CDC Software Reports Third Quarter 2010 Non-GAAP Revenue of $54.2 Million and Non-GAAP EPS of $0.25, Exceeding Consensus Estimates

Third Quarter Highlighted by $12.0 million in Operating Cash Flow, Increased License Sales, Significant New Logo Sales, Record Cross Selling and Expansion in Emerging Markets

ATLANTA & SHANGHAI — (BUSINESS WIRE) — November 11, 2010 — CDC Software Corporation (NASDAQ: CDCS), a hybrid enterprise software provider of on-premise and cloud deployments, today announced financial results for the third quarter ended September 30, 2010. Non-GAAP revenue(a) was $54.2 million and Non-GAAP net income(a) was $7.0 million, or $0.25 in Non-GAAP earnings per share(a) (Non-GAAP EPS), compared to Non-GAAP revenue of $48.6 million and Non-GAAP net income of $9.6 million, or $0.33 in Non-GAAP earnings per share, in the third quarter of 2009. Operating cash flow in the third quarter of 2010 was $12.0 million.

Third quarter 2010 Adjusted EBITDA(a) was $10.1 million, compared to $13.2 million in the third quarter of 2009. The company’s third quarter 2010 Non-GAAP EPS, Adjusted EBITDA and Non-GAAP revenue exceeded current First Call consensus estimates of $0.22 per share for Non-GAAP EPS, $9.0 million for Adjusted EBITDA and $53.9 million for Non-GAAP revenue. CDC Software’s cash and cash equivalents totaled $36.4 million as of September 30, 2010. Third quarter 2010 Adjusted EBITDA margin(a) was 19 percent, compared to 27 percent in the third quarter of 2009.

Third quarter 2010 license revenue increased by 18 percent to $9.0 million, compared to $7.6 million in the third quarter of 2009. Non-GAAP SaaS revenue(a) increased 48 percent to $3.9 million, compared to $2.6 million in the second quarter of 2010. The number of enterprise sales deals increased to 348 in the third quarter of 2010, compared to 247 in the third quarter of 2009. Approximately 54 percent of CDC Software’s total license revenue was derived from North America, 30 percent from EMEA, and 16 percent from Asia/Pacific.

“Overall, we are pleased with third quarter 2010 results including our 18 percent growth in license revenue, 12 percent increase in Non GAAP revenue compared to the third quarter of 2009, significant expansion in application sales, and solid cash flow from operations of $12.0 million,” said Bruce Cameron, president of CDC Software. “Our third quarter Non-GAAP revenue, Adjusted EBITDA and Non-GAAP EPS beat consensus estimates despite the company’s transition to its hybrid software model, which required increased upfront costs for sales, marketing and R&D. Therefore, we believe we are on track to meet Non-GAAP EPS estimates of $1.02-$1.08 for 2010 and consider our EPS to be among the highest in our selected software peer group.

“Specifically, our European business saw significant growth in the third quarter, with the U.K. region achieving its best quarter in two years for software license sales. We have also achieved our highest cross-sell revenue in more than two years, which was highlighted by a recent six figure deal with a CDC Supply Chain customer that selected our CDC eCommerce cloud solution. For our on-premise solutions, we had the highest number of new logo sales for Ross ERP in two years, significant new logo sales with our CDC Platinum HRM solutions and the CDC Factory product line generated the highest dollar revenue of new logo business of all the CDC Software Business units and product lines. We believe these recent sales achievements illustrate the success of our hybrid business model, especially with our performance in cross-sell deals between our SaaS and on-premise solutions.”

Third quarter 2010 application sales increased 84 percent to $14.0 million, from $7.6 million in the third quarter of 2009. Application sales are comprised of license revenue plus new secured total contract value (STCV) of SaaS contracts. STCV is the contract dollar amount for the duration of the contracts for all SaaS contracts secured, including new logo contracts, upsell, rental, as well as all renewals received by the end of the quarter.

The strong growth in application sales was primarily due to organic growth in the company’s core on-premise and acquired SaaS product lines, especially in new logo customers. The third quarter was highlighted by several large deals that included two seven digit sales and services deals (one for the CDC TradeBeam cloud solution and the other for the CDC Factory on-premise plant floor solution), another three-quarters of a million dollar sale for CDC TradeBeam and a sizeable Pivotal CRM on-premise license sale in Russia.

Third quarter 2010 Total Contracted Backlog (TCB) was $133.9 million, compared to $99.3 million in the third quarter of 2009. TCB is the sum of the remaining revenue value of SaaS and term license or rental contracts through the end of their respective terms, the value of contracted renewals for current SaaS and rental contracts based on 12 months of value, plus annualized maintenance revenues from existing on-premise contracts based on the rolling average of the previous 12 months. The company’s third quarter 2010 SaaS renewal rate was approximately 94 percent.

Total Non-GAAP recurring revenue(a), which CDC Software defines as Non-GAAP maintenance revenue(a) plus Non-GAAP SaaS revenue, was $29.8 million in the third quarter of 2010, compared to $25.4 million in the third quarter of 2009. CDC Software did not begin separately reporting SaaS revenue until the fourth quarter of 2009. Third quarter 2010 Non-GAAP maintenance revenue was $26.0 million, compared to $25.4 million in the third quarter of 2009. CDC Software has also continued to achieve a maintenance retention rate of approximately 90 percent. Third quarter 2010 Non-GAAP services revenue was $14.8 million, compared to $14.9 million in the third quarter of 2009.

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