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Ad hoc Disclosure

Software AG achieves objectives for first quarter 2005

Darmstadt, 12/04/2005

Software AG (Frankfurt, SOW) has achieved its financial objectives for the first quarter of 2005 to March 31. On the basis of the preliminary results, total revenue for the period increased by 6% (net of currency) to approximately € 100 million. As a result, Software AG already succeeded in the first quarter in reaching the upper limit of the 4% to 6% (net of currency) range set as a target for the full year 2005. Total license revenue increased by 15% to approximately € 27 million. License revenue for Enterprise Transactions Systems rose by 9%, confirming the stability of this business line. Of particular note was the progress achieved in XML Business Integration. License revenue for this business line increased by 33% (or more than 50% including third party sales), reflecting the launch in the first quarter of new products which gained traction in the market more rapidly than planned. Revenue for maintenance was little changed in comparison with the previous year at approximately € 44 million, while revenue from professional services increased by 4% to approximately € 29 million. On the strength of the higher revenue and sustained cost control, the operating EBIT margin rose to 17% to 18% in comparison with 15,8% for the year-ago period.

“The preliminary results confirm that we are well on our way to achieving our objectives for the current year,” said CEO Karl-Heinz Streibich. “The double-digit increase in license revenue in XML Business Integration – for the second quarter in a row – shows that we have successfully motivated our sales force and confirms that our strategy for our integration business is on target and accepted by the market. We have also maintained cost discipline while growing the business through the introduction of new products and expansion in new geographical markets. This is reflected in the higher EBIT margin for the first quarter. While the preliminary results for the first quarter are very positive, we do not intend to revisit our guidance for 2005 at this time. ”

Software AG will announce its detailed results for the first quarter of 2005 on April 28.  

Software AG provides a real-time single view of strategic business information by integrating applications and systems, in addition to modernizing mainframe and open system IT environments. Its offerings are based on the product families Adabas, Natural, EntireX and Tamino. Around 2,500 employees in 59 countries support the mission-critical systems of 3,000 customers around the world. The company maintains five R&D facilities across three continents. Founded in 1969, Software AG today is Europe’s largest and most established systems software provider. It is headquartered in Darmstadt, Germany and is listed on the Frankfurt Stock Exchange (TecDAX, ISIN DE 0003304002 / SOW). In 2004 Software AG posted 411 million euros in total revenue.

Contact:
Software AG
Susanne Eyrich
VP Corporate Communications
Uhlandstrasse 12
64297 Darmstadt
Germany
Tel: +49 6151 92-1201
Fax: +49 6151 92-1621
press@softwareag.com
http://www.softwareag.com