IONA Reports Profitable 2005 Fourth Quarter

Artix Grows to 20% of Fourth Quarter Revenue

DUBLIN, Ireland & WALTHAM, Mass. - January 26, 2006 -- IONA® Technologies (NASDAQ: IONA), a world leader in high-performance integration solutions for mission-critical IT environments, today announced fourth quarter revenue of $19.1 million. On a U.S. generally accepted accounting principles (GAAP) basis, IONA reported net income of $0.03 per share for the quarter. For the full-year 2005 total revenue was $66.8 million and the company reported a net loss of $0.02 per share. Included in the fourth quarter and full-year results is a $1.1 million first time non-cash expense for accrued vacation.

"I am pleased with the progress we are making in all areas of our business. With full-year product growth of 9% and 120% year-over-year Artix growth combined with an expanding partner ecosystem, we exited 2005 with momentum and well positioned for profitable growth in 2006," said Peter Zotto, CEO, IONA Technologies.

"IONA's heritage in distributed computing, expanding presence in the SOA software infrastructure market and leadership position in the ObjectWeb and Eclipse Open Source communities has extended IONA's role as a strategic partner to its global 2000 customers. Customers who have deployed our enterprise Artix solution are generating better returns on their IT assets, reducing annual operating costs and streamlining their IT environments. We enter 2006 recognizing the challenges associated with the emerging SOA market, yet confident in, and committed to, our strategy."

Q4 2005 Highlights

  • Full-year product growth of 9%
  • Full-year Artix growth of 120%
  • Fourth quarter year-over-year Artix revenue growth of 98%
  • Fourth quarter GAAP operating margin of 5%; 11% excluding the first time vacation accrual
  • Quarter ending $52 million balance in cash and marketable securities; deferred revenue of $23 million, up 54% sequentially
  • Entered into a strategic relationship with NS Solutions, Japan's leading systems integrator, to jointly deliver SOA-based solutions (please see press release dated November 9, 2005)
  • Joined with industry leaders BEA, IBM, Oracle, SAP, Siebel, and Sybase to introduce new Service Component Architecture (SCA) standard to ease the development and deployment of SOA (please see press release dated November 30, 2005)
  • Delivered, on time, the second and third key milestones that added critical functionality to the Celtix Open Source ESB project (please see press releases dated November 3, 2005 and December 22, 2005)
  • Solidified our customers' long-term commitment to CORBA via a successful world-wide CORBA Customer Council (please see release dated October 6, 2005)


Looking Forward

IONA expects total revenues for the first quarter of 2006 to be in the range of $15 - $16 million. The company expects total expenses for the first quarter 2006, including cost of revenue, operating expenses, and the cost of stock-based compensation to be in the range of $17.7 - $18.2 million. SFAS 123R stock-based compensation expense in the first quarter is expected to be in the range of $1.4 million to $1.6 million.

Conference Call

IONA will host a conference call today at 10:00 a.m. Eastern Time to discuss the company's fourth quarter results. Investors and other interested parties may dial into the call using the toll free number (800) 619-7628 or (210) 234-0007 internationally. The conference call will also be available via Webcast at www.iona.com/investors. Following the conclusion of the call, a rebroadcast will be available at IONA's Web site or by calling (800) 284-7031 or (203) 369-3222 internationally until February 24, 2006.

About IONA

For more than a decade, IONA® Technologies (NASDAQ: IONA) has been a world leader in delivering high-performance integration solutions for Global 2000 IT environments. IONA pioneered standards-based integration with its CORBA-based Orbix® products. Artix?, IONA's extensible Enterprise Service Bus, enables existing enterprise systems to be integrated with an organization's common infrastructure components. IONA's sponsorship of the ObjectWeb Celtix open source ESB is a natural extension of the company's history of solving integration problems by leveraging open standards and distributed architectures.

IONA is headquartered in Dublin, Ireland, with U.S. headquarters in Waltham, Massachusetts and offices worldwide. For additional information about IONA, visit our Web site at http://www.iona.com.

Click here to view the financial tables.

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, made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements concerning expected results of operations, expectations regarding future transactions, plans and objectives of management, expectations regarding future financial performance, market positioning, growth, demand and opportunity. The forward-looking statements made are neither promises nor guarantees and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated or indicated, including timing and seasonal patterns of product sales; growth in market demand for Web services and integration; IONA's sales model; impact of competitive products and pricing; development, launch and market acceptance of new and improved products; IONA's cost reduction efforts and cash balance; the integration of any future acquisitions; undetected errors in software; our continued ability to collect receivables; and general economic conditions, including their effect on the acquisition of new accounts and the time required to close sales transactions. For a more detailed discussion of the risks and uncertainties, please refer to our most recent Annual Report on Form 20-F and other periodic reports and registration statements filed with the Securities and Exchange Commission. You should not place undue reliance on any such forward-looking statements in this press release, which are current only as of the date when made. You should not expect that these forward-looking statements will be updated or supplemented as a result of changing circumstances or otherwise, and IONA disavows and disclaims any obligation to do so. In this press release we will also disclose various non-GAAP financial measures as defined by SEC Regulation G, including earnings per share excluding a first time non-cash vacation accrual. The most directly comparable GAAP financial measures and a reconciliation of the differences between the GAAP financial measures and the non-GAAP financial measures can be found at the end of this press release.

IONA, IONA Technologies, the IONA logo, Orbix, High Performance Integration, Artix, Mobile Orchestrator and Making Software Work Together are trademarks or registered trademarks of IONA Technologies PLC and/or its subsidiaries. CORBA is a trademark or registered trademark of the Object Management Group, Inc. in the United States and other countries. All other trademarks that may appear herein are the property of their respective owners.

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