<PAGE>

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

                                  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 September 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
October 30, 2001 was 23,986,041.

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

<PAGE>

                                  MARIMBA, INC.

                                      INDEX

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

Item 1.    Financial Statements

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

           Condensed Consolidated Statements of Operations and
           Comprehensive Loss for the Three and Nine Months Ended
           September 30, 2001 and 2000                                                         2

           Condensed Consolidated Statements of Cash Flows for the
           Nine Months Ended September 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                                20

Item 5.    Other Information                                                                  20

Item 6.    Exhibits and Reports on Form 8-K                                                   21

Signature                                                                                     21

Exhibit Index                                                                                 22
</TABLE>

<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                                  MARIMBA, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                    September 30,     December 31,
                                                                                         2001             2000
                                                                                       --------       ------------
                                                                                      (unaudited)          (1)
<S>                                                                                 <C>               <C>
ASSETS
Current assets:
     Cash and cash equivalents............................................             $ 23,111        $ 33,122
     Short-term investments...............................................               25,334          31,407
     Accounts receivable, net.............................................                5,628          12,500
     Note receivable from officer.........................................                  782              --
     Prepaid expenses and other current assets............................                1,336           1,599
                                                                                       --------        --------
          Total current assets............................................               56,191          78,628
Property and equipment, net...............................................                4,343           4,274
Long-term investments.....................................................               12,951           4,146
Other assets..............................................................                  360             360
                                                                                       --------        --------
                                                                                       $ 73,845        $ 87,408
                                                                                       ========        ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued liabilities.............................             $  2,251        $  2,881
     Accrued compensation.................................................                2,725           4,055
     Deferred revenue.....................................................               10,547          13,516
                                                                                       --------        --------
          Total current liabilities.......................................               15,523          20,452

Long-term liabilities.....................................................                  247             153

Stockholders' equity:
     Common stock.........................................................                    2               2
     Additional paid-in capital...........................................              100,281          97,222
     Deferred compensation................................................               (2,076)         (1,882)
     Cumulative translation adjustment....................................                  (55)            (42)
     Unrealized gain on investments.......................................                  259              33
     Accumulated deficit..................................................              (40,336)        (28,530)
                                                                                       --------        --------
          Stockholders' equity............................................               58,075          66,803
                                                                                       --------        --------
                                                                                       $ 73,845        $ 87,408
                                                                                       ========        ========
</TABLE>

    (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.

                             See accompanying notes.


                                       1

<PAGE>


                                  MARIMBA, INC.

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

<TABLE>
<CAPTION>
                                                                     Three Months Ended          Nine Months Ended
                                                                        September 30,              September 30,
                                                                  -----------------------    -----------------------
                                                                     2001           2000       2001           2000
                                                                  ---------     ---------    ---------     ---------
                                                                         (unaudited)                (unaudited)
<S>                                                               <C>           <C>          <C>           <C>
Revenues:
     License.................................................      $  5,880     $  6,560     $  21,144     $  23,784
     Service.................................................         4,126        3,548        12,051         9,007
                                                                   --------     --------     ---------     ---------
Total revenues...............................................        10,006       10,108        33,195        32,791
Cost of revenues:
     License.................................................           148          116           408           443
     Service.................................................         1,320        1,064         4,647         2,877
                                                                   --------     --------     ---------     ---------
Total cost of revenues.......................................         1,468        1,180         5,055         3,320
                                                                   --------     --------     ---------     ---------
Gross profit.................................................         8,538        8,928        28,140        29,471
Operating expenses:
     Research and development................................         2,514        2,856         8,480         7,874
     Sales and marketing.....................................         7,075        6,987        25,003        20,611
     General and administrative..............................         2,218        7,691         6,125        10,512
     Restructuring costs.....................................            --           --           789            --
     Amortization of deferred compensation...................           572          585         1,690         1,127
                                                                   --------     --------     ---------     ---------
Total operating expenses.....................................        12,379       18,119        42,087        40,124
                                                                   --------     --------     ---------     ---------
Loss from operations.........................................        (3,841)      (9,191)      (13,947)      (10,653)
Interest income, net ........................................           597        1,205         2,279         3,409
                                                                   --------     --------     ---------     ---------
Loss before income taxes.....................................        (3,244)      (7,986)      (11,668)       (7,244)
Provision for income taxes...................................            30                        138           150
                                                                   --------     --------     ---------     ---------
Net loss.....................................................      $ (3,274)    $ (7,986)    $ (11,806)    $  (7,394)
                                                                   ========     =========    =========     =========
Other comprehensive loss:
     Translation adjustment..................................            (7)          (4)          (13)          (21)
     Unrealized gain on investments..........................           149          130           226           172
                                                                   --------     --------     ---------     ---------
Comprehensive loss...........................................      $ (3,132)    $ (7,860)    $  11,593)    $  (7,243)
                                                                   ========     ========     =========     =========


Basic and diluted net loss per share.........................      $   (.14)    $   (.34)    $    (.50)    $    (.32)
                                                                   ========     ========     =========     =========

Shares used in per share calculation - basic and diluted             23,749       23,255        23,677        23,130
                                                                   ========     ========     =========     =========
</TABLE>

                             See accompanying notes.

                                        2

<PAGE>

                                  MARIMBA, INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                       Nine Months Ended
                                                                         September 30,
                                                                    -----------------------
                                                                       2001          2000
                                                                    ----------   ----------
                                                                           (unaudited)
<S>                                                                 <C>          <C>

Operating activities:
Net loss........................................................    $(11,806)    $  (7,394)
Adjustments to reconcile net loss to net cash used in
  operating activities:
     Depreciation and amortization..............................       1,578         1,184
     Amortization of deferred compensation......................       1,690         1,127
     Other......................................................         148           (20)
     Changes in operating assets and liabilities:
       Accounts receivable, net.................................       3,019          (293)
       Note receivable from officer.............................        (782)           --
       Prepaid expenses and other current assets................         263          (188)
       Other assets.............................................          --          (258)
       Accounts payable and accrued liabilities.................        (630)        2,453
       Accrued compensation.....................................       1,330)        1,651
       Long-term liabilities....................................          94            --
       Deferred revenue.........................................      (2,969)        1,239
                                                                    --------     ---------
          Net cash used in operating activities.................     (10,725)         (499)
                                                                    --------     ---------

Investing activities:
Capital expenditures............................................      (1,711)       (1,616)
Purchases of investments........................................     (52,593)      (21,640)
Sales of investments............................................      50,087        36,010
                                                                    --------     ---------
          Net cash used in investing activities.................      (4,217)      (12,754)
                                                                    --------     ---------

Financing activities:
Proceeds from issuance of common stock, net of repurchases......       1,078         1,569
Proceeds from transfer of financial assets......................       3,853            --
Principal payments under capital lease obligations..............          --           (55)
                                                                    --------     ---------
          Net cash provided by financing activities.............       4,931         1,514
                                                                    --------     ---------
Net increase (decrease) in cash and cash equivalents............     (10,011)       13,769
Cash and cash equivalents at beginning of period................      33,122        22,263
                                                                    --------     ---------
Cash and cash equivalents at end of period......................    $ 23,111     $  36,032
                                                                    ========     =========

Supplemental disclosure of noncash investing and financing
   activities:
       Deferred compensation reduction due to cancelled shares      $    566     $      --
                                                                    ========     =========
</TABLE>

                             See accompanying notes.

                                        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.

     The following table presents the calculation of basic and diluted net loss
per share:

<TABLE>
<CAPTION>
                                                                    Three Months Ended           Nine Months Ended
                                                                       September 30,               September 30,
                                                                --------------------------  -------------------------
                                                                    2001           2000         2001           2000
                                                                ------------  ------------  ------------  -----------
                                                                        (in thousands, except per share data)
<S>                                                             <C>           <C>           <C>           <C>

Net loss...............................................            $ (3,274)     $ (7,986)   $(11,806)      $ (7,394)
                                                                   ========      ========    ========       ========

Weighted-average shares - Basic:
Weighted-average shares of common stock outstanding                  23,834        23,353      23,817         23,303
   less weighted-average shares subject to repurchase..                 (85)          (98)       (140)          (173)
                                                                   --------      --------   ---------       --------
Weighted-average shares - Basic and diluted............              23,749        23,255      23,677         23,130
                                                                   ========      ========   =========       ========

Net loss per share - Basic and diluted...................          $   (.14)     $   (.34)  $    (.50)      $   (.32)
                                                                   ========      ========   =========       ========
</TABLE>

     Weighted-average options outstanding to purchase 6,481,000 and 6,689,000
shares of common stock for the three and nine months ended September 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 resellers is not
recognized until the product is 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.

                                        4

<PAGE>

     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 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.

Credit Risk and Revenue Concentrations

     Two customers accounted for 17% and 10% of total revenues in the third
quarter of 2001. In the third quarter of 2000, two customers accounted for 30%
and 10% of revenues. In the first nine months of 2001, one customer accounted
for 10% of revenues, and in the comparable period of 2000, two customers
accounted for 10% each of revenues.

     Marimba performs ongoing credit evaluations of customers, but does not
generally require collateral. We grant credit terms to most customers ranging
from 30 to 90 days, however in some instances Marimba may provide longer payment
terms.

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. There were
no transfers of accounts receivable during the third quarter of 2001. Transfers
of accounts receivables for cash are reported in the consolidated statement of
cash flows as a financing activity.

Related Party Transactions

     During the third quarter of 2001, Marimba executed a software license
agreement in the amount of $443,000 with a customer, whose chief executive
officer is a member of Marimba's board of directors. As of September 30, 2001,
the amount was included in accounts receivable.

2.   Legal Matters

Securities Litigation

     Beginning in April 2001, a number of substantially 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 have since been consolidated into a single action. The complaints
allege, among other things, that the underwriters of our 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. Similar complaints have been filed against over 180
other issuers that have had initial public offerings since 1998 and all such
actions have been included in a single coordinated proceeding. Marimba intends
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.

                                        5

<PAGE>

Beck Systems, Inc. vs. Marimba Software, Inc.

     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 (Beck Systems, Inc. v. Marimba, Inc. et al., Civil Action
No. 01 C 5207), alleging infringement of two patents held by Beck Systems. Beck
Systems alleges that Marimba's infringement relates to the manufacture and
marketing of Marimba's desktop/mobile management and server management products.
On August 29, 2001, Marimba filed its answer to Beck Systems' complaint, denying
any liability to Beck Systems, asserting various affirmative defenses, and
seeking the court's determination that the patents in suit are not infringed,
are invalid, and/or are unenforceable. Marimba further requested the court for
an award of attorneys' fees, costs and expenses. The parties are currently
engaged in discovery for this suit, and a trial date has not been set. Marimba
intends 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 requires 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
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

                                        6

<PAGE>

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.

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 assist companies to expand their market reach, reduce
costs through streamlined 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
its new server management product line. Marimba also markets embedded management
products that are designed to allow independent software vendors and device
manufacturers to incorporate software updating capabilities into their products.

     Revenues to date have been derived primarily from the license of our
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 are 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 end-user customers, OEM partners
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 or OEM partners, 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
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. Advance
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 $40.3 million at September 30, 2001.

                                        7

<PAGE>

We believe that our success depends on further increasing our customer base and
on growth in our market overall. Accordingly, over the long term, 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.

Results of Operations

     The following table sets forth certain statements of operations data as a
percentage of total revenues for the three and nine months ended September 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.

<TABLE>
<CAPTION>
                                                        Three Months Ended           Nine Months Ended
                                                          September 30,                September 30,
                                                       ----------------------     ----------------------
                                                          2001          2000         2001          2000
                                                       ---------    ---------     --------     ---------
<S>                                                    <C>          <C>           <C>          <C>
    Consolidated Statement of Operations Data:
    Revenues:
      License....................................         58.8%        64.9%         63.7%        72.5%
      Service....................................         41.2         35.1          36.3         27.5
                                                         -----        -----         -----        -----
    Total revenues...............................        100.0        100.0         100.0        100.0
    Cost of revenues:
      License....................................          1.5          1.1           1.2          1.3
      Service....................................         13.2         10.6          14.0          8.8
                                                         -----        -----         -----        -----
    Total cost of revenues.......................         14.7         11.7          15.2         10.1
                                                         -----        -----         -----        -----
    Gross margin.................................         85.3         88.3          84.8         89.9
    Operating expenses:
      Research and development...................         25.1         28.3          25.5         24.0
      Sales and marketing........................         70.7         69.1          75.3         62.9
      General and administrative.................         22.2         76.1          18.5         32.1
      Restructuring..............................           -            -            2.4            -
      Amortization of deferred compensation......          5.7          5.7           5.1          3.4
                                                        ------        -----         -----        -----
    Total operating expenses.....................        123.7        179.2         126.8        122.4
                                                        ------        -----         -----        -----
    Loss from operations.........................        (38.4)       (90.9)        (42.0)       (32.5)
    Interest income, net.........................          5.9         11.9           6.9         10.4
                                                        ------        -----         -----        -----
    Loss before income taxes.....................         32.5)       (79.0)        (35.1)       (22.1)
    Provision for income taxes...................         (0.3)        (0.0)         (0.4)         0.5
                                                        ------        -----         -----        -----
    Net loss.....................................        (32.8)%      (79.0)%       (35.5)%      (22.6)%
                                                        ======        =====         =====        =====
</TABLE>

Revenues

     Total revenues decreased $102,000 or 1%, to $10.0 million in the third
quarter of 2001 from $10.1 million in the third quarter of 2000. For the nine
months ended September 30, 2001, total revenues increased 1% to $33.2 million
from $32.8 million in the comparable period of 2000.

     License Revenues. License revenues decreased $680,000, or 10%, to $5.9
million in the third quarter of 2001 from $6.6 million in the third quarter of
2000. License revenues in the nine months ended September 30, 2001 decreased 11%
to $21.1 million from $23.8 million in the comparable period of 2000. As a
percentage of total revenues, license revenues decreased to 59% and 64% of total
revenues in the three and nine month periods ended September 30, 2001,
respectively, from 65% and 73% in each of the comparable periods of 2000. The
lower license revenues for the comparable three and nine month periods were
primarily a result of a delay in anticipated customer purchases caused by the
general weakness in the economy, compounded by the terrorist attacks on
September 11, 2001.

                                        8

<PAGE>

     Service Revenues. Service revenues include maintenance and support,
consulting and training. Service revenues increased $578,000, or 16%, to $4.1
million in the third quarter of 2001 from $3.5 million in the third quarter of
2000. Service revenues in the nine months ended September 30, 2001 increased
$3.0 million, or 34%, to $12.1 million from $9.0 million in the comparable
period of 2000. As a percentage of total revenues, service revenues increased to
41% and 36% of total revenues in the three and nine month periods ended
September 30, 2001, respectively, from 35% and 27% in each of the comparable
periods of 2000. The increase in service revenues for the comparative three and
nine month periods was due primarily to increased maintenance revenues from a
larger installed base of customers.

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 nine month periods ended September 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 $256,000, or
24%, to $1.3 million in the third quarter of 2001 from $1.1 million in the third
quarter of 2000. For the first nine months of 2001, cost of service revenues
increased $1.7 million, or 62%, to $4.6 million from $2.9 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
decreased $342,000, or 12%, to $2.5 million in the third quarter of 2001 from
$2.9 million in the third quarter of 2000. For the first nine months of 2001,
research and development expenses increased $606,000, or 8%, to $8.5 million
from $7.9 million in the comparable period of 2000. The decrease in R&D expenses
in the comparable three month period reflects Marimba's recent actions to reduce
overall staffing levels. R&D expenses increased over the comparable nine month
period due primarily to an increase in personnel and related costs.

     Sales and Marketing. Sales and marketing expenses remained relatively level
in the third quarter of 2001 compared with the third quarter of 2000. For the
first nine months of 2001, sales and marketing expenses increased $4.4 million,
or 21%, to $25.0 million from $20.6 million in the comparable period of 2000.
Sales and marketing expenses increased for the comparative nine month period in
absolute dollars due primarily to increased personnel-related costs resulting
from the continued expansion of our domestic and international sales
organizations, sales promotion activities and higher recruiting costs.

     General and Administrative. General and administrative ("G&A") expenses
decreased $5.5 million, or 71%, to $2.2 million in the third quarter of 2001
from $7.7 million in the third quarter of 2000. For the first nine months of
2001, G&A expenses decreased $4.4 million, or 42% to $6.1 million from $10.5
million in the comparable period of 2000. The decreases in G&A expenses were due
primarily to costs of settling a patent lawsuit in November 2000. The settlement
was recorded as a subsequent event for the quarter ended September 30, 2000.
Also, during the third quarter of 2000, Marimba established a $2.1 million
reserve for a credit loss from a customer.

     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. Additional deferred compensation of approximately $2.5
million was recorded in July 2001 for certain restricted stock awards.
Amortization of deferred compensation was $572,000 and $1.7 million for the
three and nine months ended September 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 $597,000 in the
third quarter of 2001 from $1.2 million in the third quarter of 2000. For the
first nine months of 2001, interest income, net, decreased to $2.3 million from
$3.4

                                        9

<PAGE>

million in the comparable period of 2000. The decrease for the comparative three
and nine month periods resulted from lower investment balances and lower
interest rates.

Liquidity and Capital Resources

     As of September 30, 2001, our principal sources of liquidity included
approximately $61.4 million of cash and total investments, comprised of the
following: $23.1 million of cash and cash equivalents, $25.3 million of
short-term investments and $13.0 million of long-term investments. Long-term
investments generally have maturities between one and two years from the time of
acquisition. Net cash used in operating activities for the first nine months of
2001 primarily reflects our net loss for the period and decreases in deferred
revenue, accrued compensation, partially offset by a decrease in accounts
receivable.

     Net cash used by investing activities was approximately $4.2 million for
the first nine months of 2001, primarily relating to purchases of investments
and purchases of property and equipment, partially offset by sales and
maturities of investments.

     Net cash provided by financing activities was $4.9 million for the first
nine 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.
There were no transfers of accounts receivable during the third quarter of 2001.

     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 September 30, 2001, we had an accumulated deficit
of approximately $40.3 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 historical revenue levels. In fact, we may not have any revenue
growth, and our revenues could decline.

                                       10

<PAGE>

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 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. 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
or unforeseen events (such as the terrorist attacks of September 11, 2001).

We Expect Significant Increases in Our Operating Expenses

     Despite recent cost cutting measures implemented by Marimba, over the long
term, we intend to substantially increase our operating expenses as we:

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

     .    Increase our research and development activities;

     .    Expand our customer support and professional services organizations;
          and

     .    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.

                                       11

<PAGE>

     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.

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

     During the third quarter of 2001, revenues from our server management and
embedded management product lines accounted for 20% and 5%, respectively, of
total license revenues. There can be no assurance that the revenues from each of
these product lines will grow, in absolute amount or as a percentage of total
license revenues, or that our server management products and embedded 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, Richard Wyckoff. We have in the past lost
senior management personnel. Several members of our senior management are
relatively new to Marimba, including our president and chief executive officer,
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.

                                       12

<PAGE>

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 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.

We Are Exposed to General Economic Conditions and Reductions in Corporate IT
Spending, and the Current Economic Downturn May Continue to Adversely Impact Our
Business

     Our business is subject to the effects of general economic conditions and,
in particular, market conditions in the industries that we serve. We believe
that our operating results are being adversely impacted by recent unfavorable
general economic conditions and reductions in corporate IT spending. In
addition, the terrorist attacks upon the U.S. on September 11, 2001 have added
(or exacerbated) general economic, political and other uncertainties. Finally,
since many of our customers may be suffering adverse effects of the general
economic slowdown, we may find that collecting accounts receivable from existing
or new customers will take longer than we expect or that some accounts
receivable will become uncollectable. If these economic conditions do not
improve, or if we experience a worsening in general economic conditions or
corporate IT spending, our business and operating results could continue to be
adversely impacted.

Our Markets Are Highly Competitive

     Our markets are 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:

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

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

     .    Desktop software management suites.

     In addition, we compete with various methods of software distribution,
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

                                       13

<PAGE>

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 could prevent, limit or interfere with our ability to
make, use or sell our products. As a result, we may be found to infringe the
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:

     .    Our paying monetary damages, which could be tripled if the
          infringement is found to have been willful;

     .    The issuance of a preliminary or permanent injunction requiring us to
          stop selling one or more of our products in their current forms;

     .    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;

     .    Our having to reimburse the holder of the infringed intellectual
          property for some or all of its attorneys' fees and costs;

     .    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

     .    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

                                       14

<PAGE>

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. There is no assurance that new sales representatives will
ultimately become productive. In prior quarters, Marimba's license revenues have
often resulted from contracts closed by just a few sales representatives. If
Marimba were to lose qualified and productive sales personnel, our revenues
would be adversely impacted. Furthermore, the cost of hiring and training
replacement personnel could be significant. 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.

     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, and
expanding internationally is expensive. However, we may not be successful in
increasing our international sales force or sales revenue. 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

                                       15

<PAGE>

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, if
significant changes were to be made to Java virtual machine implementations of
Sun Microsystems, Inc. and other vendors or if 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.

     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.

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,

                                       16

<PAGE>

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 certain of 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.

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:

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

     .    investment grade state and local government obligations;

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

     .    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.

                                       17

<PAGE>

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 U.S.
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.


                                       18

<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

Securities Litigation

     Beginning in April 2001, a number of substantially 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 have since been consolidated into a single action. The complaints
allege, among other things, that the underwriters of our 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. Similar complaints have been filed against over 180
other issuers that have had initial public offerings since 1998 and all such
actions have been included in a single coordinated proceeding. Marimba intends
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, Inc. vs. Marimba Software, Inc.

     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 (Beck Systems, Inc. v. Marimba, Inc. et al., Civil Action
No. 01 C 5207), alleging infringement of two patents held by Beck Systems. Beck
Systems alleges that Marimba's infringement relates to the manufacture and
marketing of Marimba's desktop/mobile management and server management products.
On August 29, 2001, Marimba filed its answer to Beck Systems' complaint, denying
any liability to Beck Systems, asserting various affirmative defenses, and
seeking the court's determination that the patents in suit are not infringed,
are invalid, and/or are unenforceable. Marimba further requested the court for
an award of attorneys' fees, costs and expenses. The parties are currently
engaged in discovery for this suit, and a trial date has not been set. Marimba
intends 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 AND USE OF PROCEEDS.

     None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

     None.

                                       19

<PAGE>

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

     At Marimba's 2001 Annual Meeting of Stockholders held on September 6, 2001,
our stockholders voted on and approved each of the below four proposals by the
votes indicated below. A total of 14,996,206 shares were represented and voting
in person or by proxy at the meeting.

     1.   Proposal to elect the following directors to serve for a term ending
          upon Marimba's 2002 Annual Meeting of Stockholders or until their
          successors have been duly elected and qualified:

                                       For                Withheld      Unvoted
                                       ---                --------      -------

          Kim K. Polese               14,650,296           345,910         0
          Richard C. Wyckoff          14,846,131           150,075         0
          Aneel Bhusri                13,983,091         1,013,115         0
          Eric J. Keller              14,850,181           146,025         0
          Raymond J. Lane             14,837,795           158,411         0
          Douglas J. MacKenzie        14,850,291           145,915         0
          Stratton D. Sclavos         13,955,434         1,040,772         0

     2.   Proposal to approve an amendment to the 1999 Omnibus Equity Incentive
          Plan, including an increase to the number of shares available for
          issuance under the plan:

          For:               13,295,767
          Against:            1,677,642
          Abstain:               22,797
          Unvoted:                    0

     3.   Proposal to approve an amendment to the 1999 Non-Employees Directors
          Option Plan, including an increase to the number of shares to be
          awarded periodically to non-employee directors:

          For:               13,552,275
          Against:            1,416,999
          Abstain:               26,932
          Unvoted:                    0

     4.   Proposal to ratify the appointment of Ernst & Young LLP as Marimba's
          independent public accountants for the fiscal year ending December 31,
          2001:

          For:               14,960,101
          Against:               25,094
          Abstain:               11,011
          Unvoted:                    0


ITEM 5.  OTHER INFORMATION.

     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.

                                       20

<PAGE>

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

     (a) Exhibits.

         Exhibit No.       Description
         -----------       -----------
         10.1              1999 Omnibus Equity Incentive Plan and forms of
                           agreements thereunder, as amended to date.

         10.2              1999 Non-Employee Directors Option Plan, as amended
                           to date.

     (b) Reports on Form 8-K.

         None.



                                  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:   November 1, 2001         By: /s/ Kenneth W. Owyang
                                    --------------------------------------------
                                    Kenneth W. Owyang
                                    Vice President, Finance and Chief Financial
                                    Officer
                                    (Principal Financial and Accounting Officer)


                                       21

<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No.        Description
-----------        -----------
<S>                <C>
     10.1          1999 Omnibus Equity Incentive Plan and forms of agreements thereunder, as amended to date.

     10.2          1999 Non-Employee Directors Option Plan, as amended to date.
</TABLE>



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