Paris, France and Sunnyvale, Calif. - 26 July 2007

ILOG® today announced the results of its fiscal fourth quarter, highlighted by a record $46.3 million in revenues, net income of $2.5 million and fully diluted U.S. GAAP earnings per share (EPS) of $0.14. This compared with revenues of $34.4 million, net income of $1.8 million, and EPS of $0.10 for the fourth quarter last year.

The Company also announced its 2007 fiscal year revenues which totaled $161.5 million, representing a 21% increase over the prior fiscal year’s revenues of $133.6 million. Fully diluted EPS for the 2007 fiscal year was $0.30 compared with $0.35 last year.

The Company’s recent acquisition of LogicTools increased revenues for the quarter and for the year by $1.5 million and decreased the fully diluted EPS by $.02. The acquisition accounting for LogicTools did not allow the Company to recognise most of LogicTools’ deferred revenues as of the purchase date and triggered substantial amortisation for intangible assets.

“Revenue growth was a strong 35% in the fourth quarter. Overall license growth was excellent at 37% and revenues for Business Rule Management Systems (BRMS) grew an outstanding 55%, as we keep on benefiting from the central role played by rules in both Business Process Management (BPM) and Service Oriented Architecture (SOA) projects. We expect this momentum to continue in the new fiscal year. The integration of LogicTools’ people and its products is also progressing well,” said ILOG Chairman and CEO, Pierre Haren. “However, we incurred some one-time costs during the quarter and our growth entailed higher than expected operational costs, which impacted our profitability. In the new fiscal year, strong license growth and renewed focus on our most profitable product lines should enable us to achieve significantly higher margins.”

ILOG’s non-recurring costs during the quarter mainly included relocation to new office space in Silicon Valley and London to support the expansion of the US and UK subsidiaries.

Revenue growth in Europe was a robust 51% and the U.S grew well at 29%. Asia grew more slowly at 10%.

BRMS Product Demand Strong

BRMS license revenues for the fourth quarter grew 71% year over year. This license growth helped push ILOG’s BRMS revenue growth to 29% for the full 2007 fiscal year compared with 20% growth during the 2006 fiscal year. This growth acceleration is attributed to the increasing maturity of the BRMS market. The quarter was also notable for the number of large deals that were signed, including three totaling about $1 million each, with one of the world’s largest financial services organisations, a leading UK air carrier and a large Canadian bank. A large number of new customers in the insurance space also marked significant fourth quarter deal activity, particularly in Europe where, for example, Generali France, a major insurance underwriter in Europe, selected ILOG JRules.
Without the LogicTools contribution, Optimisation revenue growth was 6%, driven by good execution by the ILOG Direct sales division, revenues from a major ISV, as well as multiple successive development projects initiated by a leading U.S. greeting card company.

Highlights of ILOG’s vertical applications business, which includes LogicTools’ products and ILOG’s PowerOps suite of products, included deals with two consumer products companies. While the Company’s PowerOps suite product revenues fell short of expectations, a second deployment for Plant PowerOps by Danone generated additional consulting revenues in the quarter.

ILOG’s Visualisation products grew 12%, highlighted by repeat business from major Chinese telecom equipment maker, Huawei, and the leading European aircraft maker, EADS/Airbus.

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