<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                          -----------------------------


                                    FORM 10-Q

              [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

                                       OR

              [ ] 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 000-24271

                                NETGRAVITY, INC.
             (Exact name of registrant as specified in its charter)



              DELAWARE                                     77-0410283
 ----------------------------------            ---------------------------------
   (State or other jurisdiction of             (IRS Employer Identification No.)
    incorporation or organization)


                             1900 S. NORFOLK STREET
                                    SUITE 150
                        SAN MATEO, CALIFORNIA 94403-1151
                                 (650) 425-6000
               (Address, including ZIP code, and telephone number)


Indicate by check mark whether the registrant (1) has 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 [ ]

17,763,000 shares of Common Stock, $0.001 par value per share, were
outstanding as of June 30, 1999.

<PAGE>

                                NETGRAVITY, INC.


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----
<S>      <C>                                                                       <C>
PART I - Financial Information

Item 1.  Condensed Consolidated Financial Statements:

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

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

         Condensed Consolidated Statements of Cash Flows for the
              three- and six- months ended June 30, 1999 and 1998                    5

         Notes to Condensed Consolidated Financial Statements                        6


Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                                      8

Item 3.  Quantitative and Qualitative Disclosure about Market Risk                  28


PART II - Other Information


Item 1.  Legal Proceedings                                                          29

Item 2.  Changes in Securities and use of Proceeds                                  29

Item 3.  Default upon Senior Securities                                             30

Item 4.  Submission of Matters to a Vote of securities Holders                      30

Item 5.  Other Information                                                          31

Item 6.  Exhibits and Reports on Form 8-K                                           31

Signature                                                                           33

</TABLE>

                                       2
<PAGE>

                                NETGRAVITY, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                      (In thousands, except per share data)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                          June 30,          December 31,
                                                                                            1999                1998
                                                                                          -------           ------------
<S>                                                                                       <C>                 <C>
                                     ASSETS

Current assets:
      Cash, cash equivalents and short-term investments                                   $ 125,043            $ 20,799
      Accounts receivable, net                                                                9,231               6,311
      Prepaid expenses and other current assets                                               1,909                 778

                                                                                  --------------------------------------
      Total current assets                                                                  136,183              27,888

Property and equipment, net                                                                   5,870               3,473
Other assets                                                                                  1,655               2,059
                                                                                  --------------------------------------
      Total assets                                                                        $ 143,708            $ 33,420
                                                                                  ======================================

                       LIABILITIES AND STOCKHOLDERS EQUITY

Current liabilities:
      Current portion of notes payable                                                          485                 618
      Accounts payable                                                                          594                 898
      Accrued liabilities                                                                     3,814               2,867
      Deferred revenue                                                                        7,791               5,800
                                                                                  --------------------------------------
        Total current liabilites                                                             12,684              10,183

Notes payable, less current portion                                                               -               1,109

Stockholders equity:
      Convertible preferred stock                                                                 -                   -
      Common stock                                                                               18                  14
      Additional paid-in capital                                                            161,121              46,817
      Deferred compensation                                                                  (1,266)             (1,706)
      Accumulated deficit                                                                   (28,849)            (22,997)
                                                                                  --------------------------------------
        Total stockholders' equity                                                          131,024              22,128

                                                                                  --------------------------------------

        Total liabilities and stockholders' equity                                          143,708              33,420
                                                                                  ======================================
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       3
<PAGE>

                             NETGRAVITY, INC.
              CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                  (In thousands, except per share data)
                               (Unaudited)
<TABLE>
<CAPTION>
                                                                     Three Months Ended                 Six Months Ended

                                                                  June 30,        June 30,          June 30,         June 30,
                                                                    1999            1998              1999             1998
                                                                    ----            ----              ----             ----
<S>                                                              <C>             <C>               <C>              <C>
Revenues:
      Software licenses                                          $  2,058        $    877          $  3,615         $  1,652
      Software upgrades                                             1,006             527             1,879              929
      Consulting and support                                        1,963             916             3,584            1,742
      Transactional services                                          622              12             1,143               12
                                                         --------------------------------------------------------------------
          Total revenues                                            5,649           2,332            10,221            4,335


Cost of revenues:
      Cost of software licenses                                        43              20                46               35
      Cost of consulting and support                                1,221           1,073             2,444            2,231
      Cost of transactional services                                1,326              19             2,306               19
                                                         --------------------------------------------------------------------
          Total cost of revenues                                    2,590           1,112             4,796            2,285
                                                         --------------------------------------------------------------------
          Gross profit                                              3,059           1,220             5,425            2,050
                                                         --------------------------------------------------------------------

Operating costs and expenses:
Research and development                                            1,615           1,063             3,577            2,059
Sales and marketing                                                 3,544           2,439             6,898            4,395
General and administrative                                          1,428             754             2,417            1,462
                                                         --------------------------------------------------------------------
Total operating costs and expenses                                  6,587           4,256            12,892            7,916
                                                         --------------------------------------------------------------------

Loss from operations                                               (3,528)         (3,036)           (7,467)          (5,866)

Other income (expense), net                                         1,425              26             1,615               56
                                                         --------------------------------------------------------------------

Net loss                                                         $ (2,103)       $ (3,010)         $ (5,852)        $ (5,810)
                                                         ====================================================================

Per share of common stock:
      Basic and diluted net loss per share                       $  (0.12)       $  (0.59)         $  (0.38)        $  (1.42)
                                                         --------------------------------------------------------------------

Weighted average shares used in per share
      calculation of basic and diluted net loss
      per share calculation                                        17,487           5,134            15,572            4,079
                                                         --------------------------------------------------------------------
</TABLE>

   See accompanying notes to the condensed consolidated financial statements.

                                       4
<PAGE>

                                             NETGRAVITY, INC.
                             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (In thousands)
                                               (Unaudited)
<TABLE>
<CAPTION>
                                                                                             Six months ended
                                                                                                 June 30,
                                                                                         1999                1998
                                                                                         ----                ----
<S>                                                                                  <C>                   <C>
Cash Flows from operating activities:
      Net loss                                                                       $ (5,852)             $ (5,810)
      Adjustments to reconcile net loss to net cash used
        in operating activities:
           Depreciation                                                                   934                   371
           Amortization of intangibles                                                    369                     -
           Amortization of deferred stock compensation                                    559                   561
           Compensation from grant of non-employee stock options
             and warrants                                                                 254                     -
              Accounts receivable, net                                                 (2,920)               (1,584)
              Prepaid expenses and other assets                                        (1,131)                 (163)
              Accounts payable                                                           (304)                  869
              Accrued liabilities                                                         947                 1,355
              Deferred revenue                                                          1,991                 1,798
                                                                            ----------------------------------------
                       Net cash used in operating activities                           (5,153)               (2,603)
                                                                            ----------------------------------------

Cash flows from investing activities:
      Capital expenditures                                                             (3,329)                 (965)
      Purchase of short-term investments, net                                            (848)                    -
      Other assets                                                                         35                  (284)
                                                                            ----------------------------------------
                       Net cash used in investing activities                           (4,142)               (1,249)
                                                                            ----------------------------------------

Cash flows from financing activities:
      Proceeds from notes payable                                                           -                  (655)
      Repayment of notes payable                                                       (1,242)                 (243)
      Proceeds from issuance of preferred stock, net                                        -                 3,249
      Proceeds from issuance of common stock, net                                     113,935                23,901
      Repurchases of common stock                                                           -                    (9)
                                                                            ----------------------------------------
                       Net cash provided by financing activities                      112,693                26,243
                                                                            ----------------------------------------

Net increase in cash and cash equivalents                                             103,398                22,391
Cash and cash equivalents at beginning of period                                       10,236                 5,637
                                                                            ----------------------------------------
Cash and cash equivalents at end of period                                            113,634                28,028
                                                                            ========================================

Supplemental disclosure of cash flow information:
      Cash paid for interest                                                               57                    71
                                                                            ========================================

Non-cash financing activities:
      Deferred compensation cost on employee and non-employee
        stock option grants                                                          $    228              $  1,037
                                                                            ========================================
</TABLE>

    See accompanying notes to the condensed consolidated financial statements.


                                       5
<PAGE>

NOTE 1.  BASIS OF PRESENTATION

The condensed consolidated financial statements of NetGravity, Inc. and
subsidiaries (the "Company") reflect all adjustments (consisting only of
normal recurring adjustments) that, in the opinion of management, are
necessary for a fair presentation of interim period results. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's annual
report on Form 10-K and other documents filed with the Securities and
Exchange Commission.

The results of operations for the current interim period are not necessarily
indicative of results to be expected for the entire current year or other
future interim periods.

Net Loss Per Share

Basic and diluted net loss per share are computed using the weighted average
number of outstanding shares of common stock.

Diluted net loss per share for the three- and six- months ended June 30, 1998
does not include the effect of approximately 1,852,000 stock options with a
weighted average exercise price of $2.58 per share, or 827,000 shares of
common stock issued and subject to repurchase by the Company at a weighted
average price of $0.22 per share, because their effects are anti-dilutive.

Diluted net loss per share for the three- and six- months ended June 30, 1999
does not include the effect of approximately 3,503,073 stock options
outstanding with a weighted average exercise price of $16.12 per share, and
approximately 164,861 shares of common stock issued and subject to repurchase
by the Company at a weighted average price of $0.28 per share, because their
effects are anti-dilutive.

                                       6
<PAGE>

NOTE 2.  EQUITY TRANSACTIONS

In March 1998, the Company issued and sold approximately 1,451,000 shares of
Series C Preferred Stock for aggregate net proceeds to the Company of
approximately $3,249,000.

In June 1998, the Company raised $23.9 million of net proceeds from the sale
of 3 million shares of the Company's common stock in its initial public
offering ("IPO"). All then outstanding shares of Series A, B and C Preferred
Stock were converted into 2.5 million shares, 1.9 million shares and 1.8
million shares of common stock, respectively, upon the closing of the IPO.

In July 1998, the Company raised an additional $2.1 million of net proceeds
from the sale of an additional 250,000 shares of the Company's common stock
upon the exercise of the underwriters' over-allotment option granted in
connection with the IPO.

In April 1999, the Company completed a secondary public offering of 4,692,000
shares of its Common Stock, of which approximately 3,830,000 were sold by the
Company, including 612,000 shares sold upon exercise of the underwriters'
over-allotment option, for net proceeds to the Company of approximately $113
million, after deducting underwriting discounts, commissions and estimated
offering expenses payable by the Company.

In connection with the Company's issuance of certain contingent stock option
rights to purchase the Company's common stock to consultants engaged in
research and development activities on behalf of the Company, the Company
valued the deferred stock compensation charge associated with the rights
issued to the consultants as of June 30, 1999 at approximately $240,000. The
Company determined the value of the contingent stock option rights using the
Black-Scholes model, based on the following assumptions: no dividends;
contractual term of one year; risk-free interest rate of 6.50%; and expected
volatility of 80%. The value assigned to the contingent stock option rights
is being remeasured at each reporting date until all such ownership rights
have been earned by the consultants, and the resulting compensation charge is
being amortized over the related service period of approximately one year.
Amortization of the assigned value of the warrant during the six months ended
June 30, 1999 totaled approximately $121,000.

In connection with the Company's issuance of a warrant to purchase the
Company's common stock to a recruitment firm as partial consideration for
services rendered in connection with the recruitment and hiring of a new CEO,
the Company valued the stock compensation charge associated with the warrant
issuance at its measurement date at approximately $133,000. The Company
determined the value of the warrant using the Black-Scholes model, based on
the following assumptions: no dividends; contractual term of six months;
risk-free interest rate of 6.50%; and expected volatility of 80%. The entire
value assigned to the warrant was expensed in the three months ended June 30,
1999.

Amortization of deferred compensation and compensation expense of
approximately $315,000 and $355,000 was recognized in the three months ended
June 30, 1998 and 1999, respectively. Amortization of deferred compensation
and compensation expense of approximately $561,000 and $813,000 was
recognized in the six months ended June 30, 1998 and 1999, respectively.

NOTE 3. SEGMENT INFORMATION

The Company has adopted the provisions of SFAS No. 131, DISCLOSURE ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 establishes
standards for the reporting by public business enterprises of information
about operating segments, products and services, geographic areas and major
customers. The method for determining what information to report is based on
the way that management organizes the operating segments within the Company
for making operating decisions and assessing financial performance.

The Company's Chief Executive Officer ("CEO") is considered to be the "chief
operating decision maker" within the meaning of SFAS No. 131. The CEO reviews
financial information presented on a consolidated basis accompanied by
disaggregated information about revenues by geographic region for purposes of
making operating decisions and assessing financial performance. The
consolidated financial information reviewed by the CEO is identical to the
information presented in the accompanying consolidated statement of
operations. Therefore, the Company has determined that it operates in a
single operating segment: interactive marketing software and services.


                                       7
<PAGE>

Revenue and asset information regarding operations in the different geographic
regions is as follows (in thousands of dollars):

<TABLE>
<CAPTION>
                                    North America    Europe       Asia     Consolidated
<S>                                  <C>              <C>         <C>       <C>
Revenues:
  Three months ended June 30, 1998     1,658           334         340        2,332
  Three months ended June 30, 1999     3,984           805         860        5,649
  Six months ended June 30, 1998       3,073           584         678        4,335
  Six months ended June 30, 1999       6,948         1,824       1,449       10,221
Identifiable Assets:
  June 30, 1999                      138,496         1,198       2,173      143,708

</TABLE>

No single customer accounted for greater than 10% of revenues in any period
reported.

NOTE 4.  MERGER WITH DOUBLECLICK INC.

In July 1999, the Company entered into an agreement with DoubleClick, Inc., a
Delaware corporation ("DoubleClick"), under which the Company agreed to merge
with DoubleClick. This merger transaction, in which the stockholders of the
Company will receive 0.28 shares of DoubleClick common stock for each share
of common stock held by them, is expected to be accounted for using the
pooling-of-interests method and should close during the quarter ending
December 31, 1999, subject to various conditions, including customary
regulatory approvals and approval by the Company's stockholders.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following information should be read in conjunction with the condensed
consolidated historical financial information and the notes thereto included
in Item 1 of this Quarterly Report on Form 10-Q (this "Form 10-Q" or this
"Report") and Management's Discussion and Analysis of Financial Condition and
Results of Operations and related financial information contained in
NetGravity's Form 10-K for the fiscal year ended December 31, 1998 (the "1998
Form 10-K"). In this Report, "NetGravity," the "Company," "we," "us" and
"our" refer to NetGravity, Inc. and its wholly-owned subsidiaries, NetGravity
Europe Limited, NetGravity Asia Pacific K.K. and NetGravity (Hong Kong)
Limited.

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT HAVE BEEN MADE PURSUANT TO
THE PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS, ESTIMATES AND
PROJECTIONS ABOUT THE COMPANY'S INDUSTRY, MANAGEMENT'S BELIEFS AND ASSUMPTIONS
MADE BY MANAGEMENT. WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS,"
"BELIEVES," "SEEKS," "ESTIMATES," VARIATIONS OF SUCH WORDS AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN
RISKS, UNCERTAINTIES AND

                                       8
<PAGE>

ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS AND
OUTCOMES MAY DIFFER MATERIALLY FROM WHAT IS EXPRESSED OR FORECASTED IN ANY
SUCH FORWARD-LOOKING STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE THOSE
SET FORTH HEREIN BELOW UNDER "FACTORS AFFECTING OUR BUSINESS, OPERATING
RESULTS AND FINANCIAL CONDITION" AS WELL AS THOSE NOTED IN THE COMPANY'S 1998
Form 10-K, PARTICULARLY IN ITEM 1 OF PART I THEREOF UNDER THE SECTION
ENTITLED "FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL
CONDITION." THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE PUBLICLY ANY
FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE
EVENTS OR OTHERWISE.

OVERVIEW

NetGravity is a leading provider of online interactive marketing solutions.
The Company develops, markets and supports a broad range of high-end,
mission-critical software and transaction-based services designed for
e-commerce merchants (vendors of products and services), advertising agencies
and content publishers.

To date, the Company has generated its revenues primarily from the license
and related upgrade of, consulting for and support of its AdServer family of
software products. The Company believes that its current AdServer family of
software products and software products in development, together with the
related consulting and support services, will continue to account for a
substantial majority of its revenues for the foreseeable future.

In August 1998, the Company formally launched its transactional services
business with the introduction of AdCenter for Publishers ("AdCenter"), an
outsourced version of AdServer. In October 1998, the Company announced the
Global Profile Service ("GPS"), which is a database of anonymous consumer
profiles that the Company makes available to its customers for use in
enhanced targeting. To date, revenues from GPS have not been material.
Revenues from AdCenter and GPS are included within the line-item
"transactional services."

In July 1999, we entered into an agreement with DoubleClick Inc., a Delaware
corporation ("DoubleClick"), under which the Company agreed to be acquired by
DoubleClick. This merger, in which stockholders of the Company will receive
0.28 shares of DoubleClick common stock for each share of common stock of the
Company held by them, is expected to be accounted for using the
pooling-of-interests method and is expected to close during the quarter
ending December 31, 1999, subject to various conditions, including customary
regulatory approvals and approval by the Company's stockholders. See " -
FACTORS AFFECTING OUR OPERATING RESULTS AND FINANCIAL CONDITION - RISKS
RELATED TO THE MERGER" and "Part II - OTHER INFORMATION, ITEM 5, OTHER
INFORMATION" for several factors that could affect the Company both currently
and in the future, whether or not the merger is completed.

                                       9

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth certain items in the Company's condensed
consolidated statements of operations as a percentage of total revenues for
the periods indicated:


                                NETGRAVITY, INC.
                               % of Revenue Table

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED               SIX MONTHS ENDED
                                                       JUNE 30,          JUNE 30,        JUNE 30,       JUNE 30,
                                                         1999              1998            1999           1998
<S>                                                   <C>               <C>            <C>             <C>
Revenues:
      Software licenses                                   36.4%            37.6%           35.4%           38.1%
      Software upgrades                                   17.8%            22.6%           18.4%           21.4%
      Consulting and support                              34.7%            39.3%           35.1%           40.2%
      Transactional services                              11.1%             0.5%           11.1%            0.3%
                                               -----------------------------------------------------------------
           Total revenues                                100.0%           100.0%          100.0%          100.0%


Cost of revenues: (1)
      Cost of software licenses (2)                        0.7%             0.9%            0.4%            0.8%
      Cost of consulting and support (3)                  21.6%            46.0%           23.9%           51.5%
      Cost of transactional services (4)                  23.5%             0.8%           22.6%            0.4%
                                               -----------------------------------------------------------------
           Total cost of revenues                         45.8%            47.7%           46.9%           52.7%
                                               -----------------------------------------------------------------
           Gross profit                                   54.2%            52.3%           53.1%           47.3%
                                               -----------------------------------------------------------------

Operating costs and expenses:
Research and development                                  28.6%            45.6%           35.0%           47.5%
Sales and marketing                                       62.7%           104.6%           67.5%          101.4%
General and administrative                                25.3%            32.3%           23.6%           33.7%
                                               -----------------------------------------------------------------
Total operating costs and expenses                       116.6%           182.5%          126.1%          182.6%
                                               -----------------------------------------------------------------

Loss from operations                                     -62.4%          -130.2%          -73.0%         -135.3%

Other income, net                                         25.2%             1.1%           15.8%            1.3%
                                               -----------------------------------------------------------------

Net loss                                                (37.2%)         (129.1%)         (57.2%)        (134.0%)
                                               =================================================================
</TABLE>



-------------------------------
   (1)  There are no material costs of revenue associated with software
        upgrades.
   (2)  As a percentage of software licenses revenues, cost of software
        licenses was 2.3%, 2.1%, 2.1% and 1.3% in the three months ended June
        30, 1998 and 1999 and the six months ended June 30, 1998 and 1999,
        respectively.
   (3)  As a percentage of consulting and support revenues, cost of
        consulting and support was 117%, 62%, 128% and 68% in the three
        months ended June 30, 1998 and 1999, respectively, and the six months
        ended June 30, 1998 and 1999, respectively.
   (4)  As a percentage of transactional services revenues, cost of
        transactional services was 158%, 213%, 158% and 202% for the three
        months ended June 30, 1998 and 1999 and the six months ended June 30,
        1998 and 1999, respectively.


REVENUES
The Company's total revenues increased from $2.3 million for the quarter
ended June 30, 1998 to $5.6 million for the quarter ended June 30, 1999. The
Company's total revenues increased from $4.3 million for the six months ended
June 30, 1998 to $10.2 million for the six months ended June 30, 1999. These
increases were primarily attributable to increased software licensing and
consulting and support revenues.

International revenues, primarily comprised of export revenues, as a
percentage of total revenues were 28.9% and 29.5% for the quarters ended June
30, 1998 and June 30, 1999, respectively, and 29.1% and 32.0% for the six
months ended June 30, 1998 and June 30, 1999, respectively. Recent growth in
international revenues was attributable to expanded consulting and support
and sales and marketing efforts overseas and the opening of an Asia-Pacific
regional office in April 1998.

No customer accounted for more than 10% of total revenues during the quarters
or six-month periods ended June 30, 1998 and 1999. The Company's total
revenues for the quarter ending September 30, 1999 and year ending December
31, 1999 may be adversely affected by the announcement and pendency of the
merger with DoubleClick due to delayed customer orders or other factors. See
" - FACTORS AFFECTING OUR OPERATING RESULTS AND FINANCIAL CONDITION - RISKS
RELATED TO THE MERGER."

SOFTWARE LICENSES. Software licenses revenues increased from $877,000 for the
quarter ended June 30, 1998 to $2.1 million for the quarter ended June 30,
1999. Software licenses revenues increased from $1.7 million for the six
months ended June 30, 1998 to $3.6 million for the six months ended June 30,
1999. These increases were attributable to an increase in the number of
AdServer licenses sold, due in part to an expansion of the Company's direct
sales organization. Because software upgrades revenues and consulting and
support revenues are, to a large extent, a function of software licenses
revenues, the Company's future operating results will be substantially
dependent on growth of software licenses revenues, and the failure to
increase software licenses revenues would likely have a material adverse
effect on the Company's business, results of operations and financial
condition.

SOFTWARE UPGRADES. Software upgrades revenues increased from $527,000 for the
quarter ended June 30, 1998 to $1.0 million for the quarter ended June 30,
1999. Software upgrades revenues increased from $929,000 for the six months
ended June 30, 1998 to $1.9 million for the six months ended June 30, 1999.
The increase was a result of software upgrades being provided to a larger
installed customer base. The number of NetGravity's customers increased from
approximately 250 at June 30, 1998 to approximately 380 at June 30, 1999.

CONSULTING AND SUPPORT. Consulting and support revenues increased from
$916,000 for the quarter ended June 30, 1998 to $2.0 million for the quarter
ended June 30, 1999. Consulting and support revenues increased from $1.7
million for the six months ended June 30, 1998 to $3.6 million for the six
months ended June 30, 1999. These increases were primarily a result of the

                                      10

<PAGE>

increased demand for consulting services, expansion in Europe and Asia, the
larger installed customer base and customers electing to renew their support
programs.

TRANSACTIONAL SERVICES. The Company's transactional services were introduced
with the formal release of AdCenter for Publishers during the third quarter
of 1998 and GPS during the fourth quarter of 1998. Transactional services
revenues increased from $12,000 for the quarter ended June 30, 1998 to
$622,000 for the quarter ended June 30, 1999. Transactional services revenues
increased from $12,000 for the six months ended June 30, 1998 to $1.1 million
for the six months ended June 30, 1999. These increases were primarily the
result of increased volumes of advertisements served for customers of the
Company's service bureau offering, AdCenter.

COST OF REVENUES

Gross margins increased from 52.3% for the quarter ended June 30, 1998 to
54.2% for the quarter ended June 30, 1999 and from 47.3% for the six months
ended June 30, 1998 to 53.1% for the six months ended June 30, 1999. In each
case, the increase was primarily attributable to higher consulting and
support margins due to increased economies of scale in the consulting and
support organizations during the three- and six- months ended June 30, 1999.
In both periods, the increase in consulting and support margins was partially
offset by negative transactional services margins which were attributable to
the Company's continued investments in additional capital, infrastructure and
operational personnel.

COST OF SOFTWARE LICENSES. Cost of software licenses consists of royalties
paid to third parties for licensed technology. Cost of software licenses was
$20,000 and $43,000 for the quarters ended June 30, 1998 and 1999,
respectively, and $35,000 and $46,000 for the six months ended June 30, 1998
and 1999, respectively. As a percentage of software licenses revenues, cost
of software licenses was 2.3% and 2.1% for the quarters ended June 30, 1998
and 1999, respectively, and 2.1% and 1.3% for the six months ended June 30,
1998 and 1999, respectively. Because AdServer 4.0 and other future versions
of the Company's software products are expected to contain components
licensed from third-parties under agreements involving royalty payments, the
Company expects that the cost of software licenses will increase
substantially both in absolute dollars and as a percentage of software
licenses revenues as the Company begins to sell such new products.

COST OF CONSULTING AND SUPPORT. Cost of consulting and support consists
primarily of personnel-related costs (including overhead) incurred in
providing consulting, support and training to customers. The cost of
consulting and support was $1.1 million and $1.2 million for the quarters
ended June 30, 1998 and 1999, respectively, and $2.2 million and $2.4 million
for the six months ended June 30, 1998 and 1999, respectively. While absolute
dollars spent on consulting and support increased from the quarter ended June
30, 1998 to the quarter ended June 30, 1999, cost of consulting and support
as a percentage of consulting and support revenues decreased from 117.1% for
the quarter ended June 30, 1998 to 62.2% for the quarter ended June 30, 1999.
Similarly, while absolute dollars spent on consulting and support increased
from the six months ended June 30,

                                      11

<PAGE>

1998 to the six months ended June 30, 1999, cost of consulting and support
decreased as a percentage of consulting and support revenues from 128.1% for
the six months ended June 30, 1998 to 68.2% for the six months ended June 30,
1999. The decrease in cost of consulting and support as a percentage of
consulting and support revenues was attributable to increased revenues and
improved economies of scale associated with a larger customer base.

COST OF TRANSACTIONAL SERVICES. The cost of transactional services consists
primarily of personnel and related expenses, hosting and bandwidth costs and
the amortization of intangibles associated with the AdCenter and GPS
offerings. The cost of transactional services was $19,000 and $1.3 million
for the quarters ended June 30, 1998 and 1999, respectively, and $19,000 and
$2.2 million for the six months ended June 30, 1998 and 1999, respectively.
The cost of transactional services as a percentage of transactional services
revenues was 158.3% and 213.2% for the quarters ended June 30, 1998 and 1999,
respectively, and 158.3% and 201.7% for the six months ended June 30, 1998
and 1999, respectively. The Company expects the cost of transactional
services to continue to increase in absolute dollars in future periods as the
Company continues to hire additional personnel and continues to investment in
capital equipment necessary to increase the transactional capacity of its
service offerings.

Overall gross margins may be impacted by the mix of products sold by the
Company, the mix of software licenses revenues, software upgrades revenues,
consulting and support revenues and transactional services revenues, the mix
of international and North American revenues, the mix of distribution
channels used by the Company and the level of royalty payments, amortization
charges and other costs related to the acquisition of technology or other
intangible assets. The Company typically realizes higher gross margins on
software upgrades revenues than on software licenses revenues, substantially
higher gross margins on software licenses revenues than on consulting and
support revenues and higher gross margins on direct sales than on indirect
sales. Shifts in the mix of revenues towards lower margin revenues or a
greater percentage of sales through indirect channels would adversely impact
the Company's overall gross margin and could materially adversely impact the
Company's operating results. There can be no assurance that such adverse
fluctuations in the mix of revenue or costs of revenues will not recur in the
future. Moreover, the Company expects that increases in costs of
transactional services will materially and adversely impact overall gross
margins for the foreseeable future.

RESEARCH AND DEVELOPMENT

Research and development expenses consist primarily of personnel-related
costs (including overhead), consulting expenses and related equipment. To
date, the Company has not capitalized any such development costs under
Statement of Financial Accounting Standards No. 86; all research and
development costs have been expensed as incurred. Research and development
expenses increased from $1.1 million for the quarter ended June 30, 1998 to
$1.6 million for the quarter ended June 30, 1999. Research and development
expenses increased from $2.1 million for the six months ended June 30, 1998
to $3.6 million for the six months ended June 30, 1999. The increase in
absolute dollars in all periods was primarily due to increased personnel
costs and related overhead, and a large increase in outside consulting
expenses associated with enhancements of

                                      12

<PAGE>

existing products and development of new products. The Company has recorded
deferred stock compensation expense under Statement of Financial Accounting
Standards No. 123 of $240,000 for stock options issued to consultants engaged
in research and development activities. Stock compensation expense associated
with these stock options charged to research and development expense totaled
approximately $121,000 for the six months ended June 30, 1999.

The Company believes that continued investment in research and development is
critical to attaining its strategic objectives and, as a result, expects that
research and development expenses may increase in absolute dollars in future
periods.

SELLING AND MARKETING

Selling and marketing expenses consist primarily of personnel-related costs
(including overhead), travel expenses, advertising expenses, trade show
expenses, seminars and costs of marketing materials. Selling and marketing
expenses increased from $2.4 million for the quarter ended June 30, 1998 to
$3.5 million for the quarter ended June 30, 1999. Selling and marketing
expenses increased from $4.4 million for the six months ended June 30, 1998
to $6.9 million for the six months ended June 30, 1999. The increase in
absolute dollars was due primarily to the increase in compensation paid to
sales and marketing personnel (including commissions) and related overhead,
and increased travel costs associated with the Company's direct selling
efforts.

The Company expects selling and marketing expenses to increase significantly
in absolute dollars in future periods, as the Company hires additional
personnel, introduces new products and services, expands into new markets and
continues to promote the NetGravity brand.

GENERAL AND ADMINISTRATIVE

General and administrative expenses consist primarily of personnel-related
costs (including overhead) for the Company's executive, administrative,
finance and human resources personnel, support services and professional
services fees. General and administrative expenses increased from $754,000
for the quarter ended June 30, 1998 to $1.4 million for the quarter ended
June 30, 1999. General and administrative expenses increased from $1.5
million for the six months ended June 30, 1998 to $2.4 million for the six
months ended June 30, 1999. The increase in absolute dollars in both periods
was primarily a result of increased personnel costs and related overhead
necessary to support the Company's increased scale of operations, including
the additional costs associated with being a publicly traded company. The
Company has recorded compensation expense under Statement of Financial
Accounting Standards No. 123 as general and administrative expense of
$133,000 in the three- and six- month periods ended June 30, 1999 related to
a warrant issued to a recruitment firm as partial consideration for services
rendered in connection with the recruitment and hiring of the Company's new
CEO. The Company expects general and administrative expenses to increase in
absolute dollars in future periods as the Company expands its staff and
incurs additional costs related to expansion of its operations.

DEFERRED STOCK COMPENSATION EXPENSE

Amortization of deferred compensation associated with employee stock option
grants totaling approximately $264,000 and $559,000 was recognized in the
three-and six- months ended June 30, 1999, respectively.

                                      13

<PAGE>

Total amortization of deferred compensation expenses and non-employee
compensation expenses in the three- and six- months ended June 30, 1999 were
$355,000 and $813,000, respectively.

Amortization of deferred stock compensation expense is allocated to costs of
consulting and support, cost of transactional services and to all operating
expense lines identified on the statement of operations over the life of the
options, which is generally four years. As a result, amortization of deferred
compensation expense will adversely impact the company's operating results
through June, 2002.

OTHER INCOME (EXPENSES)

Net other income was primarily comprised of the interest earned from
investments in investment-grade, short-term interest bearing securities. Net
other income was $26,000 and $1.4 million for the quarters ended June 30,
1998 and 1999, respectively. Net other income was $56,000 and $1.6 million
for the six months ended June 30, 1998 and 1999, respectively.

The increase in net other income was primarily due to short-term investment
interest earned on the net proceeds from the Company's IPO, which was
completed in July 1998, and from the Company's secondary public offering,
which was completed in April 1999.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1999, the Company had $125.0 million in cash, cash equivalents
and short-term investments. In June 1998, the Company sold 3,000,000 shares
of its common stock in its IPO, generating net proceeds of $23.9 million. In
July 1998, the Company sold an additional 250,000 shares of its common stock
and generated an additional $2.1 million of net proceeds in connection with
the exercise of the over-allotment option granted to the underwriters of the
Company's IPO. In March of 1999 the Company sold 3,218,440 shares of common
stock in a secondary public offering for net proceeds of approximately $94.8
million. The cash proceeds were received by the Company during the second
quarter. In addition, in April of 1999, the underwriters of the Company's
secondary public offering purchased an additional 612,000 shares of the
Company's common stock upon the exercise of their over-allotment option,
generating additional net proceeds of approximately $18.2 million.

During the six months ended June 30, 1999, the Company used $5.2 million in
cash to fund its operating activities, primarily attributable to the
Company's operating loss, offset by certain non-cash charges and increases in
certain liabilities. Net cash used in investing activities during the six
months ended June 30, 1999 of $4.1 million was primarily attributable to
purchases of property and equipment totaling approximately $3.3 million and
net short-term investments totaling approximately $800,000. Net cash provided
by financing activities during the six months ended June 30, 1999 of $112.7
million was primarily attributable to proceeds from the Company's secondary
public offering, offset slightly by the repayment of certain debts.

The Company's deferred revenue balance includes deferred software licenses
revenues and revenues attributable to uncompleted consulting engagements, as
well as the unamortized portion

                                      14

<PAGE>

of the revenues from software upgrades and support contracts. The Company
records an accounts receivable and deferred revenue upon shipment and
invoicing of a software license to a customer. The Company's accounts
receivable balance is relatively large in comparison to quarterly and annual
revenues because the Company generally recognizes revenue from the licensing
of software later than shipment and invoicing. Further, the Company's
deferred revenue balance or changes therein may not be indicative of changes
in the ordering patterns of customers or the Company's backlog.

The Company believes that it has sufficient resources to meet its anticipated
cash needs for working capital and capital expenditures for the next 12
months. However, there can be no assurance that additional funds will not be
required either during or after such 12-month period.

Year 2000 Compliance

The Company is aware that many currently installed information technology
("IT") systems, such as computer systems and software products, as well as
non-IT systems that include embedded technology, were not designed to
correctly process dates after December 31, 1999. NetGravity is currently
assessing the impact this issue, commonly referred to as the "Year
2000"issue, may have on its business and operations. The Company has formed
an ad-hoc Year 2000 project team to identify and address Year 2000 issues,
including potential issues with the significant non-IT systems in its
buildings, plant, equipment and other infrastructure. The Year 2000 project
team has reviewed the Company's products, is continuing to review the
Company's IT and non-IT systems. The Company has not identified any
significant non-compliance issues with its products that have not already
been corrected. The review of IT and non-IT systems has been completed for
the United States and Asia Pacific operations of the Company. The Company
expects that its review of its IT and non-IT systems for European operations
will be completed by September 30, 1999. In addition to its internal reviews,
the Company is discussing with its significant suppliers and service
providers their plans to investigate and address their Year 2000 issues. The
Company can give no assurances that it will be able to identify and
accurately evaluate all Year 2000 issues that it faces.

In September 1998, NetGravity released version 3.5 of its AdServer product
which included enhancements designed to correctly accept and process 21st
century dates and, as a result, the Company now believes that the current
versions of its AdServer family of software products are Year 2000 compliant.
However, given the complexity of software systems such as AdServer and the
need for them to interoperate with other systems, the Company can give no
assurances that its products will not experience Year 2000 problems in the
future. Any such Year 2000 issues could result in:

         - a decrease in sales of the Company's products;

         - deferral of revenue recognition on contracts in which the Company has
           warranted (or may in the future warrant) compliance with Year 2000
           requirements;

         - an increase in the allocation of resources to address Year 2000

                                      15

<PAGE>

           problems of the Company's customers without additional revenue
           commensurate with such dedicated resources; or

         - an increase in litigation costs relating to losses suffered by the
           Company's customers due to Year 2000 problems.

In addition, NetGravity has determined that certain of its software IT
systems are not currently Year 2000 compliant. The Company has upgraded its
Support and Sales and Financials systems, completed testing and believes that
they are not Year 2000 compliant. The Company believes that its other
software IT systems will become compliant through updates and upgrades
purchased in the ordinary course of business for reasons unrelated to Year
2000. However, the Company can give no assurances that the incremental costs
of such IT software will not materially exceed its preliminary estimates.
Higher incremental costs of upgrading or replacing its IT software could have
a material and adverse effect on the Company's business, results of
operations and financial condition.

As the Company reviews its non-IT systems, it may identify situations that
present material Year 2000 risks or that will require substantial time and
material expense to address. In addition, if its customers or its potential
customers are required to expend significant resources to address their Year
2000 issues (or if they fail to appropriately address such Year 2000 issues),
the Company's business, results of operation and financial condition could be
adversely affected due to resulting changes in purchasing patterns.
Furthermore, if Year 2000 problems experienced by any of the Company's
significant suppliers or service providers cause or contribute to delays or
interruptions in the delivery of products or services, such delays or
interruptions could have a material and adverse effect on the Company's
business, results of operations and financial condition. Although the Year
2000 project team has not yet determined the most likely worst-case Year 2000
scenarios or quantified the likely impact of such scenarios, it is clear that
the occurrence of one or more of the risks described above could have a
material and adverse effect on the Company's business, financial condition or
results of operations.

The Company does not separately account for Year 2000 related expenses but
estimates that the expenses it has incurred to date to address Year 2000
issues have not been material and, although it has not completed its full
assessment of its Year 2000 readiness, it does not expect to incur material
expenses in connection with any required future remediation efforts. However,
the Company's Year 2000 compliance efforts related to AdServer consumed
significant software engineering resources that would otherwise have been
devoted to product development efforts. To the extent that significant
additional software engineering resources are required to address other Year
2000 issues that may be discovered, the Company's product development efforts
may be significantly hampered which, in turn, could have a material and
adverse effect on the Company's business, financial condition and results of
operations.

The Company's Year 2000 project team's activities will also include the
update of existing contingency plans in the event that the Company has not
completed all of its remediation programs in a timely manner. In addition,
the Year 2000 project team will develop contingency plans in the event that
any third parties that provide goods or services essential to the Company's
business fail to appropriately address their Year 2000 issues. The Year 2000
project team expects to conclude the development of additional contingency
plans by September 30, 1999. Even if these plans are

                                      16

<PAGE>

completed on time and put in place, it is possible that unresolved or
undetected internal and external Year 2000 issues will have a material and
adverse effect on the Company's business, financial condition and results of
operations.

The information set forth above and elsewhere in this Report relating to Year
2000 issues constitute "Year 2000 Readiness Disclosures," as such term is
defined by the Year 2000 Information and Readiness Disclosure Act of 1998,
enacted October 19, 1998 (Public Law 105-271, 112 State. 2386).

FACTORS AFFECTING OUR OPERATING RESULTS AND FINANCIAL CONDITION

The following is a discussion of certain factors that currently impact or may
impact NetGravity's business, operating results and/or financial condition,
which includes a discussion of certain risk factors related to the proposed
merger of NetGravity with DoubleClick. Anyone making an investment decision
with respect to NetGravity's Common Stock or other securities of the Company
is cautioned to carefully consider these factors, along with the factors
discussed in the Company's 1998 Form 10-K, particularly in Item 1 of Part I
thereof under the section entitled "Factors Affecting our Business, Operating
Results and Financial Condition."

         WE HAVE A LIMITED OPERATING HISTORY.

We were founded in September 1995 and commercially released version 1.0 of
AdServer in May 1996. Accordingly, we have a limited operating history, and
we face all of the risks and uncertainties encountered by early-stage
companies. The new and evolving nature of the online interactive marketing
solutions markets increases these risks and uncertainties. Also, because we
have a limited operating history, our past results may not be meaningful and
you should not rely on them as indicators of our future performance.

         WE HAVE INCURRED SUBSTANTIAL LOSSES AND ANTICIPATE CONTINUED LOSSES.

Since our inception in September 1995, we have incurred substantial losses.
Our losses were $6.9 million for the year ended December 31, 1997, $11.3
million for the year ended December 31, 1998 and $5.9 million for the six
months ended June 30, 1999. As of June 30, 1999, we had an accumulated
deficit of $28.8 million.

We anticipate that our expenses relating to developing, marketing and
supporting our current and future products and services will increase
substantially in the future. In particular, we expect to spend significantly
on the following activities:

         - developing new market opportunities for our current and future
           products and services;

         - funding more research and development to improve our current
           solutions and to create new solutions, including the recently
           announced AdServer 4.0;

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<PAGE>

         - expanding and improving our sales and marketing operations;

         - expanding and enhancing our outsourced interactive marketing solution
           (AdCenter), our enhanced targeting service (Global Profile Service)
           and possible future products and services designed for e-commerce
           merchants and advertising agencies (including our recently announced
           AdCenter for Agencies offering);

         - developing new channels for distributing our products and providing
           our services;

         - expanding and improving our financial and operational infrastructure;
           and

         - broadening our customer support capabilities.

Accordingly, for the foreseeable future, we expect to experience additional
losses as our expenses for developing, marketing and supporting our current
solutions and developing new solutions exceed our total revenues. These
additional losses will increase our accumulated deficit.

         OUR FUTURE OPERATING RESULTS ARE UNCERTAIN AND ARE LIKELY TO
FLUCTUATE SIGNIFICANTLY.

Our revenues, gross margins and other operating results may vary
significantly from quarter to quarter. The fluctuations may be due to a
number of factors, many of which are beyond our control. These factors
include:

         - our or our competitors' introduction of new or enhanced online
           interactive marketing solutions;

         - market acceptance of existing or planned products and services,
           including future versions of AdServer (such as the recently announced
           version 4.0) and AdCenter, our enhanced targeting services (Global
           Profile Service) and possible future products and services designed
           for e-commerce merchants and advertising agencies (including AdCenter
           for Agencies);

         - the time it takes us to sell our services and license and implement
           our products and the size of each transaction;

         - the mix of software licenses, software upgrades, consulting and
           support and transactional services revenues;

         - the amount of advertising spending budgeted by advertisers and direct
           marketers for online interactive marketing;

                                      18

<PAGE>

         - our or our competitors' price changes or changes in pricing models;

         - our customers' failure to renew their AdServer upgrade and support
           contracts;

         - the shift from higher gross margins from software license and upgrade
           revenues to lower gross margins from consulting and support and
           transactional services revenues;

         - the mix of distribution channels through which we sell our products
           and services;

         - our sales and licensing activities in international markets;

         - costs relating to possible acquisitions of technology or businesses;
           and

         - the amounts of royalty payments, amortization charges and other costs
           related to the licensing or acquisition of technology or other
           intangible assets.

Due to all of the foregoing factors, we do not believe that period-to-period
comparisons of our historical results of operations are good predictors of
future performance. Furthermore, it is possible that in some future quarters
our results of operations may fall below the expectations of securities
analysts and investors. In such event, the trading price of our stock will
likely be materially and adversely affected.

         WE RELY HEAVILY ON SALES OF ONE PRODUCT FAMILY.

To date, we have generated nearly all of our revenues from the license and
related upgrades, consulting and support of our AdServer family of software
products. We expect that our current AdServer family of software products and
software products in development, together with the related consulting and
support services, will continue to account for a substantial majority of our
revenues for the foreseeable future. Therefore, our future financial
performance is dependent, in significant part, upon the successful
development, introduction and customer acceptance of new and enhanced
versions of AdServer and of related new products and services that we may
develop. We cannot assure you that we will be successful in upgrading
AdServer or that we will successfully develop new products and services or
that any new product or service will achieve market acceptance. Consequently,
factors affecting the pricing of and demand for AdServer, such as
competition, technological changes, failure of the market for online
interactive marketing solutions to develop as we expect or lack of customer
acceptance of AdServer could have a material and adverse effect on our
business, results of operations or financial condition.

         OUR FUTURE SUCCESS DEPENDS ON THE TIMELY COMPLETION OF NEW SOLUTIONS
UNDER DEVELOPMENT.

                                      19

<PAGE>

We must successfully complete the development of AdServer 4.0, AdCenter for
Agencies and the next version of Global Profile Service (which is being
designed to provide much more detailed consumer profiles than the current
version). Our future revenues will likely fall below our expectations (and
the expectations of investors in our common stock) if we do not successfully
develop, market and support these products and services. Any actual or
expected revenue shortfall would likely reduce the trading price of our
common stock.

         WE HAVE AN UNPROVEN AND CHANGING BUSINESS MODEL.

Our core business model has been to license software designed to enable our
customers to directly manage their online interactive marketing activities.
We believe that it is too early to determine whether this business model will
be successful in the future. An alternate business model employed by some of
our competitors (including DoubleClick and AdForce) is to provide outsourced,
service-based solutions to customers who choose not to directly manage their
online interactive marketing activities.

In 1998 we broadened our business by releasing AdCenter for Publishers, a
service-based service that transfers to us the responsibility for managing
our customers' online systems and the data generated from their online
interactive marketing activities, but preserves customers' control over their
advertising sales functions. We also recently introduced our Global Profile
Service which allows our customers to more narrowly target consumers through
the use of anonymous consumer profiles from our centralized database.

Although revenues from AdCenter and the Global Profile Service to date have
been much less significant than revenues related to our software business, we
intend to place more emphasis on developing these services in the future. Our
increased emphasis on AdCenter and the Global Profile Service may not be
successful. In particular, AdCenter may not compete effectively with current
or future outsourced service providers based on price, performance or other
features. Similarly, our Global Profile Service may not be competitive with
current or future providers of consumer profile data or related targeting
services. In addition, we expect to devote significant engineering,
marketing, sales, consulting and customer support resources to enhance
AdCenter's and the Global Profile Service's competitiveness, scalability and
cost-effectiveness. These actions may divert resources from our other
products and services and may thus harm our core AdServer business.

         OUR MARKETS ARE HIGHLY COMPETITIVE.

The market for online interactive marketing solutions is new, intensely
competitive and rapidly evolving. We expect competition to continue to
increase both from existing competitors and new market entrants. We believe
that our ability to compete depends on many factors both within and beyond
our control, including:

         - the ease of use, performance, features, price and reliability of our
           solutions as compared to those of our competitors;

                                      20

<PAGE>

         - the timing and market acceptance of new solutions and enhancements to
           existing solutions developed by us and our competitors;

         - the quality of our customer service and support; and

         - the effectiveness of our sales and marketing efforts.

In the online advertising market, we compete directly with DoubleClick, CMGI,
Inc. (through its Engage/Accipiter unit), Excite, Inc. (through its
MatchLogic unit), AdForce, Inc., Real Media, Inc. and a variety of other
online advertising service providers. To date, we have focused primarily on
developing software-based solutions, which we license to our customers,
although we have recently begun offering an outsourced solution (AdCenter).
Some of our competitors (including DoubleClick and AdForce) have adopted a
business model focused on outsourcing of interactive marketing solutions.
These competitors have much more experience offering these outsourced
solutions and may have lower cost structures due, in part, to efficiencies
created from the larger scale of their operations. If the outsourced model
gains popularity over the software model in our target market, we cannot
assure you that we will be able to compete effectively with our current
products and services.

In the online direct marketing market, we expect to face indirect competition
from the vendors of electronic commerce systems, including BroadVision, Inc.,
InterWorld Corporation and Open Market, Inc. among others. In addition, if
providers of electronic commerce systems begin including advanced online
direct marketing functionality in their products, this could reduce or
eliminate the need for separate direct marketing management solutions,
including our current and future products and services targeted at the direct
marketing market. We also encounter competition from Netscape and Microsoft,
which build or bundle advertising management products with their Internet
commerce solutions. Both Netscape and Microsoft have significantly greater
resources than we do, and, due to their control of the browser market, if
either of them were to offer online advertising and direct marketing
management solutions with features comparable to those offered by us, there
can be no assurance that we would be able to compete effectively.

Many of our current and potential competitors have longer operating histories
and significantly greater financial, technical, marketing and other resources
than we do and thus may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. Also, many of our
current and potential competitors have greater name recognition, more
extensive customer bases and larger proprietary consumer databases. These
competitors may be able to undertake more extensive promotional activities,
adopt more aggressive pricing policies, or offer more attractive terms to
purchasers than we can. In addition, current and potential competitors have
established or may establish cooperative relationships among themselves or
with third parties to enhance their products. Accordingly, it is possible
that new competitors or alliances among competitors may emerge and rapidly
acquire significant market share.

In addition to these current and potential commercial competitors, we also
face competition from the internal capabilities of some potential customers.
Some of the largest and most popular online content publishers use internally
developed interactive marketing solutions rather than the commercial
solutions offered by NetGravity and our competition. We cannot assure you

                                      21

<PAGE>

that we will be able to compete successfully with these internally-developed
solutions.

Increased competition is likely to result in price reductions, reduced gross
margins and loss of market share, any one of which could impair our finances
and business prospects. We cannot assure you that we will be able to compete
successfully against existing or potential competitors or that competitive
pressures will not materially impair our finances or business prospects.

         WE FACE RISKS ASSOCIATED WITH OUR INTERNATIONAL OPERATIONS AND PLANS
FOR EXPANSION.

         WE HAVE A LIMITED OPERATING HISTORY IN OUR INTERNATIONAL MARKETS. We
have only limited experience in marketing, selling and distributing our
products and services internationally. Through our three subsidiaries,
NetGravity Europe Limited, NetGravity Asia Pacific K.K. and NetGravity (Hong
Kong) Limited, we recently began operations in a number of markets in Europe
and Asia Pacific. The Company currently plans to establish operations in
France and Australia, as well. International revenues comprised approximately
28% of our total revenues in 1998, 29.5% of our total revenues in the three
months ended June 30, 1999 and are expected to comprise a significant portion
of our total revenues in 1999.

         THERE ARE CERTAIN RISKS AND CHALLENGES INHERENT IN DOING BUSINESS IN
INTERNATIONAL MARKETS. Such risks include:

         - difficulties in collecting accounts receivable and longer collection
           periods;

         - changing and conflicting regulatory requirements;

         - potentially adverse tax consequences;

         - tariffs and general export restrictions, including export controls
           relating to encryption technology;

         - difficulties in staffing and managing foreign operations;

         - political instability;

         - fluctuations in currency exchange rates ;

         - the uncertain impact of the introduction of the Euro;

         - seasonal reductions in business activity during the summer months in
           Europe and certain other parts of the world; and

         - the impact of local economic conditions and practices.

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<PAGE>

         INTERNATIONAL MARKETS FOR ONLINE INTERACTIVE MARKETING ARE IN THEIR
VERY EARLY STAGES OF DEVELOPMENT.

International markets for online advertising and direct marketing are in
earlier stages of development than in the United States, and we cannot assure
you that the market for, and use of online advertising and direct marketing
in international markets will be significant in the future. Factors that may
further account for slower growth in the online advertising and direct
marketing markets in Europe and Asia include:

         - slower growth in the number of individuals using the Internet
           internationally;

         - privacy concerns;

         - a lower rate of advertising spending internationally than in the
           United States; and

         - a greater reluctance internationally to use the Internet for
           advertising and direct marketing.

         WE NEED TO DEVELOP LOCALIZED VERSIONS OF OUR PRODUCTS AND TO EXPAND
OUR INTERNATIONAL PRESENCE.

We believe that having localized versions of our products may become an
important competitive factor for international sales in the future. We also
believe that our international sales may be limited in the future if we do
not increase our physical presence abroad, including hiring additional
personnel for local service and support. The development of localized
versions of our products and the expansion of our international presence will
likely require significant resources.

Any of the above factors could have a material and adverse affect on our
international sales and operations, which, in turn, could adversely affect
our overall business, operating results and financial condition.

         OUR SUCCESS DEPENDS ON CERTAIN KEY EMPLOYEES.

Our future performance will depend largely on the efforts and abilities of
our key technical, customer support, sales and managerial personnel and on
our ability to retain them. We have in the past experienced difficulty in
hiring qualified technical, customer support, sales and managerial personnel.
Our success will depend on our ability to attract and retain such personnel
in the future. In addition, the loss of any of our current executive officers
could materially and adversely affect our business, financial condition and
operating results. During the twelve months ended June 30, 1999, we hired a
new Chief Executive Officer and have had three officers leave or announce
their intention to leave the Company to pursue other opportunities. Although
we do not believe that this level of turn-over is significantly higher than
that faced by other emerging companies in our industry, we cannot assure you
that the potential instability and other effects of such senior management
changes (along with normal turn-over among lower-level employees) will not
adversely affect our business, financial conditions and operating results.

         WE MAY ACQUIRE OTHER COMPANIES' PRODUCT LINES, TECHNOLOGIES OR

                                      23

<PAGE>

BUSINESSES.

As part of our growth strategy, we may in the future attempt to purchase
other companies' product lines, technologies or businesses. In connection
with any such acquisitions, we may pay cash, issue stock, incur debt or be
required to amortize expenses related to goodwill and other intangible
assets. For example, in September 1998 we paid $2 million to MatchLogic for
rights to use certain of MatchLogic's proprietary consumer profile databases
for limited purposes. We accounted for this transaction as a purchase of an
intangible asset, which is being amortized over its expected useful life of
three years. In addition to these issues, acquisitions of companies and
businesses involve numerous risks, including difficulties in the assimilation
of the operations, technologies, products and personnel of the acquired
company, the diversion of management's attention from other business
concerns, risks of entering markets in which we have no or limited direct
prior experience and the potential loss of key employees of the acquired
company. From time to time, we have engaged in discussions with third parties
concerning potential acquisitions of product lines, technologies and
businesses. In the event that such an acquisition were to occur, our
business, results of operations, financial condition and the trading price of
our common stock may be materially and adversely affected due to the factors
described above.

RISKS RELATED TO THE PROPOSED MERGER OF NETGRAVITY WITH DOUBLECLICK.

         FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT NETGRAVITY'S
STOCK PRICE AND FUTURE BUSINESS AND OPERATIONS.

If the merger with DoubleClick is not completed for any reason, NetGravity
may be subject to a number of material risks, including the following:

         -        NetGravity may be required to pay DoubleClick a termination
                  fee of $30.0 million under certain circumstances;

         -        the price of NetGravity common stock may decline to the extent
                  that the current market price of NetGravity common stock
                  reflects a market assumption that the merger will be
                  completed; and

         -        costs related to the merger, such as legal and accounting
                  fees, must be paid even if the merger is not completed.

In addition, NetGravity customers or suppliers may, in response to the
announcement of the merger, delay or defer decisions concerning NetGravity.
Any delay or deferral in those decisions by NetGravity customers or suppliers
could have a material adverse effect on NetGravity's business. Similarly,
current and prospective NetGravity employees may experience uncertainty about
their future roles with DoubleClick until DoubleClick's strategies with
regard to NetGravity are announced or executed. This may adversely affect
NetGravity's ability to attract and retain key management, sales, marketing
and technical personnel.

Further, if the merger is terminated and NetGravity's board of directors
determines to seek another merger or business combination, NetGravity cannot
assure you that it will be able to find a partner willing to pay an
equivalent or more attractive price than the price to be paid in the merger.
In


                                      24

<PAGE>

addition, while the merger agreement is in effect, and subject to certain
limited exceptions, NetGravity is prohibited from soliciting, initiating or
encouraging or entering into certain extraordinary transactions, such as a
merger, sale of assets or other business combination, with any party other
than DoubleClick.

         NETGRAVITY STOCKHOLDERS WILL RECEIVE A FIXED NUMBER OF SHARES OF
DOUBLECLICK COMMON STOCK DESPITE CHANGES IN THE MARKET VALUE OF NETGRAVITY
COMMON STOCK OR DOUBLECLICK COMMON STOCK.

Upon the merger's completion, each share of NetGravity common stock will be
exchanged for 0.28 shares of DoubleClick common stock. There will be no
adjustment for changes in the market price of either NetGravity common stock
or DoubleClick common stock. In addition, neither NetGravity nor DoubleClick
may terminate the merger agreement or "walk away" from the merger or
resolicit the vote of NetGravity's stockholders solely because of changes in
the market price of DoubleClick common stock. Accordingly, the specific
dollar value of DoubleClick common stock that NetGravity stockholders will
receive upon the merger's completion will depend on the market value of
DoubleClick common stock when the merger is completed and may decrease. The
share price of DoubleClick common stock is by nature subject to the general
price fluctuations in the market for publicly traded equity securities and
has experienced significant volatility. NetGravity and DoubleClick cannot
predict or give any assurances as to the market price of NetGravity Common
Stock before completion of the merger or of DoubleClick common stock at any
time before or after the completion of the merger.

         DOUBLECLICK AND NETGRAVITY MAY NOT ACHIEVE THE BENEFITS THEY EXPECT
FROM THE MERGER.

We entered into the merger agreement with the expectation that the merger
will result in significant benefits. Achieving the benefits of the merger
depends on the timely, efficient and successful execution of a number of
post-merger events, including integrating the operations and personnel of the
two companies. We will need to overcome significant issues, however, in order
to realize any benefits or synergies from the merger. The successful
execution of these post-merger events will involve considerable risk and may
not be successful. NetGravity is a provider of online interactive marketing
solutions. NetGravity's business model has principally been to license
software designed to enable its customers to directly manage their online
interactive marketing activities. DoubleClick is a provider of advertising
solutions for advertisers and Web publishers. DoubleClick provides
outsourced, service-based solutions to customers who choose not to directly
manage their online interactive marketing activities. DoubleClick has little
direct experience with NetGravity's primary business model. Furthermore,
NetGravity's principal offices are located in San Mateo, California, while
DoubleClick's principal offices are located in New York, New York. There are
currently no plans to relocate either of these principal offices. In order
for the merger to be successful, we must successfully integrate NetGravity's
operations and personnel with DoubleClick's operations and personnel. The
failure of DoubleClick to complete the integration successfully could result
in the loss of DoubleClick's key personnel and customers.

         FAILURE OF THE MERGER TO RECEIVE GOVERNMENTAL APPROVALS IN A TIMELY
MANNER COULD SLOW THE PROGRESS OF THE TRANSACTION WHICH COULD NEGATIVELY IMPACT
THE VALUE OF YOUR INVESTMENT.

                                      25

<PAGE>

The merger's consummation is conditioned upon the expiration or termination
of the applicable waiting period under the Hart-Scott-Rodino Act. In
addition, other filings with, notifications to and authorizations and
approvals of various governmental agencies relating primarily to antitrust
and securities law issues must be made and received prior to the consummation
of the merger. Failure to obtain any of the necessary governmental clearances
could slow the progress of the transaction. For instance, we cannot be sure
that a court-ordered injunction will not be issued enjoining consummation of
the merger. Any of the above could have a negative effect on NetGravity's and
DoubleClick's stock prices and the value of your investment.

         DOUBLECLICK AND NETGRAVITY MAY NOT BE ABLE TO SUCCESSFULLY CROSS-MARKET
THEIR PRODUCTS OR DEVELOP NEW PRODUCTS.

Each company initially intends to offer its respective products and services
to the customers of the other company. There can be no assurance that either
company's customers will have any interest in the other company's products
and services. The failure of such cross-marketing efforts would diminish the
benefits realized by this merger.

In addition, we believe that DoubleClick intends to develop new products and
services that combine the knowledge and resources of both the DoubleClick and
NetGravity businesses after the merger. We cannot offer any assurances that
such products or services will be successful or that we can successfully
integrate or realize the anticipated benefits of the merger. To date, the
companies have not thoroughly investigated the obstacles - technological,
market-driven or otherwise - to developing and marketing these new products
and services in a timely and efficient way. We cannot assure you that
DoubleClick will be able to overcome the obstacles in developing new products
and services, or that there will be a market for the new products or services
developed by DoubleClick after the merger. Any such failure or inability
could have a material adverse effect on the combined company's business,
financial condition and operating results or could result in loss of key
personnel. In addition, the attention and effort devoted to the integration
of the two companies will significantly divert management's attention from
other important issues, and could seriously harm the combined company.

         THE MERGER COULD ADVERSELY AFFECT COMBINED FINANCIAL RESULTS.

We expect that DoubleClick will incur a significant one-time charge related
to the merger. If the benefits of the merger do not exceed the costs
associated with the merger, including any dilution to DoubleClick's
stockholders resulting from the issuance of shares in connection with the
merger, DoubleClick's financial results and, thus, the value of your
investment, could be adversely affected.

         THE MARKET PRICE OF DOUBLECLICK COMMON STOCK MAY DECLINE AS A RESULT
OF THE MERGER.

The market price of DoubleClick common stock may decline as a result of the
merger if:

         -        the integration of DoubleClick and NetGravity is unsuccessful;

         -        DoubleClick does not achieve the perceived benefits of the
                  merger as rapidly or to the extent anticipated by financial or
                  industry analysts; or

                                      26

<PAGE>

         -        the effect of the merger on DoubleClick's financial results is
                  not consistent with the expectations of financial or industry
                  analysts.

         FAILURE OF THE MERGER TO QUALIFY AS A POOLING OF INTERESTS WOULD
NEGATIVELY AFFECT COMBINED FINANCIAL RESULTS.

The failure of the merger to qualify for pooling-of-interests accounting
treatment for financial reporting purposes for any reason would materially
and adversely affect DoubleClick's reported financial results and, likely,
the price of DoubleClick's common stock.

The availability of pooling-of-interests accounting treatment for the merger
depends upon circumstances and events occurring both before and after the
merger's completion. For example, no significant changes in the business of
the combined company may occur, including significant dispositions of assets,
for a period of two years following the effective time of the merger.
Further, affiliates of DoubleClick and NetGravity must not sell any
significant number of shares of either DoubleClick or NetGravity capital
stock for a period beginning before the merger and ending on the day that
DoubleClick publicly announces financial results covering at least 30 days of
combined operations of DoubleClick and NetGravity after the merger. If the
effective time of the merger occurs before November 30, 1999, DoubleClick
expects that such combined financial results would be published in January
2000. If affiliates of DoubleClick or NetGravity sell certain amounts of
their shares of DoubleClick common stock prior to that time, despite a
contractual obligation restricting such sale, the merger may not qualify for
accounting as a pooling of interests for financial reporting purposes.

         NETGRAVITY'S OFFICERS AND DIRECTORS HAVE CONFLICTS OF INTEREST THAT MAY
INFLUENCE THEM TO SUPPORT OR APPROVE THE MERGER.

The directors and officers of NetGravity participate in arrangements and have
continuing indemnification against liabilities that provide them with
interests in the merger that are different from, or in addition to, yours,
including the following:

         -        As of July 12, 1999, the executive officers and directors of
                  NetGravity owned stock options to purchase an aggregate of
                  1,347,613 shares of NetGravity Common Stock, of which
                  1,199,753 are unvested. If the merger is completed, 146,250
                  of the unvested options will accelerate and become
                  immediately exercisable;

         -        Certain officers of NetGravity are entitled to certain
                  benefits, including substantial severance packages, under
                  their employment agreements with NetGravity if their
                  employment is terminated upon NetGravity's change of control,
                  such as the merger;

         -        Upon completion of the merger, DoubleClick and NetGravity will
                  enter into employment agreements with certain NetGravity
                  executive officers; and

         -        DoubleClick has agreed to cause the surviving corporation in
                  the merger to indemnify each present and former NetGravity
                  officer and director against liabilities arising out of such
                  person's services as an officer or director. DoubleClick will
                  cause the surviving

                                      27

<PAGE>

                  corporation to maintain officers' and directors' liability
                  insurance to cover any such liabilities for the next six
                  years.

The directors and officers of NetGravity could therefore be more likely to
vote to approve the merger agreement than if they did not hold these
interests. In addition, all directors and executive officers of NetGravity
have entered into Stockholder Agreements pursuant to which they have agreed
to vote as stockholders of NetGravity in favor of approval of the merger.
NetGravity stockholders should consider whether these interests may have
influenced these directors and officers to support or recommend the merger.

         DOUBLECLICK MUST MANAGE THE INTEGRATION OF ACQUIRED COMPANIES
SUCCESSFULLY IN ORDER TO ACHIEVE DESIRED RESULTS.

As a part of its business strategy, we understand that DoubleClick expects to
enter into additional business combinations and acquisitions such as the
recently announced merger with Abacus Direct Corporation. Acquisition
transactions are accompanied by a number of risks, including:

         -        the difficulty of assimilating the operations and personnel of
                  the acquired companies;

         -        the potential disruption of its ongoing business and
                  distraction of management;

         -        the difficulty of incorporating acquired technology and rights
                  into its products and services;

         -        unanticipated expenses related to technology integration;

         -        the maintenance of uniform standards, controls, procedures and
                  policies;

         -        the impairment of relationships with employees and customers
                  as a result of any integration of new management personnel;
                  and

         -        potential unknown liabilities or duplicate assets associated
                  with acquired businesses.

The combined company may not succeed in addressing these risks or any other
problems encountered in connection with such business combinations and
acquisitions.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
DERIVATIVES AND FINANCIAL INSTRUMENTS

         FOREIGN CURRENCY HEDGING INSTRUMENTS

The Company transacts business in various foreign currencies. Accordingly,
the Company is subject to exposure from adverse movements in foreign currency
exchange rates. This exposure is primarily related to revenues and operating
expenses in the U.K. and Japan denominated in the respective local currency.
However, as of June 30, 1999, the Company had no hedging contracts
outstanding.

The Company currently does not use financial instruments to hedge operating
expenses in the U.K. or Japan denominated in the respective local currency.
Instead, the Company believes that a natural

                                      28

<PAGE>

partial hedge exists, because local currency revenues will substantially
offset the operating expenses denominated in the respective local currency.
The Company assesses the need to utilize financial instruments to hedge
currency exposures on an ongoing basis.

The Company does not use derivative financial instruments for speculative
trading purposes, nor does the Company hedge its foreign currency exposure in
a manner that entirely offsets the effects of changes in foreign exchange
rates. The Company regularly reviews its hedging program and may as part of
this review determine at any time to change its hedging program.

         FIXED INCOME INVESTMENTS

The Company's exposure to market risks for changes in interest rates relates
primarily to investments in debt securities issued by U.S. government
agencies and corporate debt securities. The Company places its investments
with high credit quality issuers and, by policy, limits the amount of the
credit exposure to any one issuer.

The Company's general policy is to limit the risk of principal loss and
ensure the safety of invested funds by limiting market and credit risk. All
highly liquid investments with a maturity of three months or less at the date
of purchase are considered to be cash equivalents; investments with
maturities greater than three months are considered to be short-term
investments. The weighted average pre-tax interest rate on the investment
portfolio as of June 30, 1999 is approximately 5.23%.

The following schedule summarizes the scheduled maturities of the Company's
cash equivalent and short-term investments (and associated weighted average
interest rates of return) as of June 30, 1999:

<TABLE>
<CAPTION>

                                                                Weighted Ave.
                                Amounts                         Interest Rates
                               ---------                        --------------
<S>                            <C>                              <C>
Due within one year            $ 112,900                             5.19%
Due beyond one year            $  10,400                             5.68%
Total                          $ 123,300

</TABLE>
The Company had no investments that matured beyond two years.

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         Following the announcement of the proposed merger with DoubleClick,
complaints were filed in the San Mateo County, California, Superior Court and
the Chancery Court of the State of Delaware against NetGravity and several of
its directors. The complaints allege that the defendants breached their
fiduciary duties to NetGravity's stockholders in connection with the proposed
merger with DoubleClick. The California complaint asks the court to enjoin
the consummation of the merger or, alternatively, seeks to rescind the merger
or an award of unspecified damages from the defendants in the event the
merger is consummated. The Delaware complaint asks the court to invalidate the
termination fee provision of the merger agreement by and between NetGravity
and DoubleClick. The Company believes the claims asserted in the complaints
are without merit and intends to vigorously contest them.

ITEM 2.  CHANGE IN SECURITIES AND USE OF PROCEEDS.

         (a)      Not applicable.

         (b)      Not applicable.

         (c)      On May 27, 1999, the Company issued to Heidrick &
Struggles, Inc., an executive recruitment firm ("Heidrick & Struggles"), a
warrant to purchase 30,000 shares of the Company's Common Stock at a price
per share of $18.8125 as partial consideration for services rendered by
Heidrick & Struggles in connection with the recruitment and hiring by the
Company of Eric W. Spivey, the Company's Chief Executive Officer (the
"Heidrick & Struggle Warrant").

                  Heidrick & Struggles exercised the Heidrick & Struggles
Warrant on July 22, 1999, by way of a net exercise and, accordingly, received
thereupon an aggregate of 7,156 of the shares of Common Stock underlying the
Heidrick & Struggles Warrant.

                                      29

<PAGE>

                  The offer, sale and issuance of the above securities were
deemed to be exempt from registration under the Securities Act of 1933, as
amended, in reliance on Section 4(2) of the Securities Act. In the Heidrick &
Struggles Warrant, Heidrick & Struggles represented to the Company its
intention to acquire the Common Stock underlying the Heidrick & Struggles
Warrant for investment only and not with a view to or for sale in connection
with any distribution thereof. Heidrick & Struggles had adequate access,
through its relationship with the Company and through the public filings of
the Company, to information about the Company.

         (d)      Pursuant to a Registration Statement on Form S-1 (File No.
333-51007) filed with and declared effective by the Commission on June 11,
1998, the Company offered an aggregate of 3,250,000 shares of its Common
Stock for an aggregate offering price of $29.3 million and certain selling
stockholders offered an aggregate of 200,000 shares of the Company's Common
Stock for an aggregate offering price of $1.8 million (such offering, the
"IPO"). Net of underwriters' discounts and commissions of 7% of the offering
price, the Company and the selling stockholders received proceeds of $27.2
million and $1.7 million, respectively, from the IPO. In addition to
underwriters' discounts and commissions, the Company reasonably estimates
that it incurred approximately $1.3 million in additional expenses related to
the IPO, leaving it with approximately $25.9 million in net proceeds.

                  Pursuant to a Registration Statement on Form S-1 (file Nos.
333-73203 and 333-75237) filed with and declared effective by the Commission
on March 30, 1999, the Company offered an aggregate of 3,830,000 shares of
its Common Stock (which includes shares issued upon exercise of the
underwriters' 612,000 share over-allotment option) for an aggregate offering
price of $120.7 million and certain selling stockholders offered an aggregate
of 862,000 shares of the Company's Common Stock for an aggregate offering
price of $27.1 million. Net of underwriters' discounts and commissions of
5.5% of the offering price, the Company and selling stockholders received
proceeds of $114.0 million and $25.6 million, respectively, from the
secondary public offering. In addition to underwriters' discounts and
commissions, the Company reasonably estimates that it incurred approximately
$0.9 million in additional expenses related to the secondary public offering,
leaving it with approximately $113.1 million in net proceeds.

                  From June 11, 1998 through June 30, 1999, the Company has
used, from the net proceeds of the IPO and the Company's secondary offering,
approximately (i) $5.6 million to fund certain capital expenditures, (ii)
$17.9 million to fund operating expenses related to entering new markets,
increasing research and development spending, expanding sales and marketing
operations, developing new distribution channels, improving its operational
and financial systems and broadening its customer support capabilities and
(iii) $2.2 million to repay certain indebtedness. In addition, the Company
used net proceeds from the IPO to make a $2.0 million payment to MatchLogic
pursuant to an agreement between the Company and MatchLogic related to the
use of certain of MatchLogic's proprietary consumer profile databases. The
use of proceeds from the IPO and the Company's secondary offering does not
represent a material change in the use of proceeds described in the final
prospectus related to the IPO or in the final prospectus related to the
Company's secondary offering. Pending other uses, the Company has invested
most of the remaining net proceeds in investment grade, short-term interest
bearing securities.

                  None of the payments described in this Item 2(d)
constituted direct or indirect payments to directors, officers or general
partners of the issuer or their associates, or to persons owning ten percent
or more of any class of equity securities of the issuer or to affiliates of
the issuer.

ITEM 3.  DEFAULT UPON SENIOR SECURITIES.

Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.


                                      30

<PAGE>

ITEM 5.  OTHER INFORMATION.

         (a)      Execution of Merger Agreement. As disclosed in the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission on July 21, 1999 (the "Merger Agreement Report"), the Company, on
July 12, 1999, entered into an Agreement and Plan of Merger and
Reorganization (the "Merger Agreement") with DoubleClick pursuant to which
DoubleClick has agreed to merge with the Company. A copy of the Merger
Agreement is attached as Exhibit 2.1 to the Merger Agreement Report and is
also incorporated herein by reference. The merger is to be effected through
the issuance of 0.28 shares of DoubleClick common stock in exchange for each
share of common stock of the Company outstanding immediately prior to the
consummation of the merger and the assumption of the Company's stock options
and warrants outstanding at the effective date of the merger, based on such
exchange ratio. The amount of such consideration was determined based upon
arm's-length negotiations between DoubleClick and the Company. The Merger
Agreement also provides for the payment by the Company to DoubleClick under
certain circumstances of a fee of $30 million in the event the Merger
Agreement is terminated.

                  The merger is intended to qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended, and is
intended to be accounted for under the pooling of interests method. The
consummation of the merger is subject to the satisfaction of certain
conditions, including certain regulatory approvals and the approval of the
stockholders of the Company. In connection with the merger, certain
affiliates of the Company have agreed to vote in favor of approval of the
merger pursuant to Stockholder Agreements in the form attached to the Merger
Agreement Report as Exhibit 99.1.

                  See "PART I - FACTORS AFFECTING OUR OPERATING RESULTS AND
FINANCIAL CONDITION - RISKS RELATED TO THE MERGER."

         (b)      Resignation of Director. Effective as of June 30, 1999, the
John Kohler resigned from the Company's Board of Directors.

         (c)      Appointment of Director. Effective June 30, 1999, Howard
Smith became a member of the Company's Board of Directors.

         (d)      Resignation of Vice President of Marketing. Rick E.D.
Jackson has announced his intent to leave his position as the Company's Vice
President of Marketing effective as of July 30, 1999.

         (e)      Appointment of Vice President of Data Services. Effective
June 29, 1999, John A. Lloyd was appointed as the Company's Vice President of
Data Services.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a) The followings exhibits are attached hereto and incorporated
herein by reference.

         *2.1     Agreement and Plan of Merger and Reorganization dated as of
                  July 12, 1999 by and among DoubleClick Inc., NJ Merger
                  Corporation and the Registrant (excluding exhibits).

                                      31

<PAGE>


          3.2     Amended and Restated Bylaws of the Registrant.

         10.1     Employment Agreement by and between the Registrant and Eric W.
                  Spivey dated as of April 20, 1999.

         10.2     Amendment to Eric W. Spivey Employment Agreement dated as of
                  June 4, 1999.

         10.3     Employment Agreement by and between the Registrant and John
                  Andrew Lloyd dated as of June 11, 1999.

         27.1     Financial Data Schedule (Second Quarter 1999).

-------------------

* Incorporated herein by reference to exhibit 2.1 filed with the Registrant's
Current Report on Form 8-K filed on July 21, 1999.

         (b)      Reports on Form 8-K. No reports on Form 8-K were filed
during the Company's quarter ended June 30, 1999. On July 21, 1999, the
Company filed the Merger Agreement Report announcing the execution by the
Company and by DoubleClick of the Merger Agreement. See "Part I - FACTORS
AFFECTING OUR OPERATING RESULTS AND FINANCIAL CONDITION - RISKS RELATED TO
THE MERGER" and "-OTHER INFORMATION, ITEM 5, OTHER INFORMATION."

                                      32

<PAGE>

                                    SIGNATURE

         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, on August 2, 1999.

                                   NETGRAVITY, INC.



                                   By: /s/ Stephen E. Recht
                                       ---------------------------------
                                       Stephen E. Recht
                                       CHIEF FINANCIAL OFFICER
                                       AND SECRETARY
                                       (Principal financial and accounting
                                       officer and duly authorized officer)

                                      33