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Earnings Release • Aug 21, 2007

News Details

Corporate | 21 August 2007 12:44

XING AG continues profitable course of growth

XING AG / Half Year Results

Release of a Corporate News, transmitted by DGAP - a company of EquityStory
AG.
The issuer / publisher is solely responsible for the content of this announcement.

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• Number of registered members rose to approximately 3.5 million,
including Spanish acquisitions

• Market leadership in Spain secured

• Increase in revenues in Q2 by 97 percent to 4.29 million euros over Q2
2006

• Q2 2007 EBITDA increased by 70 percent to approx. 0.9 million euros over
Q1 2007

• Consolidated net profit 52 percent higher than previous quarter

• Disposal of First Tuesday AG planned in Q3 2007

Hamburg, Germany, August 21, 2007 – XING AG (formerly OPEN Business Club
AG; ISIN: DE000XNG8888) continued its profitable course of growth in Q2
2007. Its membership base grew by 1.39 million members as a result of
acquisitions and cooperation agreements, coupled with the ongoing viral
growth of the platform. At the reporting date June 30, 2007, the number of
members totaled approximately 3.52 million – including members registered
with the newly acquired Spanish networks eConozco and Neurona. This
corresponds to a 65 percent growth over Q1 2007. The proportion of
international members has shifted from 35 percent in June 2006 to 60
percent in June 2007 (including both organic and non-organic growth).
Revenues also rose again in Q2 2007 to approximately 4.29 million euros, a
9.15 percent increase in comparison to Q1 2007. XING AG generated revenues
of 8.21 million euros in the first six months ended June 30, 2007. Compared
to the same period in the previous year, 2006, this constitutes an increase
of more than 100 percent. With an EBITDA of 0.89 million euros, XING AG
more than doubled its income in Q2 2007 over the first quarter, which was
affected by non-recurring charges resulting from the IPO. The consolidated
net profit also increased in the second quarter of 2007 by more than 50
percent to 710.000 euros (Q1 2007: 467.000 euros).

Q2 2007 was characterized by further significant expansion of the XING AG
membership base on an international scale. Including the 952.000 members
registered with Neurona, the largest contact network for professionals in
Spain and Latin America, which was acquired by XING AG in June 2007, the
total number of members rose by 65 percent over Q1 2007 to 3.52 million
members – an increase of 1.39 million in absolute terms. The organic growth
of the XING platform (excluding eConozco and Neurona members) totaled 17
percent, corresponding to an increase of 337.000 members compared to Q1
2007. At the reporting date June 30, 2006, 285.000 members were registered
as fee-paying Premium users on the XING platform. This is an increase of
27.000 paying members compared to Q1 2007. The ratio of paying members
(excluding members of eConozco and Neurona) amounted to 12.3 percent in Q2
2007. This marks a slight decrease compared to 13.1 percent in the previous
quarter, which can be attributed to lower activity as a result of
extraordinarily warm weather and a higher than expected and unexplained
level of membership cancellations in the months of April and May 2007.
While the remaining months of Q2 recorded churn rates of between 1 and 2
percent of the total payer base, payer churn for the month of April 2007
was recorded at approximately 2.3 percent. Since April 2007 however, the
monthly churn rate has declined month for month. In June 2007, for
instance, the churn rate accounted for 1.3 percent.

Taking the members acquired through the takeovers of the two non
payment-based Spanish networks into account, the ratio of paying members
totaled 8.1 percent. The integration of eConozco user profiles is planned
for October 2007, while Neurona members will be incorporated into the
platform in Q1 2008. Once this process is completed, users will be able to
make use of the comprehensive features on XING as paying Premium Members.
XING will stimulate this conversion process by implementing targeted
promotional campaigns.

Once again, the increase in Premium Memberships is also reflected in
revenues: In the Q2 2007, XING AG generated revenues of approximately 4.29
million euros – constituting an increase of 9.15 percent over Q1 2007. For
the first half year ended June 30, 2007, revenues increased to 8.21 million
euros, doubling in comparison to the first half year of 2006. The further
increase in EBITDA by over 100 percent confirms the upward trend in
profitable growth. In Q2 2007 it totaled approximately 0.9 million euros,
compared to 529.000 euros in the previous quarter, Q1 2007, which was
affected by non-recurring charges resulting from the IPO in December, 2006.
The resulting EBITDA margin of 21 percent was negatively influenced by
operational losses in the Company’s subsidiary First Tuesday, which the
Company intends to sell within the third quarter. Had the disposal of First
Tuesday AG been completed within the reporting period to June 30, 2007, the
EBITDA margin would have been 26 percent.

In the second half year, XING AG expects a significant rise in EBITDA
enabled through a dynamic revenue growth and only moderate growth in the
cost base. The consolidated net profit rose by more than 50 percent in the
reporting period, totaling 710.000 euros compared with 467.000 euros in Q1
2007. In Q2 2007, the cash flow from operating activities totaled to 1.97
million euros, over 305.000 euros in Q1 2007.

The two acquisitions during the first half of 2007 ensured that XING AG was
able to secure its position as the global market leader in social business
networking in the strategically important Spanish-speaking market. At the
same time, a strategic partnership was closed with the US-based company
Zoom Information Inc. (www.zoominfo.com), which will provide XING members
with access to a further 36 million business profiles in the
English-speaking world – particularly in the US, Canada and the UK.

From an operational perspective, several IT projects – including the
implementation of the XING Marketplace and the launch of a new search
technology – were successfully implemented during the first six months of
2007. By the end of the current financial year 2007, further large-scale
projects will also be introduced e.g. integration from acquired platform,
new features on the start page, etc. Since its launch in May 2007,
approximately 30.000 job listings have been posted on XING Marketplace.
Spurred on by the high level of demand and user acceptance, XING AG intends
to offer Marketplace to employers on a fee-paying basis from Q4 2007
onwards, establishing this as a further source of income alongside Premium
Membership subscriptions.

Lars Hinrichs, Founder and CEO of XING AG, is convinced of the strategic
course realized over recent months: 'We can look back on an extremely
productive first half year. The takeovers and investments the Company has
made have enabled us to significantly expand our membership base in key
markets around the world successfully. We have also managed to further
enhance the attractiveness of XING as a business platform with the launch
of new online features such as Marketplace, which have proved highly
popular with users. In view of current developments and the strategic
long-term cooperation between ZoomInfo and XING AG, I am confident that we
are on the right path to positioning XING as the leading online business
network – not only in Europe and Asia, but in English-speaking markets as
well.'

As of today the XING management board signed a Letter of Intent to dispose
of the subsidiary First Tuesday AG, Zurich. In selling First Tuesday, XING
aims to reduce the ongoing cost of maintaining the legal entity as well as
reduce the ongoing operating costs associated with the local personnel and
other expenses. Management of the key customer relationships, which
comprised the prime activity of the company, has already been relocated to
XING AG in Hamburg. Several parties have registered their interest with
XING in acquiring the remaining assets of the subsidiary and have submitted
offers to buy the company. XING management expects the transaction to be
completed within Q3 2007 and to have an overall negligible effect on the
net assets of the Company.

The Executive Board of XING AG reiterates its forecast for the full 2007
financial year, which was released on May 22, 2007. Accordingly, revenues
of 10.1 million euros generated in the previous financial year are expected
to approximately double, while the EBITDA margin is forecast to increase to
between 30 and 35 percent.

Cautionary note regarding pro forma financial results and forward-looking
statements

This press release notice contains preliminary results, pro forma-results
and forward-looking statements concerning XING AG, its subsidiaries and
affiliated companies as well as economic and political conditions that
could influence the business development of XING AG. While XING AG believes
that its pro forma financial results marked with an * are reflective of its
recurrent trends and the on-going status of its business, there can be no
assurance that its pro forma results will accurately reflect these trends
and status and therefore, its investors are urged not to rely solely upon
the pro forma results when making their investing decision and the pro
forma results should always be reviewed together with its actual financial
results.
Forward-looking statements are based on the current views, expectations and
assumptions of the management of XING AG and involve known and unknown
risks and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in such
statements. XING AG therefore does not assume any responsibility for such
risks, and makes no guarantee as to the accuracy and completeness of the
assumptions and estimates upon which the forward-looking statements are
based, nor does the Company or its bodies ensure the correctness of the
statements contained in this press release.

About XING:
XING makes your professional network an active part of your life. Far more
than a directory of business contacts, XING enables its members to discover
professional people, opportunities and privileges through its unique
discovery capability and advanced contact management tools.

With the successful IPO of XING as the first Web 2.0 company to go public,
XING AG has had a long-term impact on the social networking trend amongst
professionals. By focusing on the target group 'business people worldwide',
the Company is able to offer tailored features, thereby making networking
and contact management simpler. Besides Headquarters in Hamburg, XING AG is
also represented with offices in Barcelona (eConozco, Neurona), Beijing and
Zurich.
XING. Powering Relationships.

Contact:

Daniela Hinrichs
VP Corporate Communications
Gänsemarkt 43
20354 Hamburg
Tel. +49 40 419131-19
Fax +49 40 419131-11
daniela.hinrichs@xing.com

21.08.2007 Financial News transmitted by DGAP

Language: English
Issuer: XING AG
Gänsemarkt 43
20354 Hamburg
Deutschland
Phone: +49 (0)40 419 131-10
Fax: +49 (0)40 419 131-11
E-mail: investor-relations@xing.com
Internet: www.xing.com
ISIN: DE000XNG8888
WKN: XNG888
Indices:
Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in
Berlin, Düsseldorf, München, Stuttgart

End of News DGAP News-Service

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