QUARTER: DIL: Quarterly Update - First Quarter 2010

13 Apr 2010 8:30 am

DIL 13/04/2010 QUARTER

REL: 0830 HRS Diligent Board Member Services INC (NS)

QUARTER: DIL: Quarterly Update - First Quarter 2010

DILIGENT BOARD MEMBER SERVICES, INC. Quarterly Update -- First Quarter 2010 (all amounts in USD) Issued: 13 April 2010

To download the full PDF version with graphs of this Quarterly Update, go to www.boardbooks.com and select the "Investor Center" tab, then click on "Shareholder Reporting," then "2010 1st Quarter Report."

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REVENUE -- First Quarters Compared

Net Sales Revenue - $US (000s)

2010 1st Quarter: 1,746 2009 1st Quarter: 998 % Change Quarterly: 75%

2010 YTD: 1,746 2009 YTD: 998 % Change YTD: 75%

- - - - Notes: 1. Net Sales Revenue definition: Revenue from Annualized License Fees and Installation Fees recorded ratably over the contract period.

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LICENSE FEES -- First Quarters Compared

Additional Annualized License Fees (ALF) - Net - $US (000s)

2010 1st Quarter: 591 2009 1st Quarter: 528 % Change Quarterly: 12%

2010 YTD: 591 2009 YTD: 528 % Change YTD: 12%

- - - - Foreign Exchange Adjustments

2010 1st Quarter: (24) 2009 1st Quarter: (7) % Change Quarterly: n/a

2010 YTD: (24) 2009 YTD: (7) % Change YTD: n/a

- - - - Cumulative Annualized License Fees (ALF) - Period End - $US (000s)

2010 YTD: 6,888 2009 YTD: 4,367 % Change YTD: 58%

- - - - Upgrades/(Downgrades) included in New ALF - $US (000s)

2010 1st Quarter: 83 2009 1st Quarter: 102 % Change Quarterly: -19%

2010 YTD: 83 2009 YTD: 102 % Change YTD: -19%

- - - - Notes: 1. Foreign exchange adjustments for prior period sales are reported quarterly and included only in Cumulative ALF numbers. 2. Upgrade/Downgrade numbers are included in Net ALFs calculation.

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LICENSE SALES -- First Quarters Compared

Net License Agreements

2010 1st Quarter: 36 2009 1st Quarter: 19 % Change Quarterly: 89%

2010 YTD: 36 2009 YTD: 19 % Change YTD: 89%

------ Cumulative License Agreements -- Period End

2010 YTD: 320 2009 YTD: 193 % Change YTD: 66%

------ Notes: 1. Because license values constantly fluctuate, we consider License Sales to be a "growth indicator." We place greater importance on Net Sales Revenue and Annualized License Fees, which we consider to be key "growth benchmarks." 2. Net License Agreements definition: Signed License Agreements net of cancellations and reclassifications.

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OTHER METRICS -- First Quarters Compared

Annualized License Fees By Sales Region at Period End - $US (000s)

US - 2010 1st Quarter: 483 US - 2009 1st Quarter: 437 % Change Quarterly: 11%

Canada - 2010 1st Quarter: 34 Canada - 2009 1st Quarter: 24 % Change Quarterly: 42%

UK/Asia Pac - 2010 1st Quarter: 74 UK/Asia Pac - 2009 1st Quarter: 67 % Change Quarterly: 10%

Q1 Total - 2010 1st Quarter: 591 Q1 Total - 2009 1st Quarter: 528 % Change Quarterly: 12%

- - - - Total Sales Personnel (as of March 31st)

2010 1st Quarter: 8 2009 1st Quarter: 9 % Change Quarterly: -11%

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LICENSE FEE GROWTH

Additional Annualized License Fees (ALF) - By Quarter - $US (000s)

2010 1st Quarter: 591 2009 4th Quarter: 749 2009 3rd Quarter: 656 2009 2nd Quarter: 465 2009 1st Quarter: 528 2008 4th Quarter: 567 2008 3rd Quarter: 512 2008 2nd Quarter: 490 2008 1st Quarter: 321 2007 4th Quarter: 405 2007 3rd Quarter: 217 2007 2nd Quarter: 252 2007 1st Quarter: 61 2006 4th Quarter: 182 2006 3rd Quarter: 219 2006 2nd Quarter: 87 2006 1st Quarter: 62

- - - - Cumulative Annualized License Fees (ALF) - By Quarter - $US (000s)

2010 1st Quarter: 6,888 2009 4th Quarter: 6,321 2009 3rd Quarter: 5,556 2009 2nd Quarter: 4,885 2009 1st Quarter: 4,367 2008 4th Quarter: 3,846 2008 3rd Quarter: 3,382 2008 2nd Quarter: 2,870 2008 1st Quarter: 2,381 2007 4th Quarter: 2,060 2007 3rd Quarter: 1,655 2007 2nd Quarter: 1,439 2007 1st Quarter: 1,187 2006 4th Quarter: 1,125 2006 3rd Quarter: 944 2006 2nd Quarter: 725 2006 1st Quarter: 637

Note: Totals reflect Additional Quarterly ALF and foreign exchange adjustments to prior periods' cumulative ALF.

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FIRST QUARTER MANAGEMENT COMMENTARY

Diligent Board Member Services, Inc. (Diligent) announces the following sales results for the quarter ended 31 March 2010.

First Quarter Results

- Net Sales Revenue was $US 1.75 million for the First Quarter of 2010, compared to $US 1.00 million for the First Quarter of 2009 -- a growth of 75%.

- Annualized License Fees increased $US 0.59 million for the First Quarter of 2010, compared to $US 0.53 million for the First Quarter of 2009 -- an improvement of 12%.

- Total Annualized License Fees were $US 6.89 million at the end of the First Quarter of 2010, compared to $US 4.37 million at the end of the First Quarter of 2009 -- a growth of 58% annual recurring revenue.

- A net of 36 New Licenses were added during the First Quarter of 2010 which compares to 19 for the First Quarter of 2009 -- an improvement of 89%.

Performance Review

Diligent produced its strongest ever First Quarter results, recording exceptional new Annualized License Fee sales of $US 0.59 million.

This is the third highest quarterly sales figure recorded by Diligent since it began offering Diligent Boardbooks licenses eight years ago and comes during what is traditionally the slowest part of the year for the company.

Following on from two consecutive record-breaking quarters ($US 0.66 million in the Third Quarter and $US 0.75 million in the Fourth Quarter last year) this strong start bodes well for the company as it moves towards its near-term goal of becoming cash-flow positive by the Third Quarter of 2010.

Moreover, the momentum built up during the First Quarter appears to be carrying over into the Second Quarter as new sales inquiries continue at a healthy pace. The client prospect list is stronger than it has ever been.

In part, the increasing demand for Diligent's products reflects the recovery of confidence in the global economy, but is more importantly due to Diligent's growing reputation for offering the highest quality product, service and support to its rapidly growing client base. Diligent is the market leader in providing company directors, executives and administrators with an easy-to-use system of compiling, viewing, monitoring and archiving board materials within a Software-as-a-Service (SaaS) model.

Diligent's income consists of subscription-based revenue that recurs each year and increases with each new license agreement or upgrade. The growth trajectory of Diligent is demonstrated by the increase in net sales revenues, which is up 75% for the First Quarter of 2010 from the same quarter a year ago.

With the addition of 36 new license agreements from the First Quarter, Diligent now has 320 worldwide clients and 8,500 users of its Boardbooks products. Management is continuing to see an increasingly diverse mix of industry groups signing up to use its Boardbooks board portal -- with the private sector and companies associated with healthcare and education featuring strongly among the new signings. Due to confidentiality arrangements, Diligent is not able to disclose its full list of clients -- many of whom are well-known Blue Chip companies.

With Annualized License Fees now approaching $US 7 million, Diligent has delivered strong revenue growth with little increase in costs which reflects the inherent leverage in its Software as a Service business model and Diligent's position as the highest quality, best board portal solution on the market.

It should be noted that Diligent is recording good sales activity in regions outside the US -- specifically Canada and UK/Asia Pacific -- and is doing so on very modest resources. The potential to tap into other markets remains a real growth opportunity.

Summary

With a 75% revenue increase from last year's First Quarter, Diligent has made a very encouraging start to the year. Importantly, sales momentum is building nicely as the company moves into the Second Quarter.

The company's continued strong performance is further evidence of Diligent's position as the global industry leader in board portals and board-level service and support.

We are committed to becoming profitable, and as we continue to demonstrate in our quarterly sales results, we believe that at the current rate of growth we will achieve "cash flow" break even in Q3 2010, and fully expect to achieve this milestone.

* * * * * * * * * * * * * * * Note: In addition to historical information, this quarterly update contains "forward-looking statements." The words "forecast," "estimate," "project," "intend," "expect," "should," "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are made only as of the date of this quarterly update, and we do not undertake any obligation, other than as required by law and the NZX Listing Rules, to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. End CA:00193643 For:DIL Type:QUARTER Time:2010-04-13:08:30:08

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