<PAGE>   1
================================================================================



                       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 March 31, 2000

                                       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: 000-26789

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


            Delaware                                       77-0417081
(State or other jurisdiction of                         (I.R.S. Employee
 incorporation or organization)                        Identification No.)

                             181 Constitution Drive
                              Menlo Park, CA 94025
           (Address of principal executive offices including zip code)

                                 (650) 614-8300
              (Registrant's telephone number, including area code)


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  [ ]


Number of shares of Registrant's common stock outstanding as of April 30, 2000:
46,513,123

(Reflects a two-for-one stock split of the Registrant's common stock,
effected in the form of a stock dividend which occurred on April 7, 2000)


<PAGE>   2
                            BROADBASE SOFTWARE, INC.
                                    FORM 10-Q
                                      INDEX

PART I.  FINANCIAL INFORMATION

<TABLE>
<S>                                                                            <C>
Item 1.   Financial Statements:

          Condensed Consolidated Balance Sheets at March 31, 2000 and
          December 31, 1999..................................................   3

          Condensed Consolidated Statements of Operations for the
          three months ended March 31, 2000 and March 31, 1999...............   4

          Condensed Consolidated Statements of Cash Flows for the
          three months ended March 31, 2000 and March 31, 1999...............   5

          Notes to Condensed Consolidated Financial Statements...............   6

Item 2.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations..............................................   9

Item 3.   Quantitative and Qualitative Disclosures about Market Risk.........  21

PART II. OTHER INFORMATION

Item 1.   Legal Proceedings..................................................  21

Item 2.   Changes in Securities and Use of Proceeds..........................  22

Item 3.   Defaults upon Senior Securities....................................  22

Item 4.   Submission of Matters to a Vote of Security Holders................  22

Item 5.   Other Information..................................................  22

Item 6.   Exhibits and Reports on Form 8-K...................................  23

          Signatures.........................................................  24
</TABLE>



                                       2
<PAGE>   3
PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                            BROADBASE SOFTWARE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                         MARCH 31,        DECEMBER 31,
                                                           2000              1999(1)
                                                         ---------         ---------
                                                        (UNAUDITED)
<S>                                                      <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                             $ 217,693         $  76,642
   Short-term investments                                   19,302                --
   Accounts receivable, net                                  8,067             2,712
   Prepaid expenses and other current assets                 2,221             1,239
                                                         ---------         ---------
     Total current assets                                  247,283            80,593
Property and equipment, net                                  5,660             2,868
Restricted cash                                                633               633
Other assets                                               350,490               676
                                                         ---------         ---------
     Total assets                                        $ 604,066         $  84,770
                                                         =========         =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                      $     668         $     559
   Accrued compensation                                      6,280             2,919
   Accrued expenses                                         10,486             2,341
   Current portion of bank line of credit,
      notes payable and capital lease obligations            1,133               749
   Deferred revenue                                          6,573             4,663
                                                         ---------         ---------
     Total  current liabilities                             25,140            11,231
                                                         ---------         ---------

Bank line of credit, notes payable and capital
   lease obligations                                           501               333

                                                         ---------         ---------
     Total liabilities                                      25,641            11,564
                                                         ---------         ---------

Stockholders' equity:
Common stock                                                    23                17
Additional paid-in capital                                 674,198           124,297
Deferred stock compensation                                (16,185)           (8,710)
Notes receivable from stockholders                            (276)             (693)
Accumulated other comprehensive loss                          (205)              (33)
Accumulated deficit                                        (79,130)          (41,672)
                                                         ---------         ---------
     Total stockholders' equity                            578,425            73,206
                                                         ---------         ---------
     Total liabilities and stockholders' equity          $ 604,066         $  84,770
                                                         =========         =========
</TABLE>


See accompanying notes to the Condensed Consolidated Financial Statements.

(1) The balance sheet at December 31, 1999 has been derived from the audited
    financial statements as of that date.



                                       3
<PAGE>   4
                            BROADBASE SOFTWARE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                          MARCH 31,
                                                                    2000             1999
                                                                  --------         --------
<S>                                                               <C>              <C>
Net revenue:
     License                                                      $  4,520         $  1,126
     Professional services                                           1,119              145
     Maintenance                                                       662              215
                                                                  --------         --------
        Total net revenue                                            6,301            1,486
Cost of revenue:
    License                                                            607              260
    Professional services (1)                                        1,531              273
    Maintenance (2)                                                    288              118
    Amortization of acquired core and developed technology             264               --
                                                                  --------         --------
Total cost of revenue                                                2,690              651
                                                                  --------         --------
     Gross margin                                                    3,611              835
                                                                  --------         --------

Operating expenses:
     Sales and marketing (3)                                         7,578            2,656
     Research and development (4)                                    2,764            1,188
     General and administrative (5)                                  1,126              494
     Amortization of deferred stock compensation                     3,510              925
     Amortization of intangible assets and goodwill                 11,896               --
     Acquired in-process research and development                   10,057               --
     Merger expenses                                                 6,184               --
                                                                  --------         --------
Total operating expenses                                            43,115            5,263
                                                                  --------         --------

Loss from operations                                               (39,504)          (4,428)
Interest income                                                      2,179              113
Interest expense                                                      (133)            (260)
                                                                  --------         --------
Net loss                                                          $(37,458)        $ (4,575)
                                                                  ========         ========

Basic and diluted net loss per share                              $  (0.92)        $  (1.29)
                                                                  ========         ========

Weighted-average shares used in computing
     basic and diluted net loss per share                           40,532            3,554
                                                                  ========         ========
</TABLE>



(1) Excludes $842,000 and $37,000 of amortization of deferred stock
compensation in 2000 and 1999, respectively.

(2) Excludes $26,000 and $17,000 of amortization of deferred stock
compensation in 2000 and 1999, respectively.

(3) Excludes $889,000 and $357,000 of amortization of deferred stock
compensation in 2000 and 1999, respectively.

(4) Excludes $365,000 and $332,000 of amortization of deferred stock
compensation in 2000 and 1999, respectively.

(5) Excludes $1,387,000 and $182,000 of amortization of deferred stock
compensation in 2000 and 1999, respectively.



See accompanying notes to the Condensed Consolidated Financial Statements.



                                       4
<PAGE>   5

                            BROADBASE SOFTWARE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                     THREE MONTHS ENDED
                                                                                          MARCH 31,
                                                                                   2000              1999
                                                                                 ---------         ---------
<S>                                                                              <C>               <C>
OPERATING ACTIVITIES:
    Net loss                                                                     $ (37,458)        $  (4,575)
    Adjustments to reconcile net loss to net cash used in operating
      activities:
        Amortization of deferred stock compensation                                  3,510               925
        Depreciation and amortization                                                  451               201
        Acquired in-process research and development                                10,057                --
        Amortization of acquired core and developed technology                         264
        Amortization of intangible assets and goodwill                              11,896                --
        Value of common stock issued in severance agreement                            276
    Changes in balance sheet items:
            Accounts receivable                                                     (4,283)             (344)
            Prepaid expenses and other current assets                                 (302)             (171)
            Accounts payable                                                        (5,528)               14
            Accrued expenses                                                         6,067               749
            Deferred revenue                                                         1,413               440
            Proceeds from sublease deposit                                             103                --
                                                                                 ---------         ---------
                Net cash used in operating activities                              (13,534)           (2,761)

INVESTING ACTIVITIES:
     Purchase of short-term investments                                            (19,428)               --
     Purchases of property and equipment                                            (1,813)             (205)
                                                                                 ---------         ---------
                Net cash used in investing activities                              (21,241)             (205)

FINANCING ACTIVITIES:
    Proceeds from issuance of common stock upon exercise of options                    167                15
    Proceeds from issuance of common stock from employee stock purchase
      program                                                                          322                --
    Proceeds from issuance of common stock in secondary public  offering,
      net                                                                          175,204                --
    Payments to repurchase unvested common stock                                        --                (8)
    Repayment of  notes receivable from stockholders                                   417                --
    Payments on notes payable                                                          (82)             (169)
    Principal payments on capital lease obligations                                    (17)              (16)
    Principal payments on equipment line of credit                                    (139)               --
                                                                                 ---------         ---------
                      Net cash provided by financing activities                    175,872              (178)

    Effect of foreign exchange rate changes on cash and cash equivalents               (46)                9
                                                                                 ---------         ---------
    Net increase in cash and cash equivalents                                      141,051            (3,135)
Cash and cash equivalents:
     Beginning of period                                                            76,642            13,990
                                                                                 ---------         ---------
     End of period                                                               $ 217,693         $  10,855
                                                                                 =========         =========
Supplemental disclosure of cash flow information:
     Cash paid for interest                                                      $      31         $      98
Supplemental schedule of non cash investing and financing activities:
     Purchase of equipment under capital leases                                         --         $      18
     Issuance of common stock in connection with purchase
        business combination                                                     $ 362,953                --
</TABLE>



See accompanying notes to the Condensed Consolidated Financial Statements



                                       5
<PAGE>   6
                            BROADBASE SOFTWARE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF FINANCIAL STATEMENT PRESENTATION

   Broadbase Software, Inc. (the "Company") was incorporated on November 28,
1995 and develops and markets customer-focused analytic and marketing automation
applications that analyze customer data from multiple touch points, and use that
information to execute marketing campaigns, improve online merchandizing and
content, increase site stickiness and personalize customer interactions.

      The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principals
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The financial statements included herein
reflect all adjustments, consisting only of normal recurring adjustments, which
in the opinion of management are necessary to fairly state the Company's
financial position, results of operations, and cash flows for the periods
presented. These financial statements should be read in conjunction with the
Company's consolidated financial statements and notes thereto for the year ended
December 31, 1999 included in the Company's Form 10-K filed with the Securities
and Exchange Commission on March 13, 2000. Operating results for the three month
period ended March 31, 2000 are not necessarily indicative of results to be
expected for the full fiscal year of 2000 or any future period.

     In January 2000, the Company's Board of Directors approved a two-for-one
stock split of the Company's outstanding shares payable in the form of a
dividend of one additional share of the Company's common stock for every share
owned by stockholders. The stock split became effective on April 7, 2000. All
share and per share data have been adjusted retroactively to reflect this split.


2. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

      The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Management determines
the appropriate classification of marketable securities at the time of purchase
and evaluates such designation as of each balance sheet date. To date, all
marketable securities have been classified as available-for-sale and are carried
at fair value with unrealized gains and losses, if any, included as a component
of accumulated other comprehensive loss in stockholders' equity. Interest,
dividend and realized gains and losses are included in interest income.

The following is a summary of available-for-sale securities (in thousands)

<TABLE>
<S>                                                    <C>
Cash equivalents:
          Money market funds                           $107,808
          Short-term taxable municipals                  46,322
          Commercial paper                               59,547
                                                       --------
                   Total cash equivalents              $213,677
                                                       ========

Short-term investments
          Corporate bonds                              $ 14,307
          Government agencies                             4,995
                                                       --------
                   Total short-term investments        $ 19,302
                                                       ========
</TABLE>


3. ACCUMULATED OTHER COMPREHENSIVE LOSS

    The following are the components of comprehensive loss (in thousands):

<TABLE>
<CAPTION>
                                         Three months ended
                                      March 31,        March 31,
                                        2000             1999
                                      --------         --------
<S>                                   <C>              <C>
Net loss                              $(37,458)        $ (4,575)
Unrealized loss on investments            (126)              --
Translation gain (loss)                    (46)               9
                                      --------         --------
         Comprehensive loss           $(37,630)        $ (4,566)
                                      ========         ========
</TABLE>



                                       6
<PAGE>   7
    The components of accumulated other comprehensive loss are as follows (in
thousands):

<TABLE>
<CAPTION>
                                                          March 31,
                                                             2000
                                                          ---------
<S>                                                       <C>
Cumulative unrealized loss on investments                   $(126)
Cumulative translation loss                                   (79)
                                                            -----
          Total accumulated other comprehensive loss        $(205)
                                                            =====
</TABLE>


4. NET LOSS PER SHARE

   Net loss per share is presented in accordance with the requirements of
Statement of Financial Accounting Standards No. 128 "Earnings Per Share" (FAS
128) which requires dual presentation of basic earnings per share ("EPS") and
diluted EPS.

   Basic earnings per share is computed using the weighted average number of
common shares outstanding during the period. Diluted earnings per share is
computed using the weighted average number of common shares and potentially
dilutive shares outstanding during the period. Diluted net loss per share, as
presented, excludes potentially dilutive shares outstanding for all periods as
the effect of the assumed exercise of stock options, warrants and contingently
issued shares is antidilutive due to the Company's net loss.

The following table sets forth the computation of net loss per share (in
thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED
                                                           MARCH  31,
                                                   -------------------------
                                                     2000             1999
                                                   --------         --------
<S>                                                <C>              <C>
Basic and diluted net loss per share:
Net loss                                           ($37,458)         ($4,575)
Weighted-average shares of common stock
  outstanding                                        41,540            5,570
Less weighted-average shares subject to
  repurchase                                         (1,008)          (2,016)
Weighted-average shares of common stock
    outstanding used in computing basic and
    diluted net loss per share                       40,532            3,554
                                                   --------         --------
Basic and diluted net loss per share                 ($0.92)          ($1.29)
                                                   ========         ========
</TABLE>


5. RECENT ACCOUNTING PRONOUNCEMENTS

     In December 1998, the AICPA issued SOP 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions". SOP 98-9
amends SOP 97-2, "Software Revenue Recognition", to require recognition of
revenue using the "residual method" when certain criteria are met. SOP 98-9 also
amends SOP 98-4, an earlier amendment to SOP 97-2, which extended the deferral
of the application of certain passages of SOP 97-2. The Company adopted the
provisions of SOP 98-9 as of January 1, 2000, which did not have a material
affect on our financial position, results of operations or cash flows.

      In December 1999, the Securities and Exchange Commission (SEC) issued SEC
Staff Accounting Bulletin No 101 (SAB 101), "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain of the SEC's views in applying generally
accepted accounting principals to revenue recognition in financial statements.
The Company has reviewed SAB 101 and has determined that it is in compliance
with its requirements. Therefore, the application of SAB 101 will have no impact
on the Company's consolidated results of operations.


6.  DEFERRED COMPENSATION ON STOCK OPTION GRANTS

      On January 4, 2000, in connection with the hiring of two new officers, the
Company granted an aggregate of 600,000 options to purchase shares of Broadbase
common stock at an exercise price of $27.00 per share. As a result of these
option grants, the Company recorded approximately $12.0 million of deferred
stock compensation, computed as the difference between the options' exercise
price and the fair market value of the Company's stock on the date of grant.
This amount will be amortized to compensation expense over the options' vesting
term, four years, on a graded vesting method.



                                       7
<PAGE>   8

7. SECONDARY STOCK OFFERING

   On February 18, 2000, the Company completed a secondary public offering of
6,900,000 shares of its common stock of which 3,900,000 shares were sold by the
Company and 3,000,000 were sold by its stockholders at a price of $47.50 per
share. Offering proceeds to the Company, net of aggregate underwriters discounts
and commissions and related offering expenses, were approximately $175.2
million.


8. ACQUISITION OF RUBRIC, INC.

     On February 1, 2000, the Company completed its acquisition of Rubric, Inc.,
a Delaware corporation ("Rubric"), a leading provider of e-marketing software
applications. The Company entered into an Agreement and Plan of Reorganization
with Rubric on December 9, 1999 (the "Merger Agreement").

       In connection with the acquisition, the Company issued approximately 6.0
million shares of its common stock in exchange for all outstanding shares of
Rubric capital stock, and converted outstanding options and warrants to acquire
Rubric capital stock into options and warrants to acquire approximately 1.2
million shares of the Company's common stock. Of the shares issued,
approximately 600,000 shares of the Company's common stock are being held in
escrow for a period of one year following the acquisition for the purpose of
providing a fund against which the Company may seek indemnification from former
Rubric stockholders for any breaches of representations, warranties or covenants
under the Merger Agreement.

         The transaction was accomplished by merging a wholly owned subsidiary
of the Company into Rubric. Rubric survived the merger and became a wholly owned
subsidiary of the Company. The Company accounted for the transaction as a
purchase, and the merger is intended to qualify as a tax-free reorganization.
Under the purchase method, the purchase price of Rubric was allocated to the
specific tangible and intangible assets acquired and liabilities assumed from
Rubric pursuant to an independent valuation. The total Rubric purchase price was
$371.8 million and included $301.7 million for the issuance of our common stock,
$61.3 million for the exchange of options to purchase our common stock and $8.8
million of acquisition related costs consisting primarily of direct transactions
costs and involuntary termination benefits. As a result the Company recorded a
charge to operations upon consummation of the transaction related to acquired
in-process research and development of approximately $10.1 million. Also, the
Company incurred merger-related costs of approximately $7.2 million, of which
$1.0 million were included in the Company's 1999 results of operations. This
amount included $2.0 million of payments to Rubric to fund its working capital
requirements prior to the close of the merger, $2.2 million of employee bonuses
paid upon successful completion of the merger, $800,000 of costs to announce the
merger, and $2.2 million of costs associated with combining the operations of
the two companies including $1.4 million for assumed customer integration costs,
$400,000 for severance and related costs and $400,000 for write-off of redundant
assets and other costs. The Company expects to incur additional merger related
costs in the second quarter of 2000 as it completes Rubric-committed product
implementations. In addition, the Company recorded approximately $362.0 million
of intangible assets and goodwill on its balance sheet, which will result in
amortization expense of approximately $66.9 million for 2000, $72.7 million for
2001, $72.7 million for 2002, $72.1 million for 2003, $71.6 million for 2004 and
$6.0 million for 2005. Accumulated amortization of intangible assets and
goodwill totaled $12.2 million at March 31, 2000.

   The following unaudited pro forma summary results of operations data have
been prepared assuming that the Rubric acquisition had occurred at the beginning
of the periods presented. The consolidated results are not necessarily
indicative of results of future operations nor of results that would have been
occurred had the acquisition been consummated as of the beginning of the periods
presented. The pro forma information excludes the impact of the one-time charges
related to in-process research and development costs of $10.1 million and the
merger related costs of approximately $7.2 million


<TABLE>
<CAPTION>
                                               Three months ended
                                            -------------------------
                                            March 31,       March 31,
                                              2000            1999
                                            --------        ---------
                                               (in thousands, except
                                                 per share data)
<S>                                         <C>             <C>
Net revenue                                 $  6,587         $  1,808
Net loss                                    $(30,751)        $(24,738)
Basic and diluted net loss per share        $  (0.76)        $  (2.59)
</TABLE>



                                       8
<PAGE>   9

9. PENDING ACQUISITION OF APERIO, INC.

     On March 27, 2000, the Company entered into a definitive agreement to
acquire all the outstanding capital stock of Aperio, Inc. in exchange for
approximately 550,000 shares of its common stock and the issuance of options to
purchase an additional approximately 130,000 shares of the Company's common
stock, in a transaction to be accounted for as a purchase business combination.
Consummation of the transaction, which is subject to receiving any necessary
regulatory approvals and other customary closing conditions, is expected in May
or June 2000.

10. SUBSEQUENT EVENT

      On May 3, 2000, in connection with the desired retention of employees
whose primary equity participation in the Company is "out of the money" options,
the Company granted an aggregate of 806,000 options to purchase shares of
Broadbase common stock at an exercise price of $1.00 per share. The Company did
not cancel or modify any outstanding stock options in connection with these new
option grants. As a result of these option grants, the Company will record
approximately $12.3 million of deferred stock compensation, computed as the
difference between the options' exercise price and the fair market value of the
Company's stock on the date of grant. This amount will be amortized to
compensation expense over the options' vesting term, two to four years, on a
graded vesting method.


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

    The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with the financial statements and
notes included under Item 1 of this report. This discussion contains
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. We may identify these statements by the
use of words such as "believe," "expect," "anticipate," "intend," "plan" and
similar expressions. These forward-looking statements involve many risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of various factors, including
those we discuss in "Risk Factors That May Affect Future Results" and elsewhere
in this report. These forward-looking statements speak only as of the date of
this report, and we caution you not to rely on these statements without also
considering the risks and uncertainties associated with these statements and our
business that are addressed in this report.


OVERVIEW

   We incorporated in November 1995 and from that date through December 1997
were in the development stage, conducting research and developing our initial
products. In the fourth quarter of 1997, we introduced Foundation. This software
product was originally designed to enable organizations to build and manage
datamarts for their customer information. In the third quarter of 1998, we began
offering applications, built on Foundation, which provide analysis for customer
relationship management. In May 1999 we expanded our suite by introducing new
applications designed for Internet sales channels, Internet marketing and other
customer-focused e-business applications, as well as new versions of our
existing applications. Throughout these periods, we expanded our organization by
hiring personnel in key areas, particularly sales, marketing and research and
development. We grew from a total of 41 full-time employees at December 31, 1997
to 75 full-time employees at December 31, 1998 to 131 full-time employees at
December 31, 1999. As of March 31, 2000 we had 214 full-time employees and
intend to hire a significant number of employees in the future. This expansion
places significant demands on our management and operational resources. To
manage this rapid growth, we are investing in and implementing scaleable
operational systems, procedures and controls.

   Our revenue comes principally from licenses of our software products, with
the balance coming from maintenance and professional services. We adopted the
provisions of Statement of Position ("SOP") No. 97-2, "Software Revenue
Recognition", as amended by SOP No. 98-4, "Deferral of the Effective Date of
Certain Provisions of SOP No. 97-2" and SOP No. 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions", which
requires recognition of revenue using the residual method when certain criteria
are met. Under SOP No. 97-2 we recognize license revenue when persuasive
evidence of an agreement exists, delivery of the product has occurred, no
significant company obligations with regard to installation or implementation of
the software remain, the fee is fixed or determinable and collectibility is
probable. In a typical application license transaction, our professional
services group connects our product to the customer's systems and data sources.
Upon completion of that connection, no significant obligations remain with
respect to implementation, and we recognize the revenue related to that license.
The actual connection process can often be completed in two to four weeks.
However, the timing of the commencement and completion of this process is
subject to factors that may be beyond our control, as this process requires
access to the customer's facilities and coordination with the customer's
personnel following delivery of the software. As a result, we typically do not
recognize the license revenue from an application license until one to three
months after our product is shipped to the customer. License revenue generated
by distributors and other resellers is recognized upon receipt of a reseller
report of sale and our shipment of the licensed software. Maintenance and
support revenue associated with new product licenses and maintenance revenue
resulting from renewed maintenance



                                       9
<PAGE>   10
contracts are deferred and recognized ratably over the contract period.
Professional services revenue is recognized when services are performed.

   Currently, businesses that license our products generally license one or more
Broadbase applications, together with Foundation and adapters to interface with
the customers' existing data sources. Customers generally receive nonexclusive,
perpetual licenses to use our products for a specified number of servers and
named concurrent users. After the initial license, they may purchase licenses
for additional servers and users as needed. In addition, customers often
purchase professional services from us, including training services, although
they may use other consulting organizations. Customers that license our products
also usually purchase maintenance contracts, which provide software upgrades,
when and if available, and technical support over a stated term, typically 12
months.

   We sell our products through our direct sales force and through indirect
sales channels. Direct sales are made by our direct sales force in North
America, Germany, the United Kingdom and the Netherlands. Our indirect sales
channels include software application vendors, resellers and distributors
located in the United States, Japan and the Netherlands. Sales through indirect
sales channels accounted for approximately 17% of our total net revenue for the
three months ended March 31, 2000.

   Revenue from customers outside North America represented 26% of our total net
revenue for the three months ended March 31, 2000. Approximately 61% of our
international revenue was derived from our direct and indirect sales force in
Europe and 39% of our international revenue was derived from sales by our
distributors in Japan. We intend to continue to expand our international
operations and commit significant management time and financial resources to
developing our direct and indirect international sales channels. International
revenue may not, however, increase as a percentage of total net revenue.

   We have experienced substantial net losses since our inception due to the
significant costs incurred to develop our technology and products, to recruit
and train personnel for our engineering, sales, marketing, professional services
and administration departments and the costs associated with our acquisition of
Rubric, Inc. As of March 31, 2000, we had an accumulated deficit of $79.1
million. We expect to continue to incur substantial losses for the foreseeable
future.


RECENT EVENTS

   On February 1, 2000, we acquired privately-held Rubric, Inc. Rubric's product
automates the planning, execution and measurement of marketing campaigns. In
connection with this acquisition, we issued approximately 6.0 million shares of
our common stock in exchange for all outstanding shares of Rubric capital stock,
and converted all outstanding options and warrants to acquire Rubric capital
stock into options and warrants to purchase approximately 1.2 million shares of
our common stock. We accounted for the transaction as a purchase, and the
acquisition is intended to qualify as a tax-free reorganization.

   On February 18, 2000, we completed a secondary public offering of 6,900,000
shares of our common stock of which 3,900,000 shares were sold by Broadbase and
3,000,000 were sold by our stockholders at a price of $47.50 per share. Offering
proceeds to Broadbase, net of aggregate underwriters discounts and commissions
and related offering expenses, were approximately $175.2 million.

   On March 27, 2000, we entered into a definitive agreement to acquire all the
outstanding capital stock of Aperio, Inc. in exchange for approximately 550,000
shares of our common stock and the issuance of options to purchase approximately
130,000 shares of our common stock, in a transaction to be accounted for as a
purchase business combination. Consummation of the transaction, which is subject
to receiving any necessary regulatory approvals and other customary closing
conditions, is expected in May or June 2000.


RESULTS OF OPERATIONS

NET REVENUE

   License. Net license revenues increased from $1.1 million in the first
quarter of 1999 to $4.5 million in the first quarter of 2000. This increase is
attributable to increases in the number of customers licensing our products, and
the increase in the average revenue per license transaction. The increase in
customers reflects the expansion of our direct sales force and our indirect
sales channels, and the increase in the average revenue per license transaction
results from our customers' licensing our applications together with Foundation.
In addition, both the increase in number of customers and the average revenue
per license transaction reflects our introductions of new e-business
applications. We intend to continue to expand both our direct and indirect sales
channels.

   Professional services. Professional services revenue is recognized as the
services are performed. Professional services revenue increased from $145,000 in
the first quarter of 1999 to $1.1 million in the first quarter of 2000. The
growth in professional services



                                       10
<PAGE>   11
revenue in the three months ended March 31, 2000 compared to the same period of
1999 reflects the expansion of our installed base of customers.

   Maintenance. Maintenance revenue is recognized on a straight-line basis over
the period support is provided, usually one year. Maintenance revenue increased
from $215,000 in the first quarter of 1999 to $662,000 in the first quarter of
2000. The growth in maintenance revenue in the three months ended March 31, 2000
compared to the same period of 1999 reflects the expansion of our installed base
of customers.


COST OF REVENUE

   Cost of license. The cost of licenses consists primarily of royalties paid to
third parties and the cost of product manuals, media, packaging and shipping.
The cost of licenses increased from $260,000 in the first quarter of 1999 to
$607,000 in the first quarter of 2000, primarily as a result of increased
license revenue. Our cost of licenses has varied significantly from quarter to
quarter. These variations are due primarily to changes in the mix of products
sold, since our products require payment of royalties to third parties at
differing rates.

   Cost of professional services. The cost of professional services consists
primarily of personnel costs associated with providing consulting services and
training services. The cost of professional services increased from $273,000 in
the first quarter of 1999 to $1.5 million in the first quarter of 2000,
primarily as a result of the hiring of additional professional services
personnel to support our growing customer base. Full time professional services
personnel grew from 6 at March 31, 1999 to 27 at March 31, 2000. We plan to
continue expanding our professional services group and, accordingly, expect the
dollar amount of our cost of professional services to increase.

   Cost of maintenance. The cost of maintenance consists primarily of personnel
costs associated with providing maintenance and support services. The cost of
maintenance increased from $118,000 in the first quarter of 1999 to $288,000 in
the first quarter of 2000, primarily as a result of the hiring additional
support personnel to support our growing customer base. Full time support
personnel grew from 4 at March 31, 1999 to 7 at March 31, 2000. We plan to
continue expanding our maintenance and support group and, accordingly, expect
the dollar amount of our cost of maintenance to increase.

   Amortization of acquired core and developed technology. Amortization of
acquired core and developed technology was $0 for the three months ended March
31, 1999 and $264,000 for the three months ended March 31, 2000. For the three
months ended March 31, 2000, the amount represents two months of amortization of
the acquired developed technology recorded upon the acquisition of Rubric on
February 1, 2000. The useful life of the acquired core and developed technology
acquired is 1 and 5 years, respectively.

OPERATING EXPENSES AND OTHER ITEMS

   Sales and marketing. Sales and marketing expenses consist primarily of
salaries, benefits, bonuses, commissions, travel, promotional expenses and the
facilities cost for the various domestic and international field sales offices.
Sales and marketing expenses increased from $2.7 million in the first quarter of
1999 to $7.6 million in the first quarter of 2000. These increases in sales and
marketing expenses resulted primarily from higher salary, recruiting, benefits,
travel and facilities costs associated with the hiring of additional sales and
marketing personnel, the expansion of our domestic and international sales
organizations, and increased marketing programs. Full time sales and marketing
personnel grew from 30 at March 31, 1999 to 84 at March 31, 2000. We plan to
continue expanding our sales and marketing organization, and expect our sales
and marketing expenses to increase.

   Research and development. Research and development expenses consist primarily
of salaries for development personnel and related costs associated with the
development of new products, the enhancement of existing products, localization,
quality assurance and testing. Research and development expenses increased from
$1.2 million in the first quarter of 1999 to $2.8 million in the first quarter
of 2000. These increases in research and development expenses were due to the
hiring of additional personnel and to other expenses associated with the
development of new products. Full time research and development personnel grew
from 27 at March 31, 1999 to 75 at March 31, 2000. We plan to continue expanding
our research and development organization, and expect our research and
development expenses to increase.

   General and administrative. General and administrative expenses consist
primarily of salaries of executive, financial, human resource and information
services personnel as well as outside professional fees. General and
administrative expenses increased from $494,000 in the first quarter of 1999 to
$1.1 million in the first quarter of 2000. These increases in general and
administrative expenses were primarily due to increased staffing required to
support our expanded operations in the United States and abroad and increased
costs of outside professional services and costs to utilize additional
management information systems services. Our full time general and
administrative personnel grew from 11 at March 31, 1999 to 20 at March 31, 2000.



                                       11
<PAGE>   12
   Amortization of deferred compensation. We amortized deferred compensation
expense of approximately $3.5 million for the three months ended March 31, 2000.
This compensation expense relates to options awarded to individuals in all
operating expense categories. In addition, in connection with the hiring of two
new officers, we granted options to purchase common stock in the first three
months of 2000 for which we recorded additional deferred compensation of
approximately $12.0 million and in May 2000, in connection with the desired
retention of employees whose primary equity participation in Broadbase is "out
of the money" options, we granted options to purchase common stock for which we
will record approximately $12.3 million of deferred stock compensation in the
second quarter of 2000. Deferred compensation is computed as the difference
between the options' exercise price and the fair market value of our stock on
the date of grant and is amortized to compensation expense using a graded
vesting method over the vesting periods of the options.

   Amortization of intangible assets and goodwill. Amortization of intangible
assets and goodwill was $0 for the three months ended March 31, 1999 and $11.9
million for the three months ended March 31, 2000. For the three months ended
March 31, 2000, the amount represents two months of amortization of the
specifically identified intangible assets and goodwill recorded upon the
acquisition of Rubric on February 1, 2000, based upon an independent valuation.
The estimated useful lives of the goodwill and other intangibles are 3 to 5
years. We expect to record additional intangible assets and goodwill in
connection with our proposed acquisition of Aperio expected to close in May or
June 2000.

   Acquired in-process research and development. Acquired in-process research
and development was $0 for the three months ended March 31, 1999 and $10.1
million for the three months ended March 31, 2000. For the three months ended
March 31, 2000, the amount represents one time charges recorded upon the
acquisition of Rubric related to in-process research and development which had
not reached technological feasibility and, in the opinion of management, had no
alternative future use.

   Merger expenses. In connection with the acquisition of Rubric we recorded
merger and integration costs of approximately $7.2 million of which $1 million
was expensed in the fourth quarter of 1999 and $6.2 million was expensed in the
first quarter of 2000. This amount included $2.0 million of payments to Rubric
to fund its working capital requirements prior to the close of the merger, $2.2
million of employee bonuses paid upon successful completion of the merger,
$800,000 of costs to announce the merger, and $2.2 million of costs associated
with combining the operations of the two companies including $1.4 million for
customer integration costs, $400,000 for severance and related costs and
$400,000 for write-off of redundant assets and other costs. We expect to incur
additional merger related costs in the second quarter of 2000 as we complete
Rubric-committed product implementations.

   Interest income. Interest income consists of interest earned on our cash,
cash equivalents and short-term investments. Interest income increased from
$113,000 in the first quarter of 1999 to $2.2 million in the first quarter of
2000 due to higher invested cash balances in 2000 as a result of the investment
of proceeds of $57.8 million from our initial public offering in September 1999
and the investment of proceeds of $175.2 million from our secondary public
offering in February 2000.

   Interest expense. Interest expense decreased from $260,000 in the first
quarter of 1999 to $133,000 in the first quarter of 2000 due primarily to the
conversion, upon our initial public offering in September 1999, of $8.3 million
of convertible debentures issued in December 1998.

   Income taxes. There was no federal income tax provision in any period
presented due to our net operating losses. We had deferred tax assets of
approximately $13.2 million as of December 31, 1999. Realization of deferred tax
assets is dependent on future earnings, if any, the timing and amount of which
are uncertain. Accordingly, a valuation allowance, in an amount equal to the net
deferred tax assets as of December 31, 1999, has been established to reflect
these uncertainties. Our deferred tax assets primarily relate to net operating
loss and tax credit carryforwards. As of December 31, 1999, we had federal net
operating loss carryforwards of approximately $29.1 million and state net
operating loss carryforwards of approximately $13.6 million. We also had federal
and state research and development tax credit carryforwards of approximately
$500,000 and $300,000, respectively. The net operating loss and tax credit
carryforwards will expire at various dates beginning in 2004, if not utilized.
Utilization of the net operating loss and tax credit carryforwards may be
subject to a substantial annual limitation due to the "change in ownership"
provisions of the Internal Revenue Code of 1986 and similar state provisions.
The annual limitation may result in the expiration of net operating loss and tax
credit carryforwards before utilization.

LIQUIDITY AND CAPITAL RESOURCES


   Net cash used in operating activities totaled $13.5 million and $2.8 million
in the first three months of 2000 and 1999, respectively. In the first three
months of 2000, net cash used in operating activities resulted primarily from
our net loss of $37.5 million and increase in accounts receivable of $4.3
million offset in part by the non cash write-off of acquired in-process research
and development of $10.1 million and the non cash amortization of intangible
assets and goodwill of $11.9 million recorded in connection with our acquisition
of Rubric on February 1, 2000, and to a lesser extent the amortization of
deferred stock compensation of $3.5 million. In the first three months of 1999,
net cash used in operating activities resulted primarily from our net loss of
$4.6 million offset in part by the amortization of deferred stock compensation
as well as increases in current liabilities, including deferred revenue and
accrued expenses. The increase in deferred revenue consisted primarily of
prepayments of licenses from Japanese distributors and prepayment of maintenance
fees.



                                       12
<PAGE>   13

   Our investing activities used cash of $21.2 million and $205,000 in the first
three months of 2000 and 1999, respectively. Net cash used in investing
activities in the first three months of 2000 was the result of the purchase of
short term investments of $19.4 million and capital expenditures of $1.8 million
for computer and communications equipment, purchased software, office equipment,
furniture, fixtures and leasehold improvements. For the first three months of
1999 net cash used in investing activities was primarily due to capital
expenditures.

   Our financing activities provided net cash of $175.9 million in the first
three months of 2000 and used cash of $178,000 in the first three months 1999.
Net cash provided from financing activities in the first three months of 2000
resulted primarily from the net proceeds of $175.2 million from our secondary
public offering in February 2000 and to a lesser extent the proceeds from the
issuance of common stock from the employee stock purchase program and the
repayment of notes receivable from our stockholders. Net cash used by financing
activities in the first three months of 1999 resulted primarily from the
payments on notes payable.

   As of March 31, 2000, we had $237.0 million of cash, cash equivalents and
short-term investments. We believe that cash, cash equivalents and short-term
investments on hand will be sufficient to fund our operations, including working
capital and capital equipment purchase requirements for the next 12 months.
However, we may need to raise additional funds in future periods through public
or private financing, or other arrangements to fund our operations and potential
acquisitions, if any, over a long-term basis until we achieve profitability, if
ever. We cannot be certain that we would be able to obtain additional financing
on favorable terms, if at all. Failure to raise capital when needed could
seriously harm our business and results of operations. If additional funds are
raised through the issuance of equity securities, the percentage of ownership of
our stockholders would be reduced. Furthermore, these equity securities might
have rights, preferences or privileges senior to our common stock.


RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

       An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below and the other information in
this report before investing in our common stock. The risks described below are
not the only ones we face. Additional risks that we are aware of or that we
currently believe are immaterial may become important factors that affect our
business. If any of the following risks occur, or if others occur, our business,
operating results and financial condition could be seriously harmed. The trading
price of our common stock could decline due to any of these risks, and you may
lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE OUR OPERATING HISTORY IS LIMITED.

   We are still in the early stages of our development. Our revenue and income
potential is unproven and depends on emerging, rapidly changing markets and on
acceptance of products that we have only recently introduced. Because our
operating history is limited and our product offerings are evolving, it is
difficult to evaluate our business and our future prospects. Additionally,
because we have only recently introduced our products, it is difficult to
predict whether our products will continue to be accepted by the market and the
level of revenues we can expect to derive from sales of our products.

   Rubric was also in the early stages of its development and had licensed its
eMA product to a limited number of customers. It is difficult to predict the
effect our recent acquisition of Rubric will have on our business.

WE HAVE INCURRED LOSSES SINCE INCEPTION AND WE EXPECT TO INCUR LOSSES FOR THE
FORESEEABLE FUTURE.

   We incurred net losses and losses from operations for each period from our
inception through the first three months of 2000. As of March 31, 2000, we had
accumulated net losses of approximately $79.1 million. We have not achieved
profitability and we expect to continue to incur substantial losses for the
foreseeable future. We expect to incur increasing sales and marketing, research
and development and general and administrative expenses. As a result, we will
need to significantly increase our revenue to achieve profitability. Although
our revenue grew significantly in 1999 and the first three months of 2000, our
growth may not continue at the current rate or at all.

WE EXPECT OUR QUARTERLY REVENUE AND OPERATING RESULTS TO FLUCTUATE.

   Our revenue and operating results are likely to vary significantly from
quarter to quarter. The factors that affect our quarterly operating results
include:

   -  the demand for our products, particularly our e-business applications;

   -  the size and timing of customer orders for our products and our
      professional services;



                                       13
<PAGE>   14
   -  increased expenses for sales and marketing, product development and
      administration;

   -  changes in the level of sales of professional services as compared to
      product licenses;

   -  changes in the mix of our domestic and international sales; and

   -  changes in general economic and market conditions.

Our quarterly revenue increased 324% from the first quarter of 1999 to the first
quarter of 2000. We do not believe that this rate of growth is indicative of the
growth in revenues, if any, that we can expect in the future. Accordingly, we
believe that period-to-period comparisons of our operating results may not be
meaningful and you should not rely on these comparisons as an indication of our
future performance. Our operating results may fall below the expectations of
investors. In this event, the market price of our common stock would likely
fall.

OUR OPERATING EXPENSES ARE INCREASING AND WE WOULD NOT BE ABLE TO REDUCE THEM
QUICKLY, WHICH COULD RESULT IN LOWER THAN EXPECTED OPERATING RESULTS IF WE DO
NOT ACHIEVE EXPECTED REVENUE LEVELS.

   We plan to significantly increase our operating expenses as we expand our
sales, marketing, research and development, professional services, customer
support and administrative groups. These expenses will be incurred before we
generate any revenues from this increased spending. If we do not significantly
increase revenues as a result of these efforts, we will not achieve
profitability. Our operating expenses are based on our expectations of future
revenues and are relatively fixed in the short term. As a result, we would not
be able to reduce spending quickly if our revenue was lower than we had
projected. Our ability to accurately forecast our quarterly revenue is limited
because of our limited operating history, the rapidly evolving nature of our
market and the sales cycle for our products, which can be long and
unpredictable. If our revenue falls below our expectations in any quarter, or if
we increase our spending ahead of our revenue growth, our operating results will
be lower than expected.

THE UNPREDICTABLE TIMING OF OUR SALES AND IMPLEMENTATION CYCLE MAKES IT
DIFFICULT TO FORECAST OUR OPERATING RESULTS.

   Our products can have a long and unpredictable sales cycle. Consequently, we
face difficulty predicting the quarter in which sales to expected customers will
occur. This contributes to the uncertainty of our future operating results.
Potential customers often require time to weigh the costs and benefits of our
products compared to those of in-house development and integration efforts. As a
result, our sales cycle has typically ranged from approximately two to four
months, although it can take longer, particularly for sales to traditional
"bricks and mortar" companies.

   In a typical application license transaction, a portion of the implementation
of our products is performed by our professional services group, which connects
our products to the customer's systems and data sources. Upon completion of that
connection, no significant obligations remain with respect to implementation,
and we recognize the revenue related to that license. The actual connection
process can often be completed in approximately two to four weeks. However, the
timing of the commencement and completion of this connection process is subject
to factors that may be beyond our control, as this process requires access to
the customer's facilities and coordination with the customer's personnel after
delivery of the software. As a result, we typically do not recognize the license
revenue from an application license until one to three months after our product
is shipped to the customer. Uncertainty as to when our product can be connected
at the customer's facilities makes it more difficult to forecast our operating
results and can result in significant variability in our period to period
results.

OUR ACQUISITION OF RUBRIC MAY RESULT IN DISRUPTIONS TO OUR BUSINESS AND
MANAGEMENT DUE TO DIFFICULTIES IN ASSIMILATING PERSONNEL, TECHNOLOGY AND
OPERATIONS.

   We may not realize the benefits from our acquisition of Rubric to the extent
that we anticipate, or at all. We may not be able to successfully assimilate the
additional personnel, operations, acquired technology and products into our
business. In particular, we will need to assimilate and retain key professional
services, engineering and marketing personnel. The Chief Executive Officer of
Rubric no longer works for us and other key Rubric personnel may decide not to
continue to work for us. The integration of Rubric into our operations will be a
complex, time consuming and expensive process and may disrupt our operations if
it is not completed efficiently or in a timely manner. Among the challenges we
may face in this regard are demonstrating to customers and suppliers that the
acquisition will not result in adverse changes in client service standards or
dilution or distraction to our business focus, retaining key personnel in the
transition and ensuring that Rubric's eMA product can be successfully integrated
with our products. Neither we nor Rubric has experience in integrating
operations on a scale similar to this acquisition, and the difficulties of
integrating our businesses could be larger than we anticipate. These
difficulties could disrupt our ongoing business, distract our management and
employees and increase our expenses.

OUR PROFITABILITY WILL BE DELAYED AND THEREAFTER REDUCED AS A RESULT OF
ACCOUNTING CHARGES RELATING TO THE ACQUISITION OF RUBRIC.



                                       14
<PAGE>   15
   We accounted for the Rubric acquisition using the purchase method of
accounting. Under the purchase method, the purchase price of Rubric was
allocated based on an independent valuation, to the specific tangible and
intangible assets acquired and liabilities assumed from Rubric. As a result, we
recorded a charge to operations upon consummation of the transaction related to
acquired in-process research and development of approximately $10.1 million. We
also recorded merger-related costs of approximately $7.2 million, of which $1.0
million were included in the our 1999 results of operations. We expect to incur
additional merger related costs in the second quarter of 2000 as we complete
Rubric-committed product implementations. Also, we recorded approximately $362.0
million of intangible assets and goodwill on our balance sheet which will result
in amortization expense of $66.9 million for 2000, $72.7 million for 2001, $72.7
million for 2002, $72.1 million for 2003, $71.6 million for 2004 and $6.0
million for 2005. We expect to record intangible assets and goodwill in
connection with our acquisition of Aperio as well as potential future
acquisitions. These charges will delay and thereafter reduce our profitability.

WE NEED TO ATTRACT, TRAIN AND RETAIN ADDITIONAL QUALIFIED PERSONNEL IN A
COMPETITIVE EMPLOYMENT MARKET.

   Our success depends on our ability to attract, train and retain qualified,
experienced employees. There is substantial competition for experienced
management, engineering, sales and marketing personnel, particularly in the
market segment in which we compete. If we are unable to retain our existing key
personnel, or to attract, train and retain additional qualified personnel, we
may experience inadequate levels of staffing to develop and sell our products
and perform services for our customers.

   The market price of our common stock has fluctuated substantially since our
initial public offering in September 1999. We have relied historically on our
ability to attract employees using equity incentives, and any perception by
potential and existing employees that our equity incentives are less attractive
could harm our ability to attract and retain qualified employees.

   We believe that our success will depend on the continued services of our
executive officers. These employees serve "at-will" and may elect to pursue
other opportunities at any time. The loss of any of our executive officers could
harm our business. Several of our executive officers joined us only recently and
have had a limited time to work together. For example, three of our executive
officers have joined us since January 2000 and two others joined us upon the
completion of our acquisition of Rubric in February 2000. We cannot assure you
that our new executive officers will be able to work effectively together to
manage our growth and continuing operations. If we are unable to expand our
sales and marketing organizations in a timely manner, our growth could be
limited.

OUR GROWTH DEPENDS ON MARKET ACCEPTANCE OF OUR APPLICATIONS DESIGNED FOR
INTERNET-BASED SYSTEMS AND RUBRIC'S EMA PRODUCT.

   We first introduced applications designed for Internet-based systems in May
1999, and Rubric first introduced its eMA product in May 1998. We expect that
our future growth will depend significantly on revenue from licenses of these
applications, eMA and related services. There are significant risks inherent in
introducing these new products. Market acceptance of these new products will
depend on the growth of the market for e-business solutions. This growth may not
occur. We cannot assure you that our new e-business applications or eMA will
meet customer performance expectations. If they do not meet customer
expectations or the market for these products fails to develop or develops more
slowly than we expect, our business would be harmed.

OUR BUSINESS WILL SUFFER IF WE DO NOT INCREASE MARKET AWARENESS OF OUR PRODUCTS
BY SIGNIFICANTLY EXPANDING OUR SALES CAPABILITIES.

   We sell our products primarily through our direct sales force. We must
significantly expand our direct sales operations to increase market awareness of
our products and increase revenue. We cannot be certain that we will be
successful in these efforts. Our products and services require sophisticated
sales efforts. As a result, our ability to increase our direct sales operation
will depend on our ability to recruit, train and retain top sales people with
advanced sales skills and technical knowledge. There is a shortage of sales
personnel with these qualifications, and competition for qualified personnel is
intense in our industry.

   The introduction of our new e-business applications has required us to hire
new sales personnel with the skills required to sell these products. As a
result, most of our current direct sales force has been with us for a relatively
short period. During 1999, we added 12 direct sales representatives to our
direct sales force, which represents 52.2% of our total direct sales
representatives and 24.0% of our total sales personnel as of December 31, 1999.
In the first three months of 2000 we added an additional 9 direct sales
representatives. New sales personnel require training and take time to achieve
full productivity. If we are unable to hire or retain qualified sales personnel,
or if newly hired personnel fail to develop the necessary skills or reach
productivity more slowly than anticipated, our business could be harmed.

WE ARE DEPENDENT ON MARKETING, TECHNOLOGY AND DISTRIBUTION RELATIONSHIPS THAT
MAY GENERALLY BE TERMINATED AT ANY TIME, AND IF OUR CURRENT AND FUTURE
RELATIONSHIPS ARE NOT SUCCESSFUL, OUR GROWTH MAY BE LIMITED.

   We rely on marketing and technology relationships with a variety of companies
which, in part, generate leads for the sale of our products. These marketing and
technology relationships include relationships with:

   -  system integrators and consulting firms;



                                       15
<PAGE>   16
   -  vendors of e-commerce and Internet software;

   -  vendors of software designed for customer relationship management or for
      management of organizations' operational information;

   -  vendors of key technology and platforms;

   -  demographic data providers; and

   -  an application service provider and an Internet hoster.

   If we cannot maintain successful marketing and technology relationships or
cannot enter into additional marketing and technology relationships, we may have
difficulty expanding the sales of our products and our growth may be limited.
While these companies do not sell or distribute our products, we believe that
many of our direct sales are the result of leads generated by vendors of
e-business and enterprise applications that work with our products. Our
marketing and technology relationships are generally not documented in writing,
or are governed by agreements that can be terminated by either party with little
or no prior notice. Some of these agreements specify that payments are to be
made by us to these companies for providing us with qualifying customer leads.
The generation of leads to date by these companies has not generally satisfied
the specified criteria and therefore payments for leads have been immaterial in
amount.

   In addition, we have distribution relationships with companies located in the
United States, Japan and the Netherlands that distribute or resell our products
-- our indirect sales channel. Sales through our indirect sales channel
accounted for approximately 28.7% of our total revenue for 1998, 35.3% for 1999
and 17.3% for the first three months of 2000. Sales of our products to Indus,
which integrates Foundation into certain of its enterprise solutions for the
energy and utility industries, represented 18.4% of our total revenue in 1998,
11.2% in 1999 and 5.1% in the first three months of 2000. Substantially all of
our sales in Japan have been made through distributors. If we cannot maintain
successful relationships with our indirect sales channel, we may have difficulty
expanding the sales of our products and our growth may be limited.

   Companies with which we have a marketing, technology or distribution
relationship may promote products of several different companies, including, in
some cases, products that compete with our products. These companies may not
devote adequate resources to selling our products. We may not be able to
maintain these relationships and enter into additional relationships that will
provide timely and cost-effective customer support and service.

CUSTOMER SATISFACTION AND DEMAND FOR OUR PRODUCTS WILL DEPEND ON OUR ABILITY TO
EXPAND OUR PROFESSIONAL SERVICES GROUP, WHICH ASSISTS OUR CUSTOMERS WITH THE
IMPLEMENTATION OF OUR PRODUCTS.

   We believe that growth in our product sales depends on our ability to provide
our customers with professional services to assist with support, training,
consulting and initial implementation of our products and to educate third-party
systems integrators in the use of our products. As a result, we plan to increase
the number of professional services personnel to meet these needs. New
professional services personnel will require training and take time to reach
full productivity. We may not be able to attract or retain a sufficient number
of highly qualified professional services personnel. Competition for qualified
professional services personnel with the appropriate knowledge is intense. We
are in a new market and there is a limited number of people who have the
necessary skills. To meet our customers' needs for professional services, we may
also need to use more costly third-party consultants to supplement our own
professional services group. In addition, we could experience delays in
recognizing revenue if our professional services group falls behind schedule in
connecting our products to customers' systems and data sources.

WE MAY BE UNABLE TO ATTRACT NEW CUSTOMERS IF WE DO NOT DEVELOP NEW PRODUCTS AND
ENHANCEMENTS.

   If we do not continue to improve our products and develop new products that
keep pace with competitive product introductions and technological developments,
satisfy diverse and rapidly evolving customer requirements and achieve market
acceptance, we may be unable to attract new customers. For example, we are
developing new applications as well as new versions of a number of our existing
applications, which are scheduled for release in 2000. In particular, we are
currently developing an enhanced version of eMA, which we plan to introduce in
the first half of 2000. The actual features and introduction date of this new
version could differ materially from those anticipated as a result of a number
of factors, many of which are beyond our control. We may not be successful in
developing and marketing these applications and new versions, or other product
enhancements and new products that respond to technological advances and market
changes, on a timely or cost-effective basis. In addition, even if these
products are developed and released, they may not achieve market acceptance. We
have in the past experienced delays in releasing new products and product
enhancements and may experience similar delays in the future. These delays or
problems in the installation or implementation of our new releases may cause
customers to forego purchases of our products.



                                       16
<PAGE>   17
MARKET ACCEPTANCE OF OUR PRODUCTS MAY SUFFER IF WE ARE UNABLE TO KEEP PACE WITH
RAPID TECHNOLOGICAL CHANGES IN OUR INDUSTRY.

   Rapidly changing technology and operating system standards may impede market
acceptance of our products. Our new applications have been designed based upon
currently prevailing Internet technology. If new Internet technologies emerge
that are incompatible with our applications, our key products may become
obsolete and our existing and potential customers may seek alternatives to our
products. We may not be able to quickly adapt our products to any new Internet
technology.

   Additionally, we have designed our products to work with databases such as
Oracle and Microsoft SQL Server. Any changes to those databases, or increasing
popularity of other databases, could require us to modify our products, and
could cause us to delay releasing future products and enhancements. Furthermore,
software adapters are necessary to integrate our products with other systems and
data sources used by our customers. We must develop and update these adapters to
reflect changes to these systems and data sources in order to maintain the
functionality provided by our products. As a result, uncertainties related to
the timing and nature of new product announcements, introductions or
modifications by vendors of operating systems, databases, customer relationship
management software, web servers and other enterprise and Internet-based
applications could delay our product development, increase our product
development expense or cause customers to delay evaluation, purchase and
deployment of our products.

FAILURE TO LICENSE NECESSARY THIRD PARTY SOFTWARE INCORPORATED IN OUR PRODUCTS
MAY CAUSE DELAYS OR REDUCTIONS IN OUR SALES.

   We license third party software which we incorporate into our products. These
licenses may not continue to be available on commercially reasonable terms or at
all. The loss of any such license could result in delays or reductions of our
applications until equivalent software is identified, licensed and integrated or
developed by us.

WE FACE INTENSE COMPETITION WHICH COULD MAKE IT DIFFICULT TO ACQUIRE AND RETAIN
CUSTOMERS.

   Our market is intensely competitive, and we expect competition to intensify
in the future. Our failure to maintain and enhance our competitive position
could seriously harm our business. Our customers' requirements and the
technology available to satisfy those requirements are continually changing.
Therefore, we must be able to respond to these changes in order to remain
competitive. Our competitors vary in size and in the scope and breadth of
products and services offered.

   We currently face competition from providers of consulting-based analysis
solutions, vendors of point technologies that provide website analysis and
in-house development efforts by potential customers. In addition, we face
potential competition from vendors of other enterprise applications as they
expand the functionality of their product offerings, including companies that
design software for decision support, management of customer relationships or of
organizations' operational information, as well as vendors of database
applications. Accordingly, it is possible that new competitors may emerge and
acquire our market share.

   Some 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 current and
potential competitors have wider name recognition and more extensive customer
bases that they could leverage, thereby gaining market share to our detriment.
They may be able to undertake more extensive promotional activities, adopt more
aggressive pricing strategies, and offer purchasers more attractive terms than
we can. Our competitors may develop products that are superior to ours or that
achieve greater market acceptance. In addition, current and potential
competitors may establish cooperative relationships among themselves or with
third parties to enhance their products to address customer needs.

   Competitive pressures may make it difficult for us to acquire and retain
customers and may require us to reduce the price of our products. We cannot be
certain that we will be able to compete successfully with existing or new
competitors. If we fail to compete successfully against current or future
competitors, our business would be seriously harmed.


                                       17
<PAGE>   18
BARRIERS TO INTERNATIONAL EXPANSION COULD LIMIT OUR FUTURE GROWTH.

   We intend to expand our international operations, but we may face significant
barriers to this expansion. Our failure to manage our international operations
effectively could limit the future growth of our business. International sales
represented approximately 5.1% of our total revenue for the year ended December
31, 1998, 23.2% of our total revenue in 1999 and 25.8% of our total revenue for
the first three months of 2000, substantially all of which consisted of sales to
customers in Canada, Europe and Japan. We conduct our international sales
primarily through direct sales offices in Germany, the Netherlands and the
United Kingdom, through our Canadian subsidiary and through distributors in
Japan. The expansion of our existing international operations and entry into
additional international markets will require significant management attention
and financial resources.

   Our international operations face numerous risks. Our products must be
localized -- customized to meet local user needs -- in order to be sold in
particular foreign countries. Developing local versions of our products for
foreign markets is difficult and can take longer than we anticipate. We
currently have limited experience in localizing products and in testing whether
these localized products will be accepted in the targeted countries. For
example, we are currently marketing localized products only in Germany and
Japan. We cannot assure you that our localization efforts will be successful. In
addition, we have only a limited history of marketing, selling and supporting
our products and services internationally. As a result, we must hire and train
experienced personnel to staff and manage our foreign operations. However, we
may experience difficulties in recruiting and training an international staff.
We must also be able to enter into strategic relationships with companies in
international markets, particularly in Japan where all of our sales have been
made through distributors. If we are not able to maintain successful strategic
relationships internationally or recruit additional companies to enter into
strategic relationships, our future growth could be limited.

   We also face certain other risks inherent in conducting business
internationally, such as:

   -  difficulties and costs of staffing and managing international operations;



                                       18
<PAGE>   19
   -  language and cultural differences;

   -  difficulties in collecting accounts receivable and longer collection
      periods;

   -  seasonal business activity in certain parts of the world;

   -  fluctuations in currency exchange rates;

   -  legal and governmental regulatory requirements;

   -  trade barriers; and

   -  potentially adverse tax consequences.

Any of these factors could seriously harm our international operations and,
consequently, our business.

   To date, a majority of our international revenue and costs have been
denominated in foreign currencies. We have not engaged in any foreign exchange
hedging transactions, and we are therefore subject to foreign currency risk.

WE ARE GROWING RAPIDLY, AND THE FAILURE TO MANAGE OUR GROWTH, INCLUDING
EXPANSION OF OUR MANAGEMENT SYSTEMS, COULD HARM OUR BUSINESS.

   We have grown rapidly and will need to continue to grow in all areas of
operation in order to execute our business strategy. Our total number of
full-time employees grew from 75 at December 31, 1998 to 131 at December 31,
1999 to 214 at March 31, 2000, and we anticipate further significant increases
in the number of our employees. Our growth has placed significant demands on
management as well as on our administrative, operational and financial resources
and controls. We expect our future growth to cause similar, and perhaps
increased, strain on our systems and controls. In particular, we need to
implement several new information systems. If we cannot effectively establish
and improve our processes, we may not be able to manage our growth successfully
or sustain and manage the growth rates we have experienced in the past.

IF WE ACQUIRE ADDITIONAL COMPANIES, PRODUCTS OR TECHNOLOGIES, WE MAY FACE RISKS
SIMILAR TO THOSE THAT WE CURRENTLY FACE IN CONNECTION WITH OUR ACQUISITION OF
RUBRIC.

   We entered into a definitive agreement to acquire Aperio in March 2000. In
addition, if we are presented with appropriate opportunities, we intend to make
other investments in complementary companies, products or technologies. We may
not realize the anticipated benefits of Aperio or any other acquisition or
investment. In connection with our proposed acquisition of Aperio and with
future acquisitions, we will likely face the same risks, uncertainties and
disruptions as discussed above with respect to our acquisition of Rubric.
Furthermore, we may have to incur debt or issue equity securities to pay for any
additional future acquisitions or investments, the issuance of which could be
dilutive to us or our existing stockholders. In addition, our profitability may
suffer because of acquisition-related costs or amortization costs for acquired
goodwill and other intangible assets.

OUR PROSPECTS FOR OBTAINING ADDITIONAL FINANCING, IF REQUIRED, ARE UNCERTAIN AND
FAILURE TO OBTAIN NEEDED FINANCING COULD AFFECT OUR ABILITY TO PURSUE FUTURE
GROWTH.

   We expect that our cash on hand, cash equivalents and proceeds from our
initial and secondary public offerings will be sufficient to meet our working
capital and capital expenditure needs for at least the next 12 months. However,
we may need to raise additional funds to fund expansion, to respond to
competitive pressures or to acquire complementary products, businesses or
technologies. We cannot assure you that we would be able to obtain additional
financing on favorable terms, if at all. If we issue additional equity
securities, stockholders may experience additional dilution or the new equity
securities may have rights, preferences or privileges senior to those of
existing holders of common stock. If we cannot raise necessary additional funds
on acceptable terms, we may not be able to develop or enhance our products, fund
expansion, take advantage of future opportunities or respond to competitive
pressures or unanticipated requirements.


                                       19
<PAGE>   20
THE SUBSTANTIAL NUMBER OF SHARES THAT WILL BE ELIGIBLE FOR SALE IN THE NEAR
FUTURE MAY CAUSE THE MARKET PRICE FOR OUR COMMON STOCK TO DROP SIGNIFICANTLY,
EVEN IF OUR BUSINESS IS DOING WELL.

   Our common stock began trading on the Nasdaq National Market on September 22,
1999. The number of shares of common stock available for sale in the public
market is limited by restrictions under federal securities laws and under
agreements that our stockholders have entered into with the underwriters of our
initial and secondary public offerings and with us. For instance, approximately
11.4 million shares will become eligible for sale beginning May 16, 2000 (the
expiration date of the remaining lock-up agreements related to our secondary
public offering) and approximately 5.1 million shares will become eligible for
sale on subsequent dates after May 16, 2000, subject in most cases to volume
limitations.

   Sales of a substantial number of shares of our common stock in the future
could cause our stock price to fall. In addition, the sale of shares by our
stockholders could impair our ability to raise capital through the sale of
additional stock.

OUR STOCK PRICE MAY BE VOLATILE, WHICH COULD LEAD TO LOSSES BY INVESTORS AND TO
SECURITIES LITIGATION.

   The market price of our common stock has been and is likely to continue to be
highly volatile due to several factors, such as:

   -  variations in our actual and anticipated operating results;

   -  changes in our earnings estimates by analysts;

   -  our failure to meet analysts' performance expectations; and

   -  the volume of trading in our common stock.

   In addition, stock markets, particularly the Nasdaq National Market, have
experienced extreme price and volume fluctuations, and the market prices of
securities of technology companies, particularly Internet-related companies,
have been highly volatile. These fluctuations have often been unrelated to the
operating performance of such companies. Fluctuations such as these may affect
the market price of our common stock. Substantial sales of our common stock
could also cause our stock price to decline.

   In the past, securities class action litigation has often been instituted
against companies following periods of volatility in their stock price. This
type of litigation could result in substantial costs and could divert our
management's attention and resources.


                                       20
<PAGE>   21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

   During the first three Months of 2000, our exposure to market risk for
changes in interest rates related primarily to our investment portfolio and
long-term debt obligations. The primary objective of our investment activities
is to preserve principal while at the same time maximizing yields without
significantly increasing risk. At March 31, 2000, our portfolio includes money
market funds, commercial paper, short-term taxable municipals, government
agencies, and corporate bonds. The diversity of the portfolio helps us to
achieve our investment objective. As of March 31, 2000 the weighted average
maturity of our portfolio was less than 90 days.

   Our debt obligations are primarily used to support general corporate
requirements including capital expenditures and working capital needs. We
continue to have interest rate exposure on borrowings under our equipment
line-of-credit which bears interest at variable rates based on the prime
interest rate (9.0% at March 31, 2000). At March 31, 2000 there was
approximately $583,000 outstanding on this line-of-credit. We have no interest
rate exposure on our notes payable to a financial institution and a term loan
and capital lease obligation assumed in connection with our acquisition of
Rubric as the interest rates on these obligations are fixed.

   We are exposed to market risk from fluctuations in foreign currency exchange
rates. We manage exposure to variability in foreign currency exchange rates
primarily through the use of natural hedges, as both liabilities and assets are
denominated in the local currency. However, different durations in our funding
obligations and assets may expose us to the risk of foreign exchange rate
fluctuations. We have not entered into any derivative instrument transactions to
manage this risk. Based on our overall foreign currency rate exposure at March
31, 2000 we do not believe that a hypothetical 10% change in foreign currency
rates would materially harm our financial position.

PART II  OTHER  INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None



                                       21
<PAGE>   22

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities

     On February 1, 2000, in connection with our acquisition of Rubric, we
issued 5,984,192 shares of our common stock and options and warrants to purchase
1,215,800 shares of our common stock to the security holders of Rubric in
exchange for all outstanding securities of Rubric. We obtained a permit for the
issuance of these securities after a fairness hearing conducted by the
California Department of Corporations, and therefore this transaction was exempt
from registration under the Securities Act pursuant to Section 3(a)(10) of the
Securities Act of 1933.

Use of Proceeds from Sale of Registered Securities

   Broadbase's Registration Statement on Form S-1 (File No. 333-82251) was
declared effective by the SEC on September 21, 1999. A total of 9,200,000 shares
of the our common stock were registered with the SEC with an aggregate
registered offering price of $64.4 million, all of which were registered on
behalf of Broadbase. The offering commenced on September 21, 1999 and all
9,200,000 shares of common stock were sold for the aggregate registered offering
price through a syndicate of underwriters managed by Deutsche Banc Alex. Brown,
Dain Rauscher Wessels, Thomas Weisel Partners LLC and E*Offering. The sale of
8,000,000 of such shares closed on September 27, 1999 and the sale of the
remaining 1,200,000 of such shares closed on October 18, 1999.

   We paid the underwriters underwriting discounts and commissions totaling $4.5
million in connection with the offering. In addition, we incurred additional
expenses of approximately $2.1 million in connection with the offering, which
when added to underwriting discounts and commissions paid by us amounts to total
expenses of $6.6 million. Thus the net offering proceeds to Broadbase (after
deducting underwriting discounts and commissions and estimated offering
expenses) were approximately $57.8 million. No offering expenses were made
directly or indirectly to any directors or officers of Broadbase (or their
associates), persons owning ten percent (10%) or more of any class of equity
securities of Broadbase, or to any other of our affiliates.

   As of March 31, 2000, we had used the estimated aggregate net proceeds of
$57.8 million that it had received from our initial public offering as follows:


<TABLE>
<S>                                                                   <C>
Construction of plant, building and facilities:                             $0
Purchase and installation of machinery and equipment:                       $0
Purchases of real estate:                                                   $0
Acquisition of other businesses:                                            $0
Repayment of indebtedness:                                                  $0
Working capital:                                                      $19.3 million
Temporary investments (short term, interest bearing securities):      $38.5 million
Other purposes:                                                             $0
</TABLE>


   The foregoing amounts represent our best estimate of the use of proceeds for
the period indicated. No such payments were made to directors or officers of
Broadbase or their associates, holders of 10% or more of any class of equity
securities of ours or to affiliates of ours.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

   Not applicable.

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

None

ITEM 5. OTHER INFORMATION

   Effective January 2000, Chuck Bay was named our Chief Executive Officer and a
member of the Board of Directors. Mr. Bay also continues as our President. Mark
Kremer continues to serve as our Chairman of the Board of Directors.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

   a. Exhibits

      The following exhibits have been filed with this report:



                                       22
<PAGE>   23

           10.1 Broadbase Software, Inc. Non-Plan Stock Option Agreement between
                us and Rusty Thomas dated January 4, 2000 (incorporated into
                this report by reference to Exhibit 4.13 to the Registrant's
                registration statement on Form S-8 (File No. 333-32120) filed
                with the Commission on March 10, 2000).

           10.2 Broadbase Software, Inc. Non-Plan Stock Option Agreement between
                us and Greg Martin dated January 4, 2000 (incorporated into this
                report by reference to Exhibit 4.12 to the Registrant's
                registration statement on Form S-8 (File No. 333-32120) filed
                with the Commission on March 10, 2000).

           10.3 Lease agreement between the Registrant and Bohannon Trusts
                Partnership II dated December 23, 1999.

           27.1 Financial Data Schedule


   b.  Reports on Form 8-K.

       On February 11, 2000, we filed a current report on Form 8-K reporting
       under Item 2, relating to our acquisition of Rubric, including historical
       financial statements of Rubric and pro forma financial information for
       the combined company.



                                       23
<PAGE>   24
                                   SIGNATURES

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


                                       BROADBASE SOFTWARE, INC.


Dated:  May 11, 2000                   By: /s/ Rusty Thomas
                                           -------------------------------------
                                           Rusty Thomas
                                           Executive Vice President and
                                           Chief Financial Officer



                                       24
<PAGE>   25
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
    EXHIBIT
      NO.          DESCRIPTION
    -------        -----------
<S>                <C>
     10.3          Lease agreement between the Registrant and Bohannon Trusts
                   Partnership II dated December 23, 1999
     27.1          Financial Data Schedule
</TABLE>



                                       25