<PAGE>   1
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                            ------------------------
                                    FORM 10-Q

(Mark One)

        [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1999

        [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

              For the transition period from __________to__________

                         Commission File Number 0-25215


                              WEBTRENDS CORPORATION
             (Exact name of registrant as specified in its charter)

            OREGON                                        93-1123283
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                         851 SW SIXTH AVENUE, SUITE 1200
                             PORTLAND, OREGON 97204
                    (Address of principal executive offices)

                                 (503) 294-7025
                         (Registrant's telephone number)

        Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X]  No [ ]

        The number of shares of common stock, no par value, outstanding on June
30, 1999 was 12,675,520.


<PAGE>   2
                              WEBTRENDS CORPORATION

                                      INDEX


<TABLE>
<S>                                                                                                                  <C>
PART I.     FINANCIAL INFORMATION                                                                                    PAGE NO.
-----------------------------------------------------------------------------------------------------------------------------

Item 1.     Condensed Financial Statements

                      Balance Sheets at June 30, 1999 and December 31, 1998.................................................3

                      Statements of Operations for the three and six months
                           ended June 30, 1999 and 1998.....................................................................4

                      Statements of Cash Flows for the six months
                           ended June 30, 1999 and 1998.....................................................................5

                      Notes to condensed financial statements...............................................................6

Item 2.     Management's Discussion and Analysis of Financial
                 Condition and Results of Operations........................................................................7

PART II.    OTHER INFORMATION
-----------------------------------------------------------------------------------------------------------------------------

Item 1.     Legal Proceedings..............................................................................................12

Item 2.     Changes in Securities and Use of Proceeds......................................................................12

Item 6.     Exhibits and Reports on Form 8-K...............................................................................12

Signatures  ...............................................................................................................13
</TABLE>


<PAGE>   3
                         PART I -- FINANCIAL INFORMATION
                     ITEM 1. CONDENSED FINANCIAL STATEMENTS


                                       2
<PAGE>   4

                              WEBTRENDS CORPORATION
                                 BALANCE SHEETS
                       JUNE 30, 1999 AND DECEMBER 31, 1998


<TABLE>
<CAPTION>
                                                                                         JUNE 30, 1999       DECEMBER 31, 1998
                                                                                         -------------       -----------------
<S>                                                                                      <C>                 <C>
                                                                                          (UNAUDITED)            (AUDITED)
ASSETS

     CURRENT ASSETS:
     Cash and cash equivalents.....................................................      $ 46,628,377           $  1,098,847
     Short-term investments........................................................        30,335,788                     --
     Accounts receivable, net......................................................         2,255,717                977,577
     Inventories...................................................................            55,794                 62,115
     Prepaid expenses..............................................................           187,647                190,530
     Deferred offering costs.......................................................                --                255,394
     Deferred taxes................................................................           157,500                157,500
                                                                                         ------------           ------------
         TOTAL CURRENT ASSETS......................................................        79,620,823              2,741,963
     Property and equipment, net...................................................         1,256,693                598,407
     Other assets..................................................................            17,535                 22,016
                                                                                         ------------           ------------
         TOTAL ASSETS..............................................................      $ 80,895,051           $  3,362,386
                                                                                         ============           ============

LIABILITIES AND STOCKHOLDERS' EQUITY

     CURRENT LIABILITIES:
     Accounts payable..............................................................      $    501,520           $    383,187
     Accrued liabilities...........................................................           638,391                385,233
     Accrued compensation and employment taxes.....................................           907,843                508,422
     Accrued sales tax.............................................................           260,730                268,533
     Accrued income taxes..........................................................           359,621                     --
     Deferred revenues.............................................................         2,472,703                824,013
     Notes and interest payable to shareholders....................................                --                151,103
                                                                                         ------------           ------------
         TOTAL CURRENT LIABILITIES.................................................         5,140,808              2,520,491
                                                                                         ------------           ------------
Commitments and contingencies......................................................                --                     --

STOCKHOLDERS' EQUITY

     Preferred stock, no par value.  Authorized, 15,000,000 shares;
        no shares outstanding......................................................                --                     --
     Common stock, Class A Voting, no par value. Authorized
        60,000,000 shares at June 30, 1999 and 30,000,000 at December 31, 1998;
        issued and outstanding, 12,675,520 shares at June 30, 1999 and 8,210,527
        at December 31, 1998.......................................................        74,985,317                260,000
     Common stock, Class B Non-Voting, no par value.  Authorized -0- shares at
        June 30, 1999 and 30,000,000 at December 31, 1998; issued and outstanding,
        -0- shares at June 30, 1999 and 8,437 at December 31, 1998.................                --                589,694
     Deferred compensation.........................................................          (478,462)              (551,534)
     Retained earnings.............................................................         1,247,388                543,735
                                                                                         ------------           ------------

         TOTAL STOCKHOLDERS' EQUITY................................................        75,754,243                841,895

                                                                                         ------------           ------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................................      $ 80,895,051           $  3,362,386
                                                                                         ============           ============
</TABLE>


            See accompanying notes to condensed financial statements.


                                       3
<PAGE>   5
                              WEBTRENDS CORPORATION
                            STATEMENTS OF OPERATIONS
                THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998


<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED JUNE 30,              SIX MONTHS ENDED JUNE 30,
                                              --------------------------------          --------------------------------
                                                 1999                 1998                 1999                 1998
                                              -----------          -----------          -----------          -----------
<S>                                           <C>                  <C>                  <C>                  <C>
                                                        (UNAUDITED)                                (UNAUDITED)
Revenue:
       Software                               $ 3,381,988          $ 1,661,229          $ 5,968,961          $ 3,157,454
       Support and services                       624,593              167,346            1,043,946              292,795
                                              -----------          -----------          -----------          -----------
          Total revenue                         4,006,581            1,828,575            7,012,907            3,450,249

Cost of revenue                                   343,141              148,707              633,451              278,119
                                              -----------          -----------          -----------          -----------

Gross margin                                    3,663,440            1,679,868            6,379,456            3,172,130

       Research and development                   759,863              512,444            1,398,996              968,222
       Sales and marketing                      2,156,663              799,148            3,662,201            1,519,182
       General and administrative                 561,675              329,108            1,017,140              621,382
                                              -----------          -----------          -----------          -----------

          Total operating expenses              3,478,201            1,640,700            6,078,337            3,108,786
                                              -----------          -----------          -----------          -----------

Income from operations                            185,239               39,168              301,119               63,344

Other income and expense, net                     656,110                7,875              825,161               12,583
                                              -----------          -----------          -----------          -----------

          Income before income taxes              841,349               47,043            1,126,280               75,927

Income tax provision                              315,777                5,645              422,627                9,110
                                              -----------          -----------          -----------          -----------

Net income                                    $   525,572          $    41,398          $   703,653          $    66,817
                                              ===========          ===========          ===========          ===========

Basic net income per share                    $      0.04          $      0.01          $      0.07          $      0.01
                                              ===========          ===========          ===========          ===========

Diluted net income per share                  $      0.04          $      0.01          $      0.06          $      0.01
                                              ===========          ===========          ===========          ===========

Shares used in basic net income
  per share calculation                        11,931,289            8,210,527           10,762,899            8,210,527
                                              ===========          ===========          ===========          ===========

Shares used in diluted net income
  per share calculation                        13,174,652            8,210,527           11,987,358            8,210,527
                                              ===========          ===========          ===========          ===========
</TABLE>


        See accompanying notes to condensed financial statements.


                                       4
<PAGE>   6
                              WEBTRENDS CORPORATION
                            STATEMENTS OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 1999 AND 1998


<TABLE>
<CAPTION>
                                                                             SIX MONTHS ENDED JUNE 30,
                                                                        -----------------------------------
                                                                            1999                   1998
                                                                        ------------           ------------
<S>                                                                     <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:                                               (UNAUDITED)

       Net income                                                       $    703,653           $     66,817
       Adjustment to reconcile net income to net cash
         provided by operating activities:
            Depreciation and amortization                                    188,398                 78,489
            Provision for doubtful accounts                                   60,000                 20,841
            Amortization of deferred stock compensation                       73,072                     --
            Changes in assets and liabilities:
                Accounts receivable                                       (1,338,140)              (133,565)
                Inventories                                                    6,321                 40,765
                Prepaid expenses and deferred offering costs                 258,277               (168,232)
                Other assets                                                   4,481                    348
                Accounts payable                                              16,584                 65,796
                Accrued liabilities                                          253,158                232,633
                Accrued compensation and employment taxes                    399,421                195,207
                Accrued sales tax                                             (7,803)                71,884
                Accrued income taxes                                         359,621                (24,548)
                Accrued interest                                              (1,103)                 6,439
                Deferred revenues                                          1,648,690                110,339
                                                                        ------------           ------------

            Net cash provided by operating activities                      2,624,630                563,213
                                                                        ------------           ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchases of equipment                                               (846,684)              (215,938)
       Purchase of short term investments                                (30,335,788)                    --
                                                                        ------------           ------------
                    Net cash used by investing activities                (31,182,472)              (215,938)
                                                                        ------------           ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Sale of common stock                                               74,037,698                     --
       Exercise of stock options                                             199,674                     --
       Principal payments to shareholders                                   (150,000)                    --
                                                                        ------------           ------------
            Net cash provided by financing activities                     74,087,372                     --
                                                                        ------------           ------------

INCREASE IN CASH AND CASH EQUIVALENTS                                     45,529,530                347,275

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                             1,098,847                806,916
                                                                        ------------           ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                $ 46,628,377           $  1,154,191
                                                                        ============           ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       Cash paid during the period for:
            Interest                                                    $     19,718           $      6,815

            Income taxes                                                $     38,200           $     65,000
</TABLE>


            See accompanying notes to condensed financial statements.


                                       5
<PAGE>   7
                              WEBTRENDS CORPORATION
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (Unaudited)


1.    Basis of Presentation

      The accompanying financial statements have been prepared in conformity
      with generally accepted accounting principles. However, certain
      information or footnote disclosures normally included in financial
      statements prepared in accordance with generally accepted accounting
      principles have been condensed, or omitted, pursuant to the rules and
      regulations of the Securities and Exchange Commission. In the opinion of
      management, the statements include all adjustments necessary (which are of
      a normal and recurring nature) for the fair presentation of the results of
      the interim periods presented. These financial statements should be read
      in conjunction with the audited financial statements for the year ended
      December 31, 1998.

2.    Shareholders' Equity

      On February 19, 1999, WebTrends completed an initial public offering of
      3,500,000 shares including 3,000,000 newly issued shares sold by WebTrends
      and 500,000 outstanding shares sold by existing shareholders.
      Subsequently, the selling shareholders sold an additional 525,000 shares
      pursuant to the underwriters' exercise of their overallotment option.
      WebTrends did not receive any of the proceeds from the sale of stock by
      the selling shareholders. The offered shares generated net proceeds to
      WebTrends of approximately $35.2 million. On May 13, 1999, WebTrends
      completed a follow-on offering of 2,500,000 shares, including 1,250,000
      shares sold by WebTrends, and 1,250,000 shares sold by existing
      shareholders. WebTrends did not receive any of the proceeds from the sale
      of stock by the selling shareholders. The follow-on offering generated net
      proceeds to WebTrends of approximately $38.4 million in capital after
      expenses.

3.    Net Income Per Common and Common Equivalent Share

      Basic and diluted net income per share were computed using the weighted
      average number of common shares outstanding during the period, with
      diluted net income per share including the effect of potentially dilutive
      common stock equivalents. Dilutive common equivalent shares consist of
      stock options. Basic and diluted net income per share have been calculated
      using the treasury stock method in accordance with SEC Staff Accounting
      Bulletin No. 98.

4.    Research and Development Costs

      Software development costs have been accounted for in accordance with
      Statement of Financial Accounting Standards No. 86, Accounting for the
      Costs of Computer Software to be Sold, Leased or Otherwise Marketed. Under
      the standard, capitalization of software development costs begins upon the
      establishment of technological feasibility, subject to net realizable
      value considerations. To date, the period between achieving technological
      feasibility and the general availability of such software has been short;
      therefore, software development costs qualifying for capitalization have
      been immaterial. Accordingly, WebTrends has not capitalized any software
      development costs and has charged all such costs to research and
      development expense as incurred.

5.    Cash, Cash Equivalents, and Short-Term Investments

      The Company classifies highly liquid investments purchased with an
      original maturity of three months or less as cash equivalents. Short-term
      investments consist of certificates of deposit, commercial paper and other
      highly liquid investments with original maturities in excess of three
      months. Short-term investments are classified as available for sale and
      are recorded at amortized cost, which approximates market value. These
      investments mature primarily in less than one year.


                                       6
<PAGE>   8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

FORWARD-LOOKING INFORMATION

      Certain statements in this Form 10-Q contain "forward-looking" information
      (as defined in Section 27A of the Securities Act of 1933, as amended) that
      involve risks and uncertainties which may cause actual results to differ
      materially from those predicted in the forward-looking statements. In
      particular, there are forward-looking statements concerning the Company's
      expectations for expense levels in both absolute and relative dollars
      during future periods. Forward-looking statements can be identified by
      their use of such verbs as expects, anticipates, believes or similar verbs
      or conjugations of such verbs. If any of the Company's assumptions on
      which the statements are based prove incorrect or should unanticipated
      circumstances arise, the Company's actual results could materially differ
      from those anticipated by such forward-looking statements. The differences
      could be caused by a number of factors or combination of factors including
      but not limited to, the risks detailed in the Company's Securities and
      Exchange Commission filings, including the Company's Form S-1 filed April
      27, 1999.

OVERVIEW

WebTrends Corporation provides comprehensive, integrated, scaleable, modular,
and easy-to-use solutions that enable organizations to cost-effectively manage
and report on their Internet-based systems. The Company was incorporated on
August 31, 1993 and reorganized effective January 1, 1997. Prior to 1997,
WebTrends was not taxable as an entity because the shareholders had elected to
be taxed individually based on their percentage ownership of the outstanding
common stock.

Since the year ended December 31, 1996, WebTrends has generated most of
its revenue from licensing its E Business Intelligence Solutions, products which
help management understand and analyze the activity on their internet and
intranet systems thus maximizing the effectiveness of their E-Business systems,
E Business System Management Solutions, products which help internet
professionals ensure the integrity, quality and around the clock availability of
their E Business systems, and E Business Security Solutions, products which help
companies stay current on a rapidly changing set of security issues with an open
architecture and automatic updates via WebTrends SecureTrends web site, and
related support and services. Prior to 1996, substantially all of WebTrends'
revenue was generated from the license of its AuditTrack product and related
products developed as solutions for managing Novell networks.

Software license revenue consists of fees for licenses of WebTrends' software
products. Revenue allocated to software licenses is recognized upon delivery of
software, assuming no significant obligations or customer acceptance rights
exist. WebTrends generally provides a thirty day right of return for each
product sold. Estimated sales returns and allowances are recorded upon shipment
of the product.

WebTrends sells a portion of its products domestically and internationally
through resellers. Sales to domestic resellers are managed directly by
WebTrends, and revenue is recognized primarily at the time of shipment, net of
estimated returns and allowances. In December of 1998, WebTrends entered into
domestic distribution agreements with Merisel Americas, Inc. and Ingram Micro,
Inc., and in May of 1999 entered into a similar agreement with Tech Data, Inc.
These agreements offer expanded rights of return and price protection beyond the
Company's normal reseller agreements. For these distributors, WebTrends is
recognizing revenue upon sale from the distributor to a third party or end user
until a returns history can be established. Sales to international resellers are
managed by a third-party export management company and revenue is recognized
upon sale from the reseller to a third party or end user.

Support and services revenue consists of annual subscriptions for upgrades,
post-sale customer support services, and professional services. Revenue
allocated to subscriptions, which give the subscriber the right to obtain
upgrades, when and if available, is paid in advance and is recognized ratably
over the term of the subscription. Revenue from professional services is
recognized as the services are performed.


                                       7
<PAGE>   9
RESULTS OF OPERATIONS

REVENUE

Total revenue increased 119.1% to $4.01 million for the second quarter of 1999
from $1.80 million for the second quarter of 1998, and 103.3% to $7.01 million
for the six months ended June 30, 1999 from $3.50 million for the six months
ended June 30, 1998. Primary contributing factors to these changes are discussed
below.

Software Licenses

<TABLE>
<CAPTION>
                                         Three Months Ended June 30,                      Six Months Ended June 30,
                                   --------------------------------------           -------------------------------------
                                     1999         Change           1998               1999         Change          1998
                                   --------      --------        --------           --------      --------       --------
<S>                                <C>           <C>             <C>                <C>           <C>            <C>
      Software Licenses            $  3,382         103.6%       $  1,661           $  5,969          89.0%      $  3,157
      Percent of Revenues              84.4%                         90.8%              85.1%                        91.5%
                                                                Dollar amounts in thousands
</TABLE>

The increase in software license revenue resulted primarily from continued
strong growth of the E Business Intelligence and E Business System Management
Solutions product lines, sales for the E Business Security Solutions product
line which was introduced in the second quarter of 1998, and the January 1999
introduction of the WebTrends Security Analyzer to the E Business Security
Solutions product line.

Support & Services

<TABLE>
<CAPTION>
                                         Three Months Ended June 30,                      Six Months Ended June 30,
                                   --------------------------------------           -------------------------------------
                                     1999         Change           1998               1999         Change          1998
                                   --------      --------        --------           --------      --------       --------
<S>                                <C>           <C>             <C>              <C>             <C>             <C>
      Support & Services           $    625         273.2%       $    167         $  1,044           256.5%       $    293
      Percent of Revenues              15.6%                          9.2%            14.9%                            8.5%
                                                                 Dollar amounts in thousands
</TABLE>

The increase in support services revenue resulted primarily from increased
subscription revenue derived from continued growth in the installed base of
customers, and the sale of consulting and training services, programs initiated
during the second half of 1998.

Cost of Revenue

<TABLE>
<CAPTION>
                                         Three Months Ended June 30,                      Six Months Ended June 30,
                                   --------------------------------------           -------------------------------------
                                     1999         Change           1998               1999         Change          1998
                                   --------      --------        --------           --------      --------       --------
<S>                               <C>            <C>             <C>              <C>             <C>            <C>
      Cost of Revenue             $    343          130.7%       $    149         $    633           127.8%      $    278
      Percent of Revenues              8.6%                           8.1%             9.0%                           8.1%
                                                                  Dollar amounts in thousands
</TABLE>

Cost of revenue includes product packaging, software documentation, duplication,
labor, and other costs associated with product fulfillment, royalties associated
with the sale of WebTrends' products, and costs associated with providing
technical support and consulting services to customers. The increase in cost of
revenue resulted primarily from hiring customer support and professional
services personnel to meet demand from a larger customer base and manage and
perform consulting and training services.


                                       8
<PAGE>   10
OPERATING EXPENSES

Research & Development

<TABLE>
<CAPTION>
                                             Three Months Ended June 30,                        Six Months Ended June 30,
                                      ----------------------------------------         ------------------------------------------
                                        1999            Change          1998             1999              Change          1998
                                      --------         --------       --------         --------           --------       --------
<S>                                   <C>              <C>            <C>              <C>                <C>            <C>
      Research & Development          $    760             48.3%      $    512         $  1,399               44.5%      $    968
      Percent of Revenues                 19.0%                            28.0%           20.0%                             28.1%
                                                                    Dollar amounts in thousands
</TABLE>

Research and development expenses consist primarily of salaries and related
costs associated with developing new products, enhancing existing products, and
performing quality assurance and documentation activities. The increase in
research and development expenses in absolute dollars is primarily attributable
to increasing the number of research and development employees over the periods
presented. Research and development expenses decreased as a percentage of total
revenue primarily due to the rapid growth in total revenue. WebTrends continues
to believe that significant investment in research and development is required
to remain competitive in its markets, and therefore anticipates that research
and development expenses will increase in absolute dollars in future periods,
but may vary as a percent of total revenue.

Sales & Marketing

<TABLE>
<CAPTION>
                                          Three Months Ended June 30,                          Six Months Ended June 30,
                                  -------------------------------------------         -------------------------------------------
                                    1999              Change           1998             1999              Change           1998
                                  --------           --------        --------         --------           --------        --------
<S>                               <C>                <C>             <C>              <C>                <C>             <C>
      Sales & Marketing           $  2,157              169.9%       $    799         $  3,662              141.1%       $  1,519
      Percent of Revenues             53.8%                              43.7%            52.2%                              44.0%
                                                                    Dollar amounts in thousands
</TABLE>

The increase in sales and marketing expense is primarily attributable to hiring
additional sales and marketing personnel, including employees to expand the
direct sales force and to support indirect distribution channels. Additionally,
advertising dollars spent during the three and six months ended June 30, 1999
increased significantly over the same periods in 1998. WebTrends expects that
sales and marketing expenses will continue to increase in absolute dollars as it
continues to expand its marketing programs and sales force to increase brand
awareness, but they may vary as a percent of total revenue.

General & Administrative

<TABLE>
<CAPTION>
                                                Three Months Ended June 30,                        Six Months Ended June 30,
                                        ----------------------------------------         ------------------------------------------
                                          1999            Change          1998             1999              Change          1998
                                        --------         --------       --------         --------           --------       --------
<S>                                     <C>              <C>            <C>              <C>                <C>            <C>
      General & Administrative          $    562             70.7%      $    329         $  1,017               63.7%      $    621
      Percent of Revenues                   14.0%                           18.1%            14.5%                             18.0%
                                                                      Dollar amounts in thousands
</TABLE>

General and administrative expenses consist primarily of salaries and other
employee-related costs for executive, financial, human resources, and
information services personnel. Legal and accounting services, and insurance and
general facility costs are also included within general and administrative
expenses. The increase in absolute dollars is primarily attributable to hiring
additional accounting and administration personnel, and public company related
costs during the six months ended June 30, 1999. WebTrends expects general and
administrative expenses will continue to increase in absolute dollars to support
the anticipated expansion of sales and operations, but they may vary as a
percent of total revenue.


                                       9
<PAGE>   11


INCOME TAXES

The income tax provision increased by $310,000 for the three months ended June
30, 1999 over the three months ended June 30, 1998, and increased by $414,000
for the six months ended June 30, 1999 over the six months ended June 30, 1998.
Income taxes for the three and six months ended June 30, 1999, and for the three
and six months ended June 30, 1998, reflect estimated effective tax rates of
37.5% and 12.0%, respectively. The increase is primarily due to increased income
from operations resulting from WebTrends' rapid revenue growth and interest
income generated from the investment of funds raised from the initial and
follow-on stock offerings, partially offset by the utilization of research and
development tax credits associated with its investment in developing new
products.

YEAR 2000 ISSUES

All new products introduced by WebTrends will be year 2000 compliant. The
Company has been testing its existing products for use in the year 2000 and
beyond. The results suggest that the following versions of WebTrends products,
and later versions of such products, are year 2000 compliant: AuditTrack v 3.2 -
SmartPass v1.09 - WebTrends Log Analyzer v 4.0a - WebTrends Professional Suite
v3.0a - WebTrends Enterprise Suite v3.0a - WebTrends Suite for Lotus Domino
v2.0a - WebTrends for Firewalls and VPNs v1.0 - WebTrends Security Analyzer
v.2.0 - WebTrends Enterprise Reporting Server for Solaris v1.0 - WebTrends
Enterprise Reporting Server for Linux v1.0 - CommerceTrends V1.0. However, the
Company's testing does not cover every possible computing environment.
Accordingly, some customers may have year 2000 problems with products that
WebTrends believes are year 2000 compliant.

WebTrends' customers may be using older versions of the above products. Problems
encountered by such customers could be quickly remedied because of the
availability of year 2000 upgrades and updates for such products. In addition,
WebTrends has not tested discontinued products that it no longer markets for
year 2000 compliance, some of which might still be in use. These discontinued
products are not widely deployed. WebTrends expects that any customers that
materially rely on such discontinued products will test them for year 2000
compliance and notify WebTrends if there are problems. WebTrends' experience in
developing year 2000 compliant versions of its existing products suggests that
if it is required to correct year 2000 problems in such discontinued products,
it could do so without incurring material expenses.

WebTrends may be affected by year 2000 issues related to non-compliant internal
systems developed by WebTrends or by third-party vendors. The Company has
received assurances from third-party vendors for all mission-critical systems in
use that such systems are year 2000 compliant and WebTrends is not currently
aware of any year 2000 problem relating to any of its internal, mission-critical
systems. The Company expects that it will continue to address Year 2000
readiness issues up to and including the Year 2000, and will react as
appropriate to newly-identified issues.

WebTrends' internal operations and business are also dependent upon the
computer-controlled systems of third parties such as suppliers, customers, and
service providers. The Company believes that absent a systemic failure outside
the control of WebTrends, such as a prolonged loss of electrical or telephone
service, year 2000 problems at such third parties will not have a material
impact on WebTrends. WebTrends' contingency plan in the event of a third party
system failure is to establish relationships with alternative suppliers or
vendors to replace failed suppliers or vendors.

WebTrends does not separately track expenditures relating to year 2000
compliance. Such expenditures are primarily absorbed within the Company's
development organization. Based on the overall development expenditures and the
amount of time people in the organization are spending on year 2000 compliance,
WebTrends believes that its spending on compliance to date has not been
material. Furthermore, based on its experiences to date, and its assessment that
all mission-critical internal systems and all currently marketed products are
year 2000 compliant, WebTrends does not anticipate that costs associated with
remediating WebTrends' non-compliant products or internal systems would be
material.



                                       10
<PAGE>   12
Any failure of WebTrends to make its products year 2000 compliant could result
in a decrease in sales of the Company's products, an increase in allocation of
resources to address year 2000 problems of its customers without additional
revenue commensurate with such dedication of resources, or an increase in
litigation costs relating to losses suffered by WebTrends' customers due to such
year 2000 problems. Failures of the internal systems of WebTrends could
temporarily prevent us from processing orders, issuing invoices, and developing
products, and could require the Company to devote significant resources to
correcting such problems. Due to the general uncertainty inherent in the year
2000 computer problem, resulting from the uncertainty of the year 2000 readiness
of third-party suppliers and vendors, WebTrends is unable to determine at this
time whether the consequences of year 2000 failures will have a material impact
on its business, results of operations, and financial condition.


LIQUIDITY AND CAPITAL RESOURCES

WebTrends had cash and cash equivalents and short-term investments of $77.0
million at June 30, 1999, which represents the Company's primary source of
liquidity, and working capital of approximately $74.5 million.

The Company's primary market risk exposure is the impact of interest rate
fluctuations on interest income earned on its investment portfolio. The risks
associated with market, liquidity and principal are mitigated by investing in
high-credit quality securities and limiting concentrations of issuers and
maturity dates. Derivative financial instruments are not part of the Company's
investment portfolio. The Company has no debt instruments nor credit facilities
as the line of credit expired in April 1999 and has not been renewed.

Cash and cash equivalents and short-term investments increased by $75.9 million
during the six months ended June 30, 1999, primarily as a result of cash
generated by financing and operating activities. The Company received
approximately $73.6 million from the completion of its initial and follow-on
public offerings in February and May of 1999. Net cash provided by operating
activities was approximately $2.6 million for the six months ended June 30,
1999, and resulted primarily from profitable operations and increased deferred
revenues, partially offset by increased accounts receivable for the periods
indicated. Cash used by investing activities, net of the purchase of short-term
investments, was approximately $850,000 for the six months ended June 30, 1999,
consisting primarily of purchased computer equipment and furniture and fixtures
related to increased personnel.

While increasing in absolute dollars, for the three and six month periods ended
June 30,1999, operating expenses decreased as a percentage of revenue to 86.8%
and 86.7%, respectively, from 89.8% and 90.1% for the same periods in 1998.
Since inception, the Company has continued to increase its operating expenses in
terms of absolute dollars. WebTrends anticipates that the Company will continue
to reinvest revenues in operating expenses for the foreseeable future, and that
operating expenses and capital expenditures will constitute a material use of
cash resources. Additionally, WebTrends may utilize cash resources to fund
acquisitions or investments in businesses, technologies, or product lines that
are complementary to its business. WebTrends believes that its current cash and
cash equivalents, short-term investments, and funds expected to be generated
from operations will satisfy its anticipated working capital and other cash
requirements for at least the next 12 months.


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                          PART II -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      WebTrends was not involved in any material legal proceedings during the
      three and six months ended June 30, 1999.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

(d)   USE OF PROCEEDS

      On February 18, 1999, WebTrends' registration statement on form S-1, file
      number 333-69171, became effective. Proceeds to WebTrends were
      $35,156,421. The proceeds are being applied in part to working capital
      with the remainder in temporary investments consisting of money market
      accounts available on a daily basis and short-term commercial paper.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   EXHIBITS

           See Exhibit Index.

(b)   REPORTS ON FORM 8-K

      No reports on Form 8-K were filed during the quarter covered by this Form
10-Q.


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                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                              WEBTRENDS CORPORATION
                              (Registrant)

Date: August 13, 1999         By  /s/ James T. Richardson
                                  ---------------------------------------------
                              James T. Richardson
                              Senior Vice President, Chief Financial Officer,
                              and Secretary
                              (principal financial and chief accounting officer)


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                                INDEX TO EXHIBITS


EXHIBIT NO.     DESCRIPTION
-----------     -----------

   27.1         Financial Data Schedule