Q4 2003 MatrixOne Inc. Earnings Conference Call - Part 1.

(From Fair Disclosure Wire)

OPERATOR: Ladies and Gentlemen, good evening and welcome to the MatrixOne Fourth Quarter Earnings Release Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. During the Q & A portion of today's call, we ask that participants limit themselves to one question, and one follow-up question. If anyone should require assistance during the call, please press * then zero, on your touch tone phone. As a reminder, Ladies and Gentlemen, this conference call is being recorded. I would now like to introduce Brian Norris, DIR for MatrixOne. Please go ahead. BRIAN NORRIS, DIRECTOR OF INVESTOR RELATIONS, MATRIXONE INC.: Good evening, everyone. Thank you for joining us. With me on the call is Mark O'Connell, the company's President and CEO, and Maurice Castonguay, the SVP and CFO. I'd like to thank you for making the recent MatrixOne panelist day 2003 a success. We had a great turnout at the Nasdaq market site on may 22 and we appreciate your continued support. Earlier today, MatrixOne issued a press release which outlined the fourth quarter and full year reports for FY-2003. In a moment, I will turn the call over to Mark who will review the results and mark will share thoughts on the business. I will present the safe harbor at the same time under the Private Securities Litigation Reform Act of 1995 forward looking statements made during this call are not promises. Or guarantees and are subject to risks and uncertainties that could cause the results to deliver materially from those anticipate.

We caution you not to place undue reliance on any such statement, which speaks only as of the date made. Such statements made subject to the mans, objectives and financial results growth and expectations for future results Forward looking statements will also include without limitation any statement relating to future events, conditions or circumstances, or using words such as will, believe, anticipate, expect, could, may estimate, project, plan, predict or contend.

For a more detailed discussion of the risks and uncertainties of our business, please refer to the periodic reports with the Securities and Exchange Commission including (inaudible) for the fiscal year, June 29 2002 and quarterly report on form 10Q for the fiscal quarter ended March 29, 2003. Today's conference call along with the fourth quarter earnings release and a company financial operating statistics can be accessed from the company's web site at www.matrixone.com/investor. At this time I'd like to turn the call over to Mark. MARK O'CONNELL, PRESIDENT AND CEO, MATRIXONE INC.: Thank you, good evening, everyone. The financial highlights for the quarter are as follows. Total revenues were $23.6 million, representing an increase of 9.4% sequentially, compared to the third quarter and in line with guidance we provided during the last conference call with the investors on April 23. Software license revenues were $9.1 million compared to $7.2 million in the third quarter. Service revenues were $17.1 million compared to $16.8 million in the third quarter. Net loss narrowed 30% sequentially to $3.7 million or 8 cents per share compared to $5.3 million or 11 cents per share in the third quarter. Pro forma net loss narrowed 25% sequentially to $3.3 million or 7 cents per share compared to $4.5 million or 9 cents per share in the third quarter. Pro forma results exclude compensation charges of 2 cents in quarters three and four as well as restructuring gain of 1 cents per share for quarter four.

Now for some additional insight on our fourth quarter revenue. Application revenues represented 39% of software license revenues with significant revenue for MatrixOne's programs central, engineering central, and team central applications. The geographic split of double revenues was 64% from the Americas, 25% from Europe and 11% from Asia Pacific. We recognize one software revenue transaction in excess $1 million, which was in the consumer products vertical market and no one customer accounted for 10% of total fourth quarter revenues. We…