Epicor® Provides Preliminary 2008 First Quarter Non-GAAP Revenue, EPS Expectations

Business Wire, April 17, 2008

IRVINE, Calif. -- Epicor Software Corporation (NASDAQ:EPIC), a leading provider of enterprise business software solutions for the midmarket and divisions of Global 1000 companies, today provided a preliminary view of its non-GAAP revenue and earnings per share expectations for the 2008 first quarter ended March 31, 2008. Non-GAAP total revenue for the 2008 first quarter is expected to be $103 to $104 million, with non-GAAP earnings per share of $0.06 to $0.07. The Company's non-GAAP total revenue expectations do not include an expected write down of deferred revenue as a result of purchase accounting related to the acquisition of NSB Retail Systems of approximately $1.5 million. Software license revenues are expected to be approximately 17 to 18 percent of total revenue. The Company's most recent guidance for the 2008 first quarter, provided on February 7, 2008, had non-GAAP total revenue of $112 to $115 million, with non-GAAP earnings per share of $0.16 to $0.17.

The Company said that non-GAAP revenue and earnings per share were impacted by lower than expected consulting revenue and significantly lower consulting margins during the quarter, due primarily to the Company having to provide significantly discounted work on a large consulting project with a significant amount of customization required. Additionally, the Company experienced lower than expected software license sales in its retail vertical and in international markets.

Epicor President and CEO Thomas Kelly commented, "While we previously stated that software license revenues would be relatively more unpredictable on a quarterly basis this year, especially with the integration of NSB into Epicor, the revenue shortfall and meaningful margin erosion in our consulting business was not anticipated and is unacceptable.

"Late in the first quarter, we made some significant senior management changes in our consulting organization," Kelly said. "Consulting margins are expected to return to historic levels in the second quarter, and I am confident that this business is clearly focused on driving more profitable revenue growth than in the past."

During the first quarter, the Company met its targets related to the integration of NSB into Epicor, including reaching its targeted annual cost savings through the elimination of redundant positions, programs and public company expense. The Company said it took longer than expected to fully communicate its combined product strategy to current and prospective customers, as well as to industry analysts, which led to customer purchasing decisions being extended beyond the first quarter. The Company also said that international software license revenues were lower than expected for the quarter, due to deals that slipped.

"We have now fully communicated our go-forward retail strategy, and our retail business is already beginning to experience significant benefits from being the market share leader in specialty retail. We are being brought into more new and larger deals than ever before, we are focusing on our significant cross-selling opportunities to take the product and services offerings from each former standalone company into our large combined base of leading retail customers and our retail pipelines are growing. While we are disappointed in the first quarter contribution from international license revenue," Kelly added, "international pipelines remain strong and consist of an excellent mix of deal metrics, small and large, new name and base."

Business Outlook

The Company said it is revising its full-year 2008 non-GAAP revenue and earnings per share expectations downward to reflect its lower than expected performance in the first quarter of 2008. 2008 full-year non-GAAP total revenues are expected to be $536 to $544 million. Non-GAAP earnings per share for 2008 is expected to be $0.92 to $0.96. Non-GAAP software license revenue for the 2008 full-year is expected to be $115 to $125 million. Hardware and other revenue for the 2008 full-year is expected to be $42 to $45 million.

The Company said that it is providing its revised 2008 guidance on a non-GAAP basis. 2008 revised revenue guidance does not include an expected write down of deferred revenue as a result of purchase accounting in accordance with GAAP reporting. The Company currently expects to write off $7 to $8 million in NSB deferred revenues for the 2008 fiscal year, less than $1 million of which will be license revenue, with the remainder consisting of maintenance revenue. The Company's 2008 full-year non-GAAP earnings per share guidance excludes current expectations for full-year amortization of intangible assets of approximately $21.0 million and full-year stock based compensation expense of approximately $7.0 million, each net of tax, and restructuring and other charges. 2008 full-year non-GAAP earnings per share expectations assume a weighted average share count of 59.5 million shares.

Tuesday, April 29, 2008 Earnings Conference Call

Epicor expects to announce the full financial results for its first quarter of 2008 on Tuesday, April 29, 2008, aftermarket. The Company will hold an investor and analyst conference call at 5:00 p.m. Eastern Time/2:00 p.m. Pacific Time on Tuesday, April 29, 2008.