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WAYNE, Pa., (June 8, 2007) - - Kenexa® (NASDAQ: KNXA), a leading provider of talent acquisition and retention solutions, today announced it has acquired Dallas-based StraightSource.  For more than 10 years, StraightSource has been providing recruitment process outsourcing (RPO) services to leading Fortune 500 companies. StraightSource offers both comprehensive and modular recruitment solutions through every aspect of the recruitment process.

Kenexa’s Chief Executive Officer, Rudy Karsan, said, “Working together, StraightSource and Kenexa will combine the most experienced recruiters, process consultants and award winning technology and human resource science to create one of the largest and strongest organizations in hiring. By combining shared services, sales and marketing, current customers of both organizations will receive greater support from the collective strength of the two organizations.

The acquisition of StraightSource will provide additional efficiency to Kenexa’s exempt and non-exempt recruitment offering. With its Dallas, Texas area office, StraightSource will expand Kenexa’s geographical reach to better serve customers located in the Dallas metro area and other Southern U.S. locations, while Kenexa’s U.S. and global locations will provide a comprehensive offering of employment branding, talent management, employee assessment, succession planning, analytic tools, and additional support for StraightSource’s current customers.

“This is an exciting next step for both of us”, says Alan Cayton, StraightSource CEO.  “Kenexa is already an award-winning provider in the Talent Acquisition and Talent Management space, and together we’ve significantly raised the bar by creating the most comprehensive suite of solutions available”.

Financial details of the transaction were not disclosed.  The financial results of StraightSource will be consolidated into Kenexa’s overall results beginning in the last month of the second quarter 2007.  As a result, the Company is updating its second quarter guidance to reflect the expected impact from the acquisition.  The Company now expects revenue to be $43.6 to $45.5 million, an increase of $600,000 compared to its original guidance of $43.0 to $44.9 million.  

The Company does not expect the acquisition to have a material impact on its non-GAAP profitability in the second quarter.  As such, the Company’s guidance continues to be non-GAAP diluted earnings per share of  $0.27 to $0.28 for the second quarter of 2007.  The Company expects the transaction to be slightly accretive to its full year 2007 non-GAAP diluted earnings per share, and full year 2007 guidance will be updated when the Company reports its second quarter 2007 financial results.  

Forward-Looking Statements

This press release includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” or words of similar meaning.  These statements may concern, among other things, guidance as to future revenue and earnings, operations, expected benefits from the StraightSource transaction, prospects of the business generally, intellectual property and the development of products.  These statements are based on our current beliefs or expectations and are inherently subject to various risks and uncertainties, including those set forth under the caption “Risk Factors” in Kenexa’s most recent Annual Report on Form 10-K as filed with the Securities and Exchange Commission and as revised or supplemented by Kenexa’s quarterly reports on Form 10-Q.  Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors, Kenexa’s ability to implement business and acquisition strategies or to complete or integrate acquisitions (including StraightSource).  Kenexa does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.

About Kenexa

Kenexa Corporation (NASDAQ:KNXA) provides outsourcing, employee research and software to help organizations more effectively recruit and retain a productive workforce. Kenexa solutions include applicant tracking, onboarding, employment process outsourcing, phone screening, skills and behavioral assessments, structured interviews, performance management, multi-rater feedback surveys, employee engagement surveys and HR Analytics. Headquartered in Wayne, Pa. (outside Philadelphia), more information about Kenexa and its global locations can be accessed at www.kenexa.com.

Non-GAAP Financial Measures

This press release includes the non-GAAP financial measure of non-GAAP diluted earnings per share which excludes stock based compensation and amortization of intangibles associated with recent M&A transactions, including StraightSource.  Kenexa uses this and other non-GAAP financial measures for internal managerial purposes as a means to evaluate period-to-period comparisons.  These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, income from operations before income taxes and interest expense, calculated in accordance with generally accepted accounting principles.  Kenexa reports its numbers on a GAAP and non-GAAP basis each quarter, and provides a reconciliation table between the two for investors.

MEDIA CONTACTS:

Sarah Teten
Kenexa
1-800-391-9557
sarah.teten@kenexa.com

Jeanne Achille
The Devon Group
1-732-224-1000, ext. 11
jeanne@devonpr.com