Cognos® Reports Second Quarter Results

Ottawa, Ontario & Burlington, Massachusetts, September 21, 2005- Cognos Incorporated (Nasdaq: COGN; TSX: CSN) (all figures in U.S. dollars and in accordance with U.S. GAAP), the world leader in business intelligence (BI) and corporate performance management (CPM) solutions, today announced results for the second quarter of fiscal year 2006, ended August 31, 2005.

Revenue for the second quarter was $212.0 million, an increase of 14 percent compared with revenue of $185.2 million in the second quarter of last fiscal year. License revenue was $78.6 million, an increase of 4 percent from $75.4 million for the same period of last fiscal year.

Net income in the quarter was $28.7 million, an increase of 4 percent compared with $27.6 million in the second quarter of last fiscal year, resulting in diluted earnings per share of $0.31 in the second quarter of fiscal year 2006, versus $0.30 in the same period last fiscal year.

Revenue for the first six months of fiscal year 2006, ended August 31, 2005, was $412.1 million, an increase of 15 percent compared with revenue of $358.8 million for the first six months of last fiscal year. Net income for the first six months of this fiscal year was $52.5 million or $0.56 per share. This represents an increase of 10% from net income of $47.7 million or $0.51 per share in the first six months of last fiscal year.

“Cognos delivered a solid second quarter,” said Rob Ashe, president and chief executive officer of Cognos. “We performed well in the quarter leading up to the launch of Cognos 8 Business Intelligence, and we are now focused on capitalizing on the opportunity that product represents. The significant marketing activity during the quarter and the strong customer reaction to Cognos 8 BI puts us in a very strong position going forward.”

Highlights of the Quarter

• Nine contracts greater than a million dollars, up from seven contracts for the same period last year
• Double-digit percentage revenue growth in all three major geographies – the Americas, Europe, and Asia-Pacific
• Previewed Cognos 8 Business Intelligence for more than 2,000 customers, partners and analysts at Cognos Forum 2005, and drew over 5,000 participants for the product’s September 14^th worldwide launch
• Named top business intelligence and corporate performance management vendor in Business 2.0 magazine’s top 100 ranking of the world’s best performing technology companies

“Cognos 8 Business Intelligence is the most important product release in the history of Cognos and the BI industry. Customer feedback has been tremendous,” continued Mr. Ashe. “Cognos 8 BI brings together the full strength of our BI capabilities on a single, modern and proven services-oriented architecture. This product redefines the standard for business intelligence – today and for years to come.”

Cognos’ balance sheet remains strong. Operating cash flow for the quarter was $28.8 million. Cognos repurchased $23.7 million of its shares in the second quarter. The Company exited the quarter with $501.3 million in cash, cash equivalents, and short-term investments.

Business Outlook

Management offers the following outlook for the third quarter of fiscal year 2006:

• Revenue is expected to be in the range of $230 million to $237 million;
• Diluted earnings per share are expected to be in the range of $0.36 to $0.39.

Management offers the following outlook for the full fiscal year 2006, ending February 28, 2006:

• Revenue is expected to be in the range of $915 million to $930 million;
• Diluted earnings per share are expected to be in the range of $1.52 to $1.58.

Cognos management will hold a webcast and conference call to present results for the second quarter of fiscal year 2006 and business outlook at 5:15 p.m. Eastern Time today, September 21, 2005. The webcast and an archive of the webcast may be accessed at www.cognos.com/company/investor/events/fy06q2/index.html. The conference call may be accessed at 416-640-1907. The replay can be accessed at 416-640-1917. The passcode for the replay is 21150821#.

Safe Harbor for Forward-Looking Statements
Certain statements made in this press release that are not based on historical information are forward-looking statements which are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements relate to, among other things, the Company’s expectations with respect to future growth and business outlook, including revenue and earnings for the third quarter of fiscal year 2006 and the full fiscal year ending February 28, 2006; expectations with respect to the Company’s release of Cognos 8 Business Intelligence; the strength of the Company’s balance sheet; and the Company’s market position.

These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements. Factors that may cause such differences include, but are not limited to: a continuing increase in the number of larger customer transactions and the potential for a related lengthening of sales cycles; continued BI market consolidation and other competitive changes in the BI market; the incursion of enterprise resource planning companies into the BI market; currency fluctuations; the Company’s ability to maintain or accurately forecast revenue growth or to anticipate and accurately forecast a decline in revenue from any of its products or services; the Company’s ability to compete in an intensely competitive market; the Company’s ability to develop and introduce new products and enhancements on schedule that respond to customer requirements and rapid technological change; customer acceptance and implementation of Cognos 8 Business Intelligence; new product introductions and enhancements by competitors; the Company’s ability to select and implement appropriate business models, plans and strategies and to execute on them; the Company’s ability to identify, hire, train, motivate, and retain highly qualified management and other key personnel; fluctuations in the Company’s quarterly and annual operating results; fluctuations in the Company’s tax exposure; the impact of global economic conditions on the Company’s business; the impact of Hurricane Katrina on the overall economic condition of North America; unauthorized use or misappropriation of the Company’s intellectual property; claims by third parties that the Company’s software infringes their intellectual property; the risks inherent in international operations, such as the impact of the laws of foreign jurisdictions; the Company’s ability to identify, pursue, and complete acquisitions with desired business results; and the existence of regulatory barriers to integration; as well as the risk factors discussed in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, filed with the United States Securities and Exchange Commission, as well as other periodic reports filed with the SEC. Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date they are made. The Company disclaims any obligation to publicly update or revise any such statement to reflect any change in its expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.

About Cognos

Cognos, the world leader in business intelligence and corporate performance management, delivers software and services that help companies drive, monitor and understand corporate performance.

Cognos delivers the next level of competitive advantage—Corporate Performance Management (CPM)—achieved through the strategic application of BI on an enterprise scale. Our integrated CPM solution helps customers drive performance through planning; monitor performance through scorecarding; and understand performance through business intelligence.

Cognos serves more than 23,000 customers in over 135 countries. Cognos enterprise business intelligence and performance management solutions and services are also available from more than 3,000 worldwide partners and resellers. For more information, visit the Cognos web site at www.cognos.com.

Cognos, the Cognos logo and ReportNet are trademarks or registered trademarks of Cognos Incorporated in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies.

SUPPLEMENTARY INFORMATION (unaudited):

Available as Excel download:
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows