Engage Announces Fiscal 2002 First Quarter Results.

Business Editors

ANDOVER, Mass.--(BUSINESS WIRE)--Dec. 10, 2001

Engage, Inc., (Nasdaq: ENGA) a leading enterprise marketing software company, and a majority-owned operating company of CMGI, Inc. (Nasdaq: CMGI), today announced operating and financial results for its first fiscal quarter of 2002 ended October 31, 2001.

Revenue for the first fiscal quarter was $6.7 million, compared to $9.1 million for the fourth quarter of 2001. Gross profit for the quarter, excluding non-cash amortization, was $2.0 million, or 30% of revenue, compared to $4.1 million, excluding non-cash amortization, or 45% of revenue, for the previous quarter. On a cash basis, for the first fiscal quarter of 2002, Engage's net loss from continuing operations before amortization, restructuring costs and stock compensation narrowed to $6.2 million, or $0.03 per share, using a weighted average share count of 196.6 million. This compared to $7.3 million, or $0.04 per share, for the fourth quarter of 2001. For the first quarter, total net loss from continuing operations was $14.9 million, or $0.08 per share, compared to $331.0 million, or $1.68 per share, in the previous quarter.

"This quarter, Engage continued to refocus its business towards a software-centric model to take advantage of the growing opportunities in the content management and ad serving markets," said president and CEO Christopher Cuddy. "Through further restructuring of sales, marketing, and product development, as well as ongoing outreach to existing customers, we are effectively repositioning the company for growth and profitability. Moreover, we are expanding our worldwide sales force through an aggressive recruitment plan in which we intend to add approximately 20 salespeople by early spring. On the product development side, we have prioritized our efforts towards new solutions that specifically address the needs and interests of our customers. We are pleased with the early progress of these initiatives, and currently anticipate releasing significant enhancements to our core products over the next few quarters. For example, a new version of ContentServer with integrated search technology is forecasted for customer release this spring."

Engage continued the wind-down of its media business following the cessation of media operations in September 2001. Engage is continuing to work diligently to complete wind-down activities, including settling significant obligations, by early calendar 2002.

"We're pleased with the pace and effectiveness of the transition, which has enabled us to dedicate additional resources towards the growing opportunities for content management software for multichannel marketing and ad serving," said Cuddy.

The Company substantially reduced its cash utilization rate for the first quarter to $11.2 million, excluding the $8.0 million of loan proceeds from CMGI, from $21.6 million in the fourth quarter. Engage had $30.0 million in cash and cash equivalents as of October 31, 2001 and reiterated that these resources, which include the recent loan of $8.0 million from CMGI, are expected to be sufficient to reach profitability by the end of fiscal 2002.

"Our strategic focus has clearly shifted from transformation towards implementation," said Cuddy. "We anticipate our near-term initiatives, including the sales force expansion and new product introductions, to accelerate our growth and more visibly contribute to our financial results in the coming quarters."

Engage will conduct a conference call and simultaneous Webcast today at 5:00 p.m. EST  to discuss the Company's fiscal 2002 first quarter results. The call can be accessed via the investor section of Engage's corporate Web site at www.engage.com.

About Engage

Engage, Inc. (Nasdaq: ENGA) is a leading enterprise marketing software company and a majority-owned operating company of CMGI, Inc. (Nasdaq: CMGI). Engage's content management products are designed to enable companies to harness the power of multichannel marketing to create more loyal customers and increase brand 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.

Engage is a trademark of Engage Inc. Other product names mentioned herein may be trademarks and/or registered trademarks of their respective owners.

Statement Under the Private Securities Litigation Reform Act

This press release includes forward-looking statements about us, including statements regarding our intent to focus on our software business, reposition the company for growth and profitability, expand our sales force, release significant enhancements to our core products, and release additional products, solutions and a new version of our ContentServer product, and statements regarding our belief that our initiatives will accelerate our growth and that we have sufficient resources to fund operations through profitability by the end of fiscal 2002. These forward-looking statements are based on information available to us as of the date of this press release, and not as of any subsequent date, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated. For example, over the next several years the content management market may not grow rapidly or grow at all. Other risks that could affect us include our ability to reduce expenses and to increase sales of our product offerings, the impact of competition within our industry, our ability to enter into additional strategic relationships, and other risks detailed in our 2001 Annual Report on Form 10-K and from time to time in our other reports filed with the SEC. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if the information available to us with respect to the subject of any forward-looking statement changes.

                             Engage, Inc.
                      Consolidated Balance Sheets
                            (In thousands)
                                  October 31, 2001        July 31, 2001
                                      (Unaudited)
Assets
Current assets:
    Cash and cash equivalents          $ 30,013              $ 33,261
     Available-for-sale securities            -                     -
     Accounts receivable, net             7,236                 8,357
     Prepaid expenses and
      other current assets                1,539                 1,221
     Current assets related
      to discontinued operations          5,686                13,016
        Total current assets             44,474                55,855

Property and equipment, net               6,291                 7,094
Intangible assets, net                   54,065                61,389
Other assets                              2,538                 7,258
Long-term assets related
 to discontinued operations               1,141                 1,241
        Total assets                  $ 108,509             $ 132,837

Liabilities and Stockholders' Equity
Current liabilities:
     Current portion of obligation
      under capital lease               $ 2,792               $ 2,806
     Current portion of
      long-term debt                      1,959                 1,693
     Debt to CMGI                        52,064                     -
     Accounts payable                     4,449                 5,903
     Due to CMGI affiliates               1,378                 1,699
     Accrued expenses                    19,433                38,396
     Deferred revenue                     3,982                 6,365
        Total current liabilities        86,057                56,862

Due to CMGI                                   -                39,821
Deferred revenue                              -                    24
Obligation under capital lease,
 less current portion                       628                   759
Long-term debt, less current portion          -                   266
Other long-term liabilities                 382                   396
        Total liabilities                87,067                98,128

Minority interest                         6,833                 6,755

Stockholders' equity:
     Common stock                         1,956                 1,965
     Additional paid-in capital       3,717,719             3,774,494
     Deferred compensation               (2,598)               (4,337)
     Accumulated other
      comprehensive income                  399                   558
     Accumulated deficit             (3,702,867)           (3,744,726)
        Total stockholders' equity       14,609                27,954

        Total liabilities and
         stockholders' equity         $ 108,509             $ 132,837


                             Engage, Inc.
                    Consolidated Operating Results
                              (Unaudited)
                 (In thousands, except per share data)
                                       Three months ended
                        October 31,         July 31,         October 31,
                            2001              2001              2000

Revenue                   $ 6,658          $ 9,057            $ 13,410
Cost of revenue             4,679            4,945               5,395
Amortization of
 developed technology       1,458            1,458                 784
       Total cost
        of revenue          6,137            6,403               6,179

       Gross profit           521            2,654               7,231

Operating expenses:

     In-process research
       and development          -                -                 700
     Research and
      development           2,419            3,003               2,536
     Selling and
      marketing             3,264            5,933              15,344
     General and
      administrative        2,636            3,181               4,535
     Amortization and
      impairment of
      goodwill and
      other intangibles     5,866          127,963              10,724
     Restructuring costs      975               80                 859
     Stock compensation       362              672                 355

       Total operating
        expenses           15,522          140,832              35,053

       Operating loss     (15,001)        (138,178)            (27,822)

Other income (expense):

     Interest income          243              497               1,897
     Interest expense        (406)             (22)                (27)
     Minority interest         93              218                 343
     Other expense            161              (30)                (42)

Loss from continuing
 operations               (14,910)        (137,515)            (25,651)

Discontinued operations:
  Loss from discontinued
   operations                   -         (176,764)           (148,166)
  Loss from disposal
   of discontinued
   operations                   -          (16,707)                  -

Net loss                $ (14,910)      $ (330,986)         $ (173,817)

Basic and diluted net
 loss per share data:

Continuing operations     $ (0.08)         $ (0.70)            $ (0.14)
Discontinued operations         -            (0.90)              (0.78)
Disposal of
 discontinued operations        -            (0.08)                  -
Basic and diluted net
 loss per share           $ (0.08)         $ (1.68)            $ (0.92)

Weighted average
 number of basic
 and diluted shares
 outstanding              196,615          196,642             188,739