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Third Quarter Results Show Consistent Revenue and Profit Growth for Graphisoft

Company on target to meet year-end goals

Budapest, November 9, 2000 - Graphisoft announced today that, based on its third quarter results, the Company is in line to meet the goals set for the year 2000. Revenues in the three months and nine months ended September 30, 2000, were €7.3 million and €22.7 million, respectively.

New acquisitions helped boost the overall revenue growth to over 30%, with the organic business growing by more than 20%. Organic business led profitability with an increase of close to 40%, contributing to the overall profit growth of close to 20%.

Key figures*

3 months ended September 30

9 months ended September 30

Organic business

With new acquisitions

Organic business

With new acquisitions

2000

Change

2000

Change

2000

Change

2000

Change

Revenues

6,688

21.3%

7,269

31.8%

20,872

21.3%

22,713

32.0%

Gross profit

5,533

22.9%

6,091

35.3%

17,298

21.4%

19,019

33.4%

Operating expenses

4,667

9.2%

5,529

29.4%

13,778

16.4%

16,156

36.5%

Operating income

866

278.2%

562

145.4%

3,520

45.7%

2,863

18.5%

EBITDA

1,319

142.0%

1,124

106.2%

4,678

41.6%

4,264

29.1%

Net income

1,354

62.5%

1,058

27.0%

4,466

37.5%

3,815

17.5%

Net income per share (€/share)

0.13

63.2%

0.10

27.5%

0.42

40.5%

0.36

20.1%

* All amounts are in thousand EURO, earnings per share is in EURO

"These financial results prove that Graphisoft's proaction in the changing market was on target. We have created new products to extend the value of our core product, and acquired businesses that can help us in this goal," said Gábor Bojár, Graphisoft's president and CEO. "The year 2001 promises to be even more dynamic, as the new version of ARCHICAD will be released, and we expect that the revenue generated by the new elements of our business, including the GDL object technology and ArchiFM 2000, will increase in proportion to our traditional product line."

Graphisoft achieved more than 20% revenue growth in the organic business and over 30% increase including new acquisitions, both in the three and nine months ending September 2000. As Graphisoft's increasing ARCHICAD sales revenue attests, the Company is successfully convincing potential clients - many of whom are using a 2D drafting oriented CAD solution - to migrate to the Virtual Building™ based ARCHICAD solution.

The distribution channels for ArchiFM have been further developed in the third quarter. With Drawbase's strong commitment to ArchiFM sales, Graphisoft has substantially increased its presence in the US market, by offering both an architectural CAD and facility management solution. Several renowned companies, including Novartis Forschungszentrum, Wien (R&D center of the multinational pharmaceutical company), concluded ArchiFM contracts in the third quarter. Additionally, Graphisoft's two UK-based subsidiaries, Graphisoft UK Ltd., London, and Cymap Ltd., Bristol, have begun co-marketing ARCHICAD and CADLink as an integrated architectural-building services solution portfolio, and CADLink 9.0 and CADLink Exchange are now being distributed in five countries through the Graphisoft distribution network.

Graphisoft made considerable progress in the strategically key business area of GDL Object Technology in the third quarter, with more than 100,000 electronic building products available in 3D electronic format by the end of September 2000. In order to capitalize on the increasing demand for GDL elements, Graphisoft plans to channel the GDL business activities into a new subsidiary with a dedicated focus.

In Europe, sales of Graphisoft products were typically strong, contributing €4.1 million in the three, and €13.5 million in the nine-month period. In addition to outstanding results in France, the UK, Switzerland and Scandinavia during the first nine months, revenues in Germany reached €4.3 million constituting 31.4% of European sales in the first three quarters.

North American sales exceeded the average through the whole year, and received a large boost in the last three months from sales of new products and revenues from the recently acquired Drawbase.

The Asia/Pacific region achieved a more than 40% revenue increase in 2000, compared to the same nine months of 1999, resulting in €1.2 and €3.9 million sales in the three and nine month periods, respectively. Revenue growth was the most dynamic in Australia, New Zealand and Japan.

In the Rest of the World, Graphisoft's Chilean and Brazilian subsidiaries and Mexico took the lions' share of the increase. Revenues grew from €459 thousand in the first nine months of 1999 to €732 thousand in the same period of 2000.

Operating expenses increased according to the business plan, by 29.4% and 36.5%, respectively, in the three and nine month periods of 2000. The Company invested €3.6 million or 15.8% of revenues in software development, as compared to €2.0 million or 11.5% of revenues in the same nine-month term of 1999. More than 60% of the increase is due to the US- and UK-based software development of Graphisoft's new acquisitions.

Graphisoft's share performance in the first six months of the year exceeded that of the main technology index performances in the global arena, whereas in the third quarter it mainly followed their trends.

The complete Third Quarter Results can be found here.