================================================================================

                                  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 June 30, 2001

                                       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 00025683

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

                Delaware                            77-0422318
        (State of incorporation)         (IRS Employer Identification No.)


                440 Clyde Avenue, Mountain View, California 94043
          (Address of principal executive offices, including ZIP code)

                                 (650) 930-5282
              (Registrant's telephone number, including area code)

                                      None
                 (Former name, former address and former fiscal
                      year, if changed since last report)

         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)  Yes X No   , and (2) has been
subject to such filing requirements for the past 90 days. Yes X No  .

         The number of shares outstanding of the Registrant's Common Stock as of
July 20, 2001 was 24,058,198.

================================================================================

<PAGE>

<TABLE>
                                           MARIMBA, INC.

                                               INDEX
<CAPTION>
                                                                                             Page No.
                                                                                             -------
<S>                                                                                              <C>
Part I.  Financial Information

Item 1.       Financial Statements

              Condensed Consolidated Balance Sheets as of June 30, 2001
              and December 31, 2000                                                               1

              Condensed Consolidated Statements of Operations and
              Comprehensive Income (Loss) for the Three and Six Months Ended
              June 30, 2001 and 2000                                                              2

              Condensed Consolidated Statements of Cash Flows for the
              Six Months Ended June 30, 2001 and 2000                                             3

              Notes to Condensed Consolidated Financial Statements                                4

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

Item 3.       Qualitative and Quantitative Disclosure About Market Risk                          17

Part II.  Other Information

Item 1.       Legal Proceedings                                                                  19

Item 2.       Changes in Securities and Use of Proceeds                                          19

Item 3.       Defaults Upon Senior Securities                                                    19

Item 4.       Submission of Matters to a Vote of Security Holders                                19

Item 5.       Other Information                                                                  20

Item 6.       Exhibits and Reports on Form 8-K                                                   20

Signature                                                                                        21

Exhibit Index                                                                                    22


<PAGE>


2

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                                  MARIMBA, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)




                                                                                     June 30,      December 31,
                                                                                       2001            2000
                                                                                    ---------      ------------
                                                                                   (unaudited)         (1)

ASSETS
Current assets:
     Cash and cash equivalents............................................           $ 30,973      $ 33,122
     Short-term investments...............................................             25,254        31,407
     Accounts receivable, net.............................................              7,704        12,500
     Note receivable from officer.........................................               782           --
     Prepaid expenses and other current assets............................              1,396         1,599
                                                                                     --------      --------
          Total current assets............................................             66,109        78,628
Property and equipment, net...............................................              4,786         4,274
Long-term investments.....................................................              5,654         4,146
Other assets..............................................................                360           360
                                                                                     --------      --------
                                                                                     $ 76,909      $ 87,408
                                                                                     ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued liabilities.............................           $  1,757      $  2,881
     Accrued compensation.................................................              3,369         4,055
     Deferred revenue.....................................................             11,046        13,516
                                                                                     --------      --------
          Total current liabilities.......................................             16,172        20,452

Long-term liabilities.....................................................                225           153

Stockholders' equity:
     Common stock.........................................................                  2             2
     Additional paid-in capital...........................................             98,238        97,222
     Deferred compensation................................................               (728)       (1,882)
     Cumulative translation adjustment....................................                (48)          (42)
     Unrealized gain on investments.......................................                110            33
     Accumulated deficit..................................................            (37,062)      (28,530)
                                                                                     --------      --------
          Stockholders' equity............................................             60,512        66,803
                                                                                     --------      --------
                                                                                     $ 76,909      $ 87,408
<FN>
    (1) The balance sheet at December  31,2000 has been derived from the audited
consolidated  financial  statements  at that date,  but does not include all the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements.
</FN>
</TABLE>
                                       1

                             See accompanying notes.


<PAGE>

<TABLE>
                                                    MARIMBA, INC.

                                   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                           AND COMPREHENSIVE INCOME (LOSS)
                                      (in thousands, except per share amounts)
<CAPTION>


                                                                     Three Months Ended          Six Months Ended
                                                                          June 30,                   June 30,
                                                                  ----------------------     -----------------------
                                                                     2001         2000          2001           2000
                                                                  ---------     --------     ---------     ---------
                                                                         (unaudited)                (unaudited)
<S>                                                                <C>           <C>         <C>            <C>
Revenues:
     License.................................................      $  8,281      $  9,163    $  15,264      $ 17,224
     Service.................................................         3,904         2,953        7,925         5,459
                                                                   --------      --------    ---------      --------
Total revenues...............................................        12,185        12,116       23,189        22,683
Cost of revenues:
     License.................................................           137           195          260           327
     Service.................................................         1,462           922        3,327         1,813
                                                                   --------      --------    ---------      --------
Total cost of revenues.......................................         1,599         1,117        3,587         2,140
                                                                   --------      --------    ---------      --------
Gross profit.................................................        10,586        10,999       19,602        20,543
Operating expenses:
     Research and development................................         2,711         2,476        5,966         5,018
     Sales and marketing.....................................         9,059         6,710       17,928        13,624
     General and administrative..............................         1,781         1,475        3,907         2,821
     Restructuring costs.....................................           789          --            789           --
     Amortization of deferred compensation...................           526           205        1,118           542
                                                                   --------      --------    ---------      --------
Total operating expenses.....................................        14,866        10,866       29,708        22,005
                                                                   --------      --------    ---------      --------
Income (loss) from operations................................        (4,280)          133      (10,106)       (1,462)
Interest income, net ........................................           651         1,150        1,682         2,204
                                                                   --------     ---------    ---------      --------
Income (loss) before income taxes............................        (3,629)        1,283       (8,424)          742
Provision for income taxes...................................            87            31          108           149
                                                                   --------      --------    ---------      --------
Net income (loss)............................................      $ (3,716)     $  1,252    $  (8,532)     $    593
                                                                   ========      ========    =========      ========

Other comprehensive income (loss):
     Translation adjustment..................................             5           (12)          (6)          (17)
     Unrealized gain (loss) on investments...................           (20)           66           77            42
                                                                   --------      --------    ---------      --------
Comprehensive income (loss)..................................      $ (3,731)     $  1,306    $  (8,461)     $    617
                                                                   ========      ========    =========      ========

Basic earnings (loss) per share..............................      $   (.16)     $    .05    $    (.36)     $    .03
                                                                   ========      ========    =========      ========
Diluted earnings (loss) per share............................      $   (.16)     $    .05    $    (.36)     $    .02
                                                                   ========      ========    =========      ========

Shares used in per share calculation - basic                         23,708        23,142       23,642        23,068
                                                                   ========      ========    =========      ========
Shares used in per share calculation - diluted                       23,708        24,739       23,642        24,950
                                                                   ========      ========    =========      ========
<FN>
                                               See accompanying notes.
</FN>
</TABLE>
                                                         2

<PAGE>

<TABLE>
                                  MARIMBA, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<CAPTION>

                                                                        Six Months Ended
                                                                            June 30,
                                                                     ---------------------
                                                                       2001         2000
                                                                     --------     --------
                                                                           (unaudited)

<S>                                                                  <C>         <C>
Operating activities:
Net income (loss)...............................................     $ (8,532)   $     593
Adjustments to reconcile net loss to net cash used in
Adjustments to reconcile net income (loss) to net cash used in
  operating activities:
     Depreciation and amortization..............................        1,045          775
     Amortization of deferred compensation......................        1,118          542
     Other......................................................           (5)         (19)
     Changes in operating assets and liabilities:
       Accounts receivable, net.................................          943       (5,172)
       Note receivable from officer.............................         (782)          --
       Prepaid expenses and other current assets................          203           49
       Other assets.............................................           --         (298)
       Accounts payable and accrued liabilities.................       (1,124)        (979)
       Accrued compensation.....................................         (686)         443
       Long-term liabilities....................................           72           --
       Deferred revenue.........................................       (2,470)       3,320
                                                                     --------    ---------
          Net cash used in operating activities.................      (10,218)        (746)
                                                                     --------    ---------

Investing activities:
Capital expenditures............................................       (1,556)      (1,033)
Purchases of investments........................................      (35,033)     (17,245)
Sales of investments............................................       39,755       31,850
                                                                     --------    ---------
          Net cash provided by (used in) investing activities...        3,166      (13,572)
                                                                     --------    ---------
Financing activities:
Proceeds from issuance of common stock, net of repurchases......        1,050        1,218
Proceeds from transfer of financial assets.....................         3,853           --
Principal payments under capital lease obligations..............           --          (49)
                                                                     --------    ---------
          Net cash provided by financing activities.............        4,903        1,169
                                                                     --------    ---------
Net increase (decrease) in cash and cash equivalents............       (2,149)      13,995
Cash and cash equivalents at beginning of period................       33,122       22,263
                                                                     --------    ---------
Cash and cash equivalents at end of period......................     $ 30,973    $  36,258
                                                                     ========    =========

Supplemental disclosure of noncash investing and financing
   activities

       Deferred compensation reduction due to cancelled shares       $     36    $      --
                                                                     ========    =========
<FN>
                             See accompanying notes.
</FN>
</TABLE>


                                         3

<PAGE>

                                  MARIMBA, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



1.    Basis of Presentation

    The accompanying  unaudited condensed consolidated financial statements have
been prepared by Marimba, Inc. ("Marimba",  the "Company",  "we", "our" or "us")
and reflect all adjustments,  consisting only of normal  recurring  adjustments,
which in the opinion of management are necessary to present fairly the financial
position  and the results of  operations  for the interim  periods.  The balance
sheet at December 31, 2000 has been derived from audited financial statements at
that date. The financial  statements  have been prepared in accordance  with the
regulations  of  the  Securities  and  Exchange  Commission,  but  omit  certain
information  and  footnote  disclosure  necessary to present the  statements  in
accordance  with  generally   accepted   accounting   principles.   For  further
information,  refer to the Consolidated  Financial  Statements and Notes thereto
included in Marimba's Annual Report on Form 10-K for the year ended December 31,
2000  filed with the  Securities  and  Exchange  Commission  on March 28,  2001.
Results for the interim  periods are not  necessarily  indicative of results for
the fiscal year ending  December 31, 2001 or for any future interim or full-year
period.

Net Loss Per Share

    Basic  and  diluted  net  loss  per  share  have  been  computed  using  the
weighted-average number of shares of common stock outstanding during the period,
less shares subject to repurchase.
<TABLE>
    The following  table presents the  calculation of basic and diluted net loss
per share:
<CAPTION>
                                                                    Three Months Ended           Six Months Ended
                                                                         June 30,                    June 30,
                                                                --------------------------  ------------------------
                                                                    2001           2000         2001         2000
                                                                ------------  ------------  ------------  ----------
                                                                        (in thousands, except per share data)

<S>                                                                <C>           <C>          <C>          <C>
Net income (loss)......................................            $(3,716)      $ 1,252      $(8,532)     $   593
                                                                   =======       =======      =======      =======

Weighted-average shares - Basic:
Weighted-average shares of common stock outstanding                 23,909        23,301       23,810       23,279
   Less weighted-average shares subject to repurchase..               (201)         (159)        (168)        (211)
                                                                   -------       -------      -------      -------
        Weighted-average shares - Basic................             23,708        23,142       23,642       23,068

Effect of dilutive securities: Employee stock options..                 --         1,597           --        1,882
                                                                   -------       -------      -------      -------


Weighted average shares - diluted......................             23,708        24,739       23,642       24,950
                                                                   =======       =======      =======      =======

Net income (loss) per share - Basic....................            $  (.16)      $   .05      $  (.36)     $   .03
                                                                   =======       =======      =======      =======
Net income (loss) per share -Diluted...................            $  (.16)      $   .05      $  (.36)     $   .02
                                                                   =======       =======      =======      =======
</TABLE>
    Weighted-average  options  outstanding  to purchase  6,924,000 and 6,793,000
shares of common stock for the three and six months ended June 30, 2001 were not
included in the  computation  of diluted net loss per share,  because the effect
would be antidilutive.  Such securities, had they been dilutive, would have been
included in the  computation  of diluted  net loss per share using the  treasury
stock method.

Revenue Recognition

    License revenues are comprised of perpetual or multiyear  license fees which
are primarily  derived from contracts  with  corporate  customers and resellers.
Such revenues are recognized  after execution of a license  agreement or receipt
of a  definitive  purchase  order,  and  delivery  of the  product  to  end-user
customers,   provided  that  there  are  no  uncertainties  surrounding  product
acceptance,  the  license  fees are  fixed or  determinable,  collectibility  is
probable and Marimba has no remaining obligations with regard to installation or
implementation  of the software.  Revenue on arrangements with customers who are
not the ultimate users (primarily resellers) is not recognized until the product
is


                                       4
<PAGE>

delivered  to the end  user.  If the fee due from the  customer  is not fixed or
determinable, revenue is recognized as payments become due from the customer. If
collectibility is not considered probable, revenue is recognized when the fee is
collected.  Advance payments are recorded as deferred revenue until the products
are shipped,  services are provided,  or obligations are met. Marimba's products
do not require significant customization.

    Revenue recognized from multiple-element software arrangements are allocated
to each element of the arrangement based on the fair value of the elements, such
as software  products,  maintenance and support,  and consulting  services.  The
determination of fair value is based on objective evidence, which is specific to
Marimba.

    Service  revenues  are  comprised of revenue  from  maintenance  agreements,
consulting  fees and training  fees.  Software  maintenance  agreements  provide
technical  support  and the  right to  unspecified  upgrades  on an  if-and-when
available basis.

    Service revenues from training and consulting are recognized upon completion
of the work to be performed. Revenue from maintenance agreements is deferred and
recognized  on a  straight-line  basis over the life of the  related  agreement,
which is typically one year.

Revenue Concentration

   Two  customers  accounted  for 21% and 16% of total  revenues  in the  second
quarter of 2001. In the second quarter of 2000,  three  customers  accounted for
21%, 16% and 13% of  revenues.  In the first six months of 2001,  two  customers
accounted for 13% and 11% of revenues, and in the comparable period of 2000, two
customers accounted for 13% and 12% of revenues.

Financing

   In June 2001, Marimba entered into a $5 million receivables purchase facility
with a  bank,  pursuant  to  which  Marimba  may  transfer  qualifying  accounts
receivables to the bank on a non-recourse  basis. The purchase facility with the
bank expires in June 2002.  Transfers  under this facility are recorded as sales
and  accounted for in accordance  with SFAS 140,  "Accounting  for Transfers and
Servicing of Financial Assets and  Extinguishments  of Liabilities."  During the
second quarter of 2001,  Marimba  transferred  to the bank accounts  receivables
totaling approximately $3.9 million, which approximated fair value. Transfers of
accounts receivables for cash are reported in the consolidated statement of cash
flows as a financing activity.

2.   Legal Matters

Securities Litigation

   Beginning in late April 2001, a number of identical  class action  complaints
alleging  violations  of the  federal  securities  laws were filed in the United
States  District  Court for the  Southern  District of New York naming  Marimba,
Inc.,  certain of its officers and directors,  and certain  underwriters  of the
company's  initial public offering  (Morgan  Stanley & Co., Inc.,  Credit Suisse
First Boston Corp. and Bear Stearns & Co.,  Inc.) as defendants.  The complaints
allege,  among other things,  that the  underwriters  of the  company's  initial
public  offering  violated the  securities  laws by failing to disclose  certain
alleged  compensation  arrangements  (such as  undisclosed  commissions or stock
stabilization  practices) in the offering's registration statement.  Marimba and
certain of its officers and  directors are named in the  complaints  pursuant to
Section 11 of the Securities Act of 1933, and one of such complaints  includes a
claim against Marimba and such officers and directors under Section 10(b) of the
Securities Exchange Act of 1934. Similar complaints have been filed against more
than 90 other issuers that have had initial public offerings since 1998. Marimba
anticipates  that  the  actions  described  above,  and any  additional  related
complaints  that may be filed,  will be  consolidated  into a single action.  We
intend  to  defend  these  actions  vigorously.  However,  due to  the  inherent
uncertainties of litigation,  we cannot accurately  predict the ultimate outcome
of the  litigation.  Any unfavorable  outcome of this  litigation  could have an
adverse impact on our business, financial condition and results of operations.

Beck Systems vs. Marimba

     On July 6, 2001, Beck Systems, Inc. filed a complaint against Marimba, Inc.
and two of its  customers in the United States  District  Court for the Northern
District of Illinois, alleging infringement of two patents held by Beck Systems.
Beck Systems alleges that Marimba's  infringement relates to the manufacture and
marketing of its desktop/mobile


                                       5

<PAGE>

management  and  server  management  products.  We intend  to  defend  this suit
vigorously.  However, due to the inherent uncertainties of litigation, we cannot
accurately predict the ultimate outcome of the litigation, particularly in cases
such as this where  sophisticated  factual  issues must be assessed  and complex
technical  issues must be decided.  Any  unfavorable  outcome of this litigation
could have an adverse impact on our business, financial condition and results of
operations.

3.   Recent Accounting Pronouncements

    In June 1998, the Financial  Accounting  Standards Board issued FAS No. 133,
"Accounting for Derivative  Instruments and Hedging Activities" ("FAS 133"). FAS
133, as amended,  establishes  methods of accounting  for  derivative  financial
instruments and hedging activities related to those instruments as well as other
hedging  activities.  We adopted FAS 133 effective  January 1, 2001.  Because we
currently hold no derivative  financial  instruments and do not currently engage
in hedging  activities,  we do not  believe  that the  adoption  of FAS 133,  as
amended,  will have a significant impact on our financial condition,  results of
operations or cash flows.

      In July 2001, the FASB issued Statement of Financial  Accounting Standards
No. 141, Business  Combinations ("SFAS 141"). SFAS 141 establishes new standards
for accounting  and reporting  business  combinations  and will require that the
purchase  method of accounting be used for all business  combinations  initiated
after June 30, 2001. Use of the pooling-of-interests  method will be prohibited.
We expect to adopt this  statement  during the first quarter of fiscal 2002, and
we do not  believe  that SFAS 141 will have a material  effect on our  operating
results or financial positions.

      In July 2001, the FASB issued Statement of Financial  Accounting Standards
No. 142, Goodwill and Other Intangible Assets ("SFAS 142"), which supersedes APB
Opinion No. 17,  Intangible  Assets.  SFAS 142  establishes  new  standards  for
goodwill, including the elimination of goodwill amortization to be replaced with
methods of periodically  evaluating goodwill for impairment.  We expect to adopt
this  statement  during the first quarter of fiscal 2002,  and we do not believe
that SFAS 142 will have a material effect on our operating  results or financial
position.

4.   Restructuring

    On April 26, 2001, Marimba announced a restructuring plan. The plan involved
the  elimination  of  approximately  20% of the  workforce,  or 60 employees and
independent contractors across all company departments. In addition, Marimba has
implemented a number of cost cutting initiatives,  including the cancellation of
certain discretionary marketing programs,  suspension of executive cash bonuses,
reduction of executive  salaries,  and the  discontinuation of Marimba.net,  our
managed service provider division.  Marimba recorded a charge of $789,000 in the
second quarter of 2001 related to the  restructuring  plan,  which  consisted of
personnel  costs of $583,000,  facilities  and  equipment  costs of $136,000 and
other costs of $70,000.

5.   Stock Option Exchange

     During  the  period  from  April 27 to July 23,  2001,  Marimba  offered  a
voluntary  stock  option  exchange  program  to its  employees,  and a total  of
1,369,500  shares of the Marimba's Common Stock were accepted for exchange under
the  program.  Members of our Board of  Directors  and our  executive  officers,
however,  were not eligible to  participate  in the program.  Under the program,
Marimba  employees  were  given the  opportunity,  if they so  chose,  to cancel
outstanding stock options  previously granted to them at an exercise price of at
least $7.50 per share, in exchange for new options to be granted no earlier than
six months and one day after July 23,  2001;  provided,  however,  that  options
granted on or after  January 23, 2001 (even if they had an exercise  price under
$7.50 per share) had also to be exchanged if the option holder chose to exchange
one or more options granted prior to January 23, 2001 at an exercise price of at
least  $7.50 per share.  The number of shares  subject to the new  options  were
determined by applying an exchange  ratio in the range of 1:1 to 1:2 (i.e.,  one
new option share for every two  canceled  option  shares)  based on the exercise
price of the canceled  option.  The exercise  price of these new options will be
equal to the closing price of our common stock on the Nasdaq  National Market on
the date the new options  are  granted.  The  exchange  program was  designed to
comply with FAS  Interpretation  No. 44  "Accounting  for  Certain  Transactions
Involving  Stock  Compensation"  and is not expected to result in any additional
compensation charges or variable plan accounting.


                                       6

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

      The information in this report contains forward-looking  statements within
the meaning of Section 27A of the  Securities Act of 1933 and Section 21E of the
Securities Act of 1934, each as amended.  Such statements are based upon current
expectations  that involve risks and  uncertainties.  Any  statements  contained
herein  that  are  not  statements  of  historical  fact  may  be  deemed  to be
forward-looking  statements.  For example, the words "believes,"  "anticipates,"
"plans,"  "expects,"  "intends" and similar expressions are intended to identify
forward-looking  statements.  Marimba's actual results and the timing of certain
events  may   differ   significantly   from  the   results   discussed   in  the
forward-looking statements. Factors that might cause such a discrepancy include,
but are not limited to, those  discussed in "Other Factors  Affecting  Operating
Results,  Liquidity and Capital Resources" below.  Additional  information about
factors  that could affect  future  results and events is included in our fiscal
2000 Form 10-K and other reports or  submissions  filed with the  Securities and
Exchange Commission.  All forward-looking statements in this report are based on
information  available to Marimba as of the date hereof,  and Marimba undertakes
no  obligation  to  release  publicly  any  updates  or  revisions  to any  such
forward-looking statements.

Overview

    Marimba is a leading  provider  of  systems  management  software  built for
e-business.  Our  products  enable  companies  to  expand  their  market  reach,
streamline  business  processes and  strengthen  relationships  with  customers,
business partners and employees.

    In  January  1997,  we  released  the first  version  of our  desktop/mobile
management  software.  Since that time, we have  continued to develop and market
that  product  line  and  enhance  the  core   infrastructure   with  additional
functionality and add-on products.  In the first half of 2000,  Marimba released
two new products in its server management product line.

    Revenues to date have been derived primarily from the license of our current
products and to a lesser extent from  maintenance  and support,  consulting  and
training  services.  Customers  who  license  our  products  generally  purchase
maintenance  contracts,  typically  covering  a 12-month  period.  Additionally,
customers may purchase consulting services, which is customarily billed by us at
a fixed daily rate plus out-of-pocket  expenses. We also offer training services
that are billed on a per student or per class session basis.

    License revenues are comprised of perpetual or multiyear license fees, which
are primarily derived from contracts with corporate customers and resellers.  We
recognize  license revenues after execution of a license agreement or receipt of
a definitive  purchase order and delivery of the product to end-user  customers,
provided that there are no uncertainties  surrounding  product  acceptance,  the
license fees are fixed or determinable,  collectibility is probable, and we have
no remaining  obligations with regard to installation or  implementation  of the
software.  Revenues on  arrangements  with  customers  who are not the  ultimate
users,  primarily  resellers,  are not  recognized  until the  software  is sold
through  to the end  user.  If the fee due from  the  customer  is not  fixed or
determinable,  revenues are recognized as payments become due from the customer.
If collectibility is not considered  probable,  revenues are recognized when the
fee is collected.  Advanced  payments are recorded as deferred revenue until the
products are delivered,  services are provided or obligations  are met.  Service
revenues are comprised of revenues from maintenance  agreements,  consulting and
training  fees.  Revenues  from  maintenance  agreements  are  recognized  on  a
straight-line  basis over the life of the related agreement,  which is typically
one year. We recognize  service  revenues  from training and  consulting as such
services are delivered.

    Since inception,  we have made substantial  investments in sales,  marketing
and  research  and  development  to expand and  enhance  our  product  lines and
increase the market  awareness  of Marimba and our  products.  We have  incurred
significant   losses  since   inception  and  had  an  accumulated   deficit  of
approximately  $37.1  million  at June 30,  2001.  We believe  that our  success
depends  on further  increasing  our  customer  base and on growth in our market
overall.  Accordingly,  we  intend  to  continue  to  invest  heavily  in sales,
marketing and research and development.

    In view of the  rapidly  changing  nature of our  business  and our  limited
operating history, we believe that period-to-period  comparisons of revenues and
operating  results are not necessarily  meaningful and should not be relied upon
as indications of future performance, growth or financial results. Additionally,
we do not believe that historical  growth rates or profitability are necessarily
sustainable, nor indicative of future growth or financial results.


                                       7
<PAGE>

Results of Operations
<TABLE>
    The following  table sets forth certain  statements of operations  data as a
percentage  of total  revenues  for the three and six months ended June 30, 2001
and 2000. This data has been derived from the unaudited  condensed  consolidated
financial  statements  contained  in this Form 10-Q  which,  in the  opinion  of
management  includes  all  adjustments,  consisting  only  of  normal  recurring
adjustments,  necessary to present fairly the financial  position and results of
operations for the interim periods. The operating results for any quarter should
not be considered  indicative of results of any future period.  This information
should be read in conjunction  with the  Consolidated  Financial  Statements and
Notes  thereto  included in  Marimba's  Annual  Report on Form 10-K for the year
ended December 31, 2000.
<CAPTION>
                                                     Three Months Ended          Six Months Ended
                                                          June 30,                   June 30,
                                                   ----------------------     ----------------------
                                                     2001          2000         2001          2000
                                                   ---------    ---------     --------     ---------
<S>                                                  <C>          <C>           <C>          <C>
Consolidated Statement of Operations Data:
Revenues:
  License....................................         68.0%        75.6%         65.8%        75.9%
  Service....................................         32.0         24.4          34.2         24.1
                                                     -----        -----         -----        -----
Total revenues...............................        100.0        100.0         100.0        100.0
Cost of revenues:
  License....................................          1.1          1.6           1.1          1.4
  Service....................................         12.0          7.6          14.4          8.0
                                                     -----        -----         -----        -----
Total cost of revenues.......................         13.1          9.2          15.5          9.4
                                                     -----        -----         -----        -----
Gross margin.................................         86.9         90.8          84.5         90.6
Operating expenses:
  Research and development...................         22.2         20.4          25.7         22.1
  Sales and marketing........................         74.3         55.4          77.3         60.1
  General and administrative.................         14.6         12.2          16.8         12.4
  Restructuring..............................          6.5            -           3.4            -
  Amortization of deferred compensation......          4.4          1.7           4.9          2.4
                                                     -----        -----         -----        -----
Total operating expenses.....................        122.0         89.7         128.1         97.0
                                                     -----        -----         -----        -----
Income (loss) from operations................        (35.1)         1.1         (43.6)        (6.4)
Interest income, net.........................          5.3          9.5           7.3          9.7
                                                     -----        -----         -----        -----
Income (loss) before income taxes............        (29.8)        10.6         (36.3)         3.3
Provision for income taxes...................         (0.7)        (0.3)         (0.5)        (0.7)
                                                     -----        -----         -----        -----
Net income (loss)............................        (30.5)%       10.3%        (36.8)%        2.6%
                                                     =====        =====         =====        =====
</TABLE>
Revenues

    Total  revenues  increased  $69,000  or 1%, to $12.2  million  in the second
quarter of 2001 from $12.1  million in the second  quarter of 2000.  For the six
months ended June 30, 2001,  total  revenues  increased 2% to $23.2 million from
$22.7 million in the comparable period of 2000.

    License  Revenues.  License  revenues  decreased  $882,000,  or 10%, to $8.3
million in the second quarter of 2001 from $9.2 million in the second quarter of
2000.  License  revenues in the six months ended June 30, 2001  decreased 11% to
$15.3  million  from  $17.2  million  in the  comparable  period  of 2000.  As a
percentage of total revenues, license revenues decreased to 68% and 66% of total
revenues in the three and six month periods  ended June 30, 2001,  respectively,
from 76% in each of the  comparable  periods of 2000.  The  reduction of license
revenues for the  comparative  three and six month periods was due to a decrease
in  product  licenses  sold,  reflecting  the  impact  of the  general  economic
slowdown,  primarily  through delays in customers' IT purchases and  lengthening
sales cycles.

    Service  Revenues.   Service  revenues  include   maintenance  and  support,
consulting and training.  Service revenues increased  $951,000,  or 32%, to $3.9
million in the second quarter of 2001 from $3.0 million in the second quarter of
2000.  Service  revenues in the six months  ended June 30, 2001  increased  $2.5
million,  or 45%,  to $7.9  million  in the  comparable  period  of  2000.  As a
percentage of total revenues, service revenues increased to 32% and 34% of total
revenues in the three and six month periods  ended June 30, 2001,  respectively,
from 24% in each of the  comparable  periods of 2000.  The  increase  in service
revenues for the  comparative  three and six month  periods was due primarily to
increased  maintenance  revenues from a larger  installed  base of customers and
increased revenue from consulting services.


                                       8

<PAGE>

Costs of Revenues

    Cost of License Revenues. Cost of license revenues consists primarily of the
cost of  third-party  software  products  that were either  integrated  into our
products or resold by  Marimba.  Cost of license  revenues  were less than 2% of
revenues in the three and six month  periods  ended June 30,  2001 and 2000.  We
expect cost of license  revenues to increase in absolute  dollar  amount  during
2001, but to remain a relatively small percentage of total revenues.

    Cost of Service Revenues.  Cost of service revenues increased  $540,000,  or
59%, to $1.5 million in the second  quarter of 2001 from  $922,000 in the second
quarter  of 2000.  For the first six months of 2001,  cost of  service  revenues
increased  $1.5  million,  or 84%,  to $3.3  million  from $1.8  million for the
comparable  period of 2000.  The  increase in cost of service  revenues  was due
primarily to the use of external  consulting services and growth in our customer
support and professional services organizations.

Operating Expenses

    Research  and  Development.   Research  and  development   ("R&D")  expenses
increased  $235,000,  or 9%, to $2.7 million in the second  quarter of 2001 from
$2.5  million in the second  quarter of 2000.  For the first six months of 2001,
research and development  expenses increased  $948,000,  or 19%, to $6.0 million
from $5.0 million in the comparable  period of 2000.  R&D expenses  increased in
absolute dollars due primarily to an increase in personnel-related costs.

    Sales and Marketing. Sales and marketing expenses increased $2.3 million, or
35%,  to $9.1  million  in the second  quarter of 2001 from $6.7  million in the
second  quarter of 2000.  For the first six months of 2001,  sales and marketing
expenses increased $4.3 million,  or 32%, to $17.9 million from $13.6 million in
the comparable period of 2000. 22

    Sales and marketing  expenses  increased for the  comparative  three and six
month periods in absolute  dollars due primarily to increased  personnel-related
costs resulting from the continued  expansion of our domestic and  international
sales  organizations,  increased marketing programs,  sales promotion activities
and higher recruiting costs.

    General and  Administrative.  General and  administrative  ("G&A")  expenses
increased  $306,000,  or 21%, to $1.8 million in the second quarter of 2001 from
$1.5  million in the second  quarter of 2000.  For the first six months of 2001,
G&A expenses increase $1.1 million,  or 38% to $3.9 million from $2.8 million in
the comparable period of 2000. The increase in G&A expenses was due primarily to
increased  personnel costs,  partially offset by a decrease in legal fees due to
the settlement of our lawsuit with Novadigm in November 2000.

    Deferred  Compensation.  We recorded deferred  compensation of approximately
$1.4 million in 1998, representing the difference between the exercise prices of
options  granted to acquire  940,500  shares of common stock during 1998 and the
deemed fair value for  financial  reporting  purposes of our common stock on the
grant dates.  In addition,  we granted options to purchase common stock in April
1999 for which we recorded  additional  deferred  compensation of  approximately
$2.0  million.  In fiscal  year  2000,  we  recorded  deferred  compensation  of
approximately $1.9 million, net of reductions of $703,000 during the same period
due to  cancelled  shares,  which  represented  the  intrinsic  value of certain
restricted stock awards.  Amortization of deferred compensation was $526,000 and
$1.1  million  for the  three  and six  months  ended  June 30,  2001.  Deferred
compensation  is being  amortized  over the  vesting  periods of the options and
restricted stock awards on a graded vesting method.

    Interest Income,  Net.  Interest income,  net,  decreased to $651,000 in the
second  quarter of 2001 from $1.2 million in the second quarter of 2000. For the
first six months of 2001,  interest income,  net, decreased to $1.7 million from
$2.2 million in the comparable  period of 2000. The decrease for the comparative
three and six month periods  resulted from lower  investment  balances and lower
interest rates.

Restructuring

    On April 26, 2001, Marimba announced a restructuring plan. The plan involved
the  elimination  of  approximately  20% of the  workforce,  or 60 employees and
independent contractors across all company departments. In addition, Marimba has
implemented a number of cost cutting initiatives,  including the cancellation of
certain discretionary marketing programs,  suspension of executive cash bonuses,
reduction of executive  salaries,  and the  discontinuation of Marimba.net,  our
managed service provider division.  Marimba recorded a charge of $789,000 in the
second quarter of 2001 related to the  restructuring  plan,  which  consisted of
personnel  costs of  $583,000,  facilities  costs of $136,000 and other costs of
$70,000.


                                       9

<PAGE>

Liquidity and Capital Resources

      As  of  June  30,  2001,  our  principal  sources  of  liquidity  included
approximately  $31.0 million of cash and cash  equivalents  and $30.9 million of
investments  in short  and  long-term  marketable  securities.  Net cash used in
operating activities for the first six months of 2001 primarily reflects our net
loss for the period and  decreases  in deferred  revenue,  accounts  payable and
accrued liabilities, partially offset by a decrease in accounts receivable.

     Net cash provided by investing  activities was  approximately  $3.1 million
for the first six months of 2001,  primarily relating to sales and maturities of
investments,  partially  offset by  purchases  of  property  and  equipment  and
purchases of investments.

     Net cash  provided by financing  activities  was $4.9 million for the first
six months of 2001,  of which $1.0  million was the result of proceeds  from the
exercise of stock options. Also, in June 2001, Marimba entered into a $5 million
receivables  purchase  facility  with a bank,  pursuant  to  which  Marimba  may
transfer  qualifying  accounts  receivables to the bank on a non-recourse basis.
The purchase  facility with the bank expires in June 2002.  Transfers under this
facility are recorded as sales and accounted  for in  accordance  with SFAS 140,
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of Liabilities."  During the second quarter of 2001, Marimba  transferred to the
bank accounts receivables totaling $3.9 million, which approximated fair value.

    We  currently  anticipate  that  our  current  cash,  cash  equivalents  and
investments  will be sufficient to meet our  anticipated  cash needs for working
capital and capital  expenditures  for at least the next 12 months.  Thereafter,
cash  generated  from  operations,  if any, may not be sufficient to satisfy our
liquidity requirements. We may therefore need to sell additional equity or raise
funds by other  means.  Any  additional  financings,  if  needed,  might  not be
available on  reasonable  terms or at all.  Failure to raise capital when needed
could seriously harm our business and operating results. 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.

 Other Factors Affecting Operating Results, Liquidity and Capital Resources

     The  factors  discussed  below  are  cautionary  statements  that  identify
important  factors that could cause  actual  results to differ  materially  from
those anticipated by the  forward-looking  statements  contained in this report.
For more information regarding the forward-looking  statements contained in this
report, see the introductory paragraph to this Item 2 above.

Our  Limited  Operating  History  May Prevent Us  From  Achieving Success in Our
Business

    We were founded in February 1996 and have a limited  operating  history that
may prevent us from achieving  success in our business.  The revenues and income
potential of our business and market are unproven.  We will encounter challenges
and  difficulties  frequently  encountered by  early-stage  companies in new and
rapidly  evolving  markets.  We  may  not  successfully  address  any  of  these
challenges  and the  failure  to do so would  seriously  harm our  business  and
operating results.  In addition,  because of our limited operating  history,  we
have limited insight into trends that may emerge and affect our business.

We Have Incurred Losses and May Incur Future Losses

    Our failure to significantly  increase our revenues would seriously harm our
business  and  operating  results.  There  is no  assurance  that we will  reach
sustained  profitability.  As of June 30, 2001, we had an accumulated deficit of
approximately  $37.1  million.  We  expect  over the long term to  increase  our
research and  development,  sales and marketing  and general and  administrative
expenses. As a result, we will need to increase our quarterly revenues to offset
these  increasing  expenses and return to  profitability.  We may not be able to
sustain our recent  revenue  growth rates.  In fact, we may not have any revenue
growth, and our revenues could decline.

Fluctuations in Quarterly Operating Results and Absence of Significant Backlog

    Our quarterly  operating  results have varied  significantly in the past and
will  likely vary  significantly  in the future.  As a result,  we believe  that
period-to-period  comparisons  of our operating  results are not  meaningful and
should  not be


                                       10

<PAGE>

relied  upon  as  indicators  of our  future  performance.  In the  future,  our
operating  results may be below the  expectations  of  securities  analysts  and
investors.  Our failure to meet these  expectations  would likely seriously harm
the market price of our common  stock.  Operating  results  vary  depending on a
number of factors,  many of which are outside our control. Our operating results
may also depend on general economic  factors,  including an economic slowdown or
recession.

    A  substantial  portion of our revenues for most quarters has been booked in
the last month of the quarter and the  magnitude  of quarterly  fluctuations  in
operating  results may not become  evident until late in or even at the end of a
particular quarter. In addition,  we anticipate that the size of customer orders
may increase as we focus on larger business  accounts.  As a result,  a delay in
recognizing  revenue,  even  from just one  account,  could  have a  significant
negative impact on our operating results.  In the past, a significant portion of
our  sales  have  been  realized  near  the  end of a  quarter.  A  delay  in an
anticipated sale past the end of a particular  quarter could  negatively  impact
our operating results.

    We generally  expect that revenues in the first quarter of each year will be
lower than  revenues  in the fourth  quarter  of the  preceding  year due to the
annual nature of companies' purchasing and budgeting cycles and the year-to-date
structure of our sales incentive program.

    Our expense  levels are  relatively  fixed for a particular  quarter and are
based, in part, on expectations as to future revenues.  As a result,  if revenue
levels fall below our  expectations  for a  particular  quarter,  our  operating
results will be adversely  affected because only a small portion of our expenses
vary with our  revenues.  We have  historically  operated  with  little  product
backlog, because our products are generally delivered as orders are received. As
a result,  revenue in any quarter will depend on the volume and timing,  and the
ability to fill, orders received in that quarter. Our operating results may also
depend on general economic factors, including an economic slowdown or recession.

We Expect Significant Increases in Our Operating Expenses

    While we expect Marimba's  restructuring  plan to lower expenses in the near
term, we intend to substantially  increase our operating  expenses over the long
term as we:

    o   Increase  our  sales  and  marketing activities, including expanding our
        direct sales force;

    o   Increase our research and development activities;

    o   Expand our customer support and professional services organizations; and

    o   Expand our distribution channels.

    With these additional expenses, we must significantly  increase our revenues
in order to achieve and sustain  profitability.  These expenses will be incurred
before we generate any revenues associated with this increased  spending.  If we
do not  significantly  increase  revenues from these  efforts,  our business and
operating results would be adversely affected.

Our Success Depends on our Desktop/Mobile Management Product Family

    We expect to continue to derive substantial revenues from our desktop/mobile
management  product  line and  related  services.  A decline in the price of our
desktop/mobile  management  products or our inability to increase sales of these
products  would  seriously  harm our business and operating  results.  We cannot
predict the  success of  desktop/mobile  management  products.  We  periodically
update our desktop/mobile  management  products to make improvements and provide
additional  enhancements.  New versions of this product line may not provide the
benefits  we expect and could fail to meet  customers'  requirements  or achieve
widespread  market  acceptance.  Furthermore,  new  products  such as our server
management  product  line could fail to meet  customer  expectations  or achieve
widespread market acceptance.

    Our strategy requires our  desktop/mobile  management  products to be highly
scalable -- in other  words,  able to rapidly  increase  deployment  size from a
limited  number of  end-users  to a very large  number of  end-users.  If we are
unable to achieve this level of scalability,  the attractiveness of our products
and services would be diminished.


                                       11

<PAGE>

We Need to Grow Our Server Management Product Revenues and Develop and Introduce
New Products and Services

    During  the  second  quarter of 2001,  revenues  from our server  management
product  line  accounted  for 15% of total  license  revenues.  There  can be no
assurance that the revenues from this product line will grow, in absolute amount
or as a percentage  of total  license  revenues,  or that our server  management
products will meet customer  expectations or gain widespread market  acceptance.
To provide comprehensive  systems management solutions,  we will need to develop
and introduce new products and services,  which offer  functionality  that we do
not currently  provide.  We may not be able to develop these  technologies,  and
therefore,  we may not be  able to  offer  a  comprehensive  systems  management
solution.  In addition,  in the past we have  experienced  delays in new product
releases,  and we may  experience  similar  delays in the future.  If we fail to
deploy new product  releases  on a timely  basis,  our  business  and  operating
results could be seriously harmed.

We  Depend  on  the Growth of Our Customer  Base and Increased Business from Our
Current Customers

    Our  success  is  substantially  dependent  on the  continued  growth of our
customer  base.  If we fail to increase  our  customer  base,  our  business and
operating  results  would be  seriously  harmed.  Our  ability  to  attract  new
customers  will  depend on a variety  of  factors,  including  the  reliability,
security,  scalability  and  cost-effectiveness  of our products and services as
well as our ability to effectively market our products and services.

    If we fail to  generate  repeat  and  expanded  business  from  our  current
customers, our business and operating results would be seriously harmed. Many of
our customers initially make a limited purchase of our products and services for
pilot programs.  These customers may not choose to purchase  additional licenses
to expand their use of our products.  In addition,  as we deploy new versions of
our products or introduce  new products,  our current  customers may not require
the  functionality  provided by our new products and may not ultimately  license
these products.

    Because the total amount of  maintenance  and support fees we receive in any
period  depends in large part on the size and  number of  licenses  that we have
previously  sold, any downturn in our software license revenues would negatively
impact our future service revenues. In addition, if customers elect not to renew
their  maintenance  agreements,  our  service  revenues  could be  significantly
adversely affected.

Implementation  of Our Products  by Large Customers May Be Complex and Customers
Could  Become Dissatisfied  if  Implementation of Our Products Proves Difficult,
Costly or Time Consuming

    Our products must integrate with many existing computer systems and software
programs used by our customers. Integrating with many other computer systems and
software  programs can be complex,  time  consuming  and expensive and can cause
delays in the  deployment of our products for such  customers.  Customers  could
become dissatisfied with our products if implementations  prove to be difficult,
costly or time consuming,  and this could negatively  impact our ability to sell
our products.

We Must Retain and Attract Key Personnel

    Our success depends largely on the skills, experience and performance of the
members  of our  senior  management  and  other  key  personnel,  including  our
President and Chief Executive Officer,  Rich Wyckoff, and our Chairman and Chief
Strategy  Officer,  Kim  Polese.  We have in the  past  lost  senior  management
personnel.  Several  members  of our senior  management  are  relatively  new to
Marimba, and our success will depend in part on the successful  assimilation and
performance of these individuals.

    We may not be successful in attracting qualified senior management personnel
or be able to attract,  assimilate and retain other key personnel in the future.
None of our senior  management  or other key personnel is bound by an employment
agreement.  If we lose  additional  key employees and are unable to replace them
with  qualified  individuals,  our  business  and  operating  results  could  be
seriously  harmed.  In addition,  our future  success will depend largely on our
ability to continue  attracting  and retaining  highly skilled  personnel.  Like
other  companies  based primarily in the San Francisco Bay Area, we face intense
competition for qualified personnel.

We Have a Long Sales Cycle that Depends upon Factors Outside Our Control

    A  customer's   decision  to  license  our  products  typically  involves  a
significant  commitment of resources and is influenced by the customer's  budget
cycles.  In  addition,  selling our  products  requires us to educate  potential
customers on their use and benefits. As a result, our products have a long sales
cycle which can take over six months. We face difficulty  predicting the quarter
in which sales to expected customers may occur. The sale of our products is also
subject


                                       12

<PAGE>

to delays  from the  lengthy  budgeting,  approval  and  competitive  evaluation
processes  of  our  customers  that  typically  accompany   significant  capital
expenditures. For example, customers frequently begin by evaluating our products
on a limited  basis and devote time and  resources to test our  products  before
they decide  whether to purchase a license for  deployment.  Customers  may also
defer orders as a result of anticipated releases of new products or enhancements
by us or our competitors.

Our Markets Are Highly Competitive

    Our markets are new, rapidly evolving and highly competitive,  and we expect
this competition to persist and intensify in the future. Our failure to maintain
and enhance our  competitive  position  could  seriously  harm our  business and
operating results. We encounter competition from a number of sources, including:

    o   Sellers of  enterprise-wide management systems, which include electronic
        software distribution;

    o   Companies that market products that support the distribution of software
        applications and content; and

    o   Desktop software management suites.

    In addition, we compete with various methods of application distribution and
management, including thin client systems and web browsers, and with application
server   vendors  and  others  that  have   introduced   software   distribution
capabilities into their products.

    Potential  competitors  may bundle their products or incorporate  additional
components  into  existing  products  in a manner  that  discourages  users from
purchasing  our  products.  Furthermore,  new  competitors  or  alliances  among
competitors  may  emerge and  rapidly  acquire  significant  market  share.  Our
competitors may be able to respond more quickly to new or emerging  technologies
and changes in customer requirements than we can.

    Some of our competitors  have longer operating  histories and  significantly
greater financial,  technical, marketing and other resources than we do. Many of
these  companies  have  more  extensive  customer  bases  and  broader  customer
relationships that they could leverage, including relationships with many of our
current and potential  customers.  These companies also have  significantly more
established customer support and professional service  organizations than we do.
In addition,  these companies may adopt aggressive pricing policies which we are
unable to match.  In the past, we have lost  potential  customers to competitors
for various reasons, including lower prices.

Protection of Our Intellectual Property Is Limited

    We rely on a combination  of patent,  trademark,  trade secret and copyright
law and  contractual  restrictions  to protect  the  proprietary  aspects of our
technology. These legal protections afford only limited protection.  Despite our
efforts to protect our proprietary rights,  unauthorized  parties may attempt to
copy aspects of our products or to obtain and use our  proprietary  information.
Litigation  may be necessary to enforce our  intellectual  property  rights,  to
protect  our  trade  secrets  and to  determine  the  validity  and scope of the
proprietary rights of others.  Such litigation could result in substantial costs
and  diversion  of  resources  and could  significantly  harm our  business  and
operating results. In addition,  we sell our products  internationally,  and the
laws of many countries do not protect our proprietary rights as well as the laws
of the United States.

We  Are  Involved in Patent Infringement Litigation and May Be Found to Infringe
Proprietary Rights of Others

     We are a defendant in the patent infringement  litigation described in Part
II, Item 1 - "Legal  Proceedings" of this report.  We intend to defend this suit
vigorously.  However, due to the inherent uncertainties of litigation, we cannot
accurately predict the ultimate outcome of the litigation, particularly in cases
such as this where  sophisticated  factual  issues must be assessed  and complex
technical issues must be decided. Our defense of this litigation,  regardless of
the  merits  of the  complaint,  has  been,  and  will  likely  continue  to be,
time-consuming,  costly and a diversion for Marimba's  technical and  management
personnel.  Any  unfavorable  outcome of this  litigation  could have an adverse
impact on our business, financial condition and results of operations.

    Other  companies,  including our  competitors,  may obtain  patents or other
proprietary rights that would prevent, or limit or interfere with our ability to
make, use or sell our products.  As a result, we may be found to infringe on the


                                       13

<PAGE>

proprietary rights of others. Furthermore,  companies in the software market are
increasingly  bringing suits alleging  infringement of their proprietary rights,
particularly patent rights.

    We  could  incur  substantial  costs to  defend  any  intellectual  property
litigation  (including  the one  described  above),  and  intellectual  property
litigation could force us to do one or more of the following:

    o   Our paying monetary  damages, which could be tripled if the infringement
        is found to have been willful;
    o   The  issuance  of a  preliminary or permanent injunction requiring us to
        stop selling one or more of our products in their current forms;
    o   Our having to  redesign  one or more of our  products,  which  could be
        costly  and  time-consuming  and could  substantially  delay  shipments,
        assuming that a redesign is feasible;
    o   Our  having  to  reimburse  the  holder of  the  infringed  intellectual
        property for some or all of its attorneys' fees and costs;
    o   Our  having  to obtain  from the  holder  licenses  to its  intellectual
        property,  which  licenses  might  not  be  made  available  to  us  on
        reasonable terms; or
    o   Our having to indemnify our  customers against any losses they may incur
        due to the alleged infringement.

    In the  event of a  successful  claim  of  infringement  against  us and our
failure or  inability  to license the  infringed  technology,  our  business and
operating results would be significantly harmed.

We Are  Involved in a  Securities  Class  Action  Litigation  and Are At Risk of
Additional Similar Litigation

    In the past,  securities  class  action  litigation  has often been  brought
against a company  following  periods of  volatility  in the market price of its
securities.  We are a party to the securities class action litigation  described
in Part II,  Item 1 - "Legal  Proceedings"  of this  report.  The defense of the
litigation described in Part II, Item 1 may increase our expenses and divert our
management's attention and resources,  and an adverse outcome in this litigation
could seriously harm our business and results of operations. In addition, we may
in the  future  be the  target  of other  securities  class  action  or  similar
litigation.

We Need to Develop Third-Party Distribution Relationships

    We have a limited  number of  distribution  relationships  and we may not be
able to  increase  our number of  distribution  relationships  or  maintain  our
existing relationships.  Our current agreements with our channel partners do not
prevent these  companies  from selling  products of other  companies,  including
products that may compete with our products,  and do not generally require these
companies to purchase  minimum  quantities of our products.  These  distributors
could give higher  priority to the  products of other  companies or to their own
products,  than they give to our  products.  In addition,  sales  through  these
channels  generally  result in lower fees to Marimba  than  direct  sales.  As a
result,  while the loss of, or  significant  reduction in sales volume to any of
our current or future  distribution  partners could  seriously harm our revenues
and operating  results,  a significant  increase in sales through these channels
could also negatively impact our gross margins.

We Need to Develop and Expand Our Sales, Marketing and Distribution Capabilities

    We need to expand  our direct  sales and  marketing  operations  in order to
increase  market  awareness  of our  products,  market our products to a greater
number of enterprises and generate increased revenues. Competition for qualified
sales personnel is intense and we may not be able to hire enough qualified sales
personnel in the future. Our products and services require a sophisticated sales
effort  targeted at senior  management of our prospective  customers.  New hires
require  extensive  training and  typically  take at least six months to achieve
full  productivity.  In  addition,  we have  limited  experience  marketing  our
products  broadly to a large number of potential  customers,  both in the United
States and elsewhere.

We Need to Expand Our Professional Services

    We may not be able  to  attract,  train  or  retain  the  number  of  highly
qualified  services personnel that our business needs. We believe that growth in
our  product  sales  depends  on our  ability  to  provide  our  customers  with
professional  services and to educate  third-party  resellers and consultants on
how to provide  similar  services.  Over the long term,  we plan to increase the
number of our services personnel to meet these needs.  However,  competition for
qualified services personnel is intense.


                                       14

<PAGE>

    We expect our total  service  revenues to increase as we continue to provide
support,  consulting and training  services that  complement our products and as
our installed customer base grows. This could negatively impact our gross margin
because margins on revenues derived from services are generally lower than gross
margins on revenues derived from the license of our products.

Expanding  Internationally  Is  Expensive,  We May  Receive No Benefit  from Our
Expansion  and  Our   International   Operations  Are  Subject  to  Governmental
Regulation

    We plan to increase our international  sales force and operations.  However,
we may not be successful in increasing our international sales. In addition, our
international  business activities are subject to a variety of risks,  including
the  adoption  of or changes in laws,  currency  fluctuations,  actions by third
parties and political and economic  conditions  that could restrict or eliminate
our  ability to do  business  in  foreign  jurisdictions.  To date,  we have not
adopted a hedging  program  to protect us from  risks  associated  with  foreign
currency fluctuations.

    Export  clearances,  and in some cases,  import  clearances must be obtained
before  our  products  can  be  distributed  internationally.   Current  or  new
government  laws  and  regulations,  or the  application  of  existing  laws and
regulations, could expose us to significant liabilities,  significantly slow our
growth and seriously harm our business and operating results.

We Must Manage Our Growth and Expansion

    Our  historical  growth  has  placed,  and any  further  growth is likely to
continue to place, a significant strain on our resources.  Any failure to manage
growth effectively could seriously harm our business and operating  results.  To
be  successful,  we will need to  implement  additional  management  information
systems, improve our operating, administrative, financial and accounting systems
and  controls,  train new employees and maintain  close  coordination  among our
executive,   engineering,   finance,  legal,  marketing,  sales  and  operations
organizations.  In addition, our growth has resulted, and any future growth will
result, in increased responsibilities for management personnel.

We Rely on Third-Party Software and Applications

    We  integrate  third-party  security  and  encryption  software  and digital
certificates as a component of our software.  There are inherent  limitations in
the use and  capabilities  of much of the technology  that we license from third
parties.  As a  result,  we face a number of  challenges  in  integrating  these
technologies  into our products.  We would be seriously  harmed if the providers
from whom we license software ceased to deliver and support  reliable  products,
enhance their current  products or respond to emerging  industry  standards.  In
addition,  the  third-party  software  may not continue to be available to us on
commercially  reasonable  terms or at all. The loss of, or inability to maintain
or obtain  this  software,  could  result  in  shipment  delays  or  reductions.
Furthermore,  we might be forced to limit the features  available in our current
or  future  product  offerings.  Either  alternative  could  seriously  harm our
business and operating results.

    Almost all of our  products  are written in Java and require a Java  virtual
machine in order to operate.  Vendors  offering these Java virtual  machines may
not  continue  to  make  these  implementations  of the  Java  virtual  machines
available  at  commercially  reasonable  terms  or at all.  Furthermore,  if Sun
Microsystems, Inc. were to make significant changes to the Java language or Java
virtual machine implementations of Sun Microsystems,  Inc. and other vendors, or
they fail to correct defects and  limitations in these products,  our ability to
continue to improve and ship our products could be impaired.  In the future, our
customers  may also require the ability to deploy our products on platforms  for
which technically acceptable Java implementations either do not exist or are not
available  on  commercially   reasonable  terms.  Our  customers  may  also  use
particular  implementations  of  the  Java  virtual  machines  that  may  not be
technically or commercially acceptable for integration into our products.

Software Defects in Our Products Would Harm Our Business

    Complex  software  products  like ours  often  contain  errors  or  defects,
including  errors relating to security,  particularly  when first  introduced or
when new versions or enhancements are released. Our products extensively utilize
digital  certificates and other complex  technology.  Our use of this technology
has in the past and may in the future result in product behavior  problems which
may not be anticipated  by us or our customers.  Defects or errors in current or
future  products could result in lost revenues or a delay in market  acceptance,
which would seriously harm our business and operating results.


                                       15

<PAGE>

    Since  many  of  our  customers  use  our  products  for   business-critical
applications,  errors,  defects or other  performance  problems  could result in
financial or other damage to our customers and could significantly  impair their
operations.  Our customers could seek damages for losses related to any of these
issues. For example,  we could be subject to claims for losses by customers that
we are unable to identify and notify and, as a result, do not install our update
that avoids the digital  certificate  problem. A product liability claim brought
against us, even if not successful, would likely be time consuming and costly to
defend and could adversely affect our marketing efforts.

Volatility of Stock Price

    The market  price of our common  stock has been and is likely to continue to
be highly  volatile.  The market price of our common stock may be  significantly
affected by factors such as actual or anticipated  fluctuations in our operating
results,  announcements  of  technological  innovations,  new  products  or  new
contracts  by us or our  competitors,  developments  with  respect to patents or
proprietary rights and related litigation,  other material litigation  involving
Marimba,  adoption of new accounting  standards affecting the software industry,
general market conditions and other factors.  In addition,  the stock market has
from time to time experienced  significant  price and volume  fluctuations  that
have  particularly  affected the market price for the common stock of technology
companies.  These types of broad market  fluctuations  may adversely  affect the
market price of our common stock. In the past,  following  periods of volatility
in  the  market  price  of  a  company's  securities,  securities  class  action
litigation  has often been  initiated  against such a company.  Such  litigation
against  Marimba  could  result  in  substantial  costs and a  diversion  of our
attention and resources and seriously harm our business and operating results.

Our Future Capital Needs Are Uncertain

    We expect that our current cash, cash  equivalents  and investments  will be
sufficient  to meet our working  capital and  capital  expenditure  needs for at
least twelve  months.  After that, we may need to raise  additional  funds,  and
additional  financing may not be available on favorable  terms,  if at all. This
could  seriously  harm our business and operating  results.  Furthermore,  if we
issue additional equity securities,  stockholders may experience  dilution,  and
the new equity  securities could have rights senior to those of existing holders
of our common stock. If we cannot raise funds, if needed,  on acceptable  terms,
we may not be able to develop or enhance our products,  take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements.

We Have Experienced Recent  Credit-Related  Issues with Certain of Our Customers
and We May Not  Achieve  Anticipated  Revenue if We Need to Defer a  Significant
Amount of Revenue

         We have experienced  recent  credit-related  issues with certain of our
existing and proposed  customers,  primarily due to the economic slowdown in the
United  States.  Certain of these  customers  are in the  process  of  obtaining
funding, and in certain cases, we have deferred a portion or all of the revenues
from these customers  until they have achieved  adequate levels of financing and
are able to compensate us. Should we have more customers than we anticipate with
credit  issues,  or if payment is not received on a timely basis,  our business,
operating results and general financial condition could be seriously harmed.

We Face Challenges Stemming from Our Emerging Markets

    The market for our products has only recently  begun to develop,  is rapidly
evolving and will likely have an increasing number of competitors.  We cannot be
certain that a viable market for our products will emerge or be sustainable.  If
our market fails to develop, or develops more slowly than expected, our business
and operating results would be seriously harmed.

    Furthermore,  in order to be successful in this emerging market,  we must be
able to  differentiate  Marimba  from our  competitors  through  our product and
service  offerings  and brand  name  recognition.  We may not be  successful  in
differentiating  Marimba  or  achieving  widespread  market  acceptance  of  our
products and  services.  Furthermore,  enterprises  that have  already  invested
substantial   resources  in  other  methods  of  deploying  and  managing  their
applications,  content  and/or  services may be reluctant or slow to adopt a new
approach that may replace, limit or compete with their existing systems.


                                       16

<PAGE>

We Depend on Continued Use of the Internet and Growth of Electronic Business

    Rapid growth in the use of and  interest in the  Internet has occurred  only
recently.  As a  result,  acceptance  and use may not  continue  to  develop  at
historical rates, and a sufficiently  broad base of consumers may not adopt, and
continue  to use,  the  Internet  and  other  online  services  as a medium  for
commerce.  Demand and market  acceptance  for recently  introduced  services and
products over the Internet are subject to a high level of  uncertainty,  and few
proven services and products exist.

    In  addition,  the  Internet  may not be accepted as a long-term  commercial
marketplace  for  a  number  of  reasons,   including   potentially   inadequate
development of the necessary network  infrastructure  or delayed  development of
enabling technologies and performance improvements.  Our success will depend, in
large part,  upon third  parties  maintaining  the  Internet  infrastructure  to
provide a reliable  network  backbone with the necessary  speed,  data capacity,
security and hardware necessary for reliable Internet access and services.

We Must Respond to Rapid Technological Change and Evolving Industry Standards

    The  markets  for our  systems  management  solutions  are  marked  by rapid
technological  change,  frequent  new product  introductions  and  enhancements,
uncertain product life cycles, changes in customer demands and evolving industry
standards. New solutions based on new technologies or new industry standards can
quickly render existing solutions  obsolete and unmarketable.  Any delays in our
ability to develop and release  enhanced or new solutions  could  seriously harm
our business and operating results. Our technology is complex, and new products,
enhancements and services can require long development and testing periods.  Our
failure to conform to prevailing  standards  could have a negative effect on our
business and operating results.

We Face Risks Associated with Potential Acquisitions

      We  may  make  acquisitions  in the  future.  Acquisitions  of  companies,
products or  technologies  entail  numerous  risks,  including  an  inability to
successfully   assimilate  acquired   operations  and  products,   diversion  of
management's  attention,  loss  of  key  employees  of  acquired  companies  and
substantial  transaction  costs.  Some  of the  products  acquired  may  require
significant  additional  development  before  they can be  marketed  and may not
generate revenue at anticipated levels. Moreover,  future acquisitions by us may
result in dilutive issuances of equity securities,  the incurrence of additional
debt, large one-time write-offs and the creation of goodwill or other intangible
assets  that could  result in  significant  amortization  expense.  Any of these
problems or factors could seriously harm our business,  financial  condition and
operating results.

Item 3. Qualitative and Quantitative Disclosures about Market Risk

Interest Rate Sensitivity

    Our interest  income is  sensitive  to changes in the general  level of U.S.
interest  rates,  particularly  since the  majority  of our  investments  are in
short-term instruments.

    Our  investment  policy  requires  us to invest  funds in excess of  current
operating requirements in:

    o   obligations of the U.S. government and its agencies;

    o   investment grade state and local government obligations;

    o   securities of U.S. corporations  rated A1 or AA by Standard and Poors or
        the Moody's equivalent; and

    o   money  market funds, deposits or notes issued  or guaranteed by U.S. and
        non-U.S. commercial banks meeting particular credit rating and net worth
        requirements with maturities of less than two years.

Exchange Rate Sensitivity

    We develop products in the United States, and sell our products and services
primarily in North America,  Europe and Asia. As a result, our financial results
could be  affected by various  factors,  including  changes in foreign  currency
exchange rates or weak economic  conditions in foreign markets. As all sales are
currently made in U.S.  dollars,  a  strengthening  of the dollar could make our
products less  competitive  in foreign  markets.  To date,  however,  because we
operate  primarily  in the  United  States  and all  sales  have been made in US
dollars,   we  have  had  no  material   exposures  to  foreign   currency  rate
fluctuations.   Accordingly,  we  have  no  basis  to  quantify  the  risk  from
hypothetical changes in foreign currency exchange rates.


                                       17

<PAGE>

PART II.      OTHER INFORMATION


Item 1.       LEGAL PROCEEDINGS.

Securities Litigation

Beginning  in late April 2001, a number of  identical  class  action  complaints
alleging  violations  of the  federal  securities  laws were filed in the United
States  District  Court for the  Southern  District of New York naming  Marimba,
Inc.,  certain of its officers and directors,  and certain  underwriters  of the
company's  initial public offering  (Morgan  Stanley & Co., Inc.,  Credit Suisse
First Boston Corp. and Bear Stearns & Co.,  Inc.) as defendants.  The complaints
allege,  among other things,  that the  underwriters  of the  company's  initial
public  offering  violated the  securities  laws by failing to disclose  certain
alleged  compensation  arrangements  (such as  undisclosed  commissions or stock
stabilization  practices) in the offering's registration statement.  Marimba and
certain of its officers and  directors are named in the  complaints  pursuant to
Section 11 of the Securities Act of 1933, and one of such complaints  includes a
claim against Marimba and such officers and directors under Section 10(b) of the
Securities Exchange Act of 1934. Similar complaints have been filed against more
than 90 of other  issuers  that have had initial  public  offerings  since 1998.
Marimba anticipates that the actions described above, and any additional related
complaints  that may be filed,  will be  consolidated  into a single action.  We
intend  to  defend  these  actions  vigorously.  However,  due to  the  inherent
uncertainties of litigation,  we cannot accurately  predict the ultimate outcome
of the  litigation.  Any unfavorable  outcome of this  litigation  could have an
adverse impact on our business, financial condition and results of operations.

Beck Systems vs. Marimba

     On July 6, 2001, Beck Systems, Inc. filed a complaint against Marimba, Inc.
and two of its  customers in the United States  District  Court for the Northern
District of Illinois, alleging infringement of two patents held by Beck Systems.
Beck Systems alleges that Marimba's  infringement relates to the manufacture and
marketing of its desktop/mobile  management and server management  products.  We
intend  to  defend  this  suit   vigorously.   However,   due  to  the  inherent
uncertainties of litigation,  we cannot accurately  predict the ultimate outcome
of the  litigation,  particularly  in  cases  such as this  where  sophisticated
factual  issues must be assessed and complex  technical  issues must be decided.
Any unfavorable  outcome of this litigation  could have an adverse impact on our
business, financial condition and results of operations.

Item 2. CHANGES IN SECURITIES.

    None.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

    None.

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

      The 2001 annual  meeting of  stockholders  of Marimba held on June 7, 2001
was adjourned  until September 6, 2001, and none of the proposed formal business
was  conducted  at such  meeting.  The motion to adjourn  the annual  meeting of
stockholders until on or about September 6, 2001 was voted on as follows:

        For:                    19,596,750
        Against:                         0
        Abstain:                         0


                                       18

<PAGE>

Item 5.  OTHER INFORMATION.

         In June 2001,  Marimba entered into a $5 million  receivables  purchase
facility with a bank, pursuant to which Marimba may transfer qualifying accounts
receivables to the bank on a non-recourse  basis. The purchase facility with the
bank  expires  in  June  2002.  During  the  second  quarter  of  2001,  Marimba
transferred  accounts  receivables  totaling  $3.9 million to the bank under the
purchase facility.

         Effective  July 8, 2001,  John F. Olsen  resigned as  President,  Chief
Executive Officer and a director of Marimba.

         Effective July 9, 2001,  Richard C. Wyckoff was appointed as President,
Chief Executive Officer and a director of Marimba.

         Effective July 20, 2001,  Eric J. Keller was appointed as a director of
Marimba.

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

      (a)   Exhibits.

            Exhibit No.    Description
            -----------    -----------
            10.1           Non-Recourse  Receivables  Purchase Agreement between
                           Silicon  Valley  Bank  and the Registrant dated as of
                           June 25, 2001.

      (b)   Reports on Form 8-K.

            None.


                                       19

<PAGE>

                                  MARIMBA, INC.
                                    SIGNATURE



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


                                  MARIMBA, INC.


Date:   August 6, 2001       By:   /s/ Kenneth W. Owyang
                                  ----------------------------------------
                                  Kenneth W. Owyang
                                  Vice  President, Finance  and  Chief Financial
                                  Officer
                                  (Principal Financial and Accounting Officer)


                                       20

<PAGE>

                                  EXHIBIT INDEX


Exhibit No.       Description
-----------       -----------
10.1              Non-Recourse  Receivables  Purchase  Agreement between Silicon
                  Valley Bank and the Registrant dated as of June 25, 2001.


                                       21