Quest Software (QSFT)

Revenues

Total revenues and year-over-year changes are as follows (in thousands, except for percentages)

Licenses Revenues — The decrease in license revenues was primarily the result of decreased sales across all product groups and geographic regions with the exception of our Virtualization Management products. Our first quarter 2009 license revenues were also negatively impacted by the strengthening U.S. Dollar relative to certain non-U.S. Dollar currencies in the first quarter of 2009. This resulted in a lesser U.S. Dollar equivalent for several currencies including the Euro and British Pound. Since certain of our international sales are denominated in these non-U.S. Dollar currencies, the impact from foreign currency comprised approximately 30% of the overall decrease in license revenues.

Services Revenues — Services revenues are derived from post-contract technical support services (“maintenance”) and consulting and training services. The largest component of our services revenues is maintenance revenue. The main driver of our growth in services revenues was maintenance renewals on our Windows Management products in the Americas. Also contributing to the growth in services revenues were maintenance renewals on our Virtualization Management products. Approximately one-third of the overall increase in services revenues during the period came from the contributions of NetPro. Revenue from consulting and training services as a percentage of total service revenues was approximately 8.2% and 10.3% in the three months ended March 31, 2009 and 2008, respectively.

Maintenance revenues continue to contribute a larger percentage of our total revenues as our installed base of customers grows, through acquisitions and their related maintenance contracts, and through multi-year pre-paid support programs. As our maintenance customer base grows, maintenance renewals have a larger influence on the maintenance revenue growth rate and the amount of new software license revenues has a diminishing effect. Therefore, the growth rate of total revenues does not necessarily correlate directly to the growth rate of new software license revenues in a given period. The primary determinant of changes in our maintenance revenue profile is the extent to which our customers renew their annual maintenance agreements. If our maintenance renewals were to decline materially, our maintenance revenues, total revenues and cash flows would likely decline materially as well.

Revenues

Total revenues and year-over-year changes are as follows (in thousands, except for percentages):

41

Table of Contents

Licenses Revenues — License revenues from sales of our Windows and Virtualization Management products were the most significant drivers of license revenues growth during 2008 while Database Management license revenues decreased. Approximately half of the increase in our Windows Management license revenues came from the contributions of ScriptLogic and NetPro. The Rest of World geographic region is growing at a faster rate than the Americas. Total license revenues in the twelve months ended December 31, 2007 benefited from the change in our revenue recognition practices for large reseller transactions. As previously disclosed, the modified practice was applied to transactions consummated on or after January 1, 2007 due to change in circumstances involving improved cash collection histories with these resellers. If this change had been implemented prior to January 1, 2007 we would have reported $295.7 million in license revenues in 2007, which would imply a 13% growth rate in total license revenues in the current period.

Services Revenues — The largest component of services revenues is maintenance revenue. Services revenues also include fees for consulting and training services. The main driver of services revenues growth in both the Americas and the Rest of World during the year ended December 31, 2008 was maintenance revenues from our Windows Management products. Approximately 34% of the overall increase in services revenues during the period came from the contributions of ScriptLogic, PassGo and NetPro. Consulting and training services as a percentage of total service revenues represented 10.2 % and 11.4% in the years ended December 31, 2008 and 2007, respectively.

Revenues

Total revenues and year-over-year changes are as follows (in thousands, except for percentages):

Licenses Revenues — Licenses revenues from sales of our Windows Management products was the most significant driver of our licenses revenues growth in the Rest of World. Licenses revenues from sales of our Virtualization Management products and Windows Management products acquired from ScriptLogic in August 2007 were the main drivers of our licenses revenues growth in the Americas. Licenses revenues growth in the Americas in these product areas was offset by reduced licenses revenues within our Application and Database Management product areas.

Effective January 1, 2007, we modified our revenue recognition practice for reseller transactions, due to a change in circumstances involving improved cash collection histories with these resellers. The modified practice was applied to transactions consummated on or after January 1, 2007. Licenses revenues for the twelve months ended December 31, 2007 includes an approximate $13 million benefit as a result of this change. In 2006 and prior years, licenses revenues from those transactions was typically deferred until cash was collected from the reseller.

Services Revenues — Our Windows Management product line and our Oracle Database Development products primarily drove growth in services revenues. Maintenance revenues from renewals of annual maintenance agreements have continued to grow. Revenues from consulting and training services remained flat year-over-year at approximately $36.7 million as the number of large scale migration projects was less than the previous year and the mid-year introduction of Foglight 5, while generally requiring consulting and training services, did not compensate for the decrease in migration projects. Consulting and training services as a percentage of total service revenues represented 11.4% and 13.5% in the twelve months ended December 31, 2007 and 2006, respectively.

45

Table of Contents

Revenues

Total revenues and year-over-year changes are as follows (in thousands, except for percentages):

Licenses Revenues — Increased sales of our Windows and Virtualization Management products were the main drivers of license revenues growth over the comparable period in the prior year. Approximately 42% of the increase in sales of our Windows Management products came from the contributions of ScriptLogic. Growth in our Windows and Virtualization Management product areas was offset slightly by a decrease in license revenues from our Database Management products. Total license revenues in the first nine months of 2007 benefited by a change in our revenue recognition practices for large reseller transactions. The modified practice was applied to transactions consummated on or after January 1, 2007 due to change in circumstances involving improved cash collection histories with these resellers. If this change had been implemented prior to January 1, 2007 we would have reported $196.7 million in license revenues in the first nine months of 2007, which would imply a 23% growth rate in total license revenues in the current period.

23

Table of Contents

Services Revenues — The primary driver of our growth in services revenue was the maintenance renewals generated by a larger customer installed base created by license revenue growth from previous periods. Maintenance revenues from our Windows, Database and Virtualization Management products were the main drivers of services revenues growth during the period. Approximately 30% of the overall increase in services revenues during the period came from the contributions of ScriptLogic and PassGo. Revenue from professional consulting and training services as a percentage of total service revenues represented 10.3% and 11.6% in the nine months ended September 30, 2008 and 2007, respectively.

Revenues

Total revenues and year-over-year changes are as follows (in thousands, except for percentages):

Licenses Revenues — Total license revenues in the first six months of 2007 benefited by a change in our revenue recognition practices for large reseller transactions. The modified practice was applied to transactions consummated on or after January 1, 2007 due to change in circumstances involving improved cash collection histories with these resellers. If this change had been implemented prior to January 1, 2007 we would have reported $127.1 million in license revenues in the first six months of 2007, which would imply a 21.5% growth rate in total

22

Table of Contents

license revenues in the current period. Increased sales of our Windows and Virtualization Management products were the main drivers of license revenue growth over the comparable period in the prior year. Growth in these product areas was offset slightly by a decrease in license revenues from our Database Management products.

Services Revenues — The primary driver of our growth in services revenue was the post-contract technical support services renewals generated by a larger customer installed base created by license revenue growth from previous periods. Professional consulting and training services as a percentage of total service revenues represented 10.7% and 11.6% in the six months ended June 30, 2008 and 2007, respectively. Maintenance revenues from our Windows Management and Application Management products and maintenance renewals on our Database Management products were the main drivers of services revenues growth during the period.

Revenues

Total revenues and year-over-year changes are as follows (in thousands, except for percentages)

Licenses Revenues — License revenues increased 6.6% on a worldwide basis. License revenues in the first quarter of 2007 benefited by a change in our revenue recognition practices for large reseller transactions. The modified practice was applied to transactions consummated on or after January 1, 2007 due to change in circumstances involving improved cash collection histories with these resellers. If this change had been implemented prior to January 1, 2007 we would have reported $61.3 million in license revenues in the first quarter of 2007, which would imply a 29% growth rate in total license revenues. The growth of our license revenues are being driven by demand for our Windows, Application Management and Virtualization products, while our Database Management products declined on a comparable quarterly basis.

Services Revenues — Services revenues are derived from post-contract technical support services (“maintenance”) and professional consulting and training services. The largest component of services revenues is maintenance revenue. Our Windows Management product line was the primary driver of growth in services revenues. Maintenance revenues from renewals of annual maintenance agreements have continued to grow. Revenues from professional consulting and training services remained flat year-over-year at approximately $9.5 million. Professional consulting and training services as a percentage of total service revenues represented 10.3% and 12.4% in the three months ended March 31, 2008 and 2007, respectively.

Over the last few years revenues generated by our maintenance offerings have become a larger contributor to total revenues. As our maintenance customer base grows, the maintenance renewal rate has a larger influence on the maintenance revenue growth rate and the amount of new software license revenues has a diminishing effect. Therefore, the growth rate of total revenues does not necessarily correlate directly to the growth rate of new software license revenues in a given period. The primary determinant of changes in our maintenance revenue profile is the rate at which our customers renew their annual maintenance and support agreements. If our maintenance renewal rates were to decline materially, our maintenance revenues, total revenues and cash flows would likely decline materially as well. Although we do not currently expect our maintenance renewal rates to deteriorate, there can be no assurance they will not.