Strong 3Q results for SumTotal

Company Achieves GAAP Profitability; Revenue Increases 20% Year-Over-Year

SumTotal Systems, the largest provider of learning and business performance technologies and services, today announced its financial results for the period ended September 30, 2005.

On a Generally Accepted Accounting Principles (GAAP) basis, total revenue for the third quarter of 2005 was $18.4 million, an increase of 20% from $15.3 million in the third quarter of 2004.

Net income for the third quarter of 2005 was $0.1 million, or $0.01 per share on both a basic and diluted basis, an improvement from a loss of $2.2 million, or $0.11 per share, in the same quarter one year ago.

On a GAAP basis, total revenue for the nine months ended September 30, 2005, was $51.0 million, an increase of 40% from $36.5 million in the first nine months of 2004.

Net loss for the nine months ended September 30, 2005, was $5.8 million, or $0.28 per share on both a basic and diluted basis, an improvement from a loss of $14.1 million, or $0.80 per share, in the same period a year ago.

SumTotal Systems generated cash flow from operating activities of $0.9 million for the first nine months of 2005 compared to $0.4 million in the first nine months of 2004.

Cash, cash equivalents and short-term investments were $33.2 million at the end of the third quarter.

"We are proud of achieving profitability ahead of schedule and strong revenue growth this quarter," commented Don Fowler, interim CEO.

"Our results demonstrate our success in increasing scale and putting distance between ourselves and our competitors".

"With the integration of Pathlore now under way and the continued strength of our backlog, we are well positioned to aggressively pursue our growth and profitability strategy." Recent highlights include:.

* Completed the acquisition of Pathlore Software Corporation shortly after the close of the third quarter, which the company expects to increase market share and reinforce market leadership.

* Increased North American market share with new customer wins at Wells Fargo, Volkswagen of America, Honda Canada, Lehman Brothers Holdings, P and H Mining Equipment, Custom Electronic Design and Installation Association, Aspect Communications and the world's most comprehensive and broadly based manufacturer of healthcare products.

* Expanded our international presence with new customer wins at Tokyo Electron Limited, U.K.

global satellite communications provider Inmarsat, U.K.-based Addenbrooke's Hospital and Corporacion Mapfre S.A.

* Won new business and added additional products and services through partnerships with Accenture Learning, Affiliated Computer Services, ExcellerateHRO, Hewitt Associates, Hewlett-Packard Educational Service - Canada, Indra Sistemas, S.A., Rapid Learning Deployment, SkillSoft, SuccessFactors and WebEx.

* Surpassed a key milestone during the quarter by implementing SumTotal 7 for the 100th customer, after less than 9 months in market.

Nearly two-thirds of customers with SumTotal 7.x implemented were able to complete their implementation out-of-the-box, highlighting the suite's hallmark of flexibility, adaptability and configurability.

* Listed in the Leader quadrant of the 2005 Magic Quadrant for e-Learning Suites as well as the Magic Quadrant for Learning Management Systems, research reports by Gartner based on an evaluation of completeness of vision and ability to execute.

SumTotal's ability to execute outstripped that of all other competitors.

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