StepStone ASA: Results for the Quarter Ended 30 June 2007

StepStone ASA (OSE:STP): Record revenues and increased profitability Revenue up 89% to €23.1m vs. Q2 2006 Adjusted EBITDA increases to €3.4m from €0.9m and EBITDA margin increases to 15% from 7% vs. Q2 2006 Online delivers record revenues: EBITDA margin increases to 27% Solutions: Revenue continues to increase up €0.5m vs. Q1 2007 despite transition to subscription model €1.2m potential licence revenues deferred into future subscriptions Restructuring of US operations undertaken in quarter Over 80 new customer wins in quarter Record operating cash flow of €4.7m for quarter Acquisition of Recruiter AS, leading Norwegian public sector e-recruitment supplier, announced Summary Company The company continued to make solid progress during Q2 delivering record revenues and adjusted EBITDA. Revenue for Q2 2007 was €23.1m, an increase of 89% compared to €12.2m in Q2 2006. Underlying organic revenue growth remains over 50%. Adjusted EBITDA more than doubled in Q2 2007 to €3.4m from €0.9m and margin increased to 15% from 7% in the same quarter of 2006. The company generated record operating cash of €4.7m in the quarter from €1.2m in the same quarter last year. Cash balances at quarter end were €28.9m, deferred revenue improved further to €20.0m and both debt and gearing remain low. The balance sheet was further strengthened by the issue of four million shares. These were issued under the employee share option scheme and placed largely with existing shareholders. On 26 July 2007 the Company announced an agreement to acquire Recruiter AS the leading supplier of e-recruitment solutions to the Norwegian public sector. Recruiter AS will complement and strengthen the Company’s leading position in the Norwegian e-Recruitment solutions market. Online Online delivered strong growth in all markets, record revenues and record margins. Revenue increased by 66% year on year and the margin improved to 27%. The results from Norway and Italy, operations that received increased investment during the first half of 2007, were particularly notable. Both increased sales by over 200% compared to the same quarter last year. However, the major contributing countries of Belgium, Denmark, Germany and Sweden all performed very well, growing sales, revenues and margins. Investment in Online sales and marketing will accelerate in Q3, traditionally the quietest trading period, in advance of the key selling period of September to May. The company’s channel strategy advanced during the quarter with the launch of two new channels. Denmark launched a sales and marketing site in partnership with Business Danmark, the country’s largest organisation for sales and marketing professionals. Germany launched the country’s first manual industries job board, Arbeiten.de, and now boasts over 4,000 users every day. Online revenue for the quarter was €13.7m up from €8.2m in Q2 2006. Online EBITDA increased to €3.8m, up from €1.7m in Q2 2006. Online EBITDA margin increased to 27% compared to 20% a year ago. Underlying fundamentals continue to move upwards - listings are up by 75% and traffic is up by 32%. Solutions Solutions also delivered record revenues whilst also progressing with the integration of its e-recruitment and talent management operations. During the quarter over eighty new Solutions customers were added with seventeen ETWeb customers moving to the subscription pricing model. Solutions had 954 customers at the end of Q2 2007 compared to 703 a year ago. The retention rate for subscription based customers in the quarter was 99%. The e-recruitment products, i-GRasp and EasyCruit are only available under the software as a service ("SaaS”) model via monthly subscription fees. Historically ETWeb, acquired in Q1 2007, sold under the licenced software model – with an upfront fee for perpetual rights and 15% annually thereafter for maintenance. StepStone’s stated objective is to migrate ETWeb to a subscription model and then deliver via the SaaS model. Good progress was made during the quarter. Seventeen ETWeb customers selected the monthly subscription fee model resulting in €1.2m potential licence revenue being deferred into future subscriptions. Despite this transition, Solutions still increased its Q2 2007 revenue by €0.5m compared to Q1 2007. During the quarter the loss making US operations inherited with ExecuTRACK were restructured. New management was put in place; staffing levels were rebalanced with investment in sales and marketing personnel. Losses increased to €0.5m from €0.2m in the previous quarter as part of the plan to move the operation to profitability by the end of 2007. Whilst the underlying level of Solutions sales increased in the quarter when compared to Q1 2007, the effect of the combined effects of the transition to the subscription pricing model on revenue together with the restructuring of the US operation on costs, resulted in Solutions EBITDA falling by €0.3m sequentially. Solutions revenue in Q2 2007 increased to €9.4m from €4.0m in Q2 2006. Solutions EBITDA increased to €1.1m compared to €0.4m in Q2 2006 and Solutions EBITDA margin increased to 11% for the quarter compared to 10% a year ago. Outlook Significant business demand and new partnerships contributed to strong momentum in Q2 2007. Online continued its impressive record, increasing market share, winning important new customers and reporting record revenue, EBITDA and EBITDA margins. Solutions also had a good quarter, adding over 80 new customers and maintaining retention rates close to 100%. The integration of ExecuTRACK is progressing on plan. Acceptance of the subscription model is accelerating and the first cross sales between the e-recruitment and talent management customer bases have been achieved. Investment will continue during Q3 and into Q4 in both divisions with the objective of increasing capacity and driving long term revenues and margins. As we reach the mid point of the year and enter the quieter summer months, the Board remains positive about the business continuing to deliver improved results over the remainder of 2007. About StepStone StepStone is one of the world’s largest providers of on-demand, talent management solutions, offering a portfolio of technology, software and online services that enable organisations to attract, recruit, develop, retain and manage the best available talent. StepStone Online operates some of Europe’s largest and most successful Total Talent Communities, covering 13 countries and attracting 1.9million visitors each week. StepStone’s Total Talent Management Software Solutions are a range of on-demand services which enable organisations to manage the entire employee lifecycle, from initial attraction, through pre-hire online recruitment, on-boarding and post hire performance management including compensation management, skills and competency management and employee training and development. StepStone recently completed the acquisition of ExecuTRACK, a global leader in strategic Talent Management, which extends StepStone's Total Talent Management solutions portfolio. Thousands of organisations including Aviva, BBC, Amey, Royal Bank of Scotland, AXA, British Airways, Xerox and Fiat use StepStone's products and services to help them recruit qualified staff globally. Founded in Norway in 1996, StepStone was the only European-headquartered vendor to be recognised as a ‘leader’ by Gartner, Inc’s recent "Magic Quadrant for E-Recruitment Software, 2006” report. For more information see: www.stepstone.com