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Graphisoft Reports 17th Consecutive Year of Double-Digit Revenue Growth and Profitability

Operating and net income remain high in the company's most dynamic year to date

Budapest - March 10, 1999

Graphisoft® (Frankfurt Neuer Markt: GPH), developer of the award-winning integrated architectural CAD program ARCHICAD®, today announced record-high revenues in 1998, representing almost 15% growth over 1997. Strong demand for new and upgrade units of ARCHICAD 6.o brought fourth quarter and FY 1998 revenues to TDM 13,219 and TDM 44,073 respectively, exceeding analysts expectations.

"In 1998, Graphisoft released ARCHICAD 6.o, the most comprehensive upgrade to date; developed new products based on ARCHICAD technology; significantly expanded its sales channel; and made its debut on the Frankfurt Stock Exchange," said President and CEO Gábor Bojár. "Our performance in 1998 shows that Graphisoft was able to move successfully from the private to the public sector and launch significant initiatives to open new markets, while increasing software sales and achieving its 17th consecutive year of double-digit revenue growth and profitability. With such a strong balance sheet, we are poised for accelerated growth in 1999."

Europe bolstered Graphisoft's revenue growth in the fourth quarter with a 38.4% increase in sales over the same period of 1997. Exceptional annual growth was achieved in Germany (44.9%), the UK (67.0%), France (55.7%) and Italy (69.1%). North American sales grew 30.4% in 1998 over 1997, a remarkable three times the overall growth rate of the North American AEC CAD market. While annual revenue in Asia/Pacific was off 40.8% compared to 1997, Graphisoft continued to gain significant market share over local competitors in this very difficult year for the region. The Rest of the World finished the year with positive growth of 5.6%.

Growth in ARCHICAD unit sales accounts for the company's 1998 revenue gains. Graphisoft sold almost 14,000 new professional units of ARCHICAD in 1998 and more than 15,000 upgrades. The company also made important inroads in 1998 to expand its business beyond ARCHICAD software sales with the first implementation of its object-based retailing solution "SalesCAD" at Europe's BauMax-x stores. Another product, "ARCHICAD for building management," will further broaden Graphisoft's Virtual Building concept by helping building owners manage their buildings.

In addition to developing new markets around ARCHICAD technology in 1998, Graphisoft released the first Software Development Kit (SDK) allowing third party developers to create programs that will work inside ARCHICAD 6.o and add specific functions such as shadow calculation, wood framing, piping and molding.

Operating expenses grew 8% in the three months and 22% in the twelve months ended December 31, 1998, compared to the same periods of 1997. The slower rate of increase in operating expenses in the fourth quarter is attributable to cost-saving measures implemented by management in September. Sales and Marketing expenses increased for the year, due to an increased presence in the US, the first full-year operation of Graphisoft's offices in the UK and Spain, and an expanded sales and marketing staff in Budapest. R&D expenses for the entire year were higher compared to 1997 as a result of staff expansion and an increase in average compensation, while administrative costs increased only 0.2% for the year.

Operating income remained high at more than 24.4% of revenues for the last quarter of 1998 and 23.7% of revenues for the year. This latter figure represents a 0.5% increase over the exceptionally high profit level of 1997 and provided a secure and stable basis for continued investment in R&D, sales, marketing and other activities that position the company for expanding growth in the coming years. Fourth quarter operating income per share was 42.9% higher than third quarter operating income per share and 36.4% higher than second quarter operating income per share.

At 28.7% of revenues for the last quarter and 29.2% of year-to-date revenues, Graphisoft's net income remained higher than its operating income because of interest income on cash reserves, currency transaction gains and a preferential tax environment for our Hungarian operation.

"Our global balance, conservative financial control and focused strategy of implementing our proprietary Virtual Building™ and object technology throughout the building industry will continue to guide our company and provide the foundation for its continuing growth," said Bojár.

The fourth quarter and FY 1998 (audited) results are as follows:

  3 Months ended Dec. 31, 1998 % to '97, same period 12 Months ended Dec. 31, 1998 % to '97 same period
Revenues¹ 13,219 7.5 % 44,073 14.7 %
Operating Income¹ 3,220 -12.2 % 10,424 0.5 %
Operating Income per share² 0.30 -22.7 % 1.00 -7.8 %
EBIT¹ 3,852 -12.2% 14,420 5.0%
EBITDA¹ 4,226 -8.6% 15,749 7.0%
Net Income¹ 3,788 -12.8% 12,868 -5.3%
Net Income per share² 0.35 -23.2% 1.23 -13.2%

1) Figures are in Thousand German Marks.
2) Per share figures are in German Marks.

Graphisoft is a leading provider of computer-aided design (CAD) software solutions for the architectural profession and the building industry. Founded in 1982, Graphisoft is ranked today among the largest AEC CAD software developers in the world, with 12 offices all over the world in addition to its headquarters. Graphisoft's flagship product, ARCHICAD, is used by more than 75,000 architects worldwide and distributed in 25 languages and 80 countries. Shares of Graphisoft are traded on the Frankfurt Stock Exchange Neuer Markt under the symbol GPH. More information about Graphisoft is available at

This press release contains statements that are forward looking. These statements are based on current expectations that are subject to risks and uncertainties. Actual results may vary because of factors such as technological shifts; customer demand; competitive products and pricing; shipping schedules; litigation; and other issues.

Graphisoft and ARCHICAD are registered trademarks of Graphisoft R&D Rt. All other trademarks mentioned are the properties of their respective owners.