Software AG Achieves Second Quarter Financial Targets Despite More Difficult Market...

Software AG Achieves Second Quarter Financial Targets Despite More Difficult Market Conditions

-- Consolidated revenue (currency-adjusted) up 18 percent

-- License revenue (currency-adjusted) up 15 percent

-- EBIT up 11 percent

-- Earnings per share rise to EUR 0.95

-- Revenue and margin forecasts for the full year reconfirmed
RESTON, Va.--(Business Wire)--
The second quarter of 2008 saw Software AG (Frankfurt TecDAX: SOW)
achieve its financial targets and therefore continue the rise in
earnings reported in recent quarters. Both product revenue and total
revenue in the two business divisions were within expectations.
Consolidated revenue (IFRS) amounted to EUR 168.8 million (Q2 2007:
EUR 152.2 million), a rise of 11 percent (currency-adjusted: 18
percent). The company increased license revenue to EUR 61.4 million
(Q2 2007: EUR 57.3 million) and maintenance revenue to EUR 61.8
million (Q2 2007: EUR 51.4 million). Adjusted for currency exchange
rate effects, this equates to growth of 15 percent in license revenue
and 30 percent in maintenance revenue. Revenue in the ETS business
division rose to EUR 92.1 million (Q2 2007: EUR 90.6 million), and in
webMethods to EUR 76.7 million (Q2 2007: EUR 61.6 million), equating
to increases of 7 percent and 34 percent respectively on a
currency-adjusted basis. EBIT was up by 11 percent to just under EUR
41 million, with the EBIT margin increased to 24.3 percent (Q2 2007:
24.1 percent).

Karl-Heinz Streibich, CEO of Software AG, explained: "The second
quarter results are in line with our forecasts both for the company as
a whole and for the ETS and webMethods business divisions. We also
expect to see growth in revenue in the second half of the year,
particularly in the fourth quarter. Given the changes to our sales and
marketing organization that we carried out in May, I'm confident that
we will achieve the challenging targets that we set ourselves for
2008."

Arnd Zinnhardt, CFO, added: "The stability we achieved in the
second quarter demonstrates that we are on the right track and we are
confident that we will be able to achieve our target EBIT margin of 24
percent. We will also continue to push ahead with the streamlining of
our cost structure."

In Q2 2008, license revenue in the webMethods business division
was a total of EUR 26.6 million (Q2 2007: EUR 24.5 million), a
currency-adjusted increase of 19 percent compared to the equivalent
period in 2007. Growth in webMethods license revenue in the EMEA
region was up slightly in the second quarter and growth in the U.S.
business continued to be robust. Maintenance revenue in the webMethods
business division climbed, as a result of both organic growth and
acquisitions, to EUR 22.5 million (Q2 2007: EUR 11.8 million), a rise
of 91 percent (currency-adjusted: 108 percent). The Professional
Service business generated revenue of EUR 27.6 million compared with
EUR 25.3 million in the equivalent period in 2007. The lower revenue
increase compared with the product business is attributable to the low
webMethods license revenue in previous quarters.

In Q2 2008, the ETS business division contributed EUR 92.1 million
(Q2 2007: EUR 90.6 million) to total revenue, equivalent to growth of
7 percent on a currency-adjusted basis. Revenue from licenses amounted
to EUR 34.7 million (Q2 2007: EUR 32.8 million), up 11 percent on a
currency-adjusted basis.

A notable development in the ETS business division is the growth
in Brazil, where the company took over direct responsibility for its
sales and marketing at the beginning of the year. Following an
excellent performance in the first half of the year, Software AG is
expecting to see further significant expansion in the business in
Brazil over the rest of the year.

Employees

As of June 30, 2008, Software AG employed 3,427 people (full-time
equivalent) compared with 3,719 as of June 30, 2007. At 754, the
number of employees in Germany was roughly at the same level as in
2007 (June 30, 2007: 763), whereas the number of employees outside
Germany fell to 2,673, down 9.6 percent (June 30, 2007: 2,956).

First six months of 2008

Consolidated revenue for the first six months of 2008 amounted to
EUR 328.2 million (Jan-June 2007: EUR 276.9 million). On a
currency-adjusted basis, this equates to an increase of 26 percent.

License revenue for the first half of the year was EUR 116.8
million, up 12 percent (currency-adjusted: 21 percent) on the
equivalent figure for 2007 of EUR 104.2 million. Maintenance revenue
amounted to EUR 121.1 million, a currency-adjusted increase of 36
percent over the equivalent period in 2007. Revenue from the service
business grew from EUR 74.3 million to EUR 88.7 million.

EBIT for the first six months of 2008 rose by just under 25
percent to EUR 77 million (Jan-June 2007: EUR 61.7 million). The EBIT
margin for the six-month period was up from 22.3 percent in 2007 to
23.5 percent. Operating cash flow reached EUR 60.2 million, up 75.5
percent on the first six months of 2007.

Outlook

The Management Board has confirmed its existing forecast for the
whole of the 2008 fiscal year: growth in consolidated revenue is
expected to be between 24 and 27 percent on a currency-adjusted basis
with the EBIT margin rising to 24 percent. A rise in revenue forecasts
for Brazil will allow the company to counter the risk of an economic
slowdown in established markets. Similarly, the proportion of revenue
growth accounted for by the ETS business division is expected to be
greater than originally planned.

-0-
*T
EUR million Q2 2008 Q2 2007 % Change 2008 forecast
----------------------------------------------------------------------
Constant- Currency-
Currency adjusted
----------------------------------------------------------------------
Financial statements in accordance with IFRS
----------------------------------------------------------------------
Consolidated revenue 168.8 152.2 +11% +18% +(24-27)%
----------------------------------------------------------------------
- License revenue 61.4 57.3 +7% +15% +(24-28)%
----------------------------------------------------------------------
- Maintenance
revenue 61.8 51.4 +20% +30% +(26-28)%
----------------------------------------------------------------------
- ETS business
division 92.1 90.6 +2% +7%
----------------------------------------------------------------------
- webMethods
business division 76.7 61.6 +25% +34%
----------------------------------------------------------------------
EBIT 40.9 36.7 +11% -
----------------------------------------------------------------------
EBIT margin 24.3% 24.1% - 24%
----------------------------------------------------------------------
Net profit 27.1 24.6 +10%
----------------------------------------------------------------------
Earnings per share
(EUR ) 0.95 0.86 +10%
----------------------------------------------------------------------
Free cash flow 23.0 11.8 +95%
----------------------------------------------------------------------

*T

About Software AG

Software AG is the world's largest independent provider of
Business Infrastructure Software. Our 4,000 global enterprise
customers achieve business results faster by modernizing, integrating
and automating their IT systems and processes. As a result, they
rapidly build measurable business value and meet changing business
demands. Based on our solutions, organizations are able to liberate
and govern their data, systems, applications, processes and services -
achieving new levels of business flexibility.

Our leading product portfolio includes solutions for high
performance data management, developing and modernizing applications,
enabling service-oriented architecture, and improving business
processes. By combining our technology with industry expertise and
best practices experience, our customers improve and differentiate
their businesses - faster.

Software AG has almost 40 years of global IT experience and over
3,600 employees serving customers in 70 countries. The company is
headquartered in Germany and listed on the Frankfurt Stock Exchange
(TecDAX, ISIN DE 0003304002 / SOW). Software AG posted total revenues
of EUR 621 million in 2007.

Software AG - Get There Faster

Software AG
John Conley john.conley@softwareag.com
Director of Public Relations
+1 (571) 2627736
or
Norbert Eder norbert.eder@softwareag.com
Vice President Corporate Communications
+49 (0) 6151 92-1146

Copyright Business Wire 2008