Revenues up 248% Year Over Year

SUNNYVALE, Calif., Oct 25, 1999 - Interwoven, Inc. (NASDAQ: IWOV), a leading provider of content management software for the enterprise Web, today reported strong third quarter performance with consolidated revenues for the quarter ended September 30, 1999 of $4.3 million, an increase of 248% over consolidated revenues of $1.2 million for the quarter ended September 30, 1998.

The consolidated net loss for the quarter ended September 30, 1999 was $4.8 million, or $0.27 per share on a pro forma basic and diluted basis (on 17,736,000 weighted average pro forma shares), compared with a consolidated net loss for the quarter ended September 30, 1998 of $2.1 million or $0.21 per share on a pro forma basic and diluted basis (on 9,821,000 weighed average pro forma shares). The consolidated net loss before the effect of non-cash charges related to stock-based compensation and acquisition expenses was $3.5 million, or $0.20 per share on a pro forma basic and diluted basis, for the quarter ended September 30, 1999, compared with $1.9 million, or $0.19 per share on a pro forma basic and diluted basis, for the quarter ended September 30, 1998.

For the nine-month period ended September 30, 1999, total consolidated revenues was $9.3 million, a 339% increase over consolidated revenues of $2.1 million for the comparable period in 1998. The consolidated net loss for the nine month period ended September 30, 1999 was $11.0 million, or $0.72 per share on a pro forma basic and diluted basis (on 15,245,000 weighted average pro forma shares), compared with a consolidated net loss for the nine month period ended September 30, 1998 of $4.5 million or $0.61 per share on a pro forma basic and diluted basis (on 7,385,000 weighed average pro forma shares). The consolidated net loss before the effect of non-cash charges related to stock-based compensation and acquisition expenses was $8.1 million, or $0.53 per share on a pro forma basic and diluted basis, for the nine months ended September 30, 1999, compared with $3.9 million, or $0.53 per share on a pro forma basic and diluted basis, for the nine month period ended September 30, 1998. "We are very pleased with the financial results we reported for our first quarter as a public company," said Interwoven's president and chief executive officer, Martin Brauns.

Interwoven completed its initial public offering on October 8, 1999. Priced at $17, Interwoven raised $57.3 million, net of underwriting costs, in an offering of 3.6 million shares of its common stock.

"In addition to our strong financial performance and a very well-received initial public offering, we increased our licensed customer count by 44% by signing 33 new license customers in the third quarter - including industry leaders such as General Electric, eBay, E*TRADE, BellSouth, LookSmart, and Fleet Boston Corporation," continued Brauns. "This record number of customers not only demonstrates the broad appeal of our flagship product TeamSite -- but also demonstrates the endorsement of our open, standards-based architecture by the world's most sophisticated Web leaders."

TeamSite customers range from large "brick and mortar" companies like General Electric Corporation to pure-play internet "DotCOMs" like LookSmart.

• General Electric has selected Interwoven as its Web content management standard. As part of the agreement, GE will utilize TeamSite for managing content on GE's Web sites linked by and connected at www.ge.com.
• LookSmart, a Web directory and search service, is one of the top 15 most-visited properties on the Web. With TeamSite, up to 180 professional editors will create and maintain content concurrently for its 1 million URL site.

Sites which went live during the quarter were from diverse industries -- internet-only dotCOMs, banking, retail, publishing, manufacturing, and high technology -- including AltaVista, Barclays Global, Best Buy, CondNet, Hungry Minds, GE, Quokka Sports, Tech Republic, Tivoli Systems, and VF Corporation, among others.

During the quarter, Interwoven unveiled the integration of TeamSite with IBM Net.Commerce and the IBM WebSphere family of server products, providing a comprehensive eBusiness content management solution for IBM customers.

Interwoven also launched the UltraTeam Partner Program and added eight new partners. New partners include indiqu (formerly ScreamingMedia), Luminant Worldwide, Icon Medialab, NetSphere, NuBridge Consulting Group, RABA and VisualTek. "The content management market has become a major new focus for systems integrators and Web interactive firms who have already implemented Interwoven solutions at many customers sites," stated Martin Brauns. "We trained 70 outside consultants on Interwoven solutions this quarter and look forward to more successful joint customer implementations."

International sales spanned Asia, Europe and Canada with NTT Data, the British Natural History Museum and MacLaren McCann Interactive of Toronto. Interwoven UK Ltd's team is directing the Company's business across Europe and is engaged with partners such as Icon Medialab, Art Technology Group (ATG) and BroadVision.

Interwoven, Inc. (NASDAQ: IWOV) is a leading provider of content management software for the enterprise Web. Its flagship product, TeamSite, controls the development, management and deployment of business-critical Web sites. As the platform for eBusiness, Interwoven enables electronic commerce, customer relationship management, supply chain management and knowledge management for Web leaders and Fortune 1000 companies moving to the Web. TeamSite is available for both the Sun Solaris and Microsoft NT operating systems. For more information on the company and its software solutions, visit the Interwoven Web site at www.interwoven.com.tw or e-mail info@interwoven.com .

This press release contains "forward-looking" statements, including projections about our business, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, and statements such that we "expect", "plan", "estimate", "anticipate" or "believe" are forward-looking statements. These forward-looking statements are based on information available to us at the time of the release and we assume no obligation to update any such forward-looking statements. The statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors, including our limited operating history, which makes it difficult to predict our performance, and the unproven nature of our market and customer acceptance of our products. These and other risks and uncertainties associated with our business are detailed in our registration statement on Form S-1 declared effective on October 7, 1999, which is on file with the SEC and available through www.sec.gov.

Financial Tables ");

INTERWOVEN, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
		Three Months Ended September 30,		Nine Months Ended September 30,
		1999		1999		1998
			(unaudited)		(unaudited)
Revenues:
License		$2,556		$5,814		$1,570
Services		1,701		3,447		539
Total revenues		4,257		9,261		2,109
Cost of revenues:
License		28		147		19
Services		2,113		3,542		791
Total cost of revenues		2,141		3,689		810
Gross profit		2,116		5,572		1,299
Operating expenses:
Research and development		1,229		2,930		1,227
Sales and marketing		3,833		9,058		2,960
General and administrative		833		2,077		1,135
Amortization of deferred stock-based compensation		1,017		2,685		564
Amortization of acquired intangible assets		249		249		-
Total operating expenses		7,161		16,999		5,886
Loss from operations		(5,045)		(11,427)		(4,587)
Interest income and other expenses, net		262		416		89
Net loss		(4,783)		(11,011)		(4,498)
Accretion of mandatorily redeemable convertible preferred stock to redemption		(6,877)		(13,227)		(463)
Net loss attributable to common stockholders		($11,660)		($24,238)		($4,961)
Basic and diluted net loss per share		$ (2.71)		$ (6.51)		$ (1.98)
Shares used in computing basic and diluted net loss per share		4,297		3,722		2,505
Pro forma basic and diluted net loss per share (1)		$ (0.27)		$ (0.72)		$ (0.61)
Shares used in computing pro forma basic and dilutednet loss per share (1)		17,736		15,245		7,385
INTERWOVEN, INC. CONDENSED CONSOLIDATED BALANCE SHEET (In thousands)
		September 30, 1999		December 31, 1998
Assets		(unaudited)
Current assets:
Cash and cash equivalents...................		$12,576				9,022
Short-term investments........................		9,419				-
Accounts receivable, net of allowance for doubtful
accounts of $288 and $270, respectively.......		2,594				2,405
Prepaid expenses and other current assests...		1,436				259
Total current assets..........................		26,025				11,686
Property and equipment, net.....		2,297				1,617
Restricted cash........................		605				605
Intangible assets, net...............		545				-
		$29,472				$13,908
Liabilities, Mandatorily Redeemable Convertible
Preferred Stock and Stockholders' Deficit
Current liabilities:
Accounts payable..................		$1,179				$484
Accrued liabilities.......................		2,592				1,473
Debt and leases, current..............		500				258
Deferred revenue, current............		2,548				627
Total current liabilities...............		6,819				2,842
Debt and leases, long-term..............		875				1,257
Deferred revenue, long-term.........		-				97
		7,694				4,196
Mandatorily redeemable convertible preferred stock		52,996				20,464
Stockholders' deficit..........................		(31,218)				(10,752)
		$29,472				$13,908

 

(1) Pro forma net loss per share is computed using the weighted average number of shares of Common Stock outstanding, including the pro forma effects of the exercise of warrants to purchase Series B Preferred Stock and the conversion of the Company's Series A, B, C, D and E Preferred Stock into shares of the Company's Common Stock as if such conversion occurred at the beginning of the period, or at the date of issuance, if later.

(2) The accompanying supplemental financial information is presented for informational purposes only and should not be considered as substitute for the historical financial information presented in accordance with generally accepted accounting principles.