KANA's total revenues for the first quarter of 2009 were $10.9 million, compared to $18.3 million in the same period in 2008.

Maintenance revenue in the first quarter of 2009 was $6.6 million, compared to $7.4 million in the first quarter of 2008. In the first quarter of 2009, professional service revenue was $3.1 million, compared to $5.2 million for the first quarter of 2008, while license revenue was $1.2 million, compared to $5.7 million in the comparable period of 2008.

Non-GAAP net loss was $2.7 million in the first quarter of 2009, compared to non-GAAP net income of $125,000 in the first quarter of 2008.

Company Highlights:

KANA continues to make improvements to its cost structure. By example, the Company reduced costs in the first and second quarters of 2009 that, combined, reduce costs by at least $3 million per quarter compared to the fourth quarter of 2008. The Company expects 2009 total non-GAAP operating expense to be approximately 25% less than 2008 non-GAAP operating expense.

KANA and IBM announced a major integration milestone in the first quarter on the way to their impending mid-year rollout of KANA's Service Experience Management product. Built on IBM's industry-leading SOA foundation, the product gives customer-service executives unprecedented control over the end-to-end Service Experience, enabling them to adapt to change in minutes, rather than months.

Com Hem, a leading provider of triple-play services in Sweden, completed its deployment of KANA's knowledge management suite for self-service and assisted service. Com Hem said that it plans to deploy KANA's email response and online collaboration solutions later in 2009.

Customers purchasing KANA solutions during the first quarter included Credit Suisse First Boston, DST Systems, Inc./Boston Financial Data Services, Affinion Group, Reliable France SAS, Value Team SPA, Barclays, Cap Gemini UK PLC, and PNC Financial Group.

KANA continued to receive numerous product and innovation awards in the first quarter of 2009, garnering honors from CRM magazine, KMWorld magazine, and Customer Interaction Solutions® magazine.

KANA announced today the extension of its banking relationship with Bridge Bank that extends the credit facility until June 30, 2010.

The Company reported a net loss in accordance with accounting principles generally accepted in the United States (GAAP) of $3.3 million, or $0.08 per share for the first quarter of 2009, compared to a loss of $79,000 or $0.00 per share for the first quarter of 2008.

For the first quarter of 2009, KANA reported a non-GAAP loss of $2.7 million, or $0.07 per share, as compared to non-GAAP net income of $125,000, or $0.00 per share, in the first quarter of 2008. KANA's quarterly non-GAAP net income (loss) was calculated by adding back accounting charges for stock-based compensation expense measured in accordance with SFAS 123R, amortization of acquired intangible assets, and restructuring recovery to KANA's GAAP net loss.

"KANA has set three broad objectives for the rest of 2009: assuring profitability in each of the remaining quarters of the year; maximizing the mid-year launch of our game-changing product with IBM; and positioning ourselves for sustainable profitability and growth when the global economy recovers," said Michael Fields, KANA's chief executive officer. "We believe that we are on track for all three. The relative consistency and strength of our maintenance revenue, combined with a leaner cost structure, allows KANA to target significant profitability in 2009 -- even with the global economic downturn's current impact on our overall revenue levels.

"As a result of a sharpened focus on our joint initiative with IBM and our cost reduction program, in the second quarter of 2009 we expect positive non-GAAP operating income and revenue of $12.5 million to $14 million. Additionally, we expect non-GAAP operating income of greater than 10% of revenue for 2009 as a whole. Combined with the renewed banking relationship we announced today, these actions position KANA to emerge strongly from the recession toward sustainable profitability, growth and market leadership in multi-channel customer service."

Investor Conference Call Information

KANA's management team will host a conference call today at 4:30PM EDT (1:30PM PDT) where it will discuss the Company's reported quarterly financial results and financial outlook. Investors are invited to listen to the call by dialing (800) 599-9829 or (617) 847-8703 and entering passcode #33415911. The conference call will also be broadcast from KANA's website. A digital recording will be provided by telephone two hours after the completion of the conference call, through midnight on May 31, 2009. To access the replay, please dial 888-286-8010 or (617) 801-6888 and enter passcode #42054418. The replay will also be available on the Company's website for one year.

About KANA

KANA Software, Inc. is a world leader in multi-channel customer service. KANA's solutions allow companies to deliver consistent service across all channels, including email, chat, call centers, and Web self-service, giving their customers the freedom to choose the service they want, how and when they want it. KANA's clients report double-digit increases in customer satisfaction, while reducing call volumes by an average of 20%. KANA's award-winning solutions are proven in hundreds of companies worldwide, including approximately half of the Fortune 50. For more information, visit www.kana.com or call 1-800-737-8738.

Non-GAAP Financial Measures

To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the attached table, which exclude certain expenses including stock-based compensation and amortization of intangible assets, that we believe are helpful in understanding our past financial performance and our future results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Compensation of our executives is based in part on the performance of our business based on these non-GAAP measures.

Cautionary Note Regarding Forward-looking Statements Under the Private Securities Litigation Reform Act of 1995: Information in this release regarding KANA's forecasts, projections, expectations, beliefs, and intentions are forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to KANA as of the date of this release, which will likely change, and we assume no obligation to update any such forward-looking statement.