AvantGo Reports Fourth Quarter and Fiscal Year 2001 Financial Results; Company Restates Third Quarter Results To Exclude $1.0 Million Revenue Under a Reseller Contract.

Business Editors/High-Tech Writers

HAYWARD, Calif.--(BUSINESS WIRE)--Jan. 22, 2002

AvantGo, Inc. (Nasdaq:AVGO), the leading provider of mobile enterprise software, today reported financial results for the fourth quarter and year ended December 31, 2001.

The Company posted fourth quarter 2001 revenues of $5.3 million and a proforma net loss of $4.7 million, or $0.14 per share, compared with proforma net losses of $8.2 million, or $0.25 per share, in the third quarter of 2001 and $10.6 million, or $0.35 per share in the fourth quarter of 2000. Revenues for the year ended December 31, 2001 were $24.0 million, a 47% increase from $16.3 million reported for 2000. Proforma net loss for 2001 was $29.9 million, or $0.91 per share, compared with a proforma net loss of $32.7 million, or $1.40 per share, in 2000. Aggregate pro-forma charges excluded from the fourth quarter of 2001, the third quarter of 2001, the fourth quarter of 2000, the full year of 2001 and the full year of 2000 were $3.5 million, $13.0 million, $4.6 million, $26.3 million and $17.2 million, respectively, all as more fully described below.

The Company sequentially reduced operating expenses by 25%, from $12.2 million in the third quarter of 2001 to $9.2 million in the fourth quarter 2001, both excluding pro-forma charges. In addition, cash burn was reduced for the fifth consecutive quarter to $7.0 million from $7.4 million in the previous quarter. At December 31, 2001, the Company had $43.1 million of cash and cash equivalents. The Company's goal is to maintain cash balances sufficient to cover at least six quarters of future operations.

Actual net loss for the fourth quarter of 2001, which includes amortization of goodwill, intangible assets and deferred compensation and other acquisition-related costs of $1.0 million, restructuring and other impairment charges related to the disposal of excess office space of $1.7 million and employee termination costs of $0.8 million, was $8.2 million, or $0.24 per share. Actual net loss for the third quarter of 2001, which includes amortization of goodwill, intangible assets and deferred compensation and other acquisition-related costs of $1.2 million, write-off of core technology of $2.0 million, and restructuring and other impairment charges related to the disposal of excess office space of $1.2 million, employee termination costs of $0.6 million, and the write-off of goodwill of $8.0 million, was $21.2 million, or $0.63 per share in the third quarter of 2001. Actual net loss for the fourth quarter of 2000, which includes amortization of goodwill, intangible assets and deferred compensation and other acquisition-related costs of $4.6 million, was $15.2 million, or $0.50 per share. Actual net loss for 2001, which includes amortization of goodwill, intangible assets and deferred compensation and other acquisition-related costs of $9.2 million, the write-off of core technology of $2.0 million, and restructuring and other impairment charges related to the disposal of excess office space of $5.4 million, employee termination costs of $1.7 million, and the write-off of goodwill of $8.0 million, was $56.2 million, or $1.71 per share compared with a loss of $49.8 million, or $2.13 per share, in 2000, which included amortization of goodwill, intangible assets and deferred compensation and other acquisition-related costs of $16.6 million and in-process research and development charges of $0.6 million.

"Our fourth quarter financial results were within our range of expectations, and we are particularly pleased with our expense and cash management," commented Richard Owen, AvantGo's chief executive officer. "In 2001, we focused on adjusting our business model to current economic conditions and successfully improved our cost structure while balancing our long-term product development efforts. As we enter 2002, our size and cost base are where we want them to be and we are investing heavily in applications that we expect to energize our growth. As the leader in mobile enterprise software with 28 of the Fortune 100 and 2500 companies in 50 countries deploying AvantGo solutions, we remain optimistic about the long-term market opportunity for mobile applications, although cautious in the short-term."

Company Restates Third Quarter 2001 Results

The Company announced it is reducing revenue and net income for the third quarter of 2001 by $1.0 million. The restatement relates to amounts under a single contract with a reseller, for ultimate sale to a federal government agency, which amount the Company has subsequently determined should not have been recognized as revenue in the third quarter. The matter and related internal controls and procedures have been investigated under the supervision of the Audit Committee of the Board of Directors. The Company is filing a Form 10QA with the Securities & Exchange Commission, which contains the restated financial statements for the third quarter of 2001.

Mobile Enterprise Software Provider Extends Marketplace Leadership

More than 20 major organizations, such as Raytheon, Reuters, GE Capital, Niagara Mohawk Power Corporation, Illinois Power and the National Institute of Health, purchased AvantGo mobile business solutions in the fourth quarter to mobilize applications for their employees and customers.

AvantGo's mobile applications continue to be well received in the marketplace. Its AvantGo Mobile Sales(TM) application, which debuted in July 2001, has performed well against its primary competition, Siebel Handheld, earning new business at Fortune 1000 companies including Baxter Healthcare and Nationwide Insurance. In addition, customers are recognizing the value of AvantGo's second packaged application, AvantGo Mobile Delivery(TM), which has enabled McKesson Corporation to realize substantial cost savings and productivity gains. By streamlining existing delivery processes, McKesson has seen significant savings and delivery errors have dropped to zero. Using the mobile application for deliveries, McKesson reports that it has reduced imaging costs by 100 percent, legal claims by 50 percent, order errors by over 50 percent and delivery claims by 30 percent.

The Company's mobile marketing application -- the AvantGo Mobile Internet Service -- achieved record results during the quarter. The fourth quarter is traditionally a strong quarter for the primarily advertising-supported service, which today has over 4.5 million registered users. New customers in the fourth quarter included Hachette Filipacchi, MasterCard, Audi, Universal Studios and FTD.

With 22% of its enterprise license sales from repeat customers, AvantGo continues to extend its marketplace leadership with customer deployments following successful pilot projects.

AvantGo Investor Call

AvantGo's fourth quarter and year-end financial results will be discussed on January 22, 2002 at 2:00 p.m. PST/5:00 p.m. EST , and will be available via a live webcast on the Company's website, under the navigation bar "investor relations," or at www.streetevents.com. A replay also will be available from the Company's website through February 5, 2002.

About AvantGo

AvantGo, Inc. (Nasdaq:AVGO) is the leading provider of mobile enterprise software. AvantGo solutions automate business processes and improve the exchange of information between companies and their employees and customers, resulting in improved business efficiencies and more effective customer interactions. AvantGo solutions include the best-of-breed mobile software platform for creating and deploying enterprise applications, proven customer relationship management (CRM), supply chain management (SCM) and personal information management (PIM) mobile business applications, and professional services to assist in the strategy, design and delivery of end-to-end mobile solutions. AvantGo's customers, which include 28 of the Fortune 100 and over 2500 companies in 50 countries, include McKesson Corporation, Ford Motor Company, Cisco Systems, FedEx, Scottish Power, The US Senate, Tyco, Harvard Medical School, American Express, The World Economic Forum, BG Group, plc., Genencor and Alcatel. For more information, please visit www.avantgo.com.

Cautionary Statement

This news release regarding fourth quarter financial results includes forward-looking statements, including AvantGo's ability to maintain sufficient cash balances to cover future operations until reaching profitability. These forward looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially. Such factors include, but are not limited to, the following: the growth in the adoption of mobile infrastructure technology; the Company's ability to fund its operations with existing cash or by raising additional capital, risks related to market acceptance of AvantGo's products and services, and the products and services of AvantGo's customers and partners which integrate or interoperate with AvantGo technologies; the rates at which advertisers invest in mobile advertising; possible disruption in commercial activities occasioned by terrorist activity and armed conflict, such as changes in logistics and security arrangements, and reduced end-user purchases relative to expectations; quarterly fluctuations in AvantGo's revenues or other operating results; pricing pressures, including the pricing that content providers and advertisers are willing to pay us in connection with our AvantGo mobile Internet service; the pricing of AvantGo enterprise products and the rates that we are able to charge for AvantGo professional services; errors in forecasting or inability to meet sales goals; inability to control costs; customer dissatisfaction; failure to close anticipated key enterprise agreements; slowdown in the adoption of mobile devices for which the market for AvantGo's software and services is dependent; changes in customer order patterns; the impact of long sales and implementation cycles for AvantGo's enterprise products; AvantGo's failure to meet financial expectations of analysts and investors; unanticipated costs or other adverse effects associated with software bugs; continued success in technological advances, including development and implementation of new products and services that are interoperable with those of its customers and partners; delays in the development or introduction of such products and services; AvantGo's ability to manage growth and successfully integrate and operate any acquired businesses; AvantGo's ability to further its brand awareness and market effectively the functionality of its software; competitive factors, such as the release of competitive products and services; marketing programs and other actions by competitors; technical difficulties with networks or operating systems on which we rely to deliver some of AvantGo services; AvantGo's need to maintain and enhance business relationships with leading hardware and software manufacturers, important partners, content providers and other parties; the ability of AvantGo partners and customers to timely develop and deliver to market viable products and services; AvantGo's ability to attract new employees, particularly in the sales and engineering groups; retention of key personnel; AvantGo's activities and those of others regarding protection of intellectual property; the California energy crisis and its impact on operating costs and our ability to operate our business and provide the AvantGo mobile Internet service; other factors which increase operating costs; rapid inflation; general economic downturns; general business and economic conditions; and the impact of events outside the United States such as the business impact of fluctuating currency rates or unrest or political instability in a locale.

Further details on these risks are set forth in the AvantGo Inc. filings with the Securities and Exchange Commission, including the recent quarterly report on Form 10-Q for the quarter ended September 30, 2001 and the annual report filed on Form 10-K for the year ended December 31, 2000. These filings are available on a website maintained by the Securities and Exchange Commission at http://www.sec.gov. Forward-looking statements in this release are generally identified by words such as "forecast," "project," "expect," "anticipate,"' "intend," "believe," "assume," "estimate," "goal," "plan" and other similar words and expressions. AvantGo does not undertake an obligation to update forward-looking statements.

Note to Editors: AvantGo, AvantGo Enterprise, AvantGo Mobile Engine, AvantGo Mobile Sales, AvantGo Mobile Delivery, Dynamic Mobility Model and the AvantGo logo are either registered trademarks or trademarks of AvantGo in the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

                             AvantGo, Inc.
                 Consolidated Statements of Operations
                 (In thousands, except per share data)


                                  Quarter Ended          Year Ended
                                   December 31,          December 31,
                                  2001       2000      2001      2000
                               --------  --------  --------  --------

Revenues:
 License fees                  $  2,616  $  3,914  $ 13,548  $  9,087
 Services                         2,715     2,651    10,456     7,231
                               ------------------  ------------------
  Total revenues                  5,331     6,565    24,004    16,318

Costs and expenses:
 Cost of license fees               176        44       594       161
 Cost of services                   966     1,530     5,137     4,103
 Product development              2,397     4,139    13,250    10,842
 Sales and marketing              5,621    10,667    29,362    30,682
 General and
  administrative                  1,153     2,221     8,085     5,768
 Purchased in-process
  research and development           --        --        --       600
 Amortization of
  goodwill, intangible
  assets and deferred
  stock compensation              1,038     4,552     9,201    16,582
 Write-off of
  core technology                    --        --     1,981        --
 Restructuring and
  other impairment charges        2,463        --    15,065        --
                               ------------------  ------------------
Total costs and expenses         13,814    23,153    82,675    68,738

                               ------------------  ------------------
Loss from operations             (8,483)  (16,588)  (58,671)  (52,420)
Interest and
 other income, net                  247     1,412     2,496     2,582
                               ------------------  ------------------
Net loss                       $ (8,236) $(15,176) $(56,175) $(49,838)
                               ==================  ==================
Net loss per share data:
 Basic and diluted             $  (0.24) $  (0.50) $  (1.71) $  (4.13)
                               ==================  ==================
 Pro forma basic and diluted   $  (0.24) $  (0.50) $  (1.71) $  (2.13)
                               ==================  ==================
Shares used in
 calculation of net
 loss per share:

 Basic and diluted               34,492    30,293    32,892    12,077
 Pro forma basic
  and diluted (1)                34,492    30,293    32,892    23,390

Supplemental data:
 Adjusted loss applicable
  to common shareholders
  excluding purchased
  in-process research
  and development,
  amortization of
  goodwill, intangible
  assets and deferred
  stock compensation,
  write-off of core technology,
  and restructuring and
  other impairment charges       (4,735)  (10,624)  (29,928)  (32,656)

 Adjusted pro forma basic
  and diluted net
  loss per share               $  (0.14) $  (0.35) $  (0.91) $  (1.40)

Shares used in
 per share computation
 - pro forma basic
 and diluted (1)                 34,492    30,293    32,892    23,390


      (1) Pro forma results assumes the conversion of preferred stock
into an equivalent number of common stock at time of issuance


                             AvantGo, Inc.
                      Consolidated Balance Sheets
                            (In thousands)


                            December 31,        December 31,
                                   2001                2000
                              ---------           ---------

ASSETS

Current assets:
 Cash and cash equivalents    $  43,091           $  57,034
 Short-term investments              --              16,432
 Accounts receivable,
  net of allowance                3,236               4,724
 Prepaid expenses
  and other assets                  480               1,186
                              ---------           ---------
   Total current assets          46,807              79,376
Restricted cash                   3,438               3,438
Property and
 equipment, net                   6,890               7,998
Goodwill and
 other intangibles                   --              12,803
Other assets                        344                 693
                              ---------           ---------
   Total assets               $  57,479           $ 104,308
                              =========           =========

LIABILITIES AND EQUITY

Current liabilities:
 Accounts payable             $   1,243           $   3,227
 Accrued liabilities              3,855               1,527
 Accrued compensation
  and related benefits            1,693               2,238
 Current portion of
  long-term debt                     --                  40
 Deferred revenue                 1,813               2,442
                              ---------           ---------
   Total current liabilities      8,604               9,474
Deferred revenue,
 net of current portion              --                  83
Accrued restructuring charges,
 net of current portion           2,127                  --
Stockholders' equity:
 Common stock                   168,302             170,841
 Notes receivable
  from stockholders                (502)               (706)
 Deferred stock compensation     (2,451)            (12,350)
 Revenue offset relating
  to warrant agreements            (592)             (1,099)
 Accumulated deficit           (118,122)            (61,947)
 Accumulated other
  comprehensive loss                113                  12
                              ---------           ---------
   Total stockholders' equity    46,748              94,751
                              ---------           ---------
   Total liabilities and
    stockholders' equity      $  57,479           $ 104,308
                              =========           =========