Annual License Revenues Grow 41% and Total Revenue Grows 22% Over Prior Year

REDWOOD SHORES, CALIF., June 30, 2005 — Saba (NASDAQ: SABA), a leading provider of human capital management (HCM) solutions, today reported financial results for its fourth quarter and year ended May 31, 2005.

Fourth Quarter Results
Saba completed its acquisition of THINQ Learning Solutions on May 5, 2005. Saba’s financial results include the results of THINQ from May 6 to May 31, 2005.

• Total revenues in the fourth quarter were $12.0 million, representing an 18% increase compared to $10.2 million in the same quarter last year.
  
• License revenue was $4.2 million, representing a 21% increase compared to $3.5 million in the fourth quarter of fiscal year 2004.
  
• Maintenance and support revenue was $3.7 million, reflecting over a 97% renewal rate for the quarter and a 22% increase compared to $3.0 million in the fourth quarter of fiscal year 2004.
  
• Professional services revenue was $4.1 million, representing an 11% increase compared to $3.7 million in the fourth quarter of fiscal year 2004.
  
• Gross margins were 70% in the quarter compared to 71% in the same quarter of the prior fiscal year.
  
• The net loss on a GAAP basis was $0.02 per share, or a loss of $396,000, compared to a loss of $0.16 per share, or $2.2 million, in the fourth quarter of fiscal year 2004. The net loss in the fourth quarter of fiscal year 2005 includes the effects of the THINQ acquisition.
  
• Deferred revenue increased 31% to $12.5 million from $9.5 million at the end of the prior quarter.
  
• Cash, cash equivalents and short-term investments of $15.4 million remained unchanged from the prior quarter.
  
• Saba completed software deals for 33 customers in the quarter.

Fiscal Year 2005 Results
For the year ended May 31, 2005, Saba posted $42.2 million in total revenues, representing a 22% increase compared to $34.5 million in the prior fiscal year. The net loss on a GAAP basis improved to $0.21 per share, or a loss of $3.2 million, compared to $12.7 million or $0.95 per share in the prior fiscal year.

“Saba is entering fiscal year 2006 in a very strong position, having achieved over 40 percent license growth over the past year, including four consecutive quarters of total revenue growth,” said Bobby Yazdani, Saba's Chairman and CEO. “In the past year, Saba completed deals with 109 enterprise customers. This year, we are expanding our reach to new and existing markets through our broader HCM offerings and additional alliances worldwide.”

Customer Successes in the Fourth Quarter of Fiscal Year 2005

• EMC Corporation, a world leader in products, services, and solutions for information storage and its management, expanded its current use of Saba Learning and added Saba Content Management to manage and deliver a broad range of SCORM-compliant content to their extended enterprise of employees, partners and customers.
  
• Wilkinson, one of the fastest growing independent retailers in the UK, chose to pilot Saba Enterprise 2005 to develop the skills of their newly hired employees, in support of its nationwide store expansion program.
  
• The U.S. Office of Personnel Management's (OPM) Center for Leadership Capacity Services (CLCS), which provides leadership development for government executives and their organizations, will use Saba Enterprise 2005 to manage the catalog, resources and payments associated with its world-class programs.
  
• CEMEX, a leading global building solutions company based in Mexico, purchased additional licenses for its Saba Learning product, to support its growing employee base as it evolves its e-learning platform to new audiences and strengthens its continuous improvement corporate culture.
  
• Toshiba Information Systems, a leading designer and manufacturer of digital, PC based and voice processing business communications systems in Japan, secured additional licenses for Saba Learning to support its new employee training program.
  
• POWEREDCOM, whose fiber-optic network extends over 250 thousand kilometers nationwide in Japan, has licensed Saba Analytics to help analyze the effect of its learning program.

Additional Saba News From the Fourth Quarter of Fiscal Year 2005

• IBM is utilizing Saba Enterprise 2005 as an element of IBM’s business transformation outsourcing offering. Additionally, Saba is enabling its integrated HCM suite on IBM’s middleware. The alliance provides customers world-class HCM and learning solutions globally.
  
• Saba introduced Saba Talent, a succession management solution that enables organizations to do more than simply create a list of possible successors for a targeted job. Instead, Saba Talent allows organizations to manage and track the development of their talent pool at all levels of the organization, ensuring the acquisition of requisite skills and competencies.
  
• Saba introduced Saba Content Management, a second-generation learning content management system (LCMS) designed for enterprise-wide content development and delivery. Unlike traditional LCMS solutions, Saba Content Management enables content development and delivery across the extended enterprise, supports multiple authoring tools, and provides deep integration into Saba Enterprise 2005, the company’s next generation HCM platform.

Business Outlook
The following statements are based on current expectations as of the date of this release. These statements are forward-looking, and actual results may differ materially. Saba does not undertake to update these targets in any way or for any reason.

• Saba anticipates revenue for its first quarter of fiscal 2006 (August 31, 2005) to be in the range of $13.0 to $14.0 million.
  
• Saba anticipates GAAP net earnings per share for its first quarter of fiscal 2006 (August 31, 2005) to range from breakeven to a loss of $0.03.

Conference Call
The company will host a conference call on fourth-quarter results at 2:00 p.m. PT on Thursday, June 30, 2005. The call will be available via Web cast at http://investor.saba.com or by dialing +1-612-332-1025.

A replay of the call will be available at http://investor.saba.com or by calling +1-320-365-3844 and entering code 783421, after 5:30 p.m. PT on June 30, 2005 through July 14, 2005, at 11:59 p.m. PT.

About Saba
Saba (NASDAQ: SABA) is a leading provider of integrated Human Capital Management (HCM) solutions. Saba enables The Aligned Enterprise™ by aligning goals, developing and motivating people, and measuring results – driving greater organizational performance.

More than 10 million current users in over 30 countries use Saba today. Customers include ABN AMRO, Alcatel, Bank of Tokyo Mitsubishi, BMW, CEMEX, Cisco Systems, DaimlerChrysler, Dell, Deloitte Touche Tohmatsu, EDS, EMC, FedEx Kinko’s, Lockheed Martin, Medtronic, National Australia Bank, Novartis, Petrobras, Procter & Gamble, Scotiabank, Sprint, Standard Charter Bank, Swedbank and the U.S. Army and Navy.

Headquartered in Redwood Shores, California, Saba has 20 offices worldwide. For more information, please visit www.saba.com or call (+ 1) 877-SABA-101 or (+1) 650-779-2791.

Legal Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws, including, without limitation, statements regarding Saba’s business outlook, including anticipated revenue and per share earnings and loss, and statements regarding Saba's market position, Saba’s ability to expand its reach through broader HCM offerings and alliances, the market acceptance of Saba's recently introduced products, and the ability of partners to contribute to Saba's revenues. Saba's actual results could differ materially from those expressed in any forward-looking statements. Risks and uncertainties Saba faces that could cause results to differ materially include risks associated with: Saba's dependence on growth of the markets for Saba's products, dependence on acceptance of Saba's products by customers and channel partners, the success of Saba’s alliances, the ability of Saba to successfully integrate the THINQ acquisition; fluctuation in customer spending, length of Saba's sales cycle, competition, rapid technological change, dependence on new product introductions and enhancements, potential software defects and the accuracy of Saba’s valuation of intangible assets acquired in the THINQ acquisition. Readers should also refer to the section entitled "Factors That May Affect Future Operating Results" on pages 23 through 30 of Saba's Annual Report on Form 10-K/A dated October 27, 2004 and similar disclosures in subsequent Saba periodic SEC reports. The forward-looking statements and risks stated in this press release are based on information available to Saba today. Saba assumes no obligation to update them.

Saba, the Saba logo, and the marks relating to other Saba products and services referenced herein are either trademarks or registered trademarks of Saba Software, Inc. All other trademarks are the property of their respective owners.