Recruitsoft Achieves GAAP Profitability On 116 Percent Quarterly Revenue Increase.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Feb. 6, 2003

Company posts 131 percent annual revenue increase, introduces 5th generation technology infrastructure to support strong customer growth and announces 2002 employee count increased 31 percent

Recruitsoft, Inc., the leading provider of staffing management services and solutions for large organizations, today announced it achieved profitability according to Generally Accepted Accounting Principles (GAAP) for the fourth quarter of 2002, posting quarterly earnings for the first time in its three-year history.

Launched in September 1999, Recruitsoft began cash flow positive operations in the fourth quarter of 2001. Privately held Recruitsoft has steadily grown its revenues while investing in its technical and business infrastructure, including the industry's largest group of R&D professionals.

The company reported that 2002 revenues increased 131 percent compared with 2001, and that fourth quarter 2002 revenues increased 116 percent compared with the fourth quarter of 2001. For 2002, approximately 71 percent of the company's revenue was derived from recurring ASP subscription revenue; the remainder was derived from the company's services division.

"Recruitsoft's first GAAP profitable quarter represents a significant milestone for our company and for our industry, and is a testament to the commitment of our customers, employees and strategic partners," stated Recruitsoft Chief Executive Officer Louis Tetu. "Since inception, we have allocated our resources and efforts to focus first on achieving results for our customers, and only as a result of this on achieving profitability and continuing to create significant value for our existing and future customers. Our business model is a circular one. When we create value for our customers, our company's value increases. The proven cost savings and productivity increases our customers are achieving with Recruitsoft for internal mobility and external hiring will enable us to continue to lead our industry in services, products and profits."

He added, "Today we are serving more than 160,000 corporate and government users in more than 65 countries. We're confident that we will continue to lead the industry by delivering innovative new technologies in the future that will further streamline and integrate major staffing processes for maximal 'Return on People.'"

Financial Highlights:

FY 2002

-- Gross profit (revenues less total cost of revenues) for 2002 increased 187 percent compared with the prior year.

-- Expenses for 2002 increased 35 percent as compared with the prior year, including a 130 percent increase in ASP computing infrastructure related expenses for the year.

Q4 2002

-- Gross profit (revenues less total cost of revenues) increased

191 percent for the fourth quarter of 2002 as compared with

the same period in 2001.

-- Expenses for the fourth quarter of 2002 increased 18 percent

as compared with the same period in 2001, including an 81

percent increase in expenses related to its ASP computing 

infrastructure for the quarter.

Recruitsoft Chief Financial Officer Jean Lavigueur stated, "With our configurable staffing management technology and services, and the continued support of our employees and customers, we expect to continue to increase profitability in the years to come while reinvesting in our business and technical infrastructures." He added, "To support our customer growth in 2002, we increased our employee count by 31 percent to 349." He added, "As testament to the results we are generating for our customers, we continue to further penetrate existing accounts; in 2002, one-third of our new business came from our existing customers. These results demonstrate our success in helping our customers reach their financial and operational objectives, and we see continued success in 2003 and beyond, in partnership with our customers."

Lavigueur continued, "The ASP business model allows us to develop our technology infrastructure in lock-step with our customer growth. This can be seen in our expenses as related to recurring revenues. While achieving a 131 percent yearly increase in revenues, we were able to invest a corresponding percentage of 130 percent in our ASP computing infrastructure for the year. Due to the recurring nature of the revenue we were able to hold overall costs to a 35 percent increase for the year, including our technology investments. For the fourth quarter, we increased investments in our ASP computing infrastructure by 81 percent, while holding overall expenses to an 18 percent quarter over quarter increase."

Recruitsoft Enterprise Staffing Network Reaches 160,000 Global Users

As of December 30, 2002, the number of registered users on the Recruitsoft Enterprise Staffing Solution reached 160,000. Currently, Recruitsoft solutions are deployed in more than 65 countries. As Recruitsoft customers continue to expand solutions globally and divisionally, and deploy new products and services such as Recruitsoft's Staffing Agency Portal, the company anticipates continued strong increases in its customer utilization metrics during 2003. The Staffing Agency Portal, introduced in mid-2002, allows recruiters and hiring managers to share, source and track specific job requisitions with selected agencies and report on that information holistically among other enterprise-wide metrics. The Recruitsoft Staffing Agency Portal allows organizations to: better manage agency sources, expand global talent pools and control costs associated with agency usage.

Continuous Investment - Fifth-generation, World-class Infrastructure

Recruitsoft continually evaluates and enhances its computing infrastructure based on the company's growth projections and available technology. Based on Recruitsoft's anticipated growth for 2003, the company has developed its fifth generation technical architecture model to ensure continued speed, scalability and reliability relating to its computing, storage and network infrastructure offerings on a global basis. Recruitsoft's ASP offering is hosted on Internap's intelligent routing network, which has a vast array of service points that take full advantage of all Internet backbones to provide maximal uptime and security as well as the best connectivity to speed data transfer.

Recruitsoft Chief Operating Officer Guy Gauvin stated, "In planning and building our technical infrastructure, we consider customer performance and security needs as well as best-practice design principles to create completely scalable, highly available infrastructure models that support continued demands for utilization and growth."

He added, "We are committed to providing our customers with implementation and integration best practices, and we have invested in the integration technology and services to provide our customers open, market-unifying architectures and interoperability to support the entire staffing supply chain. There are currently 175 R&D professionals at Recruitsoft that work together in teams to ensure that we design the functionality and infrastructure our customers need to optimally deploy talent throughout their organizations, and to increase our technology footprint to manage the overall staffing management life-cycle."

He added, "We will continue to build upon our team as the company continues to grow and expand its offerings. We feel our developers are challenged, rewarded and find true career development in working at Recruitsoft. Our R&D turnover rate speaks for itself, at less than six percent for 2002."

About Recruitsoft

Recruitsoft (www.recruitsoft.com) delivers services and technology to manage enterprise staffing, from internal mobility to external hiring. Recruitsoft solutions optimize the flow of talent throughout large organizations such as Honeywell, Hewlett-Packard, Dow Chemical (NYSE: DOW), Fortis, Starbucks Corporation, PepsiAmericas, P & G, Thomson, Agilent Technologies, The Gillette Company, Deloitte & Touche, Bombardier, Anthem Blue Cross and Blue Shield and UnitedHealth Group, among many others.

Recruitsoft's comprehensive services methodology and toolkits deliver ACE(TM) Staffing Best Practices supported by the Recruitsoft Enterprise Staffing Solution, which includes a fully configurable, workflow-enabled suite of software applications. Recruitsoft solutions support every aspect of the staffing supply chain, from requisition management, sourcing, resume management, searching and pre-screening to retention and career preference portals, enabling true e-headhunting, optimal staffing and mobility management. Recruitsoft integrates with leading Enterprise Resource Planning (ERP) solution providers such as SAP, PeopleSoft and Oracle, enabling global companies to leverage their investment in such solutions as well as benefit from best-of-breed functionality that provides corporations with significant competitive differentiation. Additionally, the technology supports such ease of use features as Single Sign On (SSO), a complete HR-XML based Integration Toolkit and API/XML Connectors.

Recruitsoft Enterprise Staffing Solution helps large organizations to: find highly qualified candidates faster; better assign people to jobs; increase return on human assets; optimize the use of staffing resources; shorten the overall time to contribution; increase retention of the best and brightest contributors; manage the internal talent pool, enterprise-wide; and importantly, improve overall performance from the hired workforce, resulting in increased productivity. Recruitsoft has received a number of accolades, recently including the industry's leading staffing solution according to the HR.com and Talent Market Group's 2003 Buyers Guide.