Brokat Reports 91 Percent Increase in First Half Revenues.

Business Editors

STUTTGART, Germany--(BUSINESS WIRE)

Aug. 17, 2000

International Business and Licensing are Growth

Engines / Acquisitions Strengthen Platform Technology

Brokat AG Frankfurt (Neuer Markt: BRJ), a leading provider of software for e-business solutions, today announced that in the first six months of 2000 revenues increased by 91 percent, from $20.8 million to $39.78 million over the comparable period in 1999. The Company also made significant strides in its international expansion during the first six months of this year compared to the same period a year ago - as revenues from outside Germany grew six-fold to $23.48 million, or 59 percent of total revenues. Business in the United States was particularly strong in the first half of 2000, as the Company reported revenues of $5.01 million, 12.6 percent of its worldwide total.

Brokat's licensing business also increased significantly during the first half of 2000, as revenues grew to $18.73 million, a 147 percent increase over the comparable period in the previous year. A principal part of this gain occurred in the strategically important area of software licenses, which increased to $9.51 million, a threefold increase over the same period in the previous year.

In the second quarter of 2000, Brokat posted revenues of $21.05 million, a 72 percent increase over the same quarter in the previous year. Revenue from abroad increased by 341 percent over the same quarter in the previous year, from $2.46 million to $10.87 million. The United States accounted for $2.99 million or 14.5 percent of total revenues during the period. Although the Company continues to carry out internationally significant projects with internal resources it has remained mindful of increasing its business with partners. In the second quarter of 2000, revenues generated through partners amounted to $5.22 million in comparison to $2.93 million in the same period last year.

Due to the continually growing licensing business, Brokat's gross profit margin increased in the first six months of 2000 to 59.8 percent, an increase of 8.7 percent over the same period in 1999. The results of operations EBITDASO (earnings before interest, tax, depreciation, amortization and stock options) amounted to a loss of $9.72 million in the first half of 2000, as compared to a loss of $4.54 million during the same period in the previous year. These results were consistent with the Company's expectations and reflect its success in strategically expanding its international business by adding new personnel and intensifying its sales and marketing activities. In spite of these costs, however, Brokat was still able to decrease its selling expenses from 54 percent of revenues during the same period last year to 44 percent.

Because of the strong performance of Brokat stock in comparison to the previous year the non-cash expenses for the employee stock option plan increased by 199 percent, to $14.96 million. Amortization of goodwill from acquisitions amounted to $7.39 million compared to $1.96 million. Overall Brokat posted a net loss of $37.33 million in the first half of this fiscal year, as compared to $12.36 million during the same period last year.

Twister Platform Expanded through Acquisitions

Announced in June of this year, the planned acquisition of software firms Blaze Software (BLZE, NASDAQ) and Gemstone Systems will increase Brokat's presence in the important United States software market. Both companies have a strong market presence and their products expand and complement Brokat's core product, the e-Services platform Brokat Twister with the addition of future-oriented technologies in the fields of customer relationship management (CRM) and Enterprise Java Beans (EJB) for innovative e-business and m-business solutions.

Brokat is financing these acquisitions with shares from authorized capital. This will increase the number of Brokat shares by approximately 25 percent. At the same time, Brokat receives a growth in sales of 50 percent on the basis of the 1999 financial numbers of the two companies that are acquired. The three companies anticipate that closings will occur at the end of September. Once the acquisitions are completed, approximately 500 of Brokat's 1,200 employees worldwide will be in the United States. "Measured by revenues, the United States is our second strongest market after Germany. This underscores our successful strategy in the U.S.," said Stefan Rover, chief executive officer of Brokat.

Brokat also continued its international expansion in Europe. The Company created a subsidiary in Italy and made a $2.7 million investment in interest in a Belgian company, Customer Dialogue Systems.

Important New Partners and Customers

In the first half of 2000, Brokat also continued its strategy of entering into partnerships with internationally important companies. In April, Brokat formed a strategic alliance with the French IT company Bull. A number of important contracts with new customers illustrates Brokat's expansion in the U.S. market. Two additional financial service providers in North America are now relying on the technology of the Twister platform: Charter One Financial and Toronto Dominion Bank of Canada. In Germany Brokat added Westdeutsche Landesbank, one of the largest financial institutions in Europe, as one of its customers for an innovative e-business project.

New Stock Options and Name Change

Among the resolutions adopted at the shareholders' meeting on May 26 in Stuttgart were the decision to change the Company's name to Brokat AG. In addition, a new employee participation plan was approved. "In spite of the tight labor market in information technology, Brokat proved itself to be an attractive employer in the past year. By issuing a convertible bond, our ability to attract the top people has once again increased," Rover emphasized.

Outlook

Fiscal year 2000 will continue to be dominated by the expansion of Brokat's global presence. The Company expects to profit from being one of the first companies to focus on solutions for mobile e-commerce. "The U.S. market has seen mobile commerce gain in importance almost overnight. On the basis of our proven expertise in Europe and Asia, we are excellently positioned for this growth market," Rover explained. "The two acquisitions in the United States will create enormous synergies. Particularly in the areas of marketing and distribution they will allow us to reduce our costs," he continued.

Brokat AG

Brokat is among the world's leading providers of software for e-business solutions. In the Internet banking market segment, the company is the world market leader. Its key product is the modular e-services platform Twister. This multi-industry software integrates existing IT systems and applications in companies and securely links to various electronic channels, such as the Internet and mobile communications. Twister provides comprehensive functionalities for customer relationship management and enterprise application integration. More than 2000 customers use Twister solutions, including Allianz, Axa, Bank of America, Deutsche Bank 24, ABN Amro, Cable & Wireless, Consors, DBS-Bank Singapur, debitel, Schweizer Post, SE-Banken, Toronto Dominion Bank and Union Bank of California. BROKAT was founded in 1994 and currently employs more than 800 employees in 16 countries. In calendar year 1999 the Company posted revenues of $45.8 million. Brokat AG has its headquarters in Stuttgart. Information about Brokat and its products can also be found on the Internet at www.brokat.com.

All currency figures in this document were converted from DM to USD using the June 30, 2000 rate of .4867.

BROKAT and Twister are trademarks of BROKAT AG in the United States and other countries. All other trademarks are properties of their respective companies.