Keynote Announces First Quarter Fiscal Year 2005 Financial Results

Keynote Systems, Inc., (www.keynote.com), The Internet Performance Authority®, today announced financial results for its first quarter of fiscal year 2005, which ended December 31, 2004.

"During the last six months, we made a change upwards in the scope and size of our business. Our quarterly revenues now are approximately 40% higher than they were a year ago, and our headcount during the same period has gone up approximately 36% from 165 to 225 people," said Umang Gupta, chairman and CEO of Keynote.

Revenue for the first quarter of fiscal year 2005 was $13.6 million, a 12% increase compared to the preceding quarter and a 40% increase compared to the first quarter of fiscal year 2004.

Net income for the first quarter of fiscal year 2005 was $791,000 or $0.04 per diluted share, compared to net income of $1.3 million, or $0.06 per diluted share, for the preceding quarter, and net income of $667,000, or $0.03 per diluted share, for the first quarter a year ago.

Keynote generated cash flow from operations for the first quarter of fiscal year 2005 of $2.8 million. Cash flow from operations was $3.0 million for the preceding quarter and $4.3 million for the first quarter of fiscal 2004. Cash used for purchases of property, equipment, and software totaled $712,000 for the first quarter of fiscal year 2005 compared to $2.3 million for the preceding quarter and $405,000 for the first quarter of fiscal 2004.

Keynote also announced that it is entering into a trading plan with a securities broker, intended to qualify under Rule 10b5-1 of the Securities Exchange Act of 1934.

The trading plan will instruct the broker to repurchase for Keynote, , in accordance with Rule 10b-18 of the Securities Exchange Act of 1934, up to 2 million shares of Keynote's Common Stock representing approximately 10% of Keynote's outstanding common shares, over a period of twelve months commencing as soon as March 1, 2005.