Our Opportunity

Concur’s mission has always been to help our clients drive costs out of their businesses. That mission remains unchanged, and in fact, Concur now offers more services than ever to help our clients cut operational costs and control employee spend.

Tough economic times force companies to take a hard look at their operations – from top to bottom. Manual, inefficient and labor-intensive processes that were deemed “good enough” during the good times are now being examined to determine if they can be managed more effectively. Companies are discovering that automating some of these processes using on-demand services requires little up-front costs and delivers significant ROI quickly – with recurring savings month after month.

T&E for most companies represents up to 10% of their operating expenses. That’s second only to payroll. Clearly – and especially during tough economic times – it’s imperative for companies to take control of this area of spend. For a significant number of companies around the globe, the process is still paper-based and managed in silos with almost no visibility or control over that spend. Concur’s on-demand services enable companies to quickly streamline the entire process, and the operational cost savings alone are usually enough to convince an organization to automate – a major driver as an increasingly greater number of companies look to Concur to help them make their operations more efficient.

The accomplishments of the past year are the direct result of the commitment and hard work of more than 1,000 dedicated employees – all of whom focus on the interests of our customers, our shareholders and our partners each and every day. But it is our customers who are the largest contributors to our success. Through their dedicated and avid support, we have a mutually enriching relationship. The opportunity to help them improve their operations is a privilege.

ACCOMPLISHMENTS FOR FISCAL 2008

Fiscal 2008 was both a record-breaking year for the company’s performance and a watershed year for the industry we continue to lead. Looking back on the past year, there are some major milestones and accomplishments that led to our success in fiscal 2008 and position us well for continued success in the years ahead.

The Gelco Acquisition

On the first day of Concur’s fiscal 2008, the company completed its acquisition of Gelco, welcoming more than 1200 new customers and nearly 300 talented employees into the Concur community. The integration of the two organizations exceeded our expectations, adding scale to our operations and further enhancing Concur’s leadership position in travel and expense management.

Concur® Travel & Expense

At our premier customer event, we announced the general availability of Concur Travel & Expense, our flagship platform and the industry’s only truly integrated end-to-end travel and expense management service. The product of almost two years of development and millions of dollars of investment, Concur Travel & Expense was a direct result of the company’s 2006 acquisition of Outtask, and provides the platform from which Concur will continue to drive the innovation curve for our industry.

Global Expansion

Fiscal 2008 saw Concur meaningfully expand our presence around the globe. With successful operations already in place in the UK and Australia, Concur opened field sales offices in Frankfurt, Paris, and Hong Kong, along with establishing a Center of Excellence operations center located in Prague to further support our aggressive expansion into the EU.

Delivering Powerful Analytics

At the NBTA Convention in Los Angeles, Concur unveiled the most powerful set of analytics and reporting tools available for travel and expense. Dubbed “the holy grail” by industry observers, Concur’s on-demand suite of business intelligence tools now enables clients – for the first time – to quickly and easily compare booked travel to actual spend using one simple on-demand service. Now, reconciling all aspects of corporate travel data from the itinerary through reimbursement – a notion that was once inconceivable – can now be accomplished with a few simple clicks.

American Express Partnership

Concur’s vision for travel and expense management received further validation when the company entered into a global partnership with American Express Travel Related Services Company, Inc. Through a seven year exclusive marketing partnership, American Express’s Global Commercial Card business will promote Concur® Expense to its corporate clients. Concur will now partner with one of the world’s leading brands, and the global leader in corporate credit cards, to promote our services to their clients around the globe. In addition, American Express invested more than $250 million and acquired a 13% share of Concur.

Four consecutive quarters of record growth

Fiscal 2008 was ground-breaking on multiple fronts. But strategy and vision are only interesting when matched with execution. Fiscal 2008 marks the 8th straight year of meeting or exceeding our financial expectations. We outperformed our objectives in each quarter and raised our full year outlook for all key metrics every quarter. On a year-over-year basis, we grew revenue 67% while also improving our non-GAAP operating margin from 17% to 19% and improving free cash flow from $20M to $51M. We continued to strengthen our management team and added significant talent to our Board of Directors with the appointment of Rajeev Singh, our President & COO as well as Ed Gilligan, Vice Chairman of American Express Company.

UNPRECEDENTED GLOBAL ECONOMIC DOWNTURN

The current economic environment is the most difficult we have seen in decades. Most economic data points to the current downturn having started at the end of 2007. At that time, the financial crisis that would eventually send shock-waves around the globe hadn’t yet fully materialized, but other factors were beginning to drag on the economy and impact our clients.

Specifically for the business travel industry, the rising cost of fuel during the first half of fiscal 2008 impacted customers and suppliers, forcing companies to deal with the rising costs of business travel amidst a slowing economy. Meanwhile, airlines cut back on capacity and a wave of consolidation and bankruptcies rippled through an already fragile industry. When the credit crisis hit, most organizations found themselves in a tough demand environment with little to no access to credit. That combination has proven to be exceptionally difficult.

It is our responsibility to manage through the difficult times ahead with an eye on long-term value creation. So, even as we see continued demand for our services, we must plan for the impacts of growing unemployment, increased business failures, decreasing travel budgets, a strengthening U.S Dollar, and declining interest rates.

With prudent investments across the business, Concur can continue to set the pace of innovation, service excellence and customer value in the corporate travel and expense management market.

OUR TOP PRIORITIES

For those who have watched our business grow over the past five years, our objectives remain unchanged. For those new to our story, I’d like to take a moment to highlight our top priorities.

Every employee at Concur is focused on the following objectives. We need to increase our investments in distribution and marketing programs to develop the market and increase market penetration. We need to continue to drive the innovation curve in our market, increasing the value that our customers receive from our services. We need to continue to invest aggressively to exceed the service expectations of our customers and drive even more operating leverage in the business.

OUR PROMISE TO YOU

The success that Concur enjoyed in fiscal 2008 is simply one more step along a path that began 15 years ago. And with each success, Concur takes one more step toward building an enduring and prosperous company for our shareholders, our customers and ourselves. That’s the goal to which we have always remained committed.

I ask that you measure our progress toward that goal through the tangible results by which you would measure any successful enterprise - revenue and earnings growth.

On behalf of the Board of Directors, our executive staff and every member of the Concur team, thank you for your continued support of our company.

Steve Singh
Chairman of the Board and Chief Executive Officer
Concur
January 30, 2009