2. Financial performance

2/3 previous forward

Revenues by type

Licensing business shows robust growth
Our licensing business is continuing its positive growth trend. Licensing revenue rose by 7 percent in Q2 2008 (currency adjusted: 15 percent) to €61.4 million (Q2 2007: €57.3 million).

Licensing revenue in the webMethods division was €26.6 million in Q2 2008, compared to €24.5 million in Q2 2007, corresponding to a 19 percent increase following currency adjustment. In the ETS division, licensing revenue rose by 11 percent following currency adjustment, to €34.7 million (Q2 2007: €32.8 million).

Maintenance business continues encouraging trend
The maintenance business once again made a high overall contribution in Q2 2008: Revenue grew by 20 percent (currency adjusted: 30 percent) to €61.8 million (Q2 2007: €51.4 million).

In the webMethods division, maintenance revenue improved both organically and through acquisitions to €22.5 million (Q2 2007: €11.8 million), which translates into a growth rate of almost 91 percent, or 108 percent following currency adjustment. The ongoing growth in the ETS division is a particular source of satisfaction. Growth in Q2 2008 was 6 percent (currency-adjusted), reaching €39.3 million in revenue (Q2 2007: €39.6 million).

Service business has room for improvement
Professional Services increased its revenue in Q2 2008 by 7 percent to €44.8 million, compared to €41.7 million in Q2 2007.

The service business in the webMethods division grew from €24.1 million to €27.6 million (+14 percent). The lower increase in revenue compared to the product business can be attributed primarily to lower licensing revenue in the previous quarters; these licensing revenues form the basis for subsequent service business. With revenue of €17.3 million, the ETS division maintained the high level of its service business (Q2 2007: €17.7 million).

EBIT once again at record levels
EBITA grew by 17 percent to €44.4 million in Q2 2008 (Q2 2007: €37.9 million). EBIT grew from €36.7 million in Q2 2007 to €40.9 million, an increase of 11 percent. The EBIT margin amounted to 24.3 percent, compared to 24.1 percent in Q2 2007.

At €18.5 million, research and development expenses in Q2 2008 significantly exceeded expenses of €14.8 million in Q2 2007. This 25-percent increase can be attributed primarily to the consolidation of the acquired company webMethods, Inc. Marketing and sales expenses increased slightly by 7 percent to €39.8 million (Q2 2007: €37.2 million) for the same reason.

KEY EARNIINGS INDICATORS

in € million

Q2|2008

Q2|2007

Change
in %

January 1 -
June 30, 2008
January 1 -
June 30, 2007
Change
in %
EBIT 40.9 36.7 11.4 77.0 61.7 24.8
EBITA 44.4 37.9 17.2 84.5 62.9 34.3
Financial income/expense, net -1.4 1.3
-2.9 4.4
Earnings before taxes 39.5 37.9 4.2 74.1 66.1 12.1
Net income 27.1 24.6 10.2 49.6 42.3 17.3
Earnings per share in Euro (basic) 0.95 0.86 10.5 1.74 1.49 16.8