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


                                  UNITED STATES
                       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




     [ ] 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: 000-25781


                              NET PERCEPTIONS, INC.
             (Exact name of Registrant as specified in its charter)

                   DELAWARE                               41-1844584
       (State or other jurisdiction of                 (I.R.S. Employer
        incorporation or organization)              Identification Number)


                             7901 FLYING CLOUD DRIVE
                          MINNEAPOLIS, MINNESOTA 55344
               (Address of principal executive offices, Zip Code)


                                 (612) 903-9424
              (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 [ ]

The number of shares of the registrant's common stock outstanding as of April
30, 2000 was 26,651,645.


<PAGE>   2



                              NET PERCEPTIONS, INC.
                                    FORM 10-Q


                      For the Quarter Ended March 31, 2000



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                                     INDEX

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<TABLE>
<CAPTION>
                                                                                                            Page
<S>                                                                                                         <C>

PART I.  FINANCIAL INFORMATION

      Item 1.  Financial Statements

            Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999                          3

            Consolidated Statements of Operations for the Three  Months Ended March 31, 2000 and 1999       4

            Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999        5

            Notes to Consolidated Financial Statements                                                      6

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

      Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                  14

PART II.  OTHER INFORMATION

     Item 1.  Legal Proceedings                                                                            15

     Item 2.  Changes in Securities and Use of Proceeds                                                    15

     Item 3.  Defaults upon Senior Securities                                                              15

     Item 4.  Submission of Matters to a Vote of Security Holders                                          15

     Item 6.  Exhibits and Reports on Form 8-K                                                             15

SIGNATURES                                                                                                 17

EXHIBIT INDEX                                                                                              18
</TABLE>


                                       2

<PAGE>   3


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                              NET PERCEPTIONS, INC.

                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>

 ----------------------------------------------------------------------------------------------------------------
                                                                               March 31,            December 31,
                                                                                 2000                   1999
 ----------------------------------------------------------------------------------------------------------------
                                                                             (Unaudited)
<S>                                                                          <C>                   <C>
 ASSETS
 Current assets:
      Cash and cash equivalents                                              $   102,767           $    17,457
      Short-term investments                                                      13,413                19,397
      Accounts receivable, net                                                     8,792                 7,663
      Royalties receivable, net                                                    1,061                 1,135
      Prepaid expenses and other current assets                                    1,703                 1,373
 ----------------------------------------------------------------------------------------------------------------
            Total current assets                                                 127,736                47,025

 Marketable securities                                                             3,964                 6,317
 Investment in joint venture                                                         269                   197
 Property and equipment, net                                                       6,778                 4,749
 Goodwill & other intangible assets                                              114,960                     -
 Other assets                                                                        396                   460
 ----------------------------------------------------------------------------------------------------------------
            Total assets                                                     $   254,103           $    58,748
=================================================================================================================

 LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities:
      Accounts payable                                                       $     1,491           $     2,550
      Accrued expenses                                                             5,025                 3,296
      Deferred revenue                                                             4,128                 3,336
      Current portion of long-term liabilities                                       743                   471
 ----------------------------------------------------------------------------------------------------------------
            Total current liabilities                                             11,387                 9,653

 Long-term liabilities, net of current portion                                       917                   707
 ----------------------------------------------------------------------------------------------------------------
            Total liabilities                                                     12,304                10,360
 ----------------------------------------------------------------------------------------------------------------

 Commitments and contingencies

 Stockholders' equity:
      Common stock                                                                     2                     2
      Additional paid-in capital                                                 272,226                71,231
      Accumulated other comprehensive loss                                           (92)                  (89)
      Accumulated deficit                                                        (30,337)              (22,756)
 ----------------------------------------------------------------------------------------------------------------
           Total stockholders' equity                                            241,799                48,388
 ----------------------------------------------------------------------------------------------------------------
           Total liabilities and
              stockholders' equity                                           $   254,103           $    58,748
=================================================================================================================
</TABLE>

               See accompanying notes to the financial statements.



                                       3
<PAGE>   4


                             NET PERCEPTIONS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
               (in thousands, except share and per share amounts)

<TABLE>
<CAPTION>


========================================================================================================
                                                                                 Three Months Ended
                                                                                    March 31,
                                                                               2000             1999
--------------------------------------------------------------------------------------------------------
                                                                                    (Unaudited)
<S>                                                                          <C>             <C>

Revenues:
   Product                                                                   $  7,524        $   1,561
   Service and maintenance                                                      1,968              334
--------------------------------------------------------------------------------------------------------
      Total revenues                                                            9,492            1,895

Cost of revenues:
   Product                                                                        274               36
   Service and maintenance                                                      1,809              313
--------------------------------------------------------------------------------------------------------
      Total cost of revenues                                                    2,083              349

Gross profit                                                                    7,409            1,546

Operating expenses:
   Sales and marketing                                                          5,901            1,737
   Research and development                                                     3,658            1,536
   General and administrative                                                   2,259              574
     Amortization of intangibles                                                3,628                -
     Stock compensation expense                                                   193              503
--------------------------------------------------------------------------------------------------------
      Total operating expenses                                                 15,639            4,350
--------------------------------------------------------------------------------------------------------

Loss from operations                                                           (8,230)          (2,804)

Other income (loss), net                                                          649              (72)

--------------------------------------------------------------------------------------------------------
Net loss                                                                     $ (7,581)        $ (2,876)
========================================================================================================


--------------------------------------------------------------------------------------------------------
Net loss per share:

Basic and diluted                                                            $ (0.34)         $  (0.64)

Shares used in computing basic and diluted net loss per share             22,499,002         4,518,784
========================================================================================================

Pro forma basic and                                                          $ (0.34)         $  (0.19)
    diluted net loss per share

Shares used in computing pro forma basic and diluted net loss per
   share                                                                  22,499,002        15,187,484
========================================================================================================
</TABLE>


               See accompanying notes to the financial statements.

                                       4

<PAGE>   5


                              NET PERCEPTIONS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>

 ========================================================================================================
                                                                                   Three Months Ended
                                                                                       March 31,
                                                                                2000               1999
 --------------------------------------------------------------------------------------------------------
                                                                                      (Unaudited)
<S>                                                                           <C>               <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss                                                                    $  (7,581)       $  (2,876)
   Reconciliation of net loss to net cash used by operating
      activities:
       Depreciation and amortization                                               4,384              135
       Provision for doubtful accounts                                               441               39
       Stock compensation expense                                                    193              503
       Equity in gains of joint venture                                              (72)              --
       Changes in operating assets and liabilities, net of effect from
           acquisition:
           Accounts receivable                                                      (433)            (705)
           Royalties receivable                                                       74             (228)
           Prepaid expenses & other current assets                                  (152)             (80)
           Other noncurrent assets                                                    84               --
           Accounts payable                                                       (2,102)             645
           Accrued expenses                                                          961              851
           Deferred offering costs                                                    --             (700)
           Deferred revenue                                                          275              440
           Other long-term liabilities                                                (5)              --
---------------------------------------------------------------------------------------------------------
                Total adjustments                                                  3,648              900
---------------------------------------------------------------------------------------------------------
         Net cash used in operating activities                                    (3,933)          (1,976)

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                          (1,967)            (626)
     Purchase of  short-term investments                                            (974)              --
     Sales of short-term investments                                               9,308               --
     Net cash paid in acquisition, net of cash acquired                           (1,156)              --
---------------------------------------------------------------------------------------------------------
        Net cash provided by (used in) investing activities                        5,211             (626)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of common stock, net of issuance costs                84,840               --
     Proceeds from exercise of stock options and warrants, net of
         redemptions                                                                 322               22
     Proceeds from issuance of short-term debt                                        --            4,000
     Repayment of short-term bank loan                                            (1,000)              --
     Principal payments under capital leases and notes payable                      (130)             (61)
---------------------------------------------------------------------------------------------------------
        Net cash provided by financing activities                                 84,032            3,961
---------------------------------------------------------------------------------------------------------

Net increase in cash and cash equivalents                                         85,310            1,359
Cash and cash equivalents at beginning of period                                  17,457              972
---------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                     $ 102,767        $   2,331
=========================================================================================================
</TABLE>


               See accompanying notes to the financial statements.

                                       5

<PAGE>   6


                              NET PERCEPTIONS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               (In thousands, except share and per share amounts)


NOTE 1.  BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited financial statements
contain all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Company's financial position, results of
operations and cash flows for the periods presented. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements should be read in
conjunction with the Company's financial statements and notes thereto for the
year ended December 31, 1999, which are contained in the Company's Annual Report
on Form 10-K (File No. 000-25781). The results of operations for the interim
periods presented are not necessarily indicative of results that may be expected
for any other interim period or for the full fiscal year.

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The equity method of accounting is used to
account for the Company's equity investment in a Japanese joint venture.

NOTE 2.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." The new
statement establishes accounting and reporting standards for derivative
instruments and hedging activities related to those instruments, as well as
other hedging activities. SFAS No. 133, as amended by SFAS No. 137, "Accounting
for Derivative Instruments and Hedging Activities-Deferral of the Effective Date
of FASB Statement No. 133," is effective for the Company beginning January
1,2001. The Company does not expect SFAS No. 133 to materially affect its
financial position or results of operations.

NOTE 3.  NET LOSS PER SHARE

Net loss per share is computed under SFAS No. 128, "Earnings Per Share." Basic
net loss per share is computed using the weighted-average number of shares of
common stock outstanding, excluding shares of common stock subject to
repurchase. Such shares of common stock subject to repurchase, which consist
primarily of founders' shares, aggregated 754,699 and 1,908,510 at March 31,
2000 and 1999, respectively. Diluted net loss per share does not differ from
basic net loss per share since potential shares of common stock from the
exercise of stock options and warrants and outstanding shares of common stock
subject to repurchase are anti-dilutive for all periods presented. Unaudited
pro- forma basic and diluted net loss per share have been calculated assuming
the conversion of all outstanding shares of preferred stock into shares of
common stock, as if the shares had converted immediately upon their issuance.
All preferred stock outstanding was converted to common stock in connection with
the Company's initial public offering in April, 1999 (See Note 4).


                                       6


<PAGE>   7


NOTE 4.   PUBLIC STOCK OFFERINGS

In April and May 1999, the Company completed an initial public offering, selling
4,197,500 shares of common stock at a price of $14 per share, including 547,500
shares sold pursuant to the exercise of an over-allotment option, raising a
total of $53,213 in net proceeds after payment of underwriting discounts,
commissions and offering expenses. Concurrent with the initial public offering,
all shares of preferred stock outstanding were converted on a 1-to-1 basis into
10,668,700 shares of common stock.

In March 2000, the Company completed a public stock offering, selling 2,000,000
shares of common stock at a price of $45.25 per share, raising a total of
$84,840 in net proceeds after payment of underwriting discounts, commissions and
estimated offering expenses.

NOTE 5.  ACQUISITION

In February 2000, the Company completed the acquisition of Knowledge Discovery
One, Inc. ("KD1"). KD1 is a leading supplier of advanced data analysis solutions
for multi-channel retailers. In this transaction, the Company acquired all of
the outstanding securities of KD1 in exchange for 1,969,630 shares of common
stock. As part of the acquisition, the Company also assumed all outstanding
options to purchase KD1 common stock. The Company has reserved 268,297 shares of
its common stock for issuance upon the exercise of these options. The
transaction was accounted for under the purchase method of accounting. The total
purchase price was $117.8 million.



                                       7





<PAGE>   8


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

The discussion in this report on Form 10-Q contains forward-looking statements
that involve risks and uncertainties. The statements contained in this Report
that are not purely historical are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements regarding our
expectations, beliefs, intentions or strategies regarding the future. All
forward-looking statements included in this document are based on information
available to us on the date hereof, and we assume no obligation to update any
such forward-looking statements. Our actual results could differ materially from
those described in our forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
under the heading "Risk Factors" in our Registration Statement on Form S-1
declared effective on March 23, 2000 by the Securities and Exchange Commission
(File No. 333-31230).

OVERVIEW

Net Perceptions is a leading provider of real time personalization and precision
marketing software solutions for Internet and multi-channel retailers. Our
solutions are designed to help retailers understand customers individually,
optimize product assortments, prices and inventories and offer the right product
to the right customer at the right price.

Through March 31, 2000, we focused on providing solutions to electronic commerce
retailers, and most of our product revenues through March 31, 2000 were
attributable to our Net Perceptions for E-commerce product. In 1999, we expanded
our product suite by introducing new applications for Internet sales channels
and other markets, including Net Perceptions for Marketing Campaigns, Net
Perceptions for Call Centers and Net Perceptions for Knowledge Management. In
addition, in 1999, we introduced the Net Perceptions Recommendation Engine,
which is a product designed for original equipment manufacturers.

We incorporated in Delaware in July 1996 and shipped our initial product in
January 1997. In the period from our inception through 1999, we expanded our
organization by hiring personnel in key areas, particularly marketing, sales and
research and development. We grew from 34 employees at December 31, 1997, to 70
employees at December 31, 1998, to 213 employees at December 31, 1999 and to 335
employees at March 31, 2000.

Prior to the third quarter of 1999, substantially all of our product revenues
were attributable to Net Perceptions for E-commerce and the Net Perceptions
Recommendation Engine and their predecessor products. In the third quarter of
1999, we recognized initial product revenues from our Net Perceptions for Call
Centers and Net Perceptions for Knowledge Management products. In 2000, we
expect to recognize initial product revenues from Net Perceptions for Marketing
Campaigns, although we anticipate Net Perceptions for E-commerce will continue
to account for a substantial portion of our revenues in this period.

We sell our products and services worldwide through a direct sales force,
original equipment manufacturers and resellers. Sales derived through indirect
channels accounted for approximately 28% of our total revenues for the first
quarter of 2000 compared to 15% of our total revenues for the first quarter of
1999. We are seeking to increase sales derived through indirect channels as a
percentage of total revenues. Sales through indirect channels have lower average
selling prices and gross margins than direct sales. As a result, we expect that
our gross margins on product sales will decline if sales through indirect
channels increase.

We license our products under various pricing plans, such as per stored profile,
per user, per e-mail, per CPU, per site and per enterprise. We grant licenses on
both a term and perpetual basis. License fees for our products range from
$50,000 to in excess of $500,000. The price of our annual maintenance contracts
is based on a percentage of the related product license price and is generally
paid in advance. Professional service fees for implementation support and
training are generally priced on a per hour or per class basis.

We recognize revenues in accordance with the Statement of Position 97-2,
"Software Revenue Recognition," as amended by Statement of Position 98-4,
"Deferral of the Effective Date of a Provision of Statement of Position 97-2"
and Statement of Position 98-9, "Modification of SOP 97-2, Software Revenue
Recognition, with Respect to Certain Transactions." We derive revenues from
software licenses, software maintenance and professional services. Maintenance
includes telephone and Web-based technical support, bug fixes and rights to
unspecified upgrades on a when-and-if available basis. Professional services
include implementation, training and consulting. In multiple-element software
arrangements that include rights to multiple software products, maintenance or
services, we allocate the total

                                       8
<PAGE>   9

arrangement fee using the residual method. Under the residual method, the fair
value of the undelivered maintenance and services elements, as determined based
on vendor-specific objective evidence, is deferred and the remaining (residual)
arrangement fee is recognized as software product revenue. In software
arrangements in which we do not have vendor-specific objective evidence, we
defer revenue until the earlier of when vendor-specific objective evidence is
determined for the undelivered elements or when all elements have been
delivered. We recognize revenues from license fees when persuasive evidence of
an agreement exists, delivery of the product has occurred, no significant
company obligations with regard to implementation remain, the fee is fixed or
determinable and collection is probable. If the fee due from the customer is not
fixed or determinable, we recognize revenues as payments become due from the
customer. If we do not consider collection to be probable, then we recognize
revenues when the fee is collected. We recognize revenues allocable to
maintenance on a straight-line basis over the periods in which it is provided.
We evaluate arrangements that include professional services to determine whether
those services are essential to the functionality of other elements of the
arrangement. When professional services are considered essential, we recognize
revenues from the arrangement using contract accounting, generally on a
percentage of completion basis. When we do not consider the professional
services to be essential, we recognize the revenues allocable to the services as
they are performed.

We have sustained losses on a quarterly and an annual basis since inception. As
of March 31, 2000, we had an accumulated deficit of $30.3 million. Our net loss
was $7.6 million for the first quarter ended March 31, 2000 (including
amortization of intangibles of $3.8 million) compared to $2.9 million for the
first quarter of 1999. These losses resulted from significant costs incurred in
the development and sale of our products and services. We expect to experience
significant increases in our operating expenses for the foreseeable future,
particularly research and development and sales and marketing expenses.
Accordingly, we anticipate that our operating expenses, as well as planned
capital expenditures, will constitute a material use of our cash resources. We
also expect to incur additional losses and continued negative cash flow from
operations for the foreseeable future, and these losses may increase
significantly from current levels. We do not expect to achieve profitability in
2000 or 2001.

Our limited operating history makes the prediction of future operating results
very difficult. We believe that period-to-period comparisons of our operating
results should not be relied upon as predictive of future performance. Our
prospects must be considered in light of the risks, expenses and difficulties
encountered by companies at an early stage of development, particularly
companies in new and rapidly evolving markets. We may not be successful in
addressing these risks and difficulties. We have experienced significant
percentage growth in revenues in recent periods; however, we do not believe that
prior growth rates are sustainable or indicative of future growth rates.

THE KD1 ACQUISITION

We acquired Knowledge Discovery One, Inc. (KD1) in February 2000, as a result of
which KD1 is now our wholly owned subsidiary. In connection with the
transaction, we acquired all of the outstanding shares of KD1 in exchange for
1,969,630 shares of our common stock. In addition, options of KD1 were converted
into options to purchase approximately 268,297 shares of our common stock.

KD1 was incorporated in Delaware in December 1996 and was in the development
stage from inception through December 1997. KD1 shipped its first products in
May 1998. KD1 had total revenues of $3.5 million in 1999 and $3.2 million in
1998. KD1's cost of revenues increased to $2.8 million in 1999 from $2.0 million
in 1998, and its operating expenses increased to $8.8 million in 1999 from $5.7
million in 1998. As of December 31, 1999, KD1 had accumulated net losses,
excluding accretion on redeemable convertible preferred stock, of $16.2 million
since inception. KD1 grew to 51 employees as of December 31, 1999 from 38
employees as of December 31, 1998.

We expect to incur additional expenses across all departments to build and
integrate our direct sales force and our professional service organization,
increase our indirect sales activities, increase our investment in the
development of technology and expand general and administrative infrastructure.
We expect that these investments will cause all operating expense categories to
increase in absolute dollars and could result in an increase in expense
categories as a percentage of revenues. In addition, this expansion will place
significant demands on our management and operational resources.

We accounted for the KD1 acquisition using the purchase method of accounting.
Under the purchase method, the purchase price of KD1 was allocated to the assets
and liabilities that we acquired from KD1. As a result, we will record non-cash
charges against our future operating results, which will adversely affect our
reported financial results. Net Perceptions recorded approximately $118.8
million in goodwill and other intangible assets in connection with the
acquisition. We recorded related amortization expense on these intangibles of
$3.8 million in the first quarter of 2000

                                       9

<PAGE>   10

and will record total amortization expense of $26.5 million in 2000, $30.4
million in 2001, $30.4 million in 2002, $28.0 million in 2003 and $3.5 million
in the first quarter of 2004.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>

 ===================================================================================================
                                                                        Three Months Ended March 31,
                                                                          2000          1999
 --------------------------------------------------------------------------------------------------
<S>                                                                       <C>           <C>

Revenues:
   Product                                                                 79%           82%
   Service and maintenance                                                 21            18
----------------------------------------------------------------------------------------------------
      Total revenues                                                      100           100

Cost of revenues:
   Product                                                                  3             2
   Service and maintenance                                                 19            16
----------------------------------------------------------------------------------------------------
      Total cost of revenues                                               22            18

Gross margin                                                               78            82

Operating expenses:
   Sales and marketing                                                     62            92
   Research and development                                                39            81
   General and administrative                                              24            30
   Amortization of Intangibles                                             38            --
   Stock compensation expense                                               2            27
----------------------------------------------------------------------------------------------------
      Total operating expenses                                            165           230
----------------------------------------------------------------------------------------------------

Loss from operations                                                      (87)         (148)

Other income (loss), net                                                    7            (4)
----------------------------------------------------------------------------------------------------
Net loss                                                                  (80%)        (152%)
====================================================================================================
</TABLE>


                                       10

<PAGE>   11


RESULTS OF OPERATIONS FOR THE QUARTERS ENDED MARCH 31, 2000 AND MARCH 31, 1999

REVENUES

Total revenues. Our revenues increased 401% to $9.5 million in the quarter ended
March 31, 2000, from $1.9 million in the first quarter of 1999. The increase in
total revenues is primarily the result of increased sales of our cornerstone
product, Net Perceptions for E-commerce and, to a lesser extent, increased sales
of our Net Perceptions for Call Centers and Net Perceptions for Knowledge
Management products, both of which were introduced in 1999.

Revenues from sales in the United States were $5.9 million in the first quarter
of 2000 compared to $1.6 million in the first quarter of 1999, representing 62%
and 83% of total revenues, respectively. Revenues from international sales were
$3.6 million in the first quarter of 2000 compared to $320,000 in the first
quarter of the prior year, representing 38% of total revenues in 2000 and 17% in
1999. The majority of international sales were made in Europe and Asia by our
direct sales force located in the United States and the United Kingdom.
International sales are generally denominated in United States dollars.
Purchases by one customer represented 11% of our revenues in 1999. We do not
expect any single customer to account for 10% or more of total revenues in 2000.

Product revenues. Product revenues increased 382% to $7.5 million in the first
quarter of 2000 compared to $1.6 million for same period in the prior year.
While we continue to derive the majority of our product revenues from our Net
Perceptions for E-commerce product, we achieved significant product
diversification during the first quarter. In the first quarter of 2000, 61% of
product revenue was derived from our E-Commerce product, compared to 85% in the
first quarter of the prior year. The growth of product revenues in absolute
dollars is attributable to an increase in the average size of license
transactions recognized, increased sales and marketing efforts, specifically the
expansion of our direct sales force, and increased sales volumes of our
products. We anticipate that revenues from product licenses will continue to
represent the majority of our total revenues in the foreseeable future. In
addition, we expect that prior percentage growth rates of our product revenues
will not be sustainable in the future.

Service and maintenance revenues. Service and maintenance revenues consist
primarily of professional and maintenance services. Our professional service
revenues include business consulting, implementation support and educational
services and are generally offered on a time and material basis. Maintenance
revenues are generally derived from annual service agreements and are recognized
ratably over the period of the agreement. Total service and maintenance revenues
increased 489% to $2.0 million in the first quarter of 2000 from $334,000 in the
first quarter of 1999. Service and maintenance revenues were 21% of total
revenues in the first quarter of 2000 compared to 18% in the first quarter of
1999.

Professional service revenues increased 668% to $1.2 million in the first
quarter of 2000 from $151,000 in 1999. Professional service revenues were 59% of
total service and maintenance revenues in the first quarter of 2000 and 45% in
the prior year. The increase in professional service revenues in 2000 is a
result of higher product sales volumes and additional personnel in our
professional services group. Our professional service revenues as a percentage
of total revenues may decline to the extent our strategy of developing alliances
with systems integrators continues to expand. Maintenance revenues increased
340% to $805,000 in the first quarter of 2000 from $183,000 in 1999.

Maintenance revenues were 41% of total service and maintenance revenues in the
first quarter of 2000 compared to 55% in the prior year. The increase in
maintenance revenues is a result of expanded product sales and corresponding
maintenance fees relating to a larger installed base of software licenses. Our
maintenance revenues as a percentage of total revenues may continue to increase
as the installed license base increases.

COST OF REVENUES

Cost of product revenues. Cost of product revenues consists primarily of the
cost of royalties paid to third-party vendors, amortization of acquired
technology costs, product media and duplication, manuals, packaging materials
and shipping expenses. Cost of product revenues increased 661% to $274,000 in
the first quarter of 2000 from $36,000 for the first quarter of 1999,
representing 3% and 2% of the related product revenues, respectively. The
increase in cost of product revenues in absolute dollars and as a percentage of
total product revenues from 1999 to 2000 is primarily attributable to
amortization of acquired technology in connection with the acquisition of KD1.
Because all development costs incurred in the research and development of new
software products and enhancements to existing software products have been
expensed as incurred, cost of product revenues includes no amortization of
capitalized software development costs. We believe that the cost of product
revenues will increase in dollar amounts and as a percentage of product revenues
in the future.


                                       11

<PAGE>   12

Cost of service and maintenance revenues. Cost of service and maintenance
revenues consists primarily of personnel-related costs incurred in providing
telephone and Web-based support, as well as professional and educational
services to customers. Cost of service and maintenance revenues increased 478%
to $1.8 million in the first quarter of 2000, from $313,000 in the first quarter
of the prior year, representing 92% and 94% of the related services and
maintenance revenues, respectively. The increase in cost of services and
maintenance revenues in absolute dollars, and as a percentage of revenues, is
due primarily to recruiting and training costs associated with increased
personnel in our service organization, as well as to increased costs for
third-party contractors used to staff consulting engagements. We believe that
the cost of service and maintenance revenues will increase in dollar amounts in
the future as we expand our service capacity to meet anticipated demand. In
addition, cost of service and maintenance revenues may vary significantly from
quarter to quarter depending upon the mix of services that we provide and the
utilization rate of our service personnel.

OPERATING EXPENSES

Sales and marketing. Sales and marketing expenses consist primarily of salaries,
other employee related costs, commissions and other incentive compensation,
travel and entertainment and expenditures for marketing programs such as
collateral materials, trade shows, public relations and creative services. Sales
and marketing expenses were $5.9 million in the first quarter of 2000 compared
to $1.7 million in the first quarter of 1999, an increase of 240%. Sales and
marketing expenses were 62% and 92% of total revenues in the first quarters of
2000 and 1999, respectively. The overall increase in sales and marketing
expenses in absolute dollar amounts reflects the cost of hiring additional sales
and marketing personnel, developing and expanding our sales and distribution
channels, launching new products and expanding promotional activities. We
believe that sales and marketing expenses will continue to increase in absolute
dollar amounts in the future as we continue to expand our direct sales and
marketing efforts for all of our product lines.

Research and development. Research and development expenses consist primarily of
salaries, other employee related costs and consulting fees relating to the
development of our products. Research and development expenses were $3.7 million
in the first quarter of 2000, an increase of 138% from the $1.5 million in
research and development expenses in the first quarter of 1999. Research and
development expenses were 39% and 81% of total revenues in the first quarters of
2000 and 1999, respectively. The increase in research and development expenses
in absolute dollars is primarily due to the cost of hiring additional research
and development personnel for the enhancement of existing products and the
development of new products. We believe that continued investment in research
and development is critical to attaining our strategic objectives and, as a
result, expect research and development expenses to increase in absolute dollars
in future periods.

General and administrative. General and administrative expenses consist
primarily of salaries, other employee related costs and professional service
fees. General and administrative expenses were $2.3 million in the first quarter
of 2000, an increase of 294% from $574,000 in the first quarter of the prior
year. General and administrative expenses were 24% and 30% of total revenues in
the first quarters of 2000 and 1999, respectively. The overall increase in
general and administrative expenses in absolute dollar amounts reflects the cost
of hiring additional general and administrative personnel, increased
professional fees, additional provision for doubtful accounts and additional
infrastructure to support our expanding operations. We expect to continue to add
administrative staff to support broadened operations. As a result, general and
administrative expenses will increase in absolute dollar amounts in the future.

Amortization of intangibles. Amortization of intangibles, related to goodwill
and other intangibles acquired in the acquisition of KD1, was $3.6 million for
the first quarter of 2000, or 38% of total revenues. Total amortization charges
will be approximately $7.6 million per quarter for the balance of 2000, with
amortization charges continuing into early 2004.

Stock compensation. Compensation charges related to granted stock options were
$193,000 in the first quarter of 2000 and $503,000 in the first quarter of 1999,
representing 2% and 27% of total revenues, respectively. These amounts represent
the difference between the exercise price of certain stock option grants and the
deemed fair value of the common stock at the time of the grants. Stock
compensation expense is recognized over the vesting period of the options, which
is generally four years. As a result, the recognition of stock compensation will
impact our reported results of operations through early 2003.

Other income (loss), net. Other income (loss), net consists of interest income,
interest expense, equity losses or gains of a joint venture and other expense
and was $649,000 in the first quarter of 2000, compared to other expense of
$72,000 in the first quarter of the prior year. Other income (loss), net
increased substantially due to interest income on the proceeds

                                       12

<PAGE>   13


from our initial public offering in April 1999. Other expense in the prior year
consisted primarily of interest expense on a convertible note payable.

PROVISION FOR INCOME TAXES

We have incurred significant operating losses for all periods from inception
through March 31, 2000. As of December 31, 1999, we had net operating loss
carryforwards of approximately $18.1 million available to reduce future taxable
income expiring at various dates beginning in 2011. In addition, as of December
31, 1999, we had $140,000 of tax credit carryforwards expiring at various dates
beginning in 2011. Under the provisions of the Internal Revenue Code, certain
substantial changes in our ownership may limit in the future the amount of net
operating loss and tax credit carryforwards that could be utilized annually to
offset future taxable income.

We have recorded a valuation allowance for the full amount of our net deferred
tax assets, as the realization of the future tax benefit is presently not
likely.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, Net Perceptions has financed its operations primarily through
the sale of equity securities, and to a lesser extent, loans and capital
equipment leases. At March 31, 2000, we had $120.1 million of cash, cash
equivalents and short-term investments, compared to $43.2 million at December
31, 1999. In March 2000, we completed a public stock offering, selling 2,000,000
shares of common stock at a price of $45.25 per share, raising a total of $84.8
million in net proceeds after payment of underwriting discounts and commissions
and estimated offering expenses. Cash used in operations was $3.9 million in the
first quarter of 2000 compared to $2.0 million in the first quarter of 1999.
Cash used in operations resulted primarily from net losses, pay down of accounts
payable, and increases in our accounts receivable, offset in part by growth in
accrued liabilities, deferred revenues and non-cash expenses, particularly
depreciation and amortization.

We generated $6.4 million in net cash from investing activities in the first
quarter of 2000 compared to a use of $626,000 in investing activities in the
first quarter last year. Our investing activities consisted primarily of
purchases and sales of short-term investments and property and equipment. To
date, we have not invested in financial instruments that involve a high level of
complexity or risk. We expect that, in the future, cash in excess of current
requirements will be continue to be invested in investment grade, interest
bearing securities.

Net cash provided by financing activities was $82.9 million in the first quarter
of 2000, reflecting the receipt of stock offering net proceeds of $84.8 million.
Cash provided by financing activities was $4.0 million in the first quarter of
1999, reflecting borrowings under a short-term convertible note payable.

Capital expenditures were $2.0 million in the first quarter of 2000 compared to
$626,000 for the first quarter of 1999. Our capital expenditures consisted of
leasehold improvements and purchases of property and equipment, primarily
computer equipment and software, for our growing employee base. Since 1999, we
have purchased property and equipment with cash balances. From inception through
1998, we generally funded the purchase of property and equipment with capital
leases. At March 31, 2000, we had approximately $1.3 million in current and
non-current loans, including $1.1 million in current and non-current capital
lease obligations. This amount includes installment loans with third-party
financing sources that are secured by the equipment financed by the third
parties. The loans bear interest at rates between 14.4% and 16.8% and mature
between November 2000 and August 2002.

Although we have no material long-term commitments for capital expenditures, we
anticipate substantial increases in our operating expenses, capital
expenditures, facilities and lease commitments consistent with anticipated
growth in operations, infrastructure and personnel. In April the company signed
a ten year lease for a new corporate facility. As a result, we will incur
increased rent expense in the future. The move to the new facility will be
completed in the summer of 2000 and will require an investment of approximately
$2.5 million in leasehold improvements, furniture and equipment. We intend to
fund this planned increase in operating expenses and capital expenditures with
the proceeds of our public offering, as well as with existing cash, cash
equivalents and short-term investments. We believe that these funds will be
sufficient to meet our working capital needs for at least the next 12 months.
However, we may need to raise additional funds in order to support more rapid
expansion of our sales force, develop new or enhanced products or services,
respond to competitive pressures, acquire complementary businesses or
technologies or respond to unanticipated requirements. If we seek to raise
additional funds, we may not be able to obtain funds on terms which are
favorable or otherwise acceptable to us. If we raise additional funds through
the issuance of equity securities, the percentage ownership of our stockholders
would be reduced.


                                       13

<PAGE>   14

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Through March 31, 2000 substantially all of our recognized revenues were
denominated in United States dollars and primarily from customers in the United
States, and our exposure to foreign currency exchange rate changes has been
immaterial. We expect, however, that future product license and service revenues
may also be derived from international markets and may be denominated in the
currency of the applicable market. As a result, our operating results may become
subject to significant fluctuations based upon changes in the exchange rates of
certain currencies in relation to the United States dollar. Furthermore, to the
extent that we engage in international sales denominated in United States
dollars, an increase in the value of the United States dollar relative to
foreign currencies could make our products less competitive in international
markets. Although we will continue to monitor our exposure to currency
fluctuations, and, when appropriate, may use financial hedging techniques in the
future to minimize the effect of these fluctuations, exchange rate fluctuations
may adversely affect our financial results in the future.

Our exposure to market risk is otherwise limited to interest income sensitivity,
which is affected by changes in the general level of United States interest
rates, particularly because the majority of our investments are in short-term
debt securities issued by corporations. We place our investments with
high-quality issuers and limit the amount of credit exposure to any one issuer.
Due to the nature of our short-term investments, we believe that we are not
subject to any material market risk exposure. We do not have any derivative
financial instruments.

                                       14

<PAGE>   15


PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         We are not currently a party to any material legal proceedings.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

(c)  During the quarter ended March 31, 2000, we issued and sold 1,969,630
     shares of common stock in connection with our acquisition of KD1. The
     issuance of these securities was deemed to be exempt from registration
     under the Securities Act (the "Act") in reliance on section 4(2) of Act as
     a transaction by an issuer not involving any public offering.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

           None.

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

           None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     Exhibit 2.1**. Agreement and Plan of Merger, dated as of January 15, 2000,
     as amended February 3, 2000, by and among Net Perceptions, Inc., Kentucky
     Acquisition Corporation and Knowledge Discovery One, Inc.

     Exhibit 3.1*. Amended and Restated Certificate of Incorporation.

     Exhibit 3.2*. Amended and Restated Bylaws.

     Exhibit 4.1*. Amended and Restated Investor Rights Agreement, dated
     December 18, 1997, among Net Perceptions, Inc. and the investors and
     founders named therein, as amended.

     Exhibit 4.2**. Registration Rights Agreement, dated February 14, 2000, by
     and among Net Perceptions, Inc. and the stockholders named therein.

     Exhibit 4.3*. Specimen Common Stock Certificate.

     Exhibit 10.1. Office Lease Agreement between DRF Holdings LLC and Net
     Perceptions, Inc. dated April 5, 2000.

     Exhibit 10.2**. Knowledge Discovery One, Inc. 1996 Stock Option/Stock
     Issuance Plan.

     Exhibit 27. Financial Data Schedule.
     ===========================================================================

     * Incorporated by reference to Net Perceptions' Registration Statement on
     Form S-1 (Registration No. 333-71919).

     ** Incorporated by reference to Net Perceptions' Registration Statement on
     Form S-1 (Registration No. 333-31230).


                                       15
<PAGE>   16


(b)  Reports on Form 8-K

     One report on Form 8-K was filed by Net Perceptions during the quarter
     ended March 31, 2000. This filing was made under Item 2 of Form 8-K in
     connection with the Company's acquisition of Knowledge Discovery One, Inc.


                                       16

<PAGE>   17




                                   SIGNATURES

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

                                 NET PERCEPTIONS, INC.



     Date:  May 15, 2000         By:  /s/ Thomas M. Donnelly
                                    ------------------------
                                      Thomas M. Donnelly
                                      Chief Financial Officer

                                      (Duly authorized officer and
                                      principal financial and accounting
                                      officer)

                                       17

<PAGE>   18


                              NET PERCEPTIONS, INC.
                                    FORM 10-Q


                      FOR THE QUARTER ENDED MARCH 31, 2000


                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------------------------------
      Exhibit Number                                        Description of Exhibit
-------------------------------------------------------------------------------------------------------------------
<S>                             <C>

          2.1**                 Agreement and Plan of Merger, dated as of January 15, 2000, as amended February
                                3, 2000, by and among Net Perceptions, Inc., Kentucky Acquisition Corporation and
                                Knowledge Discovery One, Inc.
-------------------------------------------------------------------------------------------------------------------
           3.1*                 Amended and Restated Certificate of Incorporation.
-------------------------------------------------------------------------------------------------------------------
           3.2*                 Amended and Restated Bylaws.
-------------------------------------------------------------------------------------------------------------------
           4.1*                 Amended and Restated Investor Rights Agreement, dated December 18, 1997, among Net
                                Perceptions, Inc. and the investors and founders named therin, as amended.
-------------------------------------------------------------------------------------------------------------------
          4.2**                 Registration  Rights  Agreement,  dated  February  14,  2000,  by  and  among  Net
                                Perceptions, Inc. and the stockholders named therein.
-------------------------------------------------------------------------------------------------------------------
           4.3*                 Specimen Common Stock Certificate.
-------------------------------------------------------------------------------------------------------------------
           10.1                 Office Lease Agreement  between DRF Holdings LLC and Net Perceptions,  Inc., dated
                                April 5, 2000 (filed herewith).
-------------------------------------------------------------------------------------------------------------------
          10.2**                Knowledge Discovery One, Inc. 1996 Stock Option/Stock Issuance Plan.
-------------------------------------------------------------------------------------------------------------------
            27                  Exhibit 27.  Financial Data Schedule (filed herewith).
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
                             *  Incorporated by reference to Net Perceptions' Registration Statement on Form S-1
                                (Registration No. 333-71919).
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
                            **  Incorporated by reference to Net Perceptions' Registration
                                Statement on Form S-1 (Registration No. 333-31230).
-------------------------------------------------------------------------------------------------------------------

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

-------------------------------------------------------------------------------------------------------------------
</TABLE>



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