Intershop Reports Record Second Quarter Results.

Business Editors/High-Tech Writers

HAMBURG, Germany/SAN FRANCISCO--(BUSINESS WIRE)--Aug. 2, 2000

Intershop Communications (Neuer Markt: ISH), one of the world's leading providers of e-commerce applications and software solutions, today announced record financial results for the second quarter of 2000, which ended June 30, 2000.

Second quarter revenues were Euro 32.6 million ($31.0 million), an increase of 243 percent from Euro 9.5 million ($9.0 million) reported in the comparable 1999 period. The company reported a Q2 2000 net income of Euro 1.3 million ($1.3 million), compared to a loss of Euro 4.2 million ($4.0 million) in Q2 1999. Intershop announced Euro 0.07 ($0.06) second quarter earnings per share, compared to a loss of Euro 0.21 ($0.20) per share a year ago.

With license revenues up 274 percent to Euro 22.5 million ($21.4 million) from the comparable second quarter 1999 figure of Euro 6.0 million ($5.7 million), Intershop product sales represented the driving force behind this quarter's outstanding performance. The increase was mainly driven by Intershop enfinity, launched in Q4 1999. Intershop enfinity is a complete enterprise sell side e-commerce solution that allows businesses to sell anywhere over the Internet. enfinity sales were up 80 percent compared to Q1 2000. Intershop entered the Asian market in Q4 1999 which has already contributed 8 percent of total revenues.

For the first six months of 2000 revenues grew by 249 percent to Euro 57.5 million ($54.7million), compared to Euro 16.5 million ($15.7 million) for the first half of 1999. Net income for the six months period were up from a loss of Euro 7.7 million ($7.3 million) to a profit of Euro 3.0 million million ($2.8 million). Earnings per share were Euro 0.15 ($0.14), compared to a loss of Euro 0.40 ($0.38) per share a year ago.

Management Review

Stephan Schambach, CEO, said, "In Q2, Intershop continued to pursue its strategy of expansion throughout the world and reinforced its position as one of the global leaders in e-commerce software for sell-side applications and solutions. Once again our state-of-the-art product suite enabled hundreds of new and existing enterprise customers to sell their products through the sell direct and sell indirect B2C and B2B scenarios. Our products also enabled Application Service Providers (ASPs) to offer hosted e-commerce and e-marketplace applications. Extensibility, flexibility, time-to-market and return-on-investment are the most important criteria for the customers these days and we are in a great position to deliver upon their needs."

"We are very pleased to report record revenues as well as our second profitable quarter," said Wilfried Beeck, CFO. "This was not only the tenth consecutive quarter of significant organic revenue growth, but revenue and results were also again higher than our expectations. However, the main highlight of the quarter is the success of Intershop enfinity, which provides the fundamental backbone for enabling e-Commerce."

New Customers

-- Intershop acquired an impressive list of blue chip customers

including Intel, Unisys, Bertelsmann, H.B. Fuller, Tchibo,

Mannesmann and Terranetworks (Telefonica).

-- Intershop has received significant orders from over 500

customers from 50 different countries, from new customers (38%

of revenues) as well as from existing customers (62% of

revenues). This shows that Intershop has a solid and

well-balanced global customer base.

-- In the course of the second quarter, the number of licenses

sold increased by 30,000 to 300,000, making Intershop by far

the worldwide market leader in terms of the number of

e-commerce licenses sold.

-- Shortly after its launch in Q4 1999, Intershop enfinity, the

first complete XML and Java-based sell-side e-business

application, set an industry benchmark and established a

strong position in the market. In the second quarter, over 50

new Intershop enfinity customers were added to the impressive

list of accounts. Direct enfinity customers include Business

Mart, Bolsa Do Plastico, BOL (Bertelsmann), H.B. Fuller,

Tchibo, Unisys, Terranetworks, MyExpressLane.com, MyToys.de,

Sonera and Schott Spezialglass.

-- Due to the relatively short implementation cycle of Intershop

enfinity, several customers have gone live with their

e-commerce application successfully within a few weeks after

the project was initiated. Examples of new marketplaces going

live in the second quarter were Mercateo (B2B marketplace for

e-procurement of SME), Efoodmanager (the first pan-European

B2B food marketplace), Goodax, (B2B reverse auction site for

industrial goods) and Gloomedix.com (B2B pan-European

marketplace for medical products). Examples of sell direct and

sell indirect scenarios realized with Intershop enfinity in

the second quarter were Alago, a Dresdner Bank e-procurement

platform for SME customers, H.O.T., Weartical.com, and

Coolwhite.com.

-- In the hosted e-commerce market, Intershop was able to

strengthen its leading position with the Intershop 4 product

line. New business acquired in the course of the second

quarter include leading ASPs and CSPs such as Intel, Sparkasse

Leipzig, Telia, Wirtualna Polska, Computer Partner, Ocean

Internet Services and Vertex Market. The Intershop 4 products

generated 47 percent of total license revenues.

New Products

-- To maintain its technological leadership Intershop continued

the ongoing process of product innovation and enhancements.

For Intershop enfinity these improvements included the release

of enfinity 1.1, language packs for German, French and Spanish

and a localization toolkit for other languages. Other

improvements include new cartridges for Talisma (eCRM),

CyberSource (payment), ArcadiaOne e-Syndication (content

exchange), SAP R/3 2.0 (ERP), AnnuncioBright (eCRM) and

Interwoven (content management).

-- The Intershop Marketplace toolkit, a complete toolkit for

partners to build e-marketplaces for their customers, was

released in May 2000. This bundle includes licenses for

Intershop enfinity and ePages, the Marketplace Connector and

the ArcadiaOne Content Exchange Cartridge for enfinity.

-- The Intershop 4 product line also received a number of

enhancements, such as the availability of IS4 for Compaq

Tru64, language packs and localization toolkit, Intershop 4

ePages Plus Pack for Sun Solaris platform, CyberCash Cartridge

for ePages and Cartridge for OpenMarket Transact4, Version

5.0. In addition, in July, the new release of Intershop 4.2

was launched.

-- Because of its open architecture, Intershop products are very

attractive to other software vendors. During the quarter, many

technology partners have developed new solutions and

interfaces with Intershop technologies, including Pironet

(content management solution), Paybox (payment system for

mobile commerce), enfinity cartridge for webmiles, UnitSpace

(3D shop design tool), Novomind (intelligent web agent

technology), SmartShip.com (online shipping information

system), ExtendedSearch (search engine), Esperanto (real time

ERP connector) and Acta Technologies (e-commerce data

platform).

Strategic Partners and Channel Development

-- 42 percent of license revenues were directly contributed by

the channel partners.

-- More than 2,700 consultants have been trained during the

second quarter, 2,150 of them on Intershop enfinity

technology.

-- Intershop signed several new cooperative agreements with

leading e-commerce implementation companies like Ahead,

Popnet, ISM and Lemon. The existing relationships have been

intensified with leading IT consultants and system integrators

such as PWC, KPMG, EDS, Integra, Icon Medialab and Pixelpark.

-- On the hardware side, Intershop signed a global strategic

alliance with Hewlett-Packard, which represents a milestone in

Intershop's history. The alliance covers the HP-UX port of

Intershop enfinity supported by both parties contributing

significant resources, joint marketing and sales efforts. Both

parties will assign dedicated sales professionals, in addition

HP has committed to using Intershop technology internally as a

preferred e-commerce solution.

Human Resources and Organization

-- In the second quarter, Intershop continued its course of

organizational expansion. 94 employees joined the company

during this period. As of the end of June, this brings the

total number of worldwide employees 765 people.

-- In June, Intershop acquired OWiS GmbH in order to strengthen

its personnel in R&D and Professional Services. OWiS was built

as a visionary firm focused on new technology and methods in

software development and had grown to approximately 100

people. OWiS is located near Intershop's R&D center in

Jena, Germany. The acquisition effective since July 1st is a

perfect fit with Intershop's resources and brings the

company a team of over 50 key software engineers with

experience in XML and Java as well as a profound expertise in

object-oriented software development.

About Intershop Communications

Intershop Communications is one of the world's fastest growing providers of e-commerce applications software and solutions for the enterprise. Intershop's software offers the quickest time-to-market today with the greatest flexibility for tomorrow. In addition, Intershop e-commerce solutions enable customers to "Sell Anywhere" by supporting the widest range of current and rapidly emerging e-commerce business models.

With more than 300,000 licenses sold worldwide, Intershop customers include some of the world's largest commerce service providers and enterprises such as AltaVista, Concentric, Deutsche Telekom, Go2Net, Mindspring, Nortel, PSINet, U S West Dex, Bosch, Canon USA, Columbia-Tri Star, Compaq, Electronic Arts, Hewlett-Packard Company, Kraft, Lufthansa, Mercedes Benz U.S. International, Motorola, Sony and Waterstone's. Founded in 1992, Intershop is headquartered in San Francisco with offices in the U.S., Germany, France, Australia, Canada, Brazil, Sweden, Finland, Hong Kong, Singapore and the United Kingdom and can be found on the World Wide Web at http://www.intershop.com.

This press release contains forward-looking statements about expected second quarter revenue and earnings, changing market strategies, demand for electronic commerce software and related services, expanding sales in the company's traditional market and anticipated demand for new offerings. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. The risks and uncertainties include the following: business conditions and the general economy; changes in distribution choices and channel partners; competitive factors; sales and marketing execution; shifts in technologies or market demand. Additional information covering factors that could cause results to differ materially from projected statements can be found in INTERSHOP's 1999 annual report and prior quarterly filings.