Engage, Inc. Comments on Expected First Quarter Results.

Business Editors

ANDOVER, Mass.--(BUSINESS WIRE)--Nov. 8, 2000

Engage, Inc. (Nasdaq: ENGA), a majority-owned operating company of CMGI, today commented that fiscal first quarter revenue is expected to be lower than previously anticipated.

Additionally, Engage announced today that President and CEO Paul Schaut will resign, effective November 20, 2000.

Based on preliminary data, revenues for the quarter ended October 31, 2000 are expected to be between $40 and $42 million compared to the $66.7 million reported in the Company's fiscal fourth quarter ended July 31, 2000. Cash earnings per share, which excludes amortization of goodwill and other intangible assets, stock compensation, in-process R&D and acquisition costs is expected to be a loss of no greater than $0.25, compared to a loss of $0.14 in the last quarter.

The Company attributes the revenue shortfall to a number of market-related and internal factors. Market factors include a near-term overabundance of supply in the media market, a weakened demand from dotcom companies, and a slower movement of traditional marketers increasing their online budgets. Internal factors include a longer than expected sales force integration, and a longer than expected sales cycle for the software segment.

Bob Bartlett, Chief Financial Officer, commented, "As stated at the end of the fourth quarter, we had hoped for improved industry trends, but based on continued softness in the media industry and the seasonal weakness traditionally associated with the first part of our financial quarter, we anticipate revenues will fall below original expectations. We believe many of these conditions could persist into the next three quarters. We believe we can achieve modest quarter over quarter growth throughout fiscal 2001, with total revenues anticipated to be in excess of $200 million."

The Company's cash availability as of October 31, 2000 was greater than $100 million, which the Company feels is sufficient to support operations through its cash earnings break even point. The Company anticipates that it will be able to achieve break even on a cash earnings basis, which excludes amortization of goodwill and other intangible assets, stock compensation, in-process R&D and acquisition costs, by the end of fiscal 2001, depending on its ability to further reduce expenses and improve margins.

David Wetherell, Chairman of Engage and CEO of CMGI, commented, "Although we are disappointed in Engage's media segment results for the quarter, we believe Engage as a whole continues to have a solid business model. In order to achieve success, Engage is committed to taking bold steps to reengineer its media business and further leverage our software business, core competencies, defensible intellectual property and technology infrastructure to drive revenues and achieve profitability."

As part of the strategy geared toward driving Engage's future revenue growth and profitability, the Company is implementing the following:

--A cost reduction strategy that involves rationalization of underperforming products and redeployment of resources to higher ROI areas. This allows Engage to bring expenses in line with anticipated revenue growth.

--Revenue growth through continued focus on traditional marketers and agencies, an increased focus on driving media sales through existing and new software customers, and selective product and business development efforts that leverage our unique strengths such as profiling and the ability to offer marketing solutions that reach across all media types, including offline, online, wireless and streaming.

--Gross margin improvements through revamping the economics of the media business, and by selling additional software, analytics and profile-related products with typically higher margins.

Wetherell concluded, "Engage remains optimistic about the long-term growth opportunities in both the online media and the enterprise software sectors. Also, we continue to see the line blur between online and offline media and marketing. Engage's strategy plays into this convergence, as we have the ability to offer cross-media, closed-loop software and service solutions to many types of marketers and merchants. In addition, this strategy is designed to promote higher gross margins than a media-only business, and a high-quality, stable customer base."

Engage has scheduled a conference call and simultaneous webcast on Monday, November 13, at 4:00 p.m. EST  to discuss this announcement and provide additional guidance. The call can be accessed via the Engage corporate Web site at www.engage.com and at www.vcall.com. Engage is scheduled to report final results for the fiscal 2001 first quarter the evening of December 12, 2000.

About Engage(R)

Engage, Inc. (Nasdaq: ENGA) is the industry source for both interactive media and enterprise marketing software. A majority-owned operating company of CMGI, Inc., Engage enables companies to harness the power of interactive marketing to create more loyal customers, maximize revenue, and increase their brand's visibility and recognition. Based in Andover, Massachusetts, Engage has European headquarters in London and offices worldwide. For more information on Engage please call 877-U-ENGAGE or visit www.engage.com. [pilcrow (paragraph sign)] Engage is a registered trademark of Engage, Inc. All other products and services mentioned may be trademarks or service marks of their respective owners.

Engage Statement Under the Private Securities Litigation Reform Act 

This press release includes forward-looking information. All statements other than statements of historical fact, including without limitation, those with respect to Engage's objectives, plans and strategies set forth herein are forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties which could cause Engage's future results of operations to differ materially from those anticipated. These risks include our ability to reduce expenses and improve gross margins, growth in online advertising, our ability to increase sales of our software and media offerings, the impact of competition within our industry, our ability to enter into additional strategic relationships, and other risks detailed in Engage's 2000 Annual Report on Form 10-K and from time to time in Engage's other reports filed with the SEC.