Corio, Inc. Announces Financial Results for Second Quarter of 2000; Revenues Increase 97 Percent Over Prior Quarter to $10.4 Million.

Business Editors/High-Tech Writers

SAN CARLOS, Calif.--(BUSINESS WIRE)--July 31, 2000

Corio, Inc. (Nasdaq:CRIO), a leading enterprise application service provider (ASP), today announced revenues for the second quarter ended June 30, 2000 of $10.4 million, an increase of 97 percent over revenues from the prior quarter ended March 31, 2000.

Applications management services revenue, consisting of recurring monthly fees from hosting arrangements, increased 145 percent to $2.8 million in the second quarter of 2000 from $1.1 million in the previous quarter. Professional services and other revenue, reflecting fees primarily from providing implementation, consulting, training and related services for customers, were $7.6 million in the most recent quarter, an increase of 84 percent from the quarter ended March 31, 2000. For the second quarter of 2000, the company reported a net loss of $29.1 million, or $(14.52) per share. Excluding non-cash amortization charges, the operating loss for the second quarter was $23.0 million, or $(0.64) per share, based on pro forma shares outstanding.

For the first six months of 2000, revenues totaled $15.7 million, including $3.9 million of applications management services revenue and $11.8 million of professional services and other revenue. For the first half of 2000, the company reported a net loss of $57.7 million, or $(31.08) per share. Excluding non-cash amortization charges, the operating loss for the six-month period was $45.1 million, or $(1.32) per share, based on pro-forma shares outstanding.

      The following are recent Corio business highlights:

    --  Corio entered into a strategic alliance in April whereby Cap
        Gemini Ernst & Young has agreed to implement and market hosted
        solutions from Corio and to offer value-added business process
        outsourcing services. Also in April, the company completed a
        strategic private financing for $54.5 million with leading
        infrastructure and software providers.

    --  During the quarter ended June 30th, Corio's total number of
        customers reached 72, up from 54 at the end of the prior
        quarter. During the same period, the number of applications
        management contracts increased to 123 from 91.

    --  Also during the quarter ended June 30th, Corio doubled its
        number of active customers; continued to achieve rapid
        implementations, typically between 2 and 14 weeks; and
        realized a positive margin in its professional services
        business unit.

    --  The company also continued to introduce new services and
        capabilities including the launch of eMarkets, with a total of
        four applications management contracts as of June 30th and
        brought its first eMarkets customer live on a hosted
        business-to-business exchange solution, powered by Commerce
        One, Inc.

    --  The company has continued to expand its executive management
        team with the addition of Janet Briggs, senior vice president,
        Human Resources; Jeff Lucchesi, vice president, Western
        Operations; and, more recently, Brad Boston as executive vice
        president, Worldwide Operations.

    --  Finally, in July, the company successfully completed its
        initial public offering.

"We are very pleased with our financial results and accomplishments for the most recent quarter that demonstrate the strength of our ASP model and momentum of the ASP industry in general," said George Kadifa, Corio's president and CEO. "In addition to the support we received surrounding the initial public offering, we have the strategy, people and service offerings to reinforce Corio's position as a leading enterprise ASP."

About Corio, Inc.

Corio is a leading enterprise application service provider, or ASP. Corio implements, integrates and manages the Corio Intelligent Enterprise, a suite of enterprise software applications from leading vendors such as BroadVision, Changepoint, Cognos, Commerce One, E.piphany, Moai, PeopleSoft, Portal Software, Requisite, SAP and Siebel Systems. Corio is headquartered in San Carlos, Calif., with 15 offices across the U.S. Additional information about Corio is available at http://www.corio.com.

Except for historical information contained herein, certain matters discussed in this news release, including but not limited to statements relating to market growth, strategic alliances, market positioning and the future or potential revenue, growth and profitability of the company, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, and are made under their safe-harbor provisions. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Specific factors that may cause actual results to differ include: our limited history of offering ASP services and the fact that we operate in a new industry with a rapidly evolving business model, which may affect our ability to execute our business model effectively; continued substantial investments in our business which are expected to result in continued losses, aggravated by our potential inability to adjust spending to offset any future revenue shortfall; fluctuations in our operating results as the ASP business matures; dependence on third party software vendors for the software necessary to provide our services; our relationship with Cap Gemini Ernst & Young, which could result in significant accounting charges and may not generate the benefits we expect; our need to perform software upgrades for our customers from time to time, which could involve substantial expenses; the inherent challenges in hosting, integrating and managing software applications successfully and cost-effectively; and any inability to adapt our services rapidly to meet changing market needs and incorporate evolving technologies. Additional risks that could cause actual results to differ materially from those projected are discussed in Corio's publicly available filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. Corio undertakes no obligation to publicly release the results of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Note to Editors: Corio and eMarket are trademarks of Corio, Inc. All other product and company names mentioned herein may be the trademarks of their respective owners.

                              CORIO, INC.
                            BALANCE SHEETS
                            (in thousands)

                                        June 30,       December 31,
                                         2000             1999(a)
                                    ----------------  ---------------
                                      (unaudited)
ASSETS
Current assets:
   Cash and cash equivalents           $  46,327         $  37,177
   Accounts receivable                     8,150             2,941
   Prepaid and other current assets        2,939             2,107
                                    ----------------  ---------------
     Total current assets                 57,416            42,225

Property, equipment and
 other assets                             33,377            19,371
                                    ----------------  ---------------
       Total assets                    $  90,793         $  61,596
                                    ================  ===============

LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities:
   Accounts payable and
    accrued liabilities                $  29,323         $  13,180
   Deferred revenue                        3,176             1,888
   Other current liabilities               5,680             2,709
                                    ----------------  ---------------
     Total current liabilities            38,179            17,777

Long-term liabilities                      6,455             7,335
                                    ----------------  ---------------
       Total liabilities                  44,634            25,112

Senior series E mandatorily
 redeemable preferred stock               54,460                 -

Stockholders' equity (deficit)            (8,301)           36,484
                                    ----------------  ---------------
       Total liabilities and
        stockholders' equity
        (deficit)                      $  90,793         $  61,596
                                    ================  ===============


                              CORIO, INC.
                       STATEMENTS OF OPERATIONS
               (in thousands, except per share amounts)
                              (unaudited)

                            Three Months Ended      Six Months Ended
                                 June 30,               June 30,
                           -------------------    -------------------
                             2000       1999        2000       1999
                           -------------------    -------------------
Revenues:
 Applications management
  services                 $   2,780 $      50    $   3,917 $      85
 Professional services
  and other                    7,613     1,104       11,756     1,930
                           --------- ---------    --------- ---------
     Total revenues           10,393     1,154       15,673     2,015

Costs and expenses:
 Applications management
  services                     8,140     1,152       13,989     2,020
 Professional services
  and other                    7,211     1,014       12,682     1,942
 Research and development      3,037       429        5,270       696
 Sales and marketing           9,008     1,251       18,083     1,851
 General and administrative    6,032     2,158       10,782     3,941
 Amortization expenses(b)      6,370     1,171       12,838     1,862
                           --------- ---------    --------- ---------
   Total operating expenses   39,798     7,175       73,644    12,312
                           --------- ---------    --------- ---------

Loss from operations         (29,405)   (6,021)     (57,971)  (10,297)

Interest and other
 income (expense)                267      (133)         314      (230)
                           --------- ---------    --------- ---------

Net loss                   $ (29,138)$  (6,154)   $(57,657) $ (10,527)
                           ========= =========    ========  =========

Basic and diluted net
 loss per share            $  (14.52)$   (5.31)   $ (31.08) $   (9.77)
                           ========= =========    ========  =========

Shares used in computation
 - basic and diluted           2,007     1,160       1,855      1,078
                           ========= =========    ========  =========

Pro forma operating loss
 before amortization
 expenses (unaudited):
  Operating loss before
   amortization expenses   $ (23,036)$  (4,850)   $(45,134) $  (8,435)
                           ========= =========    ========  =========

  Operating loss per share
   before amortization
   expenses, based on
   pro forma shares
   outstanding             $   (0.64)             $  (1.32)
                           =========              ========

  Pro forma shares used
   in computation(c)          36,191                34,082
                           =========              ========

(a) Derived from audited financial statements.

(b) Consists of amortization of deferred stock-based compensation, amortization of intangibles, and amortization of warrants.

(c) Assuming conversion of preferred stock to common stock prior to completion of the company's IPO, which was effective in July 2000.