"We are pleased that our revenue and non-GAAP operating results met or exceeded our guidance for the quarter, despite the continued level of uncertainty in the economy," said Dan Fishback, president and chief executive officer of DemandTec. "The integration of our recent acquisition of Connect3 Systems is progressing well and we remain focused on making our customers successful in this challenging business environment."

"During our first quarter, DemandTec unveiled its nextGEN solutions that combine category, brand and shopper insights to provide a rich understanding of shopper behavior, and the ability to leverage those insights to make better business decisions for retailers and consumer products manufacturers to better achieve their corporate goals," added Fishback.

First Quarter Financial Highlights

Revenue: Revenue was $19.5 million in the first quarter of fiscal 2010, an 8% increase from $18.1 million in the first quarter of fiscal 2009 and a 1% increase from $19.3 million in the fourth quarter of fiscal 2009.

Gross Profit: GAAP gross profit was $12.8 million in the first quarter of fiscal 2010, compared to a gross profit of $12.4 million in the first quarter of fiscal 2009. Non-GAAP gross profit, which excludes stock-based compensation expense and amortization of purchased intangibles, was $13.7 million in the first quarter of fiscal 2010, an increase of 6% from the first quarter of fiscal 2009 and representing a non-GAAP gross margin of 70.2%.

GAAP Operating and Net Loss: Loss from operations was $4.0 million in the first quarter of fiscal 2010, compared to a loss from operations of $1.5 million in the first quarter of fiscal 2009. Net loss was $3.7 million, or ($0.13) per share in the first quarter of fiscal 2010, compared to a net loss of $1.0 million, or ($0.04) per share, in the first quarter of fiscal 2009.

Non-GAAP Operating and Net Income/Loss: Non-GAAP loss from operations, which excludes $2.4 million in stock-based compensation expense, $1.1 million in amortization of purchased intangible assets and a $278,000 restructuring charge, was $236,000 in the first quarter of fiscal 2010, compared to non-GAAP operating income of $491,000 in the first quarter of fiscal 2009. Non-GAAP net income was $29,000, or $0.00 per diluted share, in the first quarter of fiscal 2010, compared to non-GAAP net income of $996,000, or $0.03 per diluted share, in the first quarter of fiscal 2009.

Cash: Cash, cash equivalents and marketable securities at the end of the first quarter of fiscal 2010 totaled $75.3 million, a decrease of approximately $12.6 million from the end of the fourth quarter of fiscal 2009. The decrease in cash, cash equivalents and marketable securities was primarily attributable to a payment in early March 2009 in connection with our purchase of Connect3 Systems, Inc. in February 2009. For the first quarter of fiscal year 2010, the company used $614,000 cash in operations and invested $242,000 in capital expenditures, resulting in a negative free cash flow of $856,000.

Conference Call Information

DemandTec will host a conference call today, July 1, 2009, at 5:00 p.m. ET (2:00 p.m. PT) to discuss the company's financial results and financial guidance. Those interested in participating in the call should dial 866-225-8754. A replay of the conference call will be available by calling 303-590-3030 using passcode 4087009 starting at approximately 8:00 p.m. ET on Wednesday, July 1, 2009 and ending on Wednesday, July 8, 2009. In addition, an archived webcast will be available on the Investor Relations page of the company's website at http://investor.demandtec.com.

About DemandTec

DemandTec (Nasdaq:DMAN) enables retailers and consumer products companies to optimize merchandising and marketing decisions, individually or collaboratively, to achieve their sales volume, revenue, and profitability objectives. DemandTec software services utilize DemandTec's science-based software platform to model and understand consumer behavior. DemandTec customers include more than 195 leading retailers and consumer products manufacturers such as Best Buy, ConAgra Foods, Delhaize America, General Mills, Giant-Carlisle, H-E-B Grocery Co., Hormel Foods, Monoprix, PETCO, Safeway, Sara Lee, The Home Depot, and WH Smith. Connected via the DemandTec TradePoint Network(TM), DemandTec customers have collaborated online with nearly 2.3 million trade deals. For more information, please visit www.demandtec.com.

Forward-Looking Statements

This press release contains forward-looking statements regarding DemandTec's expectations, hopes, plans, intentions or strategies, including statements about the company's future financial performance, financial condition or results of operations, statements as to the plans of management for future operations, and statements as to management's beliefs regarding the market's interest in DemandTec's solutions. We may, in some cases, use words such as "believes," "expects," "anticipates," "plans," "estimates," and similar expressions to identify these forward-looking statements. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties include changes in our pricing policies or those of our competitors, fluctuations in demand for our software, our ability to develop and implement in a timely manner new software and enhancements that meet customer requirements, any significant changes in the competitive dynamics of our market, including new entrants or substantial discounting of products, general economic conditions in the retail and consumer products markets, the impact of the recent global economic crisis or other adverse economic conditions, and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission ("SEC"). More information about these and other risks that may impact DemandTec's business are set forth in DemandTec's Annual Report on Form 10-K, as well as subsequent reports filed with the SEC. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. Any future products, features or related specifications that may be referenced in this release are for information purposes only and are not commitments to deliver any technology or enhancement. DemandTec reserves the right to modify future product plans at any time.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables contain non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons why management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled "Use of Non-GAAP Financial Measures" as well as the related tables. We anticipate disclosing forward-looking non-GAAP financial information in our conference call to discuss our first quarter of fiscal year 2010 results, including an estimate of non-GAAP operating income and net earnings per share for the second quarter that excludes stock-based compensation expenses and amortization of purchased intangible assets. We cannot readily estimate our expected stock-based compensation expenses for these future periods as they depend upon such factors as our future stock price for purposes of computation.

A copy of this press release can be found on the investor relations page of DemandTec's website at www.demandtec.com.

DemandTec and the DemandTec logo are registered trademarks of DemandTec, Inc. DemandTec TradePoint Network is a trademark of DemandTec, Inc.

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