Exhibit 99.1

PERVASIVE SOFTWARE REPORTS SECOND QUARTER RESULTS

AUSTIN, TEXAS – January 18, 2005 - Pervasive Software^® Inc. (Nasdaq:PVSW), a global value leader in data infrastructure software, today announced results for the second fiscal quarter ending December 31, 2004.

Revenue, as reported under generally accepted accounting principles (GAAP), was $11.6 million for the second quarter of fiscal year 2005, compared to $11.5 million for the second quarter of last fiscal year. Net income was $0.5 million, or $0.02 diluted earnings per share, for the second quarter, compared to net income of $0.9 million, or $0.04 diluted earnings per share, for the second quarter of last fiscal year. On a pro forma basis, as described below, Pervasive realized pro forma net income of $0.9 million, or $0.04 diluted earnings per share, in the second quarter of fiscal year 2005, compared to net income of $2.1 million, or $0.10 diluted earnings per share, in the second quarter of last fiscal year. Our second quarter results are within the range of guidance provided for the quarter in our press release dated October 19, 2004.

In addition, Pervasive continued to generate positive cash flow from operations with $1.7 million in the second quarter of fiscal 2005, ending the quarter with $34.7 million in cash and marketable securities and no debt.

“As expected, our second fiscal quarter results reflect the same near term characteristics we experienced in the previous quarter. Our Pervasive.SQL V8 embedded database business continues to work its way through the later stage of its version life cycle while our Integration Products business has not yet achieved its growth potential,” said David Sikora, president and CEO, Pervasive Software. “However, we expect to release version 9 of Pervasive.SQL in February and we continue to believe strongly that the investments we are making in the Integration Products business will result in revenue growth.”

“From a strategic perspective, Pervasive continues to take important steps to compete in a software market defined by increasing levels of maturation and commoditization” continued Sikora. “Linux is achieving mainstream adoption as an open source operating system, and we believe adoption of open source software will move up the stack to the next layer, the database. Last week, we announced our entry into the mainstream corporate database market with Pervasive Postgres, the most advanced open source database available in the market today. We believe Pervasive is uniquely positioned among existing public database companies to leverage many years of data management expertise and drive open source adoption in the mainstream corporate database market. The addition of Pervasive Postgres to our data infrastructure software family now gives us a full spectrum of database offerings that meets the needs of customers both large and small.”

As a reflection of its continued confidence in the company’s future, Pervasive acquired 97,000 shares of Pervasive common stock on the open market at a total cost of approximately $0.4 million, during the quarter ended December 31, 2004. We have now acquired a total of approximately 307,000 shares of Pervasive common stock at a cost of $1.6 million under our $5.0 million stock repurchase program announced in July, 2003.

Business Outlook

For the third fiscal quarter ending March 31, 2005, Pervasive expects revenue to be in the range of $11.5 million to $12.5 million and GAAP-basis diluted earnings per share of $0.02 to $0.04. GAAP-basis profitability is expected to include amortization of purchased intangibles of approximately $0.3 million in the third quarter of fiscal year 2005.

Pervasive management believes that the pro forma results described in this release are useful for an understanding of Pervasive’s ongoing operations because GAAP results include non-cash charges associated with the write-off of in-process research and development and the amortization of purchased intangibles. Management uses these pro forma results to compare the company’s performance to that of prior periods for analysis of trends, and to evaluate the company’s financial strength, develop budgets, manage expenditures and develop a financial outlook. Pro forma results are supplemental and are not intended as a substitute for GAAP results.

Conference Call Details

Pervasive will host a conference call to discuss these results with the investment community today at 5 P.M. Eastern time. The conference call will be broadcast live through a link on the Investor Relations page on the Pervasive Web site at www.pervasive.com. Please go to the Web site at least 15 minutes prior to the call to register, download and install any necessary audio software. The dial-in numbers for the call are 800-894-5910 or 785-424-1052. The conference ID is “PVSW.”

For those who cannot attend the live broadcast, a replay will be available by calling 800-938-2298 or 402-220-1124 from two hours after the call ends until midnight (Eastern) on January 26, 2005. Additionally, the Webcast will be archived on Pervasive’s website at www.pervasive.com/ircalendar.

About Pervasive Software

Pervasive Software is a global value leader in data infrastructure software. The company’s award-winning products enable customers to manage, integrate, analyze and secure their critical data, providing the industry’s best combination of performance, reliability and cost. Pervasive’s strength is evidenced by the size and diversity of its customer base, serving tens of thousands of customers in virtually every industry market around the world. With headquarters in Austin, Texas, Pervasive was founded in 1994 and sells its products into more than 150 countries. More information may be found on the Web at http://www.pervasive.com.

Cautionary Statement

This release may contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All forward-looking statements included in this document are based upon information available to Pervasive as of the date hereof, and Pervasive assumes no obligation to update any such forward-looking statement.

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All Pervasive brand and product names are trademarks or registered trademarks of Pervasive Software Inc. in the United States and other countries. All other marks are the property of their respective owners.

Pervasive Software Inc.

Condensed Consolidated Statements of Operations (GAAP) (A)

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Pervasive Software Inc.

Pro Forma Condensed Consolidated Statements of Operations (A)

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(Unaudited)

Pervasive Software Inc.

Pro Forma Condensed Consolidated Statements of Operations (A)

(in thousands, except per share data)

(Unaudited)

Pervasive Software Inc.

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