CDCS Cdc Software Corp. ADS, Each Representing One Class A Ordinary Share (MM)

CDC Software Corporation (NASDAQ: CDCS), a hybrid enterprise software provider of on-premise and cloud deployments, today announced that, based on preliminary financial projections and estimates, the company expects first quarter 2010 application sales, which is comprised of license revenue plus new total contract value for Software-as-a-Service (SaaS) sales secured during the first quarter of 2010, to increase by approximately 14 percent to $8.2 million from $7.2 million in the first quarter of 2009. Total Non-GAAP recurring revenue,a which CDC Software defines as Non-GAAP maintenance plus SaaS revenue, is also expected to increase by approximately 13 percent to $27.4 million in the first quarter of 2010 from $24.2 million in the first quarter of 2009.

First quarter 2010 license revenue is expected to be $7.9 million, and Total Contract Value for new SaaS contracts secured in the quarter is expected to be about $300,000.

“We are pleased to see the solid growth in application sales and recurring revenue this quarter,” said Bruce Cameron, president of CDC Software. “As we have previously stated, our strategy is to develop recurring revenue streams reaching closer to 70 percent of total revenue over the next few years, after completion of our planned SaaS acquisitions and our strategic investments in SaaS companies. Already, we are training our salesforce to cross-sell our SaaS solutions to our large installed base of customers. We are pleased with our SaaS sales momentum at this early stage. While Total Contract Value for the first quarter may appear small, we have seen strong growth as we have closed approximately $800,000 in SaaS business shortly after the end of the first quarter.

“So far, we have completed three cloud acquisitions and are on track to complete more by the end of the year, as well as execute a number of strategic investments and partner relationships like we recently did with Marketbright and eBizNET. In fact, earlier this week, we announced our signing of a term sheet with our largest potential SaaS acquisition to date. As a result, our goal is to reach a $50 million cloud revenue run rate on an annualized basis and an annualized total recurring revenue of $150 million in the first quarter of 2011. With this momentum, we feel confident that our recurring revenue can reach more than 60 percent of our total revenue by the first quarter of 2011 which is more than half way to our goal of 70 percent. Another exciting trend we have seen is that our second quarter to date sales pipeline has increased by approximately 60 percent compared to the same period in the second quarter in 2009.”

Cameron added, “We also are especially pleased with the steady sales progress CDC Software has made in emerging countries such as China and India where those economies are recovering faster than the U.S. and other parts of the world. Now, we have been seeing more growth coming from these emerging international markets than from the U.S. In fact, our first quarter 2010 license sales outside North America totaled 57 percent compared to 51 percent in the fourth quarter of 2009. With estimated cash of approximately $46.7 million at the end of the first quarter, we believe we are well positioned to continue our steady R&D investments and to take advantage of further growth in emerging markets such as China, despite the slow economic recovery in the U.S. and in other countries. With our solid business fundamentals in place and a strong financial foundation, we believe that we are poised to continue growth through organic and cross-sell sales opportunities, as well as synergistic acquisitions and investments in both the on-premise as well as the Software as a Service (SaaS) models.”

CDC Software will be announcing its first quarter 2010 results on April 28 at approximately 7:30AM EDT with the earnings call following at 9:00AM EDT.

About CDC Software

CDC Software (NASDAQ: CDCS), The Customer-Driven Company™, is a hybrid enterprise software provider of on-premise and cloud deployments. Leveraging a service-oriented architecture (SOA), CDC Software offers multiple delivery options for their solutions including on-premise, hosted, cloud-based Software as a Service (SaaS) or blended-hybrid deployment offerings. CDC Software’s solutions include enterprise resource planning (ERP), manufacturing operations management, enterprise manufacturing intelligence, supply chain management (demand management, order management and warehouse and transportation management), e-Commerce, human capital management, customer relationship management (CRM), complaint management and aged care solutions.

CDC Software’s recent acquisitions are part of its “acquire, integrate, innovate and grow” strategy. Fueling the success of this strategy is the company’s global scalable business and technology infrastructure featuring multiple complementary applications and services, domain expertise in vertical markets, cost effective product engineering centers in India and China, a highly collaborative and fast product development process utilizing Agile methodologies, and a worldwide network of direct sales and channel operations. This strategy has helped CDC Software deliver innovative and industry-specific solutions to more than 6,000 customers worldwide within the manufacturing, distribution, transportation, retail, government, real estate, financial services, health care, and not-for-profit industries. For more information, please visit www.cdcsoftware.com.

About CDC Corporation

The CDC family of companies includes CDC Software (NASDAQ: CDCS) focused on enterprise software applications and services, CDC Global Services focused on IT consulting services, and outsourced R&D and application development, CDC Games focused on online games, and China.com, Inc. (HKGEM:8006) focused on portals for the greater China markets. For more information about CDC Corporation (NASDAQ: CHINA), please visit www.cdccorporation.net

Footnote:

All dollar amounts are in U.S. dollars

(a) Adjusted Financial Measures

This press release includes information on Non-GAAP maintenance and SaaS revenue, which is not prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) (a "Non-GAAP Financial Measure"). Non-GAAP Financial Measures are not alternatives for measures such as revenues prepared under GAAP. Non-GAAP Financial Measures may also be different from non-GAAP measures used by other companies. Non-GAAP Financial Measures should not be used as a substitute for, or considered superior to, measures of financial performance prepared in accordance with GAAP.

Investors should be aware that Non-GAAP Financial Measures have inherent limitations, including their variance from certain of the financial measurement principals underlying GAAP, should not be considered as a replacement for GAAP performance measures, and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. These supplemental Non-GAAP Financial Measures should not be construed as an inference that the Company's future results will be unaffected by similar adjustments to revenue determined in accordance with GAAP.

The following table reconciles GAAP maintenance plus SaaS revenue to non-GAAP maintenance plus SaaS revenue (amounts in millions of USD):

   

Q1 2010

     

Q1 2009

GAAP maintenance plus SaaS revenue $ 26.6 $ 24.2 Deferred revenue grind $ 0.8 $ 0 Non-GAAP maintenance plus SaaS revenue $ 27.4 $ 24.2

* Special Note Regarding CDC Software Financial Projections

The financial estimates contained herein apply only to CDC Software Corporation, a subsidiary of CDC Corporation. These estimates and projections amounts do not apply to, and are not indicative of, the the expected consolidated financial performance of CDC Corporation, or the expected financial performance of CDC Games Corporation, China.com, Inc. or any of their respective subsidiaries. Investors are cautioned not to place reliance on the financial estimates and projections set forth herein for purposes of any investment decision with respect to the shares of CDC Corporation, and should read the foregoing in conjunction with the reports and other materials filed with the United States Securities and Exchange Commission by CDC Corporation and CDC Software Corporation, from time to time.

Cautionary Note Regarding Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our beliefs about Q1 2010 application sales, license revenue and SaaS revenue as well as total recurring non-GAAP revenue, our beliefs regarding total contract value for new SaaS contracts secured in the first quarter of 2010, our beliefs and expectations regarding projected increases in the number of enterprise and SaaS deals in the first quarter of 2010 and the geographic distribution thereof, our strategy and goals with respect to recurring revenue streams and our expectations for total maintenance and SaaS revenues, our beliefs and plans regarding the completion of additional SaaS acquisitions and strategic investments and our progress with respect thereto, our expectations regarding the completion of any acquisitions, our beliefs regarding the potential amounts of recurring revenue we may achieve and the timelines for achieving our goals, our beliefs regarding certain trends we have noticed with respect to sales pipelines, our beliefs regarding progress we have made in emerging countries, our beliefs regarding our cash position, continuation of our R&D investments and our position to take advantage of growth in emerging markets, our beliefs regarding our ability to continue our growth through organic and cross-sell sales, as well as synergistic acquisitions, and other statements that are not historical fact, the achievement of which involve risks, uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions proves incorrect, our results could differ materially from the results expressed or implied by the forward-looking statements we make. These statements are based on management's current expectations and are subject to risks and uncertainties and changes in circumstances. There are important factors that could cause actual results to differ materially from those anticipated in the forward looking statements, including the following: (a) the ability to realize strategic objectives by taking advantage of market opportunities in targeted geographic markets; (b) the ability to make changes in business strategy, development plans and product offerings to respond to the needs of current, new and potential customers, suppliers and strategic partners; (c) the effects of restructurings and rationalization of operations; (d) the ability to address technological changes and developments including the development and enhancement of products; (e) the entry of new competitors and their technological advances; (f) the need to develop, integrate and deploy enterprise software applications to meet customer's requirements; (g) the possibility of development or deployment difficulties or delays; (h) the dependence on customer satisfaction with the company's software products and services; (i) continued commitment to the deployment of the enterprise software solutions; (j) risks involved in developing software solutions and integrating them with third-party software and services; (k) the continued ability of the company's enterprise software solutions to address client-specific requirements; (l) demand for and market acceptance of new and existing enterprise software and services, the positioning of the company's and its partners’ solutions, as well as the success of any of our strategies; (m) the ability of staff to operate the enterprise software and extract and utilize information from the company's enterprise software solutions; (n) the continued cooperation of our strategic and business partners; (o) risks relating to economic conditions and other matters beyond our control; (p) the ability to complete and integrate any acquisitions we may undertake; (q) the risk that the preliminary financial results provided herein could differ from our actual results. Further information on risks or other factors that could cause results to differ is detailed in our filings or submissions with the United States Securities and Exchange Commission, and those of our ultimate parent company, CDC Corporation, located at www.sec.gov. All forward-looking statements included in this press release are based upon information available to management as of the date of the press release, and you are cautioned not to place undue reliance on any forward looking statements which speak only as of the date of this press release. All estimates contained herein regarding Q1 2010 performance are based upon preliminary financial projections and estimates. The company assumes no obligation to update or alter the forward looking statements whether as a result of new information, future events or otherwise. Historical results are not indicative of future performance.