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February 06th - 2006

MANDRIVA (formerly Mandrakesoft)
Audited results for the fiscal year 2004/2005

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NB: our fiscal year ends on 30 September

Mandriva achieved consolidated sales for the fiscal year 2004/05 of €5.45m, an increase of 5.2% on the previous year. Operating revenue was up 8.5% to €6.52m while the gross margin was down 13.2% to €3.80m. These figures compare to respectively €5.18m, €6.28m and €4.38m for the 2003/2004 fiscal year.

The results include Conectiva, the Brazilian company consolidated over six months of the year, and Edge-IT over the full year. On a like-for-like basis, sales dropped 6%.

The difference between operating revenue and sales is due primarily to government grants for R&D funding worth €0.9m.

Over the course of the year, Mandriva posted an operating loss of €1.1m compared to positive operating income of €0.86m the previous year. The net result was negative at -€0.04m, down from €1.39m in 2003/2004.

The net result includes positive one-off items worth €1.45m. These came mainly from the debt renegotiation carried out under the terms of the company's "continuation plan" (€1.06m) and the net impact of the resolution of the legal dispute with the Hearst Group (€0.49m), which was previouly covered by a provision. After amortization of €0.22m of the goodwill on the acquisitions of Edge It and Conectiva, the net result for the year is negative at -€0.04m.

The losses posted over the year and the drop in like-for-like sales have four main explanations :

  • A change to our launch cycle for new versions of the Mandriva Linux distribution means that only one version is now released each year. While this has enabled us to invest more heavily in product development, it has also hit sales on the mass retail market.

  • A significant revenue stream dried up in 2004/05 of a major OEM contract,

  • Significant investment in the enterprise market targeted the setting up of new teams, R&D, new products, marketing and sales initiatives.

  • Heavy investment in the new Brazilian subsidiary Conectiva.

The 2004/2005 year was marked by our transition from a business model focused primarily on the general retail market towards a model targeting the enterprise sector.

A revenue breakdown by product (sales from the retail market, OEM clients and e-commerce), enterprise services (consultancy, training, maintenance and support) and on-line services is respectively 40%, 34% and 25%, compared to 68%, 8% and 24% in the previous year. This reflects the strong growth in the proportion of sales coming from the enterprise sector.

About Mandriva

Mandriva is one of the world?s leading editors of Linux operating systems and open-source software. The company develops and markets the Mandriva Linux operating system. Several hundred developers worldwide contribute to the constant improvement of our product via the internet and to its internationalisation (it is now available in nearly 70 languages). Mandriva also provides associated off-line services such as consultancy, training and support, alongside on-line services including technical back-up and the Mandriva Users Club.

Mandriva has its headquarters in Paris and offices in the USA and Brazil.

The company is listed on the Marché Libre of Euronext Paris.

For more information go to: mandriva.com/company/investors/newsletter

ISIN: FR0004159382
Reuters: MAKE.PA
Number of shares: 5,593,405
Contact Mandriva Jacques Le Marois / Thierry Bossut investors at mandriva.com Tel.: +33 (0)1 40 41 00 41