Seagull Software Announces Q3 Results for Financial Year 2005

Reports Third Consecutive Quarter of Revenue Growth and $45K Profit

Dordrecht, The Netherlands and Atlanta le 23 février 2005

ALL FINANCIAL DATA INCLUDED IN THIS PRESS RELEASE IS PRESENTED IN US DOLLARS AND IS NOT AUDITED

Seagull Software (AEX : SEAGULL), a leading provider of software products for connecting legacy applications to Internet architectures, today announced revenue and earnings for the third quarter of Financial Year 2005 (Q3 FY05). For the quarter ended 31 January 2005, the Company achieved revenues of $6.3 million, an increase of 11% as compared to prior quarter revenues of $5.7 million, and an increase of 16% as compared to $5.5 million for the first quarter. On a year-over-year basis, revenues increased by 5% compared with $6 million in Q3 FY04. The company reported a profit for the third quarter, with net income of $45K.

“Seagull Software has posted sequential growth each quarter this year, and we delivered a profit for Q3,” said Don Addington, Seagull Software President & CEO. “As large enterprises embrace Web services and service oriented architecture (SOA) at a growing rate, our LegaSuite platform is filling a correspondingly growing need to rapidly SOA-enable enterprise business applications. We’re encouraged by this trend, and also by market acceptance of our terminal emulator cost-savings program. Over 30 new customers joined the Seagull Software installed base this quarter to service-enable their existing applications and to cut IT costs.“

Total revenue for the nine-month period ended 31 January 2005 was $17.5 million, an increase of 11% as compared to $15.7 million for the corresponding period in the previous financial year. Net loss for the nine-month period ended 31 January 2005 was $1.4 million (excluding restructuring cost of $1.1 million). This compares with a net loss of $4.4 million in the corresponding period of the previous financial year.

Gross margin was $4.9 million or 78% of total revenues, as compared to gross margin of $4.9 million or 81% of total revenues for the corresponding quarter in the previous year. Total operating expenses for the sales & marketing, research & development and administrative functions were $4.9 million, 9% lower than expenses of $5.4 million reported for the same period in the previous financial year.

“Profitability this quarter reflects a combination of sustained revenue performance, plus the positive impact of consolidation of our European development labs announced in September 2004,” commented Mory Motabar, Seagull Software CFO. “We are very pleased with our Q3 results.”

Business Highlights

During Q3 FY05, Seagull Software achieved new and follow on transactions with customers such as AFLAC, American Century, Bank of America, Bank Saderat, Capgemini UK, Continental General Insurance Company, DST Systems, Fetzer GmbH, Graco, Metavante Corporation, New England Motor Freight, Powerlink Queensland, Ryder Truck Rental, Inc. and State of Florida. A total of 32 new customers joined the Seagull Software installed base during the period.

The Company also announced the appointment of two news sales executives in Q3 : Stephen P. Tickhill, a former sales executive with Sun Microsystems, as vice president of sales for the United Kingdom and Ireland and John Overholt, a former sales executive with Geac and Texas Instruments, as a vice president of enterprise sales for North America.

The Company plans to publish fourth quarter and annual financials for the Financial Year ending 30 April 2005 in June.