Applix Growth Continues as Qyarterly License Revenue Increases 15%; Total Revenue Rises 31%

Company re-affirms outlook for 2007
(PresseBox) (München, ) Applix, Inc. (NasdaqGS: APLX), a leading business analytics software solutions provider, today reported that total revenue for the quarter ended June 30, 2007 was $17.44 million, a 31 percent increase over revenue of $13.32 million in the second quarter of 2006. License revenue for the second quarter of 2007 was $9.42 million, a 15 percent increase compared to $8.19 million for the same period in 2006.

Net income for the second quarter of 2007, as reported in accordance with U.S. generally accepted accounting principles (GAAP), was $2.13 million, or $0.12 per diluted share, compared to net income of $2.33 million, or $0.14 per diluted share, for the year ago period.

Second quarter 2007 non-GAAP net income was $2.78 million, or $0.15 per diluted share, after excluding $850,000 of stock-based compensation charges, $192,000 of amortization costs primarily associated with the Company’s acquisition of Temtec International B.V. in June 2006, $35,000 of legal and indemnification expenses related to the Securities and Exchange Commission (SEC) investigation and the related income tax benefit of $431,000 on these non-GAAP adjustments. In the second quarter of 2006, non-GAAP net income was $3.13 million, or $0.19 per diluted share, reflecting the exclusion of stock-based compensation, amortization costs and SEC investigation-related legal and indemnification expenses of $550,000, $62,000 and $211,000, respectively, and the related income tax benefit of $19,000 on these non-GAAP adjustments. The SEC investigation was settled with respect to Applix in January 2006, with no monetary penalty assessed.

David C. Mahoney, President and Chief Executive Officer of Applix, said, “Our second quarter results show clearly that we are executing well on our growth strategy, emerging as a leader in the increasingly important Business Analytics sector. Even when compared to a strong quarter last year, we produced marked gains, especially in North America. At the same time, we are working diligently to expand our business opportunities in both the mid-market and enterprise sectors in geographies around the world. This is evidenced by our recent product enhancements including a Unicode release, providing important support to customers in the broader international markets, and the launch of new marketing initiatives including a bolder advertising campaign designed to increase awareness of Applix with both the CFO and the CIO. We recognize that reaching our growth targets requires continued investments in all areas of the business and a keen focus on our goals, and we are prepared to take the steps necessary to achieve them and thereby extend our leadership position while driving aggressive revenue growth.”

Second Quarter Business Highlights

- Applix held its annual international user conference in Orlando, Florida, attracting record attendance and providing current customers and prospects with new insights on the use of Business Analytics through the Applix platform.

- Applix added new customers from around the world, including Circuit City, Cato Corporation, Radeberger Gruppe KG, Provident Financial plc and Meggit Avionics.

- Applix ranked sixth on BusinessWeek’s annual list of “Hot Growth” companies.

Second Quarter Financial Highlights

- Cash and short-term investments grew to $38.14 million at 6/30/07, up from $33.11 million at 3/31/07 and $27.21 million at 12/31/06.

- Gross margin for the second quarter of 2007 was 88.8%, compared to 90.4% in the second quarter of 2006.

- Days sales outstanding was 64 days at 6/30/07, compared to 57 days at 6/30/06.

- 23 customers purchased more than $100,000 in software licenses in the second quarter of 2007, up from 16 in the second quarter of 2006.

- Average license deal size for transactions over $20,000 was between $75,000 - $80,000 in the second quarter of 2007, compared to between $80,000 - $85,000 in the second quarter of 2006.

Milt Alpern, Senior Vice President and CFO of Applix, commented, “Once again, we posted strong operating results, including continued revenue growth and solid gross margins, while also generating an increase in cash and short-term investments of more than $5 million. Our current balances and continued positive operating cash flow enabled us to pay off our outstanding bank debt of approximately $4.9 million associated with the acquisition of Temtec in mid-2006, following the end of the quarter. We are continuing to invest in our sales and marketing programs, in order to deliver upon the growth opportunity that we see for Applix, and enable us to produce the industry-leading growth levels we have forecasted for the remainder of the year.”

Six Months Results

Total revenue for the first half of 2007 was $31.34 million, a 40 percent increase over total revenue of $22.31 million for the first half of 2006. License revenue in the first six months of 2007 was $16.53 million, a 31 percent increase over license revenue of $12.62 million in 2006’s first half. Net income on a GAAP basis in the 2007 first half was $2.89 million, or $0.16 per diluted share, compared to $2.42 million or $0.15 per diluted share, in the same period in 2006. On a non-GAAP basis, net income for the first half of 2007 was $4.20 million, or $0.23 per diluted share, reflecting the exclusion of stock-based compensation, amortization costs and SEC investigation-related expenses of $1.59 million, $447,000 and $147,000, respectively, and the related income tax benefit of $873,000 on these non-GAAP adjustments. In the same period in 2006, non-GAAP net income was $3.96 million or $0.24 per diluted share, reflecting the exclusion of stockbased compensation, amortization costs and SEC investigation-related expenses of $1.05 million, $125,000 and $408,000, respectively, and the related income tax benefit of 38,000 on these non-GAAP adjustments.

Financial Outlook for 2007

Applix is today re-affirming the financial outlook for the Company for 2007 it first provided on February 8, 2007 and re-affirmed on April 26, 2007. The Company continues to target total revenue of $67 - $70 million and license revenue of $38.5 - $40.5 million. Applix is targeting diluted earnings per share for 2007 on a GAAP basis between $0.31 - $0.38, based upon an assumed weighted average number of diluted shares of 18,500,000 and an estimated effective tax rate of 40%. The increase in the effective tax rate to 40% is primarily due to the reversal of the valuation allowance on domestic net operating losses. On a non-GAAP basis, excluding the expected annual impact of stock-based compensation charges of $3.2 million, or $0.17 per diluted share, amortization costs of $840,000, or $0.05 per diluted share, SEC investigation-related expenses of $300,000, or $0.02 per diluted share, and the related income tax benefit of $1.7 million, or $0.09 per diluted share, on these non-GAAP adjustments, the company’s forecast for annual earnings is between $0.46 - $0.53 per diluted share. Neither forecast reflects the impact of foreign exchange, which cannot be predicted.

Investor Conference Call and Webcast

The senior management of Applix will host a conference call and Webcast to discuss the second quarter results tomorrow morning, Friday, July 27, 2007 at 8:30 am ET. To access the call, please dial 1-866-383-8008, using the confirmation code 41775839. Internationally, the call may be accessed by dialing 1-617-597-5341, using the same confirmation code. To listen via live audio Webcast, please visit the Company’s website, www.applix.com at least ten minutes prior to the start of the call. The Webcast will be available as a replay starting one hour after the call is completed at the same location.

Use of Non-GAAP Financial Measures

The non-GAAP financial measures included in this press release are different from those presented under U.S. GAAP as these non-GAAP measures exclude certain non-cash charges, such as amortization of intangible assets and stock-based compensation expense, and other non-recurring items. Applix has provided these measures in addition to U.S. GAAP financial results because management believes that these non-GAAP measures provide a consistent basis for comparisons between quarters and of growth rates year-over-year that are not influenced by certain non-cash charges, impacts of prior period acquisitions or other non-recurring items, and therefore are helpful in understanding the company’s underlying operating results. Reconciliations of U.S. GAAP to non-GAAP results are presented at the end of this press release.

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Applix GmbH
Boschetsrieder Str. 67
D-81379 München
Nicole Gryzewski
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