KANA Closes 2002 with Strong Partner Momentum and Significant Growth in Key Vertical Industries.

Business Editors/High-Tech Writers

MENLO PARK, Calif.--(BUSINESS WIRE)--Jan. 28, 2003

KANA(R) (NASDAQ: KANA), a leading provider of customer-centric eCRM applications, today announced a series of financial, technical and business highlights occurring in the year 2002. Over the past year, Global 2000 organizations around the world continued to select and expand their use of KANA's eCRM applications, leading to some of the largest deals in the Company's history. KANA's highly successful partner program remained a major driving force in the Company's success, and KANA's commitment to innovation resulted in a broad range of product enhancements, including the development of a series of modular applications customized for key vertical industries.

With these customer, partner and product successes as its foundation, KANA closed 2002 with a strong financial position and a vibrant, efficient organization that is well positioned to capitalize on present and future market opportunities. As a result of KANA's strategy and execution, the company exceeded its financial guidance in each of the last two quarters. License revenue for the company grew 9% in 2002 compared to 2001, and gross margins grew accordingly to 59% for 2002, among the highest in the CRM industry.

Both new and existing customers are rapidly embracing KANA's modular applications, which provide customers the ability to build their contact centers one step at a time, through focused implementations that address the specific needs of their business. Dozens of KANA's existing customers expanded their investment in KANA's applications throughout 2002, underscoring the success of this modular approach. During 2002, each of the applications in the KANA iCARE(TM) suite was also optimized for the specific needs of key vertical industries, such as healthcare, financial services, telecommunications, high technology, retail, government and higher education. This optimization, which enables faster deployments for KANA's customers and a more rapid return on investment, resulted in customer growth in each of these markets for KANA.

Over the past year KANA also expanded its work with its network of strategic systems integration partners, including Accenture, BearingPoint, BusinessEdge, CSC and IBM Global Services to further expand its partner sales channel. Nearly 100% of KANA's customer engagements in 2002 involved a systems integration partner, and these major partners helped to drive many of the largest customers wins of the year.

"Two years ago, we made a strategic decision to focus our organization solely on developing our world-class eCRM applications and turn to our systems integration partners to successfully implement KANA's eCRM solutions and maximize value for our joint customers. Our results for 2002 stand as strong validation for this approach," said Chuck Bay, CEO of KANA. "The largest organizations in the world are turning to KANA because of the strength of our applications, employees and network of partners."

KANA's company highlights for the year 2002 can be divided into three major areas: partner-driven global customer growth, product initiatives and industry honors.

World-Class Partnerships Drive Global Customer Growth

KANA's partner-centric approach to its business continued to drive results in 2002, bringing some of the largest deals in the Company's history. This approach has allowed KANA to focus on developing world-class eCRM applications optimized for key vertical industries, while leveraging strategic relationships with the largest systems integrators in the world to deploy and service its software.

-- KANA expanded its relationship with each of its key systems integrators, including Accenture, Bearing Point, BusinessEdge, CSC and IBM Global Services.

-- KANA expanded its global customer base to more than 1,300 customers with primary growth coming from Global 2000 companies in eight vertical industries. These customers include:

-- Healthcare - Anthem Blue Cross and Blue Shield, Allergan, Inc., Highmark, and St. Vincent Hospital.

-- Telecommunications - Bell Canada, Bell West, Bertelsmann, Cellcom, Cincinnati Bell Long Distance, Comcast Corporation, CoreComm, Cox Communications, Hutchison 3G, o2 GmbH & Co. OHG, Ringo Communications, Sprint PCS, Telesoft, Telewest Broadband, and World Vision International.

-- Financial Services - Ameritrade, Inc., Banca 121, Citibank, Citizens Bank, GMAC Mortgage Corporation, HVB Direkt, JP Morgan Chase & Co., Kookmin Bank, Mn Services, OKO Bank Group, Pentagon Federal Credit Union, PGGM, Upromise, and West Group.

-- Public Sector - Austrian Lottery, City of Amsterdam, Dutch Tax Office, EKZ Elektrizitatswerk des Kantons Zurich, Postbus 51, State of California Department of Motor Vehicles, and State of Ohio.

-- Retail - American Greetings Corporation, EB World, Federated Department Stores, Hermes International, Rosenbluth International, The Home Depot, Inc., Tiffany & Co., and World Wrestling Entertainment, Inc.

-- Transportation - ANA Information Systems Planning, Co., British Airways Plc., Daimler Chrysler AG, Delta Airlines, Ford Motor Company, Mazda Motor Corp., and Washington Metropolitan Transit Authority.

-- Manufacturing - Medtronics, Royal Philips Electronics, Sogei, Velux, Wehkamp, and Xerox.

-- High Tech - Advanced Micro Devices, Inc., BEA Systems, Inc., CNET Networks, Inc., Dell Computer Corporation, Deremate.com, Inc., Digital River, Inc., EarthLink, Electronic Data Systems Corporation, Inc., Encyclosoft Co. Ltd., eProfile, Equant N.V., Freeserve Plc., Getronics N.V., G-Search, KYOCERA Corporation, LG Cards, Madeforchina, Malam Systems Ltd, Matchnet, NEC Corporation, Palm, Inc., Siemens AG, and Sony Corporation.

Product Initiatives

KANA's commitment to innovation continued in 2002 through the development of a series of vertical industry-focused applications, significant product upgrades and the addition of platform support for Microsoft .Net. KANA continues to expand on its industry-leading product offerings to meet the evolving demands of its customer base. Product highlights from the past year included:

-- KANA developed a series of customizations to its eCRM

applications that are specifically targeted for organizations

in customer-centric industries including telecommunications,

financial services, high technology, healthcare, retail,

government and higher education. Based on successful

deployments in each of these markets, these customizations

allow organizations to optimize the value of their

investments.

-- KANA addressed the needs of enterprise organizations that

require an application that can be smoothly deployed worldwide

and facilitate critical communication with their growing

global customer bases with the launch of KANA Response(TM) 7.5

software. KANA Response 7.5 is a fully internationalized

product that accommodates localization, enabling companies

worldwide to answer inbound e-mail and Web inquiries

intelligently and cost-efficiently, regardless of the language

in which the e-mail was written.

-- KANA also announced that its products would support the

Microsoft .Net platform and KANA Contact Center(TM) software

emerged as one of the first high-end eCRM applications

available on the Microsoft .Net platform. This platform

support will enable KANA customers to take advantage of the

enterprise-readiness and integration capabilities of Microsoft

.Net, resulting in a significant increase in operational

efficiencies and rapid ROI.

Industry Honors

Since its inception, KANA has regularly been honored by industry publications and organizations and this string of awards continued in 2002.

-- KANA was honored with the Product of the Year award from

Customer Inter@ction Solutions magazine and from Call Center

Magazine for KANA Response 7.5 and the KANA iCARE Suite,

respectively.

-- KANA was also named to the DM Review 100 list by DM Review

magazine; the KM World 100 Companies that Matter by KM World

magazine and the Software 500 by Software Magazine.

-- KANA was named to the "Top Ten" of the Aberdeen Group's "CRM

50" for Q3 2002, which ranks CRM vendors based on financial

performance. KANA was recognized as a "Hot Company" by

Aberdeen for the third quarter.

KANA provides eCRM applications optimized specifically for the telecommunications, financial services, healthcare, high technology, retail, government and higher education markets to drive better relationships through effective, efficient interactions with customers at all points of contact (self-service, Web collaboration, phone, e-mail, live chat) and throughout the enterprise. KANA's industry-specific applications and customizations address the unique needs of Global 2000 organizations in these markets, giving businesses a competitive advantage and increasing their ability to service, market to and sell to their customers. More than 1,300 companies worldwide benefit from KANA's customer-centric approach to managing customer relationships, which combines sophisticated analytics with thin-client Web architecture to deliver extraordinary customer interactions that decrease costs and drive revenue growth.

KANA released its fourth quarter and year-end 2002 earnings announcement on January 28, 2003. The Company's press release can be found by visiting www.kana.com.

About KANA

KANA (NASDAQ: KANA) provides industry-leading customer-centric eCRM applications optimized specifically for the telecommunications, financial services, healthcare, high technology, retail, government and higher education industries. Part of the KANA iCARE suite, these modular applications help businesses to better service, market to and understand their customers and partners, while improving results and decreasing costs across the enterprise. The company's customer-focused service, marketing and commerce software applications enable organizations to improve customer and partner relationships by enabling them to productively interact when, where and how they want - across all touch points, including self-service, web collaboration, e-mail, and telephone. With comprehensive multi-channel customer relationship management that combines the best-in-class KANA iCARE Architecture with modular applications, KANA's software is successfully deployed at Global 2000 organizations around the world. ADP, Chase, E*Trade, GAP, GM, Hewlett-Packard, Kodak, priceline.com, Sony, TaylorMade-adidas Golf, United Airlines, Verizon, and Williams Sonoma are among the industry leaders that have implemented KANA's eCRM applications. KANA has customer sales and support locations in 22 countries worldwide, in addition to an extensive global network of channel partners. For more information, please visit www.kana.com.

Cautionary Note Regarding Forward-looking Statements Under the Private Securities Litigation Reform Act of 1995:

Information in this release regarding KANA's forecasts, projections, expectations, beliefs, and intentions are forward-looking statements that involve risks and uncertainties. These statements include statements about KANA's expected revenue, operating results, EBITDA, cash flows, long-term success, new business and market position. All forward-looking statements included in this release are based upon information available to KANA as of the date of this release, which may likely change, and we assume no obligation to update any such forward-looking statement. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to such differences include, but are not limited to: competition in our marketplace, including introductions of new products or services, or reductions in prices, by competitors; risks associated with lack of market acceptance of KANA's products or services; inability to enhance and develop our products and services within budget and on schedule; inability to attract and retain qualified employees, to manage cash and expenditures or to expand sales; inability to manage our business in light of recent personnel reductions; KANA's history of losses; the effect of potential military action and terrorist activities; and slow economic conditions, particularly as they affect spending by our prospective customers on eCRM and similar enterprise software products. These and other factors are risks associated with our business that may affect our operating results and are discussed in KANA's filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and our quarterly reports on Form 10-Q.

NOTE: KANA is a registered trademark, and KANA Software, KANA iCARE, KANA Contact Center, KANA IQ, KANA ResponseIQ, KANA Response, KANA Marketing, KANA iCARE Analytics and the KANA logo are trademarks of KANA Software, Inc. All other company and product names may be trademarks of their respective owners.