Press Release


Contact: Colin Smith, WebEx Communications
408-566-5694 or colin.smith@webex.com

Investor Relations : 408-566-5600

WebEx Announces Third Quarter 2005 Results

SANTA CLARA, Calif., October 27, 2005—WebEx Communications, Inc. (Nasdaq: WEBX) today announced financial results for the third quarter ended September 30, 2005.

Revenue
For the third quarter of 2005, revenue was $78.6 million, a 23% increase from $64.0 million in the third quarter of 2004. Revenue included $0.7 million from the company’s Intranets.com subsidiary after closing of its acquisition on September 9, 2005.

GAAP Earnings
Net income was $12.7 million for the third quarter of 2005, a 7% increase from $11.8 million for the third quarter of 2004. Diluted earnings per share were $0.26 per share even with $0.26 in the third quarter of 2004.

Non-GAAP Earnings
Net income on a non-GAAP basis was $13.1 million for the third quarter of 2005, or $0.27 per diluted share, compared to $11.8 million, or $0.26 per diluted share, in the comparable period last year. Non-GAAP EPS exclude expenses associated with the acquisition of Intranets.com, such as the effects of amortization of intangible assets, certain employee compensation and in-process research and development.

Cash
Cash and short-term investments at quarter end were approximately $194.8 million, after payment of $40 million cash (net of cash acquired) for the purchase of Intranets.com. Cash flow from operations was $17.6 million, partially offset by $4.4 million of capital expenditures, yielding a free cash flow of $13.2 million for the three months ended September 30, 2005. During the third quarter of 2005, WebEx spent approximately $7.9 million as part of its stock buyback program, repurchasing approximately 304,000 shares of common stock. Under the currently authorized stock buyback program of $40 million, WebEx has spent approximately $26 million to date, while approximately $14 million remains available for future stock repurchases.

“I am pleased to report that we had the strongest new order booking quarter in the history of WebEx. We believe this demonstrates that the named-user flat rate pricing option is generating increased demand for our collaborative web applications,” said Subrah Iyar chairman and chief executive officer of WebEx. “Within one month of the acquisition of Intranets.com, we also delivered new integrated products to the market and significantly expanded our application suite to extend our leadership in software as a service delivery.”

Guidance
The following contains forward-looking guidance regarding WebEx’s financial outlook. The following statements are based on current expectations.

For the fourth quarter of 2005, WebEx anticipates revenues in the range of $81.0 to $83.5 million and GAAP EPS in the range of $0.26 to $0.28 and Non-GAAP EPS in the range of $0.27 to $0.29. Non-GAAP EPS exclude expenses associated with the acquisition of Intranets.com, including the effects of amortization of intangible assets and certain employee compensation.

For fiscal year 2006, revenue is anticipated to be in the range of $370 to $385 million. For fiscal year 2006, anticipated GAAP EPS will be provided later due to change in accounting standards regarding expensing equity based compensation that becomes effective in 2006.

Conference Call
Management will host the quarterly WebEx online meeting to discuss the results today October 27, 2005, beginning at 5:00 p.m. Eastern time. In conjunction with the audio call, there will be a WebEx meeting for the visual part of the presentation.

Interested parties may participate in the WebEx online meeting in one of the two ways:

  • To join the WebEx online meeting and listen to the audio via the computer (WebEx VoIP), please go to http://webex.com/q3_earnings_voip
  • To join the WebEx online meeting and listen to the audio via the telephone, please go to http://webex.com/q3_earnings_tele and call (617) 614-3933 and enter passcode 90504408

For those unable to participate in the live WebEx meeting, a replay will be available beginning one hour after the conclusion of the meeting. To replay the recorded WebEx meeting, go to http://webex.com/q3_replay or to replay the audio only, call (617) 801-6888 and enter passcode 90504408.

Non-GAAP Financial Measures
This press release includes financial measures for earnings per share and net income for our results for the third quarter of 2005 and guidance for the fourth quarter of 2005 that have not been calculated in accordance with generally accepted accounting principles (GAAP). These differ from GAAP in that they exclude expenses associated with the acquisition of Intranets.com, including the effects of amortization of intangible assets, certain employee compensation, and in-process research and development. WebEx believes that providing these non-GAAP financial measurements is useful to its investors because they provide a consistent basis for comparison of WebEx’s financial condition and results of operations between quarters, which comparison is not influenced by acquisition related expenses associated with the purchase of Intranets.com. The presentation of this additional information is not meant to be considered in isolation or as a substitute for earnings per share or net income calculated in accordance with GAAP. A reconciliation of these GAAP and non-GAAP financial measures is included in the attached tables.

About WebEx Communications, Inc.
WebEx Communications, Inc. is the world's leading provider of on-demand web meeting applications. WebEx applications improve collaboration and increase productivity in sales, support, training, marketing, engineering and product design. WebEx delivers its suite of real-time collaborative applications over the global WebEx MediaTone Network, a global network specifically designed for the delivery of on-demand applications. WebEx Communications is based in Santa Clara, California and with offices in Europe, Asia and Australia. Please call toll free 877-509-3239 or visit www.webex.com for more information.

###

This press release contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by use of the terms anticipates, believes, continue, could, estimates, expects, intends, may, plans, potential, predicts, should or will, or the negative of those terms or similar expressions. These forward-looking statements are subject to significant risks and uncertainties. Actual results may differ materially from those described in such statements as a result of these risks and uncertainties. In particular, these forward looking statements include, but are not limited to, our beliefs that our strategy of using named user flat rate pricing will generate increased demand for our products, statements regarding guidance for the fourth quarter of 2005 and fiscal year 2006 on anticipated revenues and earnings per share. Factors which could contribute to risks and uncertainties include, but are not limited to the failure of WebEx to meet financial expectations, decrease in demand for WebEx services, the failure of WebEx to meet projections in domestic and international direct sales activity, channel sales, customer retention and expense control, failures and interruptions in the software and systems underlying WebEx’s services, the effects of competitive offerings, and additional expenses associated with the further integration of Intranets.com. A fuller discussion of the risks and uncertainties that could affect WebEx Communications, Inc. are more fully set forth in WebEx Communications, Inc.’s filings with the Securities and Exchange Commission, including WebEx’s Form 10-Q filed on August 9, 2005. WebEx Communications, Inc. assumes no obligation to update forward-looking information contained in this press release.

MediaTone is a trademark of WebEx Communications, Inc.