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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              ---------------------

                                    Form 10-Q

     |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 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
April 30, 2001 was 23,850,732.


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


<PAGE>


                                  MARIMBA, INC.

                                      INDEX

                                                                        Page No.
                                                                        --------
Part I.  Financial Information

Item 1.       Condensed Consolidated Balance Sheets as of March 31, 2001
              and December 31, 2000                                           1

              Condensed Consolidated Statements of Operations for the
              Three Months Ended March 31, 2001 and 2000                      2

              Condensed Consolidated Statements of Cash Flows for the
              Three Months Ended March 31, 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                                              18

Item 2.       Changes in Securities and Use of Proceeds                      18

Item 3.       Defaults Upon Senior Securities                                18

Item 4.       Submission of Matters to a Vote of Security Holders            18

Item 5.       Other Information                                              18

Item 6.       Exhibits and Reports on Form 8-K                               18

Signature                                                                    19


<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

                                  MARIMBA, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


                                                      March 31,    December 31,
                                                         2001          2000
                                                       --------      --------
                                                     (unaudited)

ASSETS
Current assets:
     Cash and cash equivalents .....................   $ 36,230      $ 33,122
     Short-term investments ........................     24,709        31,407
     Accounts receivable, net ......................      7,972        12,500
     Prepaid expenses and other current assets .....        944         1,599
                                                       --------      --------
          Total current assets .....................     69,855        78,628
Property and equipment, net ........................      5,310         4,274
Long-term investments ..............................      4,696         4,146
Other assets .......................................        360           360
                                                       --------      --------
                                                       $ 80,221      $ 87,408
                                                       ========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued liabilities ......   $  2,570      $  2,881
     Accrued compensation ..........................      3,748         4,055
     Deferred revenue ..............................     10,475        13,516
                                                       --------      --------
          Total current liabilities ................     16,793        20,452

Long-term liabilities ..............................        198           153

Stockholders' equity:
     Common stock ..................................          2             2
     Additional paid-in capital ....................     97,777        97,222
     Deferred compensation .........................     (1,290)       (1,882)
     Cumulative translation adjustment .............        (43)          (42)
     Unrealized gain on investments ................        130            33
     Accumulated deficit ...........................    (33,346)      (28,530)
                                                       --------      --------
          Stockholders' equity .....................     63,230        66,803
                                                       --------      --------
                                                       $ 80,221      $ 87,408
                                                       ========      ========

                             See accompanying notes.

                                       1

<PAGE>


                                  MARIMBA, INC.

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


                                                            Three Months Ended
                                                                 March 31,
                                                           --------------------
                                                             2001        2000
                                                           --------    --------
                                                                (unaudited)

Revenues:
     License ...........................................   $  6,983    $  8,061
     Service ...........................................      4,021       2,506
                                                           --------    --------
Total revenues .........................................     11,004      10,567
Cost of revenues:
     License ...........................................        123         132
     Service ...........................................      1,865         891
                                                           --------    --------
Total cost of revenues .................................      1,988       1,023
                                                           --------    --------
Gross profit ...........................................      9,016       9,544
Operating expenses:
     Research and development ..........................      3,255       2,542
     Sales and marketing ...............................      8,869       6,915
     General and administrative ........................      2,126       1,346
     Amortization of deferred compensation .............        592         336
                                                           --------    --------
Total operating expenses ...............................     14,842      11,139
                                                           --------    --------
Loss from operations ...................................     (5,826)     (1,595)
Interest income, net ...................................      1,031       1,055
                                                           --------    --------
Loss before income taxes ...............................     (4,795)       (540)
Provision for income taxes .............................         21         119
                                                           --------    --------
Net loss ...............................................     (4,816)       (659)

Other comprehensive loss:
     Translation adjustment ............................         (1)         (6)
     Unrealized gain (loss) on investments .............         97         (24)
                                                           --------    --------
Comprehensive loss .....................................   $ (4,720)   $   (689)
                                                           ========    ========

Basic and diluted net loss per share ...................   $   (.20)   $   (.03)
                                                           ========    ========

Weighted-average shares of common stock outstanding
  used in computing basic and diluted net loss per share     23,575      22,994
                                                           ========    ========

                             See accompanying notes.

                                       2

<PAGE>


<TABLE>
                                                            MARIMBA, INC.

                                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           (in thousands)


<CAPTION>
                                                                                                           Three Months Ended
                                                                                                                March 31,
                                                                                                     ------------------------------
                                                                                                       2001                  2000
                                                                                                     --------              --------
                                                                                                                (unaudited)
<S>                                                                                                  <C>                   <C>
Operating activities:
Net loss .................................................................................           $ (4,816)             $   (659)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation and amortization ........................................................                500                   365
    Amortization of deferred compensation ................................................                592                   336
    Other ................................................................................                 (1)                   (6)
    Changes in operating assets and liabilities:
      Accounts receivable, net ...........................................................              4,528                (3,155)
      Prepaid expenses and other current assets ..........................................                655                   361
      Other assets .......................................................................               --                    (325)
      Accounts payable and accrued liabilities ...........................................               (311)                 (411)
      Accrued compensation ...............................................................               (307)                 (287)
      Long-term liabilities ..............................................................                 45                  --
      Deferred revenue ...................................................................             (3,041)                1,739
                                                                                                     --------              --------
        Net cash used in operating activities ............................................             (2,156)               (2,042)
                                                                                                     --------              --------

Investing activities:
  Capital expenditures ...................................................................             (1,536)                 (552)
  Purchases of investments ...............................................................            (16,587)               (6,316)
  Sales of investments ...................................................................             22,832                 8,500
                                                                                                     --------              --------
        Net cash provided by investing activities ........................................              4,709                 1,632
                                                                                                     --------              --------

Financing activities:
  Proceeds from issuance of common stock, net of repurchases .............................                555                   466
  Principal payments under capital lease obligations .....................................               --                     (33)
                                                                                                     --------              --------
        Net cash provided by financing activities ........................................                555                   433
                                                                                                     --------              --------
Net increase in cash and cash equivalents ................................................              3,108                    23
Cash and cash equivalents at beginning of period .........................................             33,122                22,263
                                                                                                     --------              --------
Cash and cash equivalents at end of period ...............................................           $ 36,230              $ 22,286
                                                                                                     ========              ========

Supplemental disclosure of noncash investing and financing
  activities
  Deferred compensation reduction due to cancelled shares ................................           $   --                $    257
                                                                                                     ========              ========

<FN>
                                                       See accompanying notes.
</FN>
</TABLE>

                                                                 3

<PAGE>


                                  MARIMBA, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   Basis of Presentation

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

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:


                                                          Three Months Ended
                                                               March 31,
                                                        ---------------------
                                                          2001         2000
                                                        --------     --------
                                                       (in thousands, except per
                                                              share data)

        Net loss ....................................   $ (4,816)    $   (659)
                                                        ========     ========

        Basic and diluted:
           Weighted-average shares of common stock
             outstanding .............................    23,710       23,258

           Less weighted-average shares subject
             to repurchase ...........................      (135)        (264)
                                                        --------     --------
           Weighted-average shares -
             basic and diluted .......................    23,575       22,994
                                                        --------     --------
           Net loss per share -
             basic and diluted .......................  $   (.20)    $   (.03)
                                                        ========     ========


     Marimba has excluded all  outstanding  stock options and shares  subject to
repurchase by Marimba from the calculation of diluted loss per share because all
such securities are  antidilutive  for all periods  presented.  Weighted-average
options  outstanding to purchase  6,662,826 and 3,539,217 shares of common stock
for the three  months  ended  March 31,  2001 and 2000,  respectively,  were not
included in the  computation  of diluted net loss per share,  because the effect
would be antidilutive.  Such securities, had they been dilutive, would have been
included in the  computation  of diluted  net loss per share using the  treasury
stock method.

Revenue Recognition

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

                                       4

<PAGE>


fee is collected.  Advance  payments are recorded as deferred  revenue until the
products are shipped,  services are provided,  or obligations are met. Marimba's
products do not require significant customization.

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

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

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

Revenue Concentration

     Three  customers  accounted  for 24%, 12% and 12% of total  revenues in the
first quarter of 2001, as compared to two customers  accounting  for 25% and 15%
of total revenues in the first quarter of 2000.

2.   Legal Matters

     In late April and early May 2001, three complaints were filed in the United
States  District  Court for the  Southern  District of New York naming  Marimba,
Inc., Morgan Stanley & Co., Incorporated, Credit Suisse First Boston Corporation
and Bear Stearns & Co. Inc. as  defendants  (No. 01 CV 3483,  No. 01 CV 3833 and
No. 01 CV 3858).  In addition to naming the above parties,  the complaints  also
name as  defendants  Fred Gerson,  Kim Polese and Arthur van Hoff,  existing and
former  directors  and/or  officers of Marimba.  The plaintiffs seek to have the
matters certified as a class action of purchasers of the common stock of Marimba
during the period from April 30, 1999 to March 27, 2000. The complaints  allege,
among other  things,  that Marimba and the  individual  defendants  named in the
complaints  violated  the  federal  securities  laws by issuing  and selling our
common stock in our initial public offering in April 1999 without  disclosing to
investors that certain of the underwriters in the offering  allegedly  solicited
and received  excessive  and  undisclosed  commissions  from certain  investors.
Similar  complaints  have been filed  against a number of other issuers that had
initial public  offerings in 1999 and 2000.  Marimba  anticipates that the three
actions  described  above,  and any additional  related  complaints  that may be
filed,  will be  consolidated  into a single  action.  We intend to defend these
actions vigorously.  However,  due to the inherent  uncertainties of litigation,
Marimba cannot  accurately  predict the ultimate outcome of the litigation.  Any
unfavorable  outcome of 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.

4.   Subsequent Events

     On April  26,  2001,  Marimba  announced  a  restructuring  plan.  The plan
involved the elimination of approximately 20% of the workforce,  or 60 employees
and independent contractors across all company departments. In addition, Marimba
has  implemented  or plans to  implement 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
plans to record a non-recurring  charge in the second quarter of 2001 of between
$700,000 and $800,000 related to the restructuring plan. Actual costs related to
the  severance  packages of these  terminated  employees  are  expected to total
approximately  $400,000,  which we expect to pay primarily in the second quarter
of 2001.

                                       5

<PAGE>


     On April 27,  2001,  Marimba  offered a  voluntary  stock  option  exchange
program to its  employees.  Members of our Board of Directors  and our executive
officers,  however,  are not eligible to participate  in the program.  Under the
program, Marimba employees have been given the opportunity, if they so choose by
no later than May 25,  2001,  to cancel  outstanding  stock  options  previously
granted to them at an exercise  price of at least  $8.00 per share,  in exchange
for new  options to be granted no earlier  than six months and one day after May
25, 2001; provided,  however,  that option granted on or after November 25, 2000
and having an exercise price under $8.00 per share must also be exchanged if the
option holder chooses to exchange one or more options  granted prior to November
25, 2000 at an exercise price of at least $8.00 per share.  The number of shares
subject to the new options will be determined by applying an exchange  ratio, in
the range of 1:1 to 1:4  (i.e.,  one new option  share for every  four  canceled
option shares), which is 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  has  been   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.

     In a separate  transaction,  Marimba has entered into an  agreement,  dated
March 16, 2001, with its President and Chief Executive Officer,  to exchange his
outstanding option for a new option to purchase Marimba's common stock that will
be granted no earlier  than six  months and one day after  March 16,  2001.  The
exercise  price of such new  option  will be equal to the  closing  price of our
common  stock on the  Nasdaq  National  Market  on the date  the new  option  is
granted.   This  option   exchange   has  been   designed  to  comply  with  FAS
Interpretation  No. 44  "Accounting  for Certain  Transactions  Involving  Stock
Compensation"  and is not  expected  to  result in any  additional  compensation
charges or variable plan accounting.

                                       6

<PAGE>


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

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

Overview

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

     In January  1997,  we released our first version of Castanet and since that
time have continued to develop and market the Castanet  product line and enhance
the core Castanet infrastructure with additional Castanet products. In the first
half of 2000,  Marimba  released  two  products  in a new  product  line  called
Timbale.  In April 2001, we announced  plans to  reconfigure  and modularize our
existing  Castanet and Timbale  product  lines into three new product  families:
server management, desktop/mobile management and embedded management.

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

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

     Since inception,  we have made substantial  investments in sales, marketing
and  research  and  development  to expand and  enhance  our  product  lines and
increase the market  awareness  of Marimba and our  products.  We have  incurred
significant   losses  since   inception  and  had  an  accumulated   deficit  of
approximately  $33.3  million at March 31,  2001.  We believe  that our  success
depends  on further  increasing  our  customer  base and on growth in our market
overall.  Accordingly,  we  intend  to  continue  to  invest  heavily  in sales,
marketing and research and development.

                                       7

<PAGE>

     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.

     On April  26,  2001,  Marimba  announced  a  restructuring  plan.  The plan
involved the elimination of approximately 20% of the workforce,  or 60 employees
and independent contractors across all company departments. In addition, Marimba
has  implemented  or plans to  implement 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
plans to record a non-recurring  charge in the second quarter of 2001 of between
$700,000 and $800,000 related to the restructuring plan. Actual costs related to
the  severance  packages of these  terminated  employees  are  expected to total
approximately  $400,000,  which we expect to pay primarily in the second quarter
of 2001.

Results of Operations

     The following  table sets forth certain  statements of operations data as a
percentage of total revenues for the three months ended March 31, 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
include  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.

                                                               Three Months
                                                                March 31,
                                                          -------------------
                                                           2001          2000
                                                          -----         -----
      Consolidated Statement of Operations Data:
      Revenues:
        License ....................................       63.5%         76.3%
        Service ....................................       36.5          23.7
                                                          -----         -----
      Total revenues ...............................      100.0         100.0
      Cost of revenues:
        License ....................................        1.1           1.2
        Service ....................................       17.0           8.4
                                                          -----         -----
      Total cost of revenues .......................       18.1           9.6
                                                          -----         -----
      Gross margin .................................       81.9          90.4
      Operating expenses:
        Research and development ...................       29.6          24.1
        Sales and marketing ........................       80.6          65.4
        General and administrative .................       19.3          12.7
        Amortization of deferred compensation ......        5.4           3.2
                                                          -----         -----
      Total operating expenses .....................      134.9         105.4
                                                          -----         -----
      Loss from operations .........................      (53.0)        (15.0)
      Interest income, net .........................        9.4          10.0
                                                          -----         -----
      Loss before income taxes .....................      (43.6)         (5.0)
      Provision for income taxes ...................       (0.2)         (1.2)
                                                          -----         -----
      Net loss .....................................      (43.8)%        (6.2)%
                                                          =====         =====

Revenues

     Total  revenues  increased  $437,000 or 4.1%, to $11.0 million in the first
quarter of 2001 from $10.6 million in the first quarter of 2000. Three customers
accounted  for 24%, 12% and 12% of total  revenues in the first quarter of 2001,
whereas two customers  accounted for 25% and 15% of total  revenues in the first
quarter of 2000.

                                       8

<PAGE>


     License Revenues.  License revenues decreased $1.1 million, or 13%, to $7.0
million in the first  quarter of 2001 from $8.1 million in the first  quarter of
2000.  The  reduction  of  license  revenues  was due to a  decrease  in product
licenses sold, reflecting the impact of the general economic slowdown, primarily
through delays in customers' IT purchases and lengthening sales cycles.

     Service  Revenues.   Service  revenues  include  maintenance  and  support,
consulting and training.  Service  revenues  increased $1.5 million,  or 60%, to
$4.0 million in the first quarter of 2001 from $2.5 million in the first quarter
of 2000. As a percentage of total revenues, service revenues increased to 37% in
the first quarter of 2001 from 24% in the first quarter of 2000. The increase in
service  revenues,   in  absolute  dollars,   was  due  primarily  to  increased
maintenance  revenues  from a larger  installed  base of customers and increased
revenue from consulting services.

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 first  quarter  of 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  to $1.9
million in the first quarter of 2001 from $891,000 in the first quarter of 2000,
representing  46% and 36% of service revenue in each period,  respectively.  The
increase in cost of service  revenues in the first  quarter of 2001  compared to
the first  quarter of 2000 was due  primarily to growth in our customer  support
and professional services organizations.

Operating Expenses

     Research  and  Development.   Research  and  development  ("R&D")  expenses
increased to $3.3 million in the first  quarter of 2001 from $2.5 million in the
first quarter of 2000. R&D expenses, as a percentage of net revenues,  increased
to 29.6% in the quarter  ended  March 31,  2001 from 24.1% in the quarter  ended
March 31, 2000. R&D expenses  increased in absolute  dollars due primarily to an
increase in  personnel-related  costs,  higher  recruiting  costs, as well as an
increase in third-party consulting costs.

     Sales and Marketing. Sales and marketing expenses increased to $8.9 million
in the first  quarter of 2001 from $6.9  million  in the first  quarter of 2000.
Sales and marketing  expenses,  as a percentage  of net  revenues,  increased to
80.6% in the quarter  ended March 31, 2001 from 65.4% in the quarter ended March
31,  2000.  Sales and  marketing  expenses  increased  in  absolute  dollars due
primarily to increased  personnel-related  costs,  resulting  from the continued
expansion of our  domestic  and  international  sales  organizations,  increased
marketing programs, sales promotion activities and higher recruiting costs.

     General and  Administrative.  General and  administrative  ("G&A") expenses
increased to $2.1 million in the first  quarter of 2001 from $1.3 million in the
first quarter of 2000. G&A expenses, as a percentage of net revenues,  increased
to 19.3% in the quarter  ended  March 31,  2001 from 12.7% in the quarter  ended
March 31, 2000.  The  increase in G&A  expenses  was due  primarily to increased
personnel  costs  and  increased  bad debt  provisions,  partially  offset  by a
decrease in  anticipated  legal fees due to the  settlement  of our lawsuit with
Novadigm in November 2000.

     Deferred  Compensation.  We recorded deferred compensation of approximately
$1.4 million in 1998, representing the difference between the exercise prices of
options  granted to acquire  940,500  shares of common stock during 1998 and the
deemed fair value for  financial  reporting  purposes of our common stock on the
grant dates.  In addition,  we granted options to purchase common stock in April
1999 for which we recorded  additional  deferred  compensation of  approximately
$2.0  million.  In fiscal  year  2000,  we  recorded  deferred  compensation  of
approximately $1.9 million, net of reductions of $703,000 during the same period
due to  cancelled  shares,  which  represented  the  intrinsic  value of certain
restricted  stock awards.  Deferred  compensation  is being  amortized  over the
vesting  periods of the  options on a graded  vesting  method.  Amortization  of
deferred  compensation  was  $592,000  for the quarter  ended March 31, 2001 and
$336,000 for the first quarter of 2000.

     Interest  Income,  Net.  Interest  income,  net,  was $1.0 million and $1.1
million for the quarters ended March 31, 2001 and 2000, respectively.

                                       9

<PAGE>


Liquidity and Capital Resources

     As  of  March  31,  2001,  our  principal  sources  of  liquidity  included
approximately  $36.2 million of cash and cash  equivalents  and $29.5 million of
investments in marketable securities.  Net cash used in operating activities for
the first quarter of 2001  primarily  reflects our net loss for the period and a
decrease  in  deferred  revenue,  partially  offset by a  decrease  in  accounts
receivable.

     Net cash provided by investing  activities was  approximately  $3.7 million
for the quarter ended March 31, 2001,  primarily related to sales and maturities
of  investments,  partially  offset by purchases of property and  equipment  and
purchases of investments.

     Net cash  provided by  financing  activities  was  $555,000,  the result of
proceeds from the exercise of stock options.

     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 March 31, 2001, we had an accumulated deficit of
approximately $33.3 million. We expect to increase our research and development,
sales and marketing and general and  administrative  expenses.  As a result,  we
will need to increase our quarterly revenues to offset these increasing expenses
and return to  profitability.  We may not be able to sustain our recent  revenue
growth  rates.  In fact,  we may not have any revenue  growth,  and our revenues
could decline.

Fluctuations in Quarterly Operating Results and Absence of Significant Backlog

     Our quarterly  operating results have varied  significantly in the past and
will  likely vary  significantly  in the future.  As a result,  we believe  that
period-to-period  comparisons  of our operating  results are not  meaningful and
should  not be relied  upon as  indicators  of our  future  performance.  In the
future,  our  operating  results  may be below the  expectations  of  securities
analysts  and  investors.  Our failure to meet these  expectations  would likely
seriously  harm the market  price of our common  stock.  Operating  results vary
depending  on a number of factors,  many of which are outside our  control.  Our
operating  results may also depend on general  economic  factors,  including  an
economic slowdown or recession.

     A substantial  portion of our revenues for most quarters has been booked in
the last month of the quarter and the  magnitude  of quarterly  fluctuations  in
operating  results may not become  evident until late in or even at the end of a
particular quarter. In addition,  we anticipate that the size of customer orders
may increase as we focus on larger

                                       10

<PAGE>


business accounts.  As a result, a delay in recognizing revenue,  even from just
one account,  could have a significant negative impact on our operating results.
In the past, a significant  portion of our sales have been realized near the end
of a  quarter.  A delay in an  anticipated  sale  past  the end of a  particular
quarter could negatively impact our operating results.

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

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

We Expect Significant Increases in Our Operating Expenses

     While we expect Marimba's restructuring plan to lower expenses in the third
and  fourth  quarters  of 2001 over the long  term,  we intend to  substantially
increase our operating expenses as we:

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

     o   Increase our research and development activities;

     o   Expand our customer  support and professional  services  organizations;
         and

     o   Expand our distribution channels.

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

Our Success Depends on Desktop/Mobile Management (Castanet) Product Family

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

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

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

     During the first  quarter of 2001 and fiscal year 2000,  revenues  from our
server management product line accounted for 23% and 12%, respectively, of total
license revenues.  There can be no assurance that the revenues from this product
line will grow, in absolute amount or as a percentage of total license revenues,
or that our server management  products will meet customer  expectations or gain
widespread  market  acceptance.  To  provide  comprehensive  systems  management
solutions,  we will need to develop and  introduce  new products  and  services,
which offer  functionality that we do not currently provide.  We may not be able
to develop  these  technologies,  and  therefore,  we may not be able to offer a
comprehensive  systems  management  solution.  In addition,  in the past we have
experienced delays in new

                                       11

<PAGE>


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  of 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,  John Olsen,  and our Chairman and Chief
Strategy  Officer,  Kim  Polese.  We have in the  past  lost  senior  management
personnel.  Several  members  of our senior  management  are  relatively  new to
Marimba, and our success will depend in part on the successful  assimilation and
performance of these individuals.

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

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

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

                                       12

<PAGE>


Our Markets Are Highly Competitive

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

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

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

     o   Desktop software management suites.

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

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

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

Protection of Our Intellectual Property Is Limited

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

We May Be Found to Infringe Proprietary Rights of Others

     Other  companies,  including our  competitors,  may obtain patents or other
proprietary rights that would prevent, or limit or interfere with our ability to
make, use or sell our products.  As a result, we may be found to infringe on the
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
litigation,  and  intellectual  property  litigation could force us to do one or
more of the following:

     o   Cease  selling,  incorporating  or  using  products  or  services  that
         incorporate the challenged intellectual property;

     o   Obtain a license from the holder of the infringed intellectual property
         right; and

     o   Redesign products or services.

     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.

                                       13

<PAGE>


We Are At Risk of  Securities  Class  Action  Litigation  Due to Our Stock Price
Volatility

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

We Need to Develop Third-Party Distribution Relationships

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

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

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

We Need to Expand Our Professional Services

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

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

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

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

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

                                       14

<PAGE>


We Must Manage Our Growth and Expansion

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

We Rely on Third-Party Software and Applications

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

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

Software Defects in Our Products Would Harm Our Business

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

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

Volatility of Stock Price

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

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company. Such litigation against Marimba could result in substantial costs and a
diversion of our attention  and  resources  and seriously  harm our business and
operating results.

Our Future Capital Needs Are Uncertain

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

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

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

We Face Challenges Stemming from Our Emerging Markets

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

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

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

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

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

We Must Respond to Rapid Technological Change and Evolving Industry Standards

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

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<PAGE>


require  long  development  and  testing  periods.  Our  failure  to  conform to
prevailing  standards could have a negative effect on our business and operating
results.

We Face Risks Associated with Potential Acquisitions

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


ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Sensitivity

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

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

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

     o   investment grade state and local government obligations;

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

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

Exchange Rate Sensitivity

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

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<PAGE>


PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

     In late April and early May 2001, three complaints were filed in the United
States  District  Court for the  Southern  District of New York naming  Marimba,
Inc., Morgan Stanley & Co., Incorporated, Credit Suisse First Boston Corporation
and Bear Stearns & Co. Inc. as  defendants  (No. 01 CV 3483,  No. 01 CV 3833 and
No. 01 CV 3858).  In addition to naming the above parties,  the complaints  also
name as  defendants  Fred Gerson,  Kim Polese and Arthur van Hoff,  existing and
former  directors  and/or  officers of Marimba.  The plaintiffs seek to have the
matters certified as a class action of purchasers of the common stock of Marimba
during the period from April 30, 1999 to March 27, 2000. The complaints  allege,
among other  things,  that Marimba and the  individual  defendants  named in the
complaints  violated  the  federal  securities  laws by issuing  and selling our
common stock in our initial public offering in April 1999 without  disclosing to
investors that certain of the underwriters in the offering  allegedly  solicited
and received  excessive  and  undisclosed  commissions  from certain  investors.
Similar  complaints  have been filed  against a number of other issuers that had
initial public  offerings in 1999 and 2000.  Marimba  anticipates that the three
actions  described  above,  and any additional  related  complaints  that may be
filed,  will be  consolidated  into a single  action.  We intend to defend these
actions vigorously.  However,  due to the inherent  uncertainties of litigation,
Marimba cannot  accurately  predict the ultimate outcome of the litigation.  Any
unfavorable  outcome of litigation could have an adverse impact on our business,
financial condition and results of operations.


ITEM 2. CHANGES IN SECURITIES.

     None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

     None.


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

     None.


ITEM 5. OTHER INFORMATION.

     None.


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

     (a) Exhibits.

         None.

     (b) Reports on Form 8-K.

         None.

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                                  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:   May 15, 2001                         By: /s/ Kenneth W. Owyang
                                                --------------------------------
                                                Kenneth W. Owyang
                                                Vice President, Finance and
                                                Chief Financial Officer
                                                (Principal Financial and
                                                Accounting Officer)

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