BackWeb Reports Improved Fourth Quarter and Full-Year Bottom-Line Performance; Balance Sheet Remains Strong With $10.3 million in Cash and Investments and No Debt.

SAN JOSE, Calif. -- BackWeb Technologies Ltd. (Nasdaq: BWEB), a leading provider of offline Web software, today reported financial results for the fourth quarter and year ended December 31, 2004.

BackWeb reported Q4 2004 revenue of $1.53 million compared to $1.76 million in the fourth quarter of 2003, and $1.18 million in the third quarter of 2004. Expenses for the quarter included costs related to the October 2004 reductions in overhead and personnel. BackWeb reported a substantially reduced net loss of $911,000, or $0.02 per share, for Q4 2004, compared to a net loss of $1.99 million, or $0.05 per share, in Q4 2003, and a net loss of $1.54 million, or $0.04 per share, in Q3 2004.

For the full year 2004, BackWeb reported revenue of $5.50 million compared to $6.50 million in 2003. Realizing the benefits from ongoing cost reduction measures, BackWeb's net loss for 2004 declined to $5.14 million, or $0.13 per share, compared to a net loss of $10.73 million, or $0.27 per share, in 2003.

BackWeb closed the year with a solid balance sheet. BackWeb had cash, cash equivalents and investments totaling approximately $10.3 million and no long-term debt at year-end 2004. This represents a modest increase in cash, cash equivalents and investments compared to approximately $10.1 million at the close of Q3 2004, the increase coming as a result of the payment by a customer of approximately $1.5 million for a previously announced agreement.

BackWeb's CEO, Bill Heye, commented, "We successfully completed our restructuring program during the fourth quarter while also making good progress on our sales and marketing initiatives, moving toward our ultimate goals of profitability and positive cash flow. We continue to focus our sales and marketing efforts on the market to mobilize Web applications for enterprise customers, especially those in the healthcare, pharmaceutical and manufacturing sectors. We are seeing good initial traction from our initiatives, both with new customers and new divisions within existing customers.

"During the fourth quarter we closed new contracts with an existing customer, F-Secure, and two new customers, Mercury Interactive and the Ortho Biotech Products, L.P., a subsidiary of Johnson & Johnson. Additionally, we signed contracts to initiate projects with other customers that we expect to result in recognizable license revenue in the first half of 2005.

We are seeing increased maturity of enterprise Web applications and a growing realization by enterprise customers and systems integrators of the value that can be unlocked in those applications once they are mobilized for use by their field and mobile personnel. These factors set the stage for potential revenue growth at BackWeb, and we will continue our work to capitalize on these market drivers. To support this effort, as announced separately today, we are expanding our market reach by partnering with leading system integrators."

About BackWeb Technologies:

BackWeb Technologies is a leading offline Web software company. BackWeb extends the value of technology investments by offering mobile and remote employees offline access to portals, intranets, and other Web-based applications and content. The Company's products are designed to reduce network costs and improve the productivity of an increasingly mobile workforce. At the core of BackWeb's products is its patented Polite(R) synchronization technology that can distribute large amounts of data even over narrow bandwidth connections.

BackWeb(R) Offline Access Server(TM), the Company's flagship product, integrates with portal frameworks, intranets, and web applications to extend access to users who are frequently disconnected from the network or offline. Its two-way synchronization capability enables field personnel to both access and publish to portals and web applications while disconnected, creating greater efficiency and improved data accuracy and value.

BackWeb customers include market leaders such as Boehringer Ingelheim, Centocor, Eastman Kodak, GE Medical Systems, Guidant, Hewlett-Packard, KLA Tencor, Lam Research, Pfizer, and more than one hundred other companies. BackWeb also has a co-marketing partnership with BEA and a reseller alliance with software industry leader SAP.

BackWeb is headquartered in San Jose, California, and Rosh Ha'ayin, Israel. For more information, visit www.backweb.com or call [phone].

(C) 2005 BackWeb Technologies Ltd. All rights reserved. BackWeb and Polite are registered trademarks and Offline Access Server is a trademark of BackWeb Technologies Ltd. All other trademarks are property of their respective owners.

Statements in this news release, which are not purely historical, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements of beliefs, plans, expectations or intentions regarding the future. Such forward-looking statements include statements regarding: BackWeb's ability to achieve profitability and positive cash flow, the expected benefits of BackWeb's sales and marketing efforts, the timing of recognizing revenue from recently entered into agreements and potential revenue growth. Actual results could differ materially from those in such forward-looking statements. Factors that could cause actual results to differ materially from expectations include, but are not limited to, the effects of a continued prolonged downturn in general economic conditions or IT industry spending; the ability of the Company's new and existing sales personnel to effectively transition to the new sales execution model; the uncertainty of market acceptance of offline access products or our ability to license those products to customers; the ability of the Company to develop innovative technology and deliver solutions that meet customer needs; and potential emergence of competitive technologies or competitor companies. In addition, please refer to our periodic filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, which contain more detailed descriptions of the risk factors facing our business. BackWeb assumes no obligation to update any of the forward-looking statements in this release.

BackWeb Technologies Ltd.
                 Condensed Consolidated Balance Sheets
                            (in thousands)

                                            December 31,  December 31,
                                                2004          2003
                                             Unaudited
                                            ------------
ASSETS
Current assets:
   Cash and investments                         $10,320       $14,457
   Trade accounts receivable, net                 1,677         2,403
   Other current assets                             378           782
                                            ------------ -------------
Total current assets                             12,375        17,642

Long-term investments and other assets               26           572
Property and equipment, net                         154           301
                                            ------------ -------------
     Total assets                               $12,555       $18,515
                                            ============ =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued liabilities      $1,884        $4,216
   Deferred revenue                               2,672         1,125
                                            ------------ -------------
     Total current liabilities                    4,556         5,341

Long-term liabilities                                61           213
Total shareholders' equity                        7,938        12,961
                                            ------------ -------------
     Total liabilities and shareholders'
      equity                                    $12,555       $18,515
                                            ============ =============


                       BackWeb Technologies Ltd.
            Condensed Consolidated Statements of Operations
                 (in thousands, except per share data)


                          Three months ended     Twelve months ended
                        ---------------------- -----------------------
                         December    December    December    December
                            31,         31,        31,          31,
                           2004        2003       2004         2003
                         Unaudited              Unaudited
                        -----------            -----------
Revenue:
  License                     $550       $853      $1,593      $3,232
  Service                      983        903       3,906       3,270
                        ----------- ---------- ----------- -----------
       Total revenue         1,533      1,756       5,499       6,502

Cost of revenue:
  License                       20         26          72         128
  Service                      209        333       1,170       1,057
                        ----------- ---------- ----------- -----------
       Total cost of
        revenue                229        359       1,242       1,185
                        ----------- ---------- ----------- -----------

Gross profit                 1,304      1,397       4,257       5,317
                        ----------- ---------- ----------- -----------

Operating expenses:
   Research and
    development                811        906       3,338       4,487
   Sales and marketing       1,039      1,342       4,313       6,272
   General and
    administrative             612        752       2,145       3,939
                        ----------- ---------- ----------- -----------
   Restructuring charge         --        443          --         443
                        ----------- ---------- ----------- -----------
       Total operating
        expenses             2,462      3,443       9,796      15,141
                        ----------- ---------- ----------- -----------

Loss from operations        (1,158)    (2,046)     (5,539)     (9,824)

 Finance and other
  income, net                  247         56         396          98
Write-down of an equity
 investment                     --         --          --      (1,000)
                        ----------- ---------- ----------- -----------
Net loss                     $(911)   $(1,990)    $(5,143)   $(10,726)
                        =========== ========== =========== ===========

Net loss per share          $(0.02)    $(0.05)     $(0.13)     $(0.27)
                        =========== ========== =========== ===========

Shares used in
 computing net loss
 per share                  40,760     40,101      40,711      40,000
                        =========== ========== =========== ===========