Interim report January 1 - June 30, 2010

Interim report January 1 - June 30, 2010

First joint Orc/Neonet business transaction effected
- Cost synergies confirmed

The integration between Orc and Neonet is almost finished and the
anticipated cost synergies of SEK 40m have been secured. During the
quarter, the first joint business transaction was carried out after the
merger with Neonet. Orc's Technology operations are growing further with
continuing high margins. Activities have also been launched to increase
the revenues and margins of Orc's transaction operations. During the
quarter, income was charged with SEK 29.3m in nonrecurring costs related
to the merger.

Adjusted for the SEK 29.3m in nonrecurring costs, operating income was
SEK 39.3m. Synergies have thus been secured and costs will decline by
another SEK 10m, on a quarterly basis, as a result. Including these
synergies, the operating margin would be 18%. 

The annualized contract value (ACV) at the end of Q2 2010 was SEK 750.6m
(674.6), an increase of SEK 76.0m, or 11%, compared to Q2 2009. On the
merger date, ACV in Neonet amounted to SEK 52.1m.

The transaction net was SEK 31.7m (-) and the transaction margin was 35%
(-) for the second quarter 2010.

April - June 2010

  · Operating revenue of SEK 282.7m (180.1)
  · Revenue growth of 57%
  · Operating income of 10.0m (42.1)
  · Operating margin of 4% (23)
  · Income after tax of SEK 6.0m (31.0)
  · Basic earnings per share of SEK 0.26 (2.04) 

January - June 2010

  · Operating revenue of SEK 453.0m (343.9)
  · Revenue growth of 32%
  · Operating income of SEK 37.3m (92.0)
  · Operating margin of 8% (27)
  · Income after tax of SEK 24.9m (67.3)
  · Basic earnings per share of SEK 1.30 (4.43) 

The Neonet Group has been consolidated as of April 1, 2010. The actual
transaction date was April 7. 

CEO Thomas Bill comments:
Due to a good trend of sales in all regions during the quarter, our
Annualized Contract Value (ACV) increased by SEK 19m, despite a higher
churn. Positive foreign exchange effects and customer contracts received
in connection with the merger with Neonet were other contributing
factors, and as a whole, ACV increased by SEK 97m. The higher churn was
primarily attributable to operations that were discontinued because of
changed conditions or poor profitability. However, in our opinion, this
does not indicate a long-term return to the levels of 2009. 

The integration of Orc and Neonet is almost finished. We can note that
we completed our first joint business transaction and several more are
in progress. We can already confirm our cost synergies and the new
organization is in place and working on achieving our common targets. We
are very confident that this will lead to solid opportunities for
growth, especially for Managed Services solutions. 

We have launched efforts to increase the sales and margins of our
transaction business and are convinced they will bear fruit. 

New laws have been introduced in the U.S. and discussions are in
progress in Europe within the financial area. No one knows what the
exact consequences will be. However, in our judgment, the business
opportunities created by these changes will be considerably bigger than
the risks for Orc. 

With our new common and strong technology portfolio, our concentration
on Managed Services solutions, the new efficient organization and our
focused and target-oriented work to leverage opportunities afforded by
our transaction business, we look positively toward our growth during
the remainder of 2010. 

If we should already include the secured cost synergies, we would have
an adjusted operating margin of 18%, making us feel confident about
reaching our goals of an anticipated operating margin not lower than
about 20% in a weak market and a potential operating margin of 35% or
higher in a buoyant market. 

About Orc Software
Orc Software is the leading global provider of technology and services
for advanced trading in financial instruments. Orc's competitive edge
lies in its depth of knowledge of the trading world, gained by deploying
sophisticated trading solutions for over 20 years. 

Orc Trading and Orc Connect provide the tools for making the best
trading and connectivity decisions with strong analytics, unmatched
market access, high performance derivatives trading capabilities,
automated trading strategies and execution, ultra-low latency and risk
management. 

Through the merger with Neonet, Orc also delivers neutral, high-speed
brokerage services to professional market participants, with clients in
over 20 countries globally. With subsidiary CameronTec, Orc is the
leading provider of FIX infrastructure and low latency connectivity. 

Orc's customers include leading banks, trading and market-making firms,
exchanges, brokerage houses, institutional investors and hedge funds. 

Orc provides sales and quality support services from its offices across
EMEA, Americas and Asia Pacific. 

Orc Software is listed on NASDAQ OMX Stockholm (SSE: ORC). 

For more information, please visit:
www.orcsoftware.com (http://www.orcsoftware.com/)

Contact Information
CEO Thomas Bill, phone: +46 8 506 477 35
CFO Anders Berg, phone: +46 8 506 477 24 

N.B. The English text is a translation of the Swedish text. In case of
discrepancy between the Swedish and the English text the Swedish version
shall prevail.