Deltek Reports Q3 License Revenue of $15.4 million up 21% Year over Year; Finalizes INPUT Acquisition

Herndon, VA – November 1, 2010 – Deltek (Nasdaq: PROJ),the leading global provider of enterprise applications software and solutions for project-focused businesses, today announced financial results for its third quarter ended September 30, 2010.

Q3 license revenue was $15.4 million, compared to $12.7 million in the third quarter of 2009, an increase of 21%. Maintenance and support revenue in the third quarter was $33.9 million, compared with $31.6 million in the prior year. Due to the GAAP purchase accounting treatment of the Maconomy acquisition, maintenance and support revenues included in Q3 are approximately $2.6 million less than Maconomy’s historical results. Consulting services revenue for Q3 was $15.6 million, compared to $19.7 million in Q3 2009. Total revenue for the third quarter of 2010 was $65.2 million, compared to $64.1 million in Q3 2009.

Q3 GAAP operating loss was $1.3 million compared to GAAP operating income of $10.2 million in the prior-year period. Our GAAP results include the impact of $3.6 million of transaction costs associated with the Maconomy and INPUT acquisitions and $1.7 million of incremental intangible amortization expense also associated with the acquisition of Maconomy.

Q3 GAAP operating margin was (2.0%), reflecting the impact of the acquisition and purchase price impacts described above. The Q3 margin percentage was reduced by 12.1 percentage points as a result of the acquisition and purchase price related impacts. This compares to a GAAP operating margin of 15.9% in Q3 2009.

Non-GAAP operating income for the third quarter was $8.2 million, compared to $15.6 million in Q3 2009. A full reconciliation of Non-GAAP operating income to GAAP operating margin is included in the exhibits to this press release.

Non-GAAP operating income margin was 12.5% for Q3 2010, compared to 24.3% in Q3 2009. The Q3 Non-GAAP operating income margin reflects a 4 percentage point negative effect due to the impact of the purchase accounting treatment of assumed maintenance and support contracts related to the Maconomy acquisition as previously described.

Q3 GAAP net loss was $4.1 million, or ($0.06) per diluted share, including the after-tax impact of the $3.6 million of acquisition-related transaction costs, the $1.7 million in incremental amortization expense and reflecting the purchase accounting treatment of the $2.6 million associated with maintenance and support contracts described above. This compares with $6.6 million, or $0.10 per diluted share, in the third quarter of 2009. Non-GAAP net income for the third quarter of 2010 was $4.3 million, or $0.06 per diluted share, compared to $9.9 million, or $0.15 per diluted share, in Q3 2009. Non-GAAP net income for Q3 2010 does not include the after-tax effect of the $3.6 million of transaction costs previously discussed or the $1.7 million in incremental amortization, but does reflect the $2.6 million purchase accounting treatment.

“Q3 was a transformational quarter for our company,” said Kevin Parker, president and CEO of Deltek. “The successful completion of the Maconomy and INPUT acquisitions accelerated our expansion into new markets, increased our international presence, and significantly broadened our product portfolio. As we expand our licensing portfolio to include subscription and on-demand pricing in addition to perpetual licensing, contract booking value will be an important measure of our success in the marketplace. In Q3, total product-related bookings were $17 million, an increase of 26% from the prior year.

Our competitive position remains strong, and during the quarter we won a number of significant deals in the U.S. and Europe, and we saw our overall pipeline increase in key markets. The integrations of both Maconomy and INPUT are moving forward quickly. We’re very enthusiastic about our ability to drive new revenue opportunities as a result.”

Comparison of GAAP and Non-GAAP measurements:

Non-GAAP operating income and margin exclude the pre-tax impact of acquisition-related costs, stock-based compensation, expenses associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, and restructuring charges. Non-GAAP net income excludes the same items on a net-of-tax basis.

A reconciliation of GAAP to non-GAAP financial measures is provided in the tables at the end of this press release.

• Deltek successfully completed the acquisition of INPUT for $60 million in an all cash transaction. INPUT delivers opportunity intelligence and business development capabilities that complement and enhance Deltek’s comprehensive portfolio of government contracting solutions. In addition, Deltek and INPUT together provide the industry’s broadest and deepest actionable intelligence on the government marketplace. This acquisition broadens Deltek’s customer base and capabilities, and further solidifies Deltek as the premier government contracting solutions provider and thought leader in the marketplace.
• Electronic Warfare Associates (EWA), a large government contractor, selected Deltek’s Costpoint solution suite to power its corporate operations. EWA chose Deltek for Costpoint’s broad and deep capabilities that are purpose-built for government contractors. Deltek’s solutions met all of EWA’s requirements and reporting needs, and Costpoint offered the best return on investment (ROI). EWA is using Deltek’s integrated Costpoint solution across all of its divisions to more efficiently manage resources, streamline access to corporate data, and stay compliant with government reporting requirements.
• Concurrent Technologies Corporation (CTC), an independent, nonprofit, applied scientific research and development professional services organization, chose Deltek Costpoint CRM to streamlines its business development processes. CTC turned to Costpoint CRM because it offered game-changing functionality and substantially lower total lifetime cost of ownership compared to its legacy system.
• Deltek launched an expanded version of govWin.com to deliver new features and content focused on enabling government contractors to win more business. The govWin network now features rich industry content from Deltek’s acquisition of INPUT and a first-of-its-kind supplier verification system that quickly identifies the most qualified teaming partners in the network and delivers a complete supplier audit trail to automate compliance activities for contractors that leverage the online network.
• In Q3, Deltek closed a number of significant deals internationally highlighted by strong sales of its Maconomy solutions. Key new customers include WPP France, a global communications company, Länsförsäkringar, a Swedish insurance provider, and Cambio Healthcare Systems, one of Sweden’s largest healthcare administrators.
• ttsp, an architecture and design firm with operations in the United Kingdom and Germany, purchased Deltek Vision. After evaluating multiple software solutions, ttsp chose Deltek Vision to manage its back-office, improve resource utilization, and measure profitability and performance through real-time visibility into projects and resources.
• Kevin Iaquinto joined Deltek as its new Chief Marketing Officer. Mr. Iaquinto will manage the company’s brand awareness and identity, lead generation programs, sales enablement, marketing communications, public and analyst relations, partner marketing, social media and global events marketing. Mr. Iaquinto has over 20 years of experience leading global marketing teams for multiple publicly-traded software companies. Most recently, Mr. Iaquinto served as SVP of Global Marketing for Software AG, a leading enterprise software company with operations in 70 countries worldwide.

Conference Call Information

Deltek will host a conference call at 5:00 p.m. Eastern Time today to discuss the Company’s second quarter results. To access this call, dial 1-866-395-1514 in North America and 1-706-643-9496 outside North America. No password is required to join the call. The conference call also can be accessed through the Investor Relations section of Deltek’s website (http://investor.deltek.com). Those unable to participate in the live call may hear a replay through November 8, 2010 by dialing 1-800-642-1687 in North America and 1-706-645-9291 outside North America (pass code: 17901042). The replay also will be available through November 8, 2010 on Deltek’s website.

About Deltek

Deltek (Nasdaq: PROJ), which recently acquired Maconomy and INPUT, is the leading global provider of enterprise applications software and solutions designed specifically for project-focused businesses. For decades, we have enabled government contractors and professional services firms to automate mission-critical business processes around the engagement, execution and delivery of projects. Over 14,000 customers use our solutions to measure business results, optimize performance, streamline operations and win new business. For more information, visit www.deltek.com.

Use of Non-GAAP and Other Financial Measures

This press release and the related conference call described above contain certain non-GAAP financial measures, including non-GAAP net income, non-GAAP operating income and margin and adjusted EBITDA. The Company defines non-GAAP net income as GAAP net income before the net-of-tax impact of stock-based compensation, expenses associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, acquisition-related costs and restructuring charges. Non-GAAP operating income and margin are defined as GAAP operating income before the pre-tax impact of stock-based compensation, expenses associated with the Company’s 2005 recapitalization, amortization of acquired intangible assets, acquisition-related costs and restructuring charges. Adjusted EBITDA is defined as GAAP net income before interest expenses (net of interest income), provision for income taxes, depreciation, amortization, stock-based compensation, expenses associated with the Company’s 2005 recapitalization, acquisition-related costs and restructuring charges. Product-related bookings are defined as the aggregate contract value of licenses, products and related services contracted during the period. This consists of the aggregate contract value of product-related contracts signed during the period which are reflected as license revenue ($15.4 million) or deferred revenue (approximately $1.6 million) in accordance with GAAP. The Company uses product-related bookings as a measure of the aggregate economic value of product-related sales activity contracted during the period.

The Company believes that the presentation of these non-GAAP and other financial measures provides useful information to its investors and lenders because these measures allow for more accurate comparisons of results from period-to-period, enhance the overall understanding of the Company’s performance and provide greater insight into the prospects for the Company’s ongoing business operations. Moreover, the Company also believes it is appropriate to exclude costs associated with restructuring charges because these charges are excluded from management’s assessment of the Company’s operating performance and are not related to the Company’s ongoing business operations. In addition, the Company excludes the items from EBITDA described above in its calculations to determine compliance with its debt covenants and to assess its ability to borrow additional funds to finance or expand its operations.

The Company believes that by reporting these measures, it provides insight and consistency in its financial reporting and presents a basis for comparison of its business operations between current, past and future periods. In addition, the measures provide a basis for the Company to compare its financial results to those of other comparable publicly traded companies and are used by its management team to plan and forecast its business.

Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance which are prepared in accordance with U.S. GAAP and may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review the reconciliations of our GAAP to non-GAAP net income and adjusted EBITDA, which are set forth below.

Forward-Looking Statements

This press release and related conference call contain forward-looking statements that involve substantial risks and uncertainties. You can identify forward-looking statements by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “would” or similar words. You should consider these statements carefully because they discuss our plans, targets, strategies, prospects and expectations concerning our business, operating results, financial condition and other similar matters. We believe that it is important to communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict accurately or control. Our actual results may differ materially from the expectations we describe in our forward-looking statements. Factors or events that could cause our actual results to materially differ may emerge from time to time, and it is not possible for us to accurately predict all of them. Before you invest in our common stock, you should be aware that the occurrence of any such event or of any of the additional events described as risk factors in the Company’s filings with the Securities and Exchange Commission could have a material adverse effect on our business, results of operation and financial position. Any forward-looking statement made by us in this press release or related conference call speaks only as of the date on which we make it. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.