IONA Reports Second Quarter Results; Artix Sales Accelerating, Revenue up 128%

On a U.S. generally accepted accounting principles (GAAP) basis,for the second quarter IONA reported a net loss of $0.2 million, or($0.01) per share. Net loss for the quarter includes stock-basedcompensation expense of $1.2 million due to the implementation of SFAS123R. Net income on a GAAP basis prior to fiscal 2006 did not includeemployee stock-based compensation expense related to SFAS 123R.

Net income and earnings per share, excluding $1.2 million of SFAS123R stock-based compensation expense, in the second quarter of fiscal2006 was $1.0 million, or $0.03 per share, compared with a net loss of$2.3 million or $0.07 per share for the second fiscal quarter of 2005.A complete reconciliation between net income (loss) on a GAAP basisand net income (loss) on a non-GAAP basis is provided in theaccompanying financial tables.

"The consistent execution of IONA's strategy resulted in anothersolid quarter marked by steady progress in all aspects of ourbusiness," said Peter Zotto, CEO, IONA Technologies. "We remainfocused on serving the needs of our global 2000 customers who seekService Oriented Architecture (SOA) infrastructure software to helpachieve greater ROI as they modernize their IT environments and reducetotal operating costs. The value we deliver to our customers isgenerating robust growth in our Artix(TM) business and solid resultsin our CORBA(R) business."

"We are very pleased to see that our operating execution isgenerating corresponding positive financial metrics," commented BobMcBride, CFO, IONA Technologies. "For the first time in five years,IONA achieved sequential second quarter revenue growth. For fourstraight quarters we have achieved year on year product revenue growthand positive operating margin, excluding stock-based compensationexpense. Second quarter DSO of 50 days drove us to again be cash flowpositive in the quarter, and sales productivity has shown significantimprovement in the first half of this year compared to the first halfof 2005. Clearly, we believe our financial fundamentals are in goodorder and we are increasingly well positioned to continue executingour strategic plan going forward."

Mr. Zotto continued, "Our unique approach to SOA, our activeparticipation in driving industry standards and our commitment tooffering customers flexible solutions for incremental SOA adoption,continues to gain broad industry recognition. Forrester Researchrecently identified IONA as an Enterprise Service Bus 'Leader' and wecontinue to forge new global partnerships and important strategicindustry relationships. Leading systems integrator Wipro selectedArtix as powerful SOA enablement software that can help theircustomers achieve business agility. Our commitment to open standardsand the open source development model has led to collaboration withleading organizations such as JPMorgan Chase, Cisco and Red Hat, amongothers, to create a new specification called the Advanced MessageQueuing Protocol (AMQP) for developing open, standards-based messaginginfrastructure."

Highlights

-- Quarterly revenue growth of 27% year-over-year

-- Artix revenue growth of 128% year-over-year

-- Quarter ending $55 million balance in cash, restricted cash and marketable securities

-- Named an ESB "Leader" by Forrester Research, with Artix cited as particularly suited to complex, high-end, heterogeneous computing environments (see press release date July 11, 2006)

-- Joined with industry-leading companies including JPMorgan Chase, Cisco, Red Hat, and others to introduce AMQP, a new messaging protocol based on open standards (see press release dated June 20, 2006)

-- Released version 4.0 of Artix with an extensive set of enhancements designed to improve customers' ability to incrementally adopt a distributed, standards-based SOA (see press release dated April 3, 2006)

-- Demonstrated successful interoperability between Microsoft's Windows Communication Foundation (WCF) and Artix 4.0 using Web services standards (see press release dated April 24, 2006)

-- Signed partnership agreement with systems integrator Wipro to deliver Artix-based Service Oriented Architecture deployments (see press release dated May 11, 2006)

-- Delivered version 1.0 of the Celtix open source ESB project (see press release dated May 8, 2006)

-- Appointed Bruce J. Ryan to IONA's Board of Directors; subsequently elected Chairman of the Audit Committee (see press release dated June 2, 2006)

Looking Forward

IONA expects total revenue for the third quarter of 2006 to be inthe range of $17.5 - $18.5 million. The company expects total expensesfor the third quarter 2006, including cost of revenue, operatingexpenses, and the cost of stock-based compensation to be in the rangeof $18.3 - $18.8 million. SFAS 123R stock-based compensation expensein the third quarter is expected to be approximately $1.3 million.

Conference Call

IONA will host a conference call today at 10:00 a.m. Eastern Timeto discuss the company's second quarter results. Investors and otherinterested parties may dial into the call using the toll free number(800) 619-7628 or (630) 395-0180 internationally. The conference callwill also be available via Web cast at www.iona.com/investors.Following the conclusion of the call, a rebroadcast will be availableat IONA's Web site or by calling (866) 433-1146 or (203) 369-0991internationally until August 18, 2006.

About IONA

For more than a decade, IONA(R) Technologies (NASDAQ: IONA) hasbeen a world leader in delivering high-performance integrationsolutions for Global 2000 IT environments. IONA pioneeredstandards-based integration with its CORBA-based Orbix(R) products.Artix(TM), IONA's extensible Enterprise Service Bus, enables existingenterprise systems to be integrated with an organization's commoninfrastructure components. IONA's sponsorship of the ObjectWeb Celtixopen source ESB is a natural extension of the company's history ofsolving integration problems by leveraging open standards anddistributed architectures.

IONA is headquartered in Dublin, Ireland, with U.S. subsidiaryheadquarters in Waltham, Massachusetts and offices worldwide. Foradditional information about IONA, visit our Web site athttp://www.iona.com.

This press release contains forward-looking statements within themeaning of the Private Securities Litigation Reform Act of 1995,including statements concerning expectations regarding futurefinancial performance, profitability, future operating performance,and economic and market conditions. The forward-looking statementsmade are neither promises nor guarantees and are subject to risks anduncertainties that could cause actual results to differ materiallyfrom those anticipated or indicated, including risks and uncertaintiesrelating to the Company's cost management efforts; growth in marketdemand for service oriented architectures, and enterprise service bussoftware; volume, timing and seasonal patterns of product sales;impact of competitive products and pricing; development, launch andmarket acceptance of new and improved products; undetected errors insoftware; and general economic conditions, including their effect onthe acquisition of new accounts and the time required to close salestransactions. For a more detailed discussion of the risks anduncertainties, please refer to our most recent Annual Report on Form20-F and other periodic reports and registration statements filed withthe Securities and Exchange Commission. You should not place unduereliance on any such forward-looking statements in this press release,which are current only as of the date when made. You should not expectthat these forward-looking statements will be updated or supplementedas a result of changing circumstances or otherwise, and IONA disavowsand disclaims any obligation to do so. In this press release we havealso disclosed various non-GAAP financial measures as defined by SECRegulation G, including net income, earnings per share on a dilutedbasis, operating income and operating margin. The most directlycomparable GAAP financial measures can be found above and in thefinancial tables at the end of this press release, and areconciliation of the differences between the GAAP financial measuresand the non-GAAP financial measures can be found at the end of thispress release.

IONA, IONA Technologies, and the IONA logo, Orbix, HighPerformance Integration, Artix, Mobile Orchestrator and MakingSoftware Work Together are trademarks or registered trademarks of IONATechnologies PLC and/or its subsidiaries. CORBA is a trademark orregistered trademark of the Object Management Group, Inc. in theUnited States and other countries. All other trademarks that mayappear herein are the property of their respective owners.
IONA Technologies PLC
Condensed Consolidated Statements of Operations
(U.S. dollars in thousands, except per share data)


Three Months Ended Six Months Ended
(Unaudited) (Unaudited)
June 30, June 30, June 30, June 30,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenue:
Product revenue $ 8,819 $ 5,664 $ 17,024 $ 13,352
Service revenue 8,903 8,304 17,702 16,934
--------- --------- --------- ---------
Total revenue 17,722 13,968 34,726 30,286

Cost of revenue:
Cost of product revenue 85 75 155 171
Cost of service revenue 3,306 2,909 6,661 5,824
--------- --------- --------- ---------
Total cost of revenue 3,391 2,984 6,816 5,995

--------- --------- --------- ---------
Gross profit 14,331 10,984 27,910 24,291

Operating expense:
Research and development 4,171 3,975 8,298 7,983
Sales and marketing 7,541 7,373 15,119 14,533
General and administrative 2,965 2,175 5,493 4,226
Amortization of other non-
current assets 0 0 0 94
Restructuring 0 0 0 (97)
--------- --------- --------- ---------
Total operating expenses 14,677 13,523 28,910 26,739

Loss from operations (346) (2,539) (1,000) (2,448)

Interest income, net 459 223 827 391
Net exchange (loss) gain (35) 163 (149) 171
--------- --------- --------- ---------

Income (loss) before
provision for income taxes 78 (2,153) (322) (1,886)
Provision for income taxes 310 195 531 355
--------- --------- --------- ---------

Net loss ($232) ($2,348) ($853) ($2,241)
========= ========= ========= =========

Net (loss) income per
ordinary share and per ADS
Basic ($0.01) ($0.07) ($0.02) ($0.06)
Diluted ($0.01) ($0.07) ($0.02) ($0.06)
Non-GAAP basic $ 0.03 ($0.07) $ 0.05 ($0.06)
Non-GAAP diluted $ 0.03 ($0.07) $ 0.05 ($0.06)

Shares used in computing net
(loss) income per ordinary
share and per ADS
(in thousands)
Basic 35,563 35,060 35,499 34,999
Diluted 35,563 35,060 35,499 34,999
Non-GAAP basic 35,563 35,060 35,499 34,999
Non-GAAP diluted 36,934 35,060 36,638 34,999


IONA Technologies PLC
Unaudited Non-GAAP Statements of Operations
Impact of Non-GAAP Adjustments on GAAP Net (Loss) Income
(U.S. dollars in thousands, except per share data)


Three Months Ended
June 30, 2006
(Unaudited)
---------------------------------

As Reported Adjusts(1) Non-GAAP
--------------------------------

Revenue $ 17,722 $ 0 $ 17,722

Cost of revenue 3,391 (150) 3,241

Gross profit 14,331 150 14,481

Research and development 4,171 (367) 3,804
Sales and marketing 7,541 (310) 7,231
General and administrative 2,965 (418) 2,547
---------- ---------- ----------
Total operating expenses 14,677 (1,095) 13,582

(Loss) income from operations (346) 1,245 899

Income (loss) before provision for
income taxes 78 1,245 1,323

Provision for income taxes 310 0 310

Net (loss) income ($232) $ 1,245 $ 1,013

Net (loss) income per ordinary share
and per ADS
Basic ($0.01) $ 0.04 $ 0.03
Diluted ($0.01) $ 0.04 $ 0.03

Shares used in computing net (loss)
income per ordinary share and per ADS
(in thousands)
Basic 35,563 35,563
Diluted 35,563 36,934



Six Months Ended
June 30, 2006
(Unaudited)
---------------------------------

As Reported Adjusts(1) Non-GAAP
---------------------------------

Revenue $ 34,726 $ 0 $ 34,726

Cost of revenue 6,816 (325) 6,491

Gross profit 27,910 325 28,235

Research and development 8,298 (804) 7,494
Sales and marketing 15,119 (666) 14,453
General and administrative 5,493 (889) 4,604
Amortization of other non-current
assets 0 0 0
Restructuring 0 0 0
---------- ---------- ----------
Total operating expenses 28,910 (2,359) 26,551

(Loss) income from operations (1,000) 2,684 1,684

(Loss) income before provision for
income taxes (322) 2,684 2,362

Provision for income taxes 531 0 531

Net (loss) income ($853) $ 2,684 $ 1,831

Net (loss) income per ordinary share
and per ADS
Basic ($0.02) $ 0.07 $ 0.05
Diluted ($0.02) $ 0.07 $ 0.05

Shares used in computing net (loss)
income per ordinary share and per ADS
(in thousands)
Basic 35,499 35,499
Diluted 35,499 36,638



Three Months Ended
June 30, 2005
(Unaudited)
---------------------------------

As Adjusts Non-GAAP
Reported
---------------------------------

Revenue $ 13,968 $ 0 $ 13,968

Cost of revenue 2,984 0 2,984

Gross profit 10,984 0 10,984

Research and development 3,975 0 3,975
Sales and marketing 7,373 0 7,373
General and administrative 2,175 0 2,175
---------- ---------- ----------
Total operating expenses 13,523 0 13,523

(Loss) income from operations (2,539) 0 (2,539)

Income (loss) before provision for
income taxes (2,153) 0 (2,153)

Provision for income taxes 195 0 195

Net (loss) income ($2,348) $ 0 ($2,348)

Net (loss) income per ordinary share
and per ADS
Basic ($0.07) $ 0.00 ($0.07)
Diluted ($0.07) $ 0.00 ($0.07)

Shares used in computing net (loss)
income per
ordinary share and per ADS (in
thousands)
Basic 35,060 35,060
Diluted 35,060 35,060



Six Months Ended
June 30, 2005
(Unaudited)
---------------------------------

As Adjusts Non-GAAP
Reported
---------------------------------

Revenue $ 30,286 $ 0 $ 30,286

Cost of revenue 5,995 0 5,995

Gross profit 24,291 0 24,291

Research and development 7,983 0 7,983
Sales and marketing 14,533 0 14,533
General and administrative 4,226 0 4,226
Amortization of other non-current
assets 94 0 94
Restructuring (97) 0 (97)
---------- ---------- ----------
Total operating expenses 26,739 0 26,739

(Loss) income from operations (2,448) 0 (2,448)

(Loss) income before provision for
income taxes (1,886) 0 (1,886)

Provision for income taxes 355 0 355

Net (loss) income ($2,241) $ 0 ($2,241)

Net (loss) income per ordinary share
and per ADS
Basic ($0.06) $ 0.00 ($0.06)
Diluted ($0.06) $ 0.00 ($0.06)

Shares used in computing net (loss)
income per
ordinary share and per ADS (in
thousands)
Basic 34,999 34,999
Diluted 34,999 34,999

(1) Adjusted to exclude: stock-based compensation of $1,245,000 for
the three months ended June 30, 2006 and $2,684,000 for the six
months ended June 30, 2006.



IONA Technologies PLC
Condensed Consolidated Balance Sheets
(U.S. dollars in thousands, except share and per share data)


June 30, December 31,
2006 2005(1)
(Unaudited)
-----------------------
ASSETS
Current assets:
Cash and cash equivalents $ 25,337 $ 27,936
Restricted cash 495 495
Marketable securities 29,142 23,685
Accounts receivable, net of allowance for
doubtful accounts of $549 at
June 30, 2006 and
$740 at December 31, 2005 9,787 17,949
Prepaid expenses 2,469 2,033
Other assets 495 921
-----------------------
Total current assets 67,725 73,019

Property and equipment, net 3,384 3,893
Other non-current assets, net 196 191
-----------------------
Total assets $ 71,305 $ 77,103
=======================

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,517 $ 2,406
Accrued payroll and related expenses 4,442 5,385
Other accrued liabilities 10,056 10,226
Deferred revenue 16,693 22,708
-----------------------
Total current liabilities 32,708 40,725

Other non-current liabilities 996 1,137

Shareholders' equity:

Ordinary shares 98 98
Additional paid-in capital 499,184 495,957
Accumulated deficit (461,667) (460,814)
Accumulated other comprehensive loss (14) 0
-----------------------
Total shareholders' equity 37,601 35,241

-----------------------
Total liabilities and shareholders'
equity $ 71,305 $ 77,103
=======================

(1) The December balance sheet information has been derived from the
December 31, 2005 audited consolidated financial statements.