PLATO Learning, Inc. provider of K-adult computer-based and e-learning solutions, today announced revenues of $17.0 million for its first quarter ended January 31, 2007 compared to $23.5 million for the first quarter of fiscal 2006. Orders for the first quarter were $12.8 million compared to $16.3 million in 2006. A revenue decline was not unexpected as the Company continued its transition from perpetual license products, for which revenue is recognized upon delivery, to subscription license products for which revenue is recognized over the subscription period. However, total orders for the quarter fell short of the Company's goal. Despite the $6.5 million decline in revenues, the Company's net loss for the period increased only $1.3 million to ($4.5) million, or ($0.19) per share, as operating costs and expenses declined by over $5.1 million.

Orders for subscription-based courseware products, which are the foundation of the Company's new product strategy, grew more than 160% for the quarter, but were not sufficient to offset a $1.8 million decline in Supplemental Education Services orders, a line of business the Company exited in 2006, and declining sales emphasis on the Company's legacy perpetual license products.
Mike Morache, PLATO Learning President and CEO said, "As expected, our long-term strategy to deliver all of our solutions on a subscription basis over the internet has resulted in a decline in reported revenues compared to this time last year principally due to the difference in revenue recognition timing between perpetual and subscription products. The transition from perpetual license products, which have price points of up to three times greater than subscription-based products, continues to create challenges in achieving near-term order growth. Over time, subscription renewals are expected to more than offset these price point differentials. However, we will not fully realize the leverage of subscription renewals until this transition is complete, and the first renewal period for products delivered on our new courseware management system, the PLATO Learning Environment (PLE), does not occur until the third quarter of this year. We are pleased with the progress our new subscription-based products are making in the marketplace. In just seven months since its initial release, PLE continues to operate at 100% up-time and has over 196,000 users in more than 1,400 schools around the country."

"Our transition has required us to make many significant, difficult changes across all parts of our business. We are pleased with the progress we have made in many areas of required change. In just over 15 months since announcing our new subscription-based strategy, we have built a world-class product development organization, released 43 new or upgraded products to the market, streamlined, simplified and improved most of our internal business processes, and significantly lowered our cost structure. However, we have not yet achieved the full productivity of our sales organization. Recently we announced the resignation of the head of our K-12 sales organization and are actively pursuing a replacement. While there is short-term risk that this change may be disruptive, we believe it is an opportunity to improve our sales effectiveness as we head into our peak selling season."

Press Release, March 6.