webMethods Reports Losses

Company will reduce staff 15 percent

Fairfax, VA  July 6, 2001  Integration software company webMethods today announced preliminary results for the first fiscal quarter ended June 30, 2001. webMethods expects to report quarterly revenue of approximately $55 million. Based on these revenues, the company expects to report a net loss for the quarter of $0.09 to $0.10 per share, excluding amortization of deferred stock compensation, goodwill and other non-cash charges.

As a result of what the company calls macro-economic conditions, webMethods also announced a plan to reduce spending across all major areas, including a reduction in staffing levels by approximately 15 percent. The company expects to take a one-time restructuring charge during the second quarter of fiscal year 2002.

"These challenging economic times continue to affect our business. The sales cycle is lengthening as customers continue to defer spending decisions, and the internal approval process is becoming even more complex. We are very confident in our ability to close business opportunities in our pipeline, but we are less certain about the timing of those wins," said Phillip Merrick, chairman and CEO of webMethods. "As such, we are taking steps to realign our resources and adapt our business to the current economic environment, in order to maintain our leadership position in this market."

"We are pleased with the progress we made in reducing our operating expenses during the quarter. In addition, we further improved the strength of our balance sheet by increasing our cash and marketable securities balances to approximately $208 million," said Mary Dridi, CFO of webMethods. "Moving forward, we are confident in our ability to continue managing our operating expenses in line with general economic conditions."