A Application Server Platform, enables the flow of information across disparate systems and the liberation of application assets for new business opportunities.

Founded in 1991, IONA(R) (NASDAQ: IONA) is headquartered in Dublin, Ireland, with U.S. headquarters in Waltham, Massachusetts. The company had revenues of $181 million in 2001 and employs approximately 900 people in more than 30 offices worldwide. For additional information about IONA, visit our Web site at http://www.iona.com.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements concerning plans and objectives of management, expectations regarding future financial performance and market positioning, growth, demand and opportunity. The forward-looking statements made are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated or indicated, including risks and uncertainties relating to the integration of recent and future acquisitions; IONA's Orbix End 2 Anywhere strategy; IONA's enterprise sales model; volume, timing and seasonal patterns of product sales; impact of competitive products and pricing; development and market acceptance of new and improved products; undetected errors in software; and general economic conditions. For a more detailed discussion of the risks and uncertainties, please refer to our periodic reports and registration statements filed with the Securities and Exchange Commission.

IONA, IONA Technologies, the IONA logo, Orbix, E2A, End 2 Anywhere, End To Anywhere, Orbix E2A, IONA E2A, IONA e-Business Platform, iPortal Application Server, SureTrack, IONA XMLBus, Adaptive Runtime Technology, Orbacus, Orbix/E, IONA University and Total Business Integration are trademarks or registered trademarks of IONA Technologies PLC and/or its subsidiaries. All other trademarks that may appear herein are the property of their respective owners.

 IONA Technologies
 Condensed Consolidated Statement of Operations
 (U.S. dollars in thousands, except per share data)

 Three Months Ended
 March 31, March 31,
 2002 2001
 (Unaudited) (Unaudited)
 ------------------------
Revenue:
 Product revenue $ 25,567 $ 27,635
 Service revenue 13,955 15,017
 -------- --------
 Total revenue 39,522 42,652

Cost of revenue:
 Cost of product revenue 456 1,203
 Cost of service revenue 7,587 8,431
 -------- --------
 Total cost of revenue 8,043 9,634

 -------- --------
 Gross profit 31,479 33,018

Operating expense:
 Research and development 10,514 7,949
 Sales and marketing 20,703 18,299
 General and administrative 3,562 3,559
 Amortization of goodwill
 and purchased intangible assets 3,268 4,117
 -------- --------
 Total operating expense 38,047 33,924

Income (loss) from operations (6,568) (906)

 Interest income, net 195 1,064
 Net exchange loss (255) (120)
 Other 4 164
 -------- --------

Income (loss) before provision for
 (benefit of) income taxes (6,624) 202
Provision for income taxes 0 611
 -------- --------

Net income (loss) ($ 6,624) ($ 409)
 ======== ========

Net income (loss) per Ordinary Share and
 per ADS
 Basic ($ 0.23) ($ 0.02)
 Diluted ($ 0.23) ($ 0.02)
 Pro forma basic ($ 0.08) $ 0.17
 Pro forma diluted ($ 0.08) $ 0.15
 ======== ========

Shares used in computing net
 income per ordinary share
 and per ADS (in thousands)
 Basic
 29,399 22,165
 Diluted
 29,399 22,165
 Pro forma basic
 29,399 22,165
 Pro forma diluted
 29,399 23,929
 ======== ========


 IONA Technologies
 Pro forma Statement of Operations
 Impact of Pro forma Adjustments on Pro forma Net (Loss) Income
 (U.S. dollars in thousands, except per share data)

 Three Months Ended Three Months Ended
 March 31, 2002 March 31, 2001
 --------------------------- --------------------------
 As Adjusts Pro forma As Adjusts Pro forma
 Reported (1) Reported (2)

Revenues $ 39,522 0 $ 39,522 $ 42,652 0 $ 42,652

Cost of revenue 8,043 (107) 7,936 9,634 0 9,634

Gross profit 31,479 107 31,586 33,018 0 33,018

Total operating
 expense 38,047 (3,616) 34,431 33,924 (4,215) 29,709

Income (loss)
 from operations (6,568) 3,723 (2,845) (906) 4,215 3,309

Income (loss)
 before provision
 for income taxes (6,624) 3,723 (2,901) 202 4,215 4,417

Net income
 (loss) ($ 6,624) 4,201 ($ 2,423) ($ 409) 4,097 $ 3,688

Net income (loss)
 per ordinary
 share and
 per ADS
 Basic ($ 0.23) $ 0.15 ($ 0.08) ($ 0.02)$ 0.19 $ 0.17
 Diluted ($ 0.23) $ 0.15 ($ 0.08) ($ 0.02)$ 0.17 $ 0.15

Shares used in computing net
 income per ordinary share
 and per ADS (in thousands)
 Basic 29,399 29,399 22,165 22,165
 Diluted 29,399 29,399 22,165 23,929


(1) Adjusted to exclude: amortization of purchased intangible assets
 of $3,268,000, stock compensation of $455,000 and the associated
 tax effect of ($478,000) for the three months ended March 31,
 2002.

(2) Adjusted to exclude: amortization of goodwill and purchased
 intangible assets of $4,117,000, stock compensation of $98,000 and
 the associated tax effect of $118,000 for the three months ended
 March 31, 2001.


 IONA Technologies
 Condensed Consolidated Balance Sheets
 (U.S. dollars in thousands, except share and per share data)

 March 31, December 31,
 2002 2001
 (Unaudited) (Unaudited)
 -------------------------
 ASSETS
Current assets:
 Cash and cash equivalents $ 11,712 $ 28,509
 Restricted cash 1,078 1,078
 Marketable securities 98,239 24,110
 Accounts receivable, net of allowance for
 doubtful accounts of $1,321 at March
 31, 2002 and December 31, 2001 37,499 44,207
 Prepaid expenses and other current assets 4,428 4,290
 ---------- ----------
 Total current assets 152,956 102,194

Property and equipment, net 17,977 18,789
Other non-current assets 37,728 47,948
Investments 50 50
Goodwill, net of accumulated amortization of
 $64,654 at March 31, 2002 and
 December 31, 2001 276,808 268,717
 ---------- ----------
 Total assets $ 485,519 $ 437,698
 ========== ==========

 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable $ 1,964 $ 3,429
 Accrued payroll and related expenses 6,705 12,134
 Other accrued liabilities 10,688 14,017
 Deferred revenue 29,306 32,352
 ---------- ----------
 Total current liabilities 48,663 61,932

Shareholders' equity:
 Ordinary Shares, E 0.0025 par value,
 150,000,000 shares authorized;
 32,573,966 and 27,816,711 shares
 issued and outstanding at March 31,
 2002 and December 31, 2001, respectively 91 80
 Additional paid-in capital 493,879 427,128
 Accumulated deficit (53,244) (46,620)
 Deferred stock compensation (3,870) (4,822)
 ----------- ----------
 Total shareholders' equity 436,856 375,766

 ---------- ----------
 Total liabilities and
 shareholders' equity $ 485,519 $ 437,698
 ========== ==========
COPYRIGHT 2002 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2002, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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