RSA Security Announces Fourth Quarter and Year End Results

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RSA Security (www.rsasecurity.com)
Matt Buckley
Tel: +44 1344 781 784
E-mail: mbuckley@rsasecurity.com

Lammers van Toorenburg Benelux PR
Paul Maris
Tel: +31 (0)30 - 65 65 070
E-mail : paul@lvtpr.nl

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RSA Security Announces Fourth Quarter and Year End Results

Company Generates 16% Revenue Growth and Earnings Per Share of $0.10;

RSA Security Inc. (NASDAQ: RSAS), the most trusted name in e-security®, today reported financial results for the fourth quarter ended December 31, 2003. 

Revenue for the fourth quarter of 2003 increased 16 percent to $70.7 million, compared with $61.0 million for the fourth quarter of 2002.  Net income for the fourth quarter of 2003 was $6.2 million, or $0.10 per diluted share, compared with a net loss of $49.8 million, or ($0.88) per share, for the same period in 2002.  The Company's fourth quarter 2002 net loss included charges of approximately $48 million.

"The fourth quarter capped a year of resurgence for RSA Security, as we recaptured our operating margins, grew total annual revenue 12 percent, and grew RSA SecurID® software revenue by 20 percent," said Art Coviello, president and chief executive officer of RSA Security.  "The improvements we made in 2003 with respect to both our operating effectiveness and product set position us well for growth in 2004."

Financial Highlights:

• Revenue:  RSA Security's 16 percent year-over-year revenue growth in the fourth quarter was the result of several factors, especially record RSA SecurID token shipments.  The Company also generated a book-to-bill ratio of 1.1 to 1, ended the quarter with more than $15 million in product and services backlog, and increased deferred revenue by $3.4 million during the fourth quarter of 2003.  For full year 2003, RSA Security generated revenue of $259.9 million.  This is an increase of 12 percent from $232.1 million for the year ended December 31, 2002.
  
  
• Net Income:  RSA Security's net income per share of $0.10 for the fourth quarter of 2003 concluded a year of steady earnings improvement.  For full year 2003, the Company posted earnings of $14.8 million, or $0.24 per diluted share, compared with a net loss of $96.8 million, or $1.71 per share, for full year 2002.
  
  
• Cash Position:  Cash and cash equivalents increased for the ninth consecutive quarter to $207.3 million on December 31, 2003.  This is more than double the Company's balance of $103.0 million on December 31, 2002. 

Operational Highlights:

• Customer Base:  RSA Security shipped product to more than 4,500 customers in the fourth quarter, including 800 new customers.  The Company sold products to a broad base of customers across multiple vertical markets in the fourth quarter of 2003. In particular, sales to the financial services, technology and telecommunications sectors grew during the quarter. During 2003, the Company's customer base grew by 30 percent to almost 14,000 customers worldwide.
  
  
• Key Partnerships:  RSA Security continued to add and expand its strategic relationships during the fourth quarter.  In November, RSA Security announced a global alliance with Accenture to offer customers a rapidly deployable solution - called the Accelerated I&AM Delivery Solution - to prevent unauthorized access to company computer networks.  The solution combines RSA ClearTrust® web access management software with Accenture services and provisioning software from Thor Technologies.
  
  
• Technology Advances:  The Company demonstrated progress on its Identity and Access Management strategy in the fourth quarter with the shipment of RSA ClearTrust v5.5 software.  Through its Advanced User Management Module, the new release delivers advanced user management capabilities that help relieve administration workload, expedite deployment and lower total cost of ownership.  In addition, the software's Federated Identity Management Module provides the first commercially available Security Assertions Markup Language (SAML) functionality for generating and consuming SAML v1.1 assertions, enabling customers to leverage identities across multiple businesses.  RSA ClearTrust v5.5 software, which offers unparalleled integration with Microsoft® platforms, has also been included as part of Microsoft's Identity and Access Management Technology Adoption Program.

First Quarter Business Outlook

RSA Security's financial guidance for the first quarter of 2004 assumes no material change in the global IT spending environment.  The Company does anticipate some historical seasonality in its first quarter revenue; however, the Company expects the effects of seasonality to be mitigated given RSA Security's level of backlog entering the first quarter.  This guidance is current as of today only, and is based upon the Company's expectation of an effective tax rate of approximately 20 percent for 2004.  RSA Security undertakes no obligation to update its estimates:

• Total revenue in the range of $68 million to $71 million, or 11 percent to 16 percent year-over-year growth.
• Diluted earnings per share in the range of $0.06 to $0.09, as compared to $0.03 earnings per share a year ago.

About RSA Security Inc.
With almost 14,000 customers around the globe, RSA Security provides interoperable solutions for establishing online identities, access rights and privileges for people, applications and devices. Built to work seamlessly and transparently in complex environments, the Company's comprehensive portfolio of identity and access management solutions -- including authentication, Web access management and developer solutions -- is designed to allow customers to confidently exploit new technologies for competitive advantage. RSA Security's strong reputation is built on its history of ingenuity and leadership, proven technologies and long-standing relationships with more than 1,000 technology partners. For more information, please visit www.rsasecurity.com.

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RSA, SecurID, ClearTrust and The Most Trusted Name in e-Security are either registered trademarks or trademarks of RSA Security Inc. in the United States and/or other countries.  All other products and services mentioned are trademarks of their respective companies.

This press release contains forward-looking statements regarding RSA Security's financial guidance for the first quarter of 2004.  These statements involve a number of risks and uncertainties.  Some of the important factors that could cause actual results to differ materially from those indicated by the forward-looking statements are general economic conditions, including the current weakness in the global economy, changes in our operating expenses, the timing of the introduction or enhancement of our products and our competitors' and strategic partners' products, changes in product pricing, including changes in competitors' pricing policies, development and performance of our direct and indirect distribution channels, delays in product development, competitive pressures, changes in customer and market requirements and standards, market acceptance of new products and technologies, technological changes in the computer industry, and the risk factors detailed from time to time in RSA Security's periodic reports and registration statements filed with the Securities and Exchange Commission, including, without limitation, RSA Security's Annual Report on Form 10 K filed on March 26, 2003 and Quarterly Report on Form 10 Q filed on October 31, 2003.