OutStart Announces Record Results for Q2 2005; Company Experiences Eleventh Consecutive Quarter of Double Digit Revenue Growth.

BOSTON -- OutStart, the leading provider of software solutions for learning and knowledge-sharing, today announced record results in the second quarter of 2005. The company saw strong expansion within its current customer base as well as new customer acquisitions. A consistent rise in overall revenue further validates the company's leadership in the online learning and knowledge-sharing markets.

"The second quarter of 2005 proved to be a successful time for OutStart on many fronts from signing on new customers, increasing our presence within the government sector and continuing to expand our sales channels throughout the world," said Massood Zarrabian, president and CEO of OutStart. "We continue to prove that we have the right solutions and programs in place to help organizations improve business with creative, collaborative learning and knowledge-sharing initiatives."

Highlights for Q2 2005 include:

--16 percent revenue increase year-over-year

--88 percent boost in recurring revenue streams

--Increased deferred revenues by 50 percent.

--The U.S. Office of Personnel Management selected OutStart as an authorized vendor for Specialized Training Technical Areas under the GoLearn Indefinite Deliverable Indefinite Quality program, paving the way for government and Department of Defense agencies to select OutStart's world-class software to create, manage and deliver learning solutions.

--Expanded presence in Asia-Pacific through distribution partnership with MultiMedia Concepts Pty Ltd. in Australia, Tembusu Advantage Pte Ltd. in Singapore and Vital Learning Systems in Korea. Vital Learning Systems is also translating OutStart's SoftSim and Evolution products for the Korean and Japanese markets.

--49 percent increase in indirect sales within EMEA region due to an expanded and maturing network of channel partners.

--Recognized for enabling award-winning knowledge management initiatives. The Australia Department of Defense, an OutStart customer, was honored with the Computerworld 21st Century Achievement Award for its visionary use of technology for learning management. OutStart client BBS Computing received the Best Tax Software award for its Tax Tips and Tools application.

--Secured significant new customer orders, including BBS Computing, Wiltshire County Council, DirecTV, Rubbermaid Commercial Products, Volvo and Old Dominion University.

--OutStart Evolution LCMS and OutStart Evolution LMS have been deployed as core elements of the U.S. Navy's Integrated Shipboard Learning Environment, a learning infrastructure used on the Navy's fleet of ships and submarines to deliver personalized training to thousands of sailors at sea.

"In addition to solid growth in the second quarter, we saw a substantial increase in recurring revenue sources, subscription licenses, ASP and software maintenance," said Dan Kossmann, OutStart's chief financial officer. "This strong base of recurring revenues is providing increased stability and predictability helping to further ensure the company's long term financial health."

About OutStart

OutStart software powers solutions that help make people more effective in a fraction of the time and cost. Unlike traditional training or knowledge management approaches that take too long, cost too much and fail to address the entire need, OutStart's applications address the way people learn through a combination of formal training, knowledge sharing and expert collaboration that is available on-demand. Customers like Empire BlueCross BlueShield, Cisco Systems, Steelcase, the U.S. Navy, Verizon, and Westland Helicopters rely on OutStart to increase individual and organizational performance, improve knowledge transfer, and lower operating costs. Headquartered in Boston, Mass., OutStart has offices throughout the US and Europe and can be found on the Web at www.outstart.com.