<PAGE>   1

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(MARK ONE)

[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


                                NETGENESIS CORP.
             (Exact name of registrant as specified in its charter)

                DELAWARE                                 04-3236862
     (State or other jurisdiction of                  (I.R.S. Employer
     incorporation or organization)                  Identification No.)

                               ONE ALEWIFE CENTER
                               CAMBRIDGE, MA 02140
          (Address of principal executive offices, including zip code)

                                 (617) 665-9200
              (Registrant's telephone number, including area code)


        Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                          Yes    [X]      No    [ ]


        As of May 7, 2001, there were 21,862,978 shares of the registrant's
Common Stock outstanding.

<PAGE>   2

                                NETGENESIS CORP.

                                      INDEX

<TABLE>
<CAPTION>
                                                                           PAGE
<S>                                                                        <C>
PART I. FINANCIAL INFORMATION

    ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)
             CONDENSED BALANCE SHEETS
                 AT MARCH 31, 2001 AND DECEMBER 31, 2000                     3

             STATEMENTS OF OPERATIONS
                 FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000          4

             STATEMENTS OF CASH FLOWS
                 FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000          5

             NOTES TO UNAUDITED FINANCIAL STATEMENTS                         6

    ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS                         8

    ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     20

PART II. OTHER INFORMATION

    ITEM 1.  LEGAL PROCEEDINGS                                              20

    ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                      20

    ITEM 3.  DEFAULTS UPON SENIOR SECURITIES                                21

    ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            21

    ITEM 5.  OTHER INFORMATION                                              21

    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                               21

SIGNATURES                                                                  22
</TABLE>



                                       2
<PAGE>   3

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                                NETGENESIS CORP.
                            CONDENSED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                                                  MARCH 31,     DECEMBER 31,
                                                                                    2001          2000
                                                                                 -----------    -----------
<S>                                                                              <C>            <C>
      ASSETS
      Current assets:
        Cash and cash equivalents ..........................................     $  33,127      $  15,564
        Restricted cash ....................................................         1,901            490
        Short-term investments and marketable securities ...................        13,625         32,870
        Accounts receivable, net ...........................................         4,575          9,100
        Prepaid expenses and other current assets ..........................         1,850          2,283
                                                                                 ---------      ---------
          Total current assets .............................................        55,078         60,307

      Marketable securities ................................................         1,336          4,312
      Fixed assets, net ....................................................         9,948         10,861
      Other assets .........................................................         3,616          3,505
                                                                                 ---------      ---------
          Total assets .....................................................     $  69,978      $  78,985
                                                                                 =========      =========
      LIABILITIES AND STOCKHOLDERS' EQUITY

      Current liabilities:
        Current portion of capital lease obligations .......................         1,571            442
        Current portion of long-term debt ..................................         1,066          1,354
        Accounts payable ...................................................           706            664
        Accrued expenses ...................................................         4,121          3,428
        Deferred revenue ...................................................         2,574          2,738
                                                                                 ---------      ---------
          Total current liabilities ........................................        10,038          8,626

      Long-term portion of capital lease obligations .......................         1,840            362
      Long-term debt .......................................................            --            121
      Other long-term liabilities ..........................................           364            164
                                                                                 ---------      ---------
          Total liabilities ................................................        12,242          9,273
                                                                                 ---------      ---------
Stockholders' equity:
        Common stock, $.001 par value; 100,000 shares authorized; 21,763 and
         21,690 issued and outstanding at March 31, 2001 and December 31,
         2000, respectively ................................................            22             22
        Additional paid-in capital .........................................       130,522        130,739
        Deferred compensation ..............................................        (5,897)        (6,946)
        Note receivable from stockholder ...................................           (96)           (96)
        Accumulated deficit ................................................       (67,014)       (54,129)
        Accumulated other comprehensive income .............................           199            122
                                                                                 ---------      ---------
          Total stockholders' equity .......................................        57,736         69,712
                                                                                 ---------      ---------
          Total liabilities and stockholders' equity .......................     $  69,978      $  78,985
                                                                                 =========      =========
</TABLE>

The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>   4

                                NETGENESIS CORP.
                            STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED
                                                                                ---------------------
                                                                                MARCH 31,    MARCH 31,
                                                                                  2001          2000
                                                                                --------      --------
<S>                                                                             <C>           <C>
Revenue:
  Product revenue .........................................................     $    837      $  2,082
  Service revenue .........................................................        2,845         1,682
                                                                                --------      --------
     Total revenue ........................................................        3,682         3,764
                                                                                --------      --------
Cost of revenue:
  Cost of product revenue .................................................          119           128
  Cost of service revenue (excludes stock-based
    compensation  of $114 and $95 for  the  three
    months ended March 31, 2001 and 2000,
    respectively) .........................................................        3,292         1,802
                                                                                --------      --------
    Total cost of revenue .................................................        3,411         1,930
                                                                                --------      --------
Gross profit ..............................................................          271         1,834
                                                                                --------      --------
Operating expenses:
Sales and marketing (excludes stock-based compensation of $354 and $489 for
    the three months ended March 31, 2001 and 2000,
    respectively) .........................................................        7,434         4,080
Research and development (excludes stock-based
    compensation  of $119 and $83 for the three
    months ended March 31, 2001 and 2000,
    respectively) .........................................................        2,770         2,477
General and administrative (excludes stock-based
    compensation  of $145 and $102 for the three
    months ended March 31, 2001 and 2000
    respectively) .........................................................        2,670         1,682
Stock-based compensation ..................................................          732           769
                                                                                --------      --------
     Total operating expenses .............................................       13,606         9,008
                                                                                --------      --------
Loss from operations ......................................................      (13,335)       (7,174)
Other income:
  Interest and other income, net ..........................................          450           363
  Gain on sale of short-term investments and
  marketable securities ...................................................           --         1,148
                                                                                --------      --------
Net loss ..................................................................     $(12,885)       (5,663)
                                                                                --------      --------
Dividends and accretion of redeemable preferred
  stock ...................................................................           --          (442)
                                                                                --------      --------
Net loss available to common stockholders .................................     $(12,885)     $ (6,105)
                                                                                ========      ========
Basic and diluted net loss available to common
  stockholders per share ..................................................     $  (0.62)     $  (0.73)
                                                                                ========      ========
Shares used in computing  basic and diluted net
  loss available to common stockholders per share .........................       20,930         8,366

Pro forma basic and diluted net loss per common
  share ...................................................................                   $  (0.34)
                                                                                              ========
Shares used in computing pro forma basic and
  diluted net loss per common share .......................................                     16,709
</TABLE>


The accompanying notes are an integral part of these financial statements.

                                       4
<PAGE>   5



                                NETGENESIS CORP.
                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED
                                                      -----------------------
                                                      MARCH 31,     MARCH 31,
                                                        2001          2000
                                                      --------      --------
<S>                                                   <C>           <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss ........................................     $(12,885)     $ (5,663)
Adjustments  to  reconcile  net  loss to net cash
used in operating activities:
  Depreciation and amortization .................        1,177           399
  Gain  on  sale of  short-term  investments  and
      marketable securities .....................           --        (1,148)
  Loss on disposal of fixed assets ..............            9            --
  Non-cash interest expense .....................           21            21
  Stock-based compensation expense ..............          732           769
  Increase (decrease) resulting from changes in
     operating assets and liabilities:
     Accounts receivable ........................        4,525        (1,326)
     Prepaid expenses and other assets ..........          433          (439)
     Other assets ...............................         (194)          (56)
     Deferred revenue ...........................         (164)         (105)
     Accounts payable ...........................           42           469
     Accrued expenses ...........................          693          (245)
     Other liabilities ..........................          200            --
                                                      --------      --------
       Net cash used in operating activities ....       (5,411)       (7,324)
                                                      --------      --------
CASH FLOW FROM INVESTING ACTIVITIES:
  Purchases of fixed assets .....................         (190)       (2,166)
  Purchases of short-term investments and
     marketable securities ......................       (1,000)      (61,472)
  Proceeds from sales of  short-term  investments
     and marketable securities ..................       23,298         1,148
  Restricted cash ...............................       (1,411)           --
                                                      --------      --------
       Net cash provided by (used in) investing
       activities ...............................       20,697       (62,490)
                                                      --------      --------
CASH FLOW FROM FINANCING ACTIVITIES:
  Proceeds  from  sale  and  leaseback  of  fixed
     assets .....................................        2,660           547
  Principal payments of capital lease obligations          (53)          (24)
  Repayment of debt .............................         (430)         (488)
  Proceeds from the issuance of common stock ....           --        80,653
  Proceeds from exercise of stock options .......          100            30
  Repurchase of restricted common stock .........           --           (11)
                                                      --------      --------
       Net cash provided by financing activities         2,277        80,707
                                                      --------      --------
Net increase in cash and cash equivalents .......       17,563        10,893
Cash and cash equivalents, beginning of period ..       15,564         9,643
                                                      --------      --------
Cash and cash equivalents, end of period ........     $ 33,127      $ 20,536
                                                      ========      ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Dividends and accretion of preferred stock ....     $     --      $    442

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
  FINANCING ACTIVITIES:
  Additions  to  capital  lease  obligations  for
     sale and leaseback of fixed assets .........        2,660           547
  Conversion of redeemable convertible preferred
     stock to common stock ......................           --        36,575
  Conversion of convertible preferred stock
     to common stock ............................           --         1,717
</TABLE>
The accompanying notes are an integral part of these financial statements.


                                       5
<PAGE>   6

NOTES TO UNAUDITED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements reflect all
adjustments (consisting only of normal recurring adjustments) which, in the
opinion of management, are necessary for a fair presentation of the financial
results for the periods shown.

The accompanying unaudited financial statements have been prepared in accordance
with the instructions for Form 10-Q and therefore do not include all information
and footnotes necessary for a complete presentation of the results of
operations, financial position, and cash flows of the Company, in conformity
with generally accepted accounting principles. These unaudited financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission.

The results of operations for the current interim period are not necessarily
indicative of results to be expected for the entire current year or other future
interim periods.

NOTE 2 - NET LOSS AVAILABLE TO COMMON STOCKHOLDERS PER COMMON SHARE AND PRO
FORMA NET LOSS PER COMMON SHARE

Basic and diluted net loss available to common stockholders per share is
computed using the weighted average number of common shares outstanding. Options
and warrants were not included in the computation of diluted net loss available
to common stockholders per share because the effect would be anti-dilutive.

Pro forma net loss per share has been computed as described above except that it
gives effect to the conversion of preferred stock outstanding as if the
conversion took place at the beginning of the period presented:

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED
                                                                        ---------------------
                                                                        MARCH 31,     MARCH 31,
                                                                          2001          2000
                                                                        ---------     ---------
<S>                                                                     <C>           <C>
 Net loss .........................................................     $(12,885)     $ (5,663)
 Dividends and accretion of redeemable preferred stock ............           --          (442)
                                                                        --------      --------
 Net loss available to common stockholders ........................     $(12,885)     $ (6,105)
      Weighted average shares .....................................       21,719         9,473
      Weighted average unvested common shares subject to repurchase         (789)       (1,107)
                                                                        --------      --------
 Shares used in computing basic and diluted net loss available to
   common stockholders per share ..................................       20,930         8,366
 Net loss available to common stockholders per share:
      Basic and diluted ...........................................     $  (0.62)     $  (0.73)
                                                                        ========      ========

Conversion of convertible preferred stock .........................                      8,343
Pro forma shares used in computing basic and diluted net loss
  per share .......................................................                     16,709
Pro forma net loss per share:
      Basic and diluted ...........................................                   $  (0.34)
                                                                                      ========
</TABLE>

                                       6
<PAGE>   7


NOTE 3 - EQUITY TRANSACTIONS

Amortization of deferred stock-based compensation recognized for the three
months ended March 31, 2001 and 2000 was $445,000 and $418,000, respectively.
During the quarter ended March 31, 2001 the Company recorded amortization of
stock-based compensation of $287,000 related to the acquisition of a German
distributor of software in October 2000. In addition, during the three months
ended March 31, 2000, the Company recorded stock-based compensation expense of
$351,000 related to a separation agreement entered into with a former employee.
For the three months ended March 31, 2001, the Company recorded a decrease in
deferred stock-based compensation of $317,000 related to the forfeiture of stock
options.

NOTE 4 - SIGNIFICANT CUSTOMER AND GEOGRAPHIC INFORMATION

Revenue by geographic region is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                         THREE MONTHS ENDED
                                                                                        --------------------
                                                                                         MARCH 31,   MARCH 31,
                                                                                         2001           2000
                                                                                         ------        ------
<S>                                                                                     <C>            <C>
United States .................................................................         $2,470         $3,246
Europe ........................................................................          1,125            372
Australia .....................................................................             87             53
Other .........................................................................             --             93
                                                                                        ------         ------
Total .........................................................................         $3,682         $3,764
                                                                                        ======         ======
</TABLE>

One customer accounted for more than 10% of revenue for the quarter ended March
31, 2001. A different customer accounted for more than 10% of revenue for the
quarter ended March 31, 2000.

NOTE 5 - COMPREHENSIVE LOSS

The components of comprehensive loss, net of income taxes, are as follows:
(in thousands)

<TABLE>
<CAPTION>
                                                           Three months ended
                                                      March 31,         March 31,
                                                        2001              2000
                                                      ---------         ---------
<S>                                                   <C>               <C>
Net loss ....................................         ($12,885)         ($ 5,663)
Unrealized gain on short-term investments and
 marketable securities ......................               77            (1,098)
                                                      --------          --------
Comprehensive loss ..........................         ($12,808)         ($ 6,761)
                                                      --------          --------
</TABLE>

NOTE 6 - COMMITMENTS AND CONTINGENCIES

In March 2001, the Company entered into two separate sale and leaseback
agreements in which certain fixed assets were sold to a third party and
subsequently leased back to the Company. The lease terms are 24 and 36 months,
respectively. Both leases have been accounted for as capital leases on the
balance sheet. As of March 31, 2001, the outstanding balances on these two
leases were $1.2 million and $1.5 million, respectively. Related to these
transactions, the Company recorded a deferred gain of $437,000, which is being
recognized ratably over the term of the lease through other income.

                                       7
<PAGE>   8


NOTE 7 - RECENT ACCOUNTING PRONOUNCEMENTS

In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a replacement
of FASB Statement No. 125". SFAS No. 140 revises the standards for accounting
for securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but it carries over most of SFAS No. 125's
provisions without reconsideration. This Statement is effective for transfers
and servicing of financial assets and extinguishments of liabilities occurring
after March 31, 2001. This Statement is effective for recognition and
reclassification of collateral and for disclosures related to securitization
transactions and collateral for fiscal years ending after December 15, 2000. We
do not expect the adoption of SFAS No. 140 to have a material impact on our
financial position or results of operations.


NOTE 8 - SUBSEQUENT EVENT

In the second quarter of 2001, in response to changes in our business
environment, the Company implemented a cost reduction program that will result
in restructuring charges of approximately $3.4 million. To reduce payroll and
other related expenditures, the Company will reduce its headcount. The cost to
implement this reduction will be approximately $350,000, with anticipated
savings of approximately $2.7 million per year. We also committed to consolidate
facilities. The cost to reduce these facilities will be approximately $3.1
million.


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

The following information should be read in conjunction with the condensed
historical financial information and the notes thereto included in this report
and Management's Discussion and Analysis of Financial Condition and Results of
Operations and related financial information contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000 (File No. 0-29721).

THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934, INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S
EXPECTATIONS, BELIEFS, INTENTIONS OR FUTURE STRATEGIES THAT ARE SIGNIFIED BY THE
WORDS "EXPECTS", "ANTICIPATES", "INTENDS", "BELIEVES", OR SIMILAR LANGUAGE. ALL
FORWARD-LOOKING STATEMENTS INCLUDED IN THIS DOCUMENT ARE BASED ON INFORMATION
AVAILABLE TO THE COMPANY ON THE DATE HEREOF, AND THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS.
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THESE
FORWARD-LOOKING STATEMENTS INCLUDE THOSE SET FORTH BELOW UNDER THE CAPTION "RISK
FACTORS," AND UNDER THE CAPTION "RISK FACTORS" IN OUR ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2000. THE COMPANY CAUTIONS INVESTORS THAT ITS
BUSINESS AND FINANCIAL PERFORMANCE ARE SUBJECT TO SUBSTANTIAL RISKS AND
UNCERTAINTIES.

OVERVIEW

    We offer e-customer intelligence software that enables companies to
understand and improve their online businesses. We license our software product
to customers for a fee and also provide related maintenance and support
services. In addition, we provide professional consulting services, including
analytic consulting, product implementation, application integration,
customization of e-customer analysis reporting, and training.

    We license our software products to customers primarily on a perpetual,
non-exclusive and non-transferable basis. Our pricing model is based on the
number of CPU's within the customer's managed servers in the customer's
environment, the platform supported and the number of end users of software,
allowing for additional
                                       8
<PAGE>   9
revenue as a customer's requirements grow. Support and maintenance contracts,
which are typically purchased with initial product licenses, and are renewable
annually thereafter, entitle customers to telephone, e-mail and web-based
support and to routine product upgrades, when and if available. The price for
support and maintenance services is based on a percentage of the current list
price of software. Consulting fees for implementation services and training are
charged primarily on a time-and-materials basis.

    Service revenue consists of fees from professional services and from
software maintenance and support. Professional services include analytic
consulting, product implementation, application integration, report
customization, training and support. Professional services fees are typically
recognized as the services are performed.

    Customers typically purchase maintenance and support agreements annually.
Revenue from maintenance and support agreements is recognized ratably over the
term of the agreement, typically one year. Cash receipts from clients and billed
amounts due from clients in excess of revenue recognized are recorded as
deferred revenue. The timing and amount of cash receipts from clients can vary
significantly depending on specific contract terms and can therefore have a
significant impact on the amount of deferred revenue in any given period.

    Since inception, we have incurred substantial costs to develop our
technology and products, to recruit and train personnel for engineering, sales
and marketing and professional services departments, and to establish an
administrative organization. As a result, we have incurred net losses in each
fiscal quarter since December 31, 1994 and, as of March 31, 2001, had an
accumulated deficit of $67.0 million. We anticipate that our operating expenses
will stabilize or decrease over the next several quarters, but will increase in
the long-term as we increase sales and marketing operations, develop new
distribution channels, fund greater levels of research and development, broaden
professional consulting services and support, and improve operational and
financial systems. We expect that these operating expenses, as well as
anticipated capital expenditures, will constitute a material use of our cash
resources. We expect to incur additional losses and continued negative cash flow
from operations, and may not achieve or sustain profitability or positive cash
flow from operations.

    We have recorded deferred stock-based compensation related to grants of
stock options. This amount represents the difference between the exercise price
of these stock option grants and the amount subsequently determined to be the
fair market value of the underlying common stock for financial reporting
purposes at the time of grant. Of this amount, approximately $445,000 was
amortized in the quarter ended March 31, 2001. In addition, we recorded
amortization of stock-based compensation of $287,000 related to stock issued in
connection with the acquisition of a German distributor of software in October
2000. A total of $5.9 million of stock-based compensation will be amortized
ratably over the remaining vesting periods of the stock and options, generally
four years or less, which will affect reported results of operations through
2003. All of these amounts are included in the statements of operation under the
appropriate department.

RESULTS OF OPERATIONS

    Total Revenue. Total revenue decreased by $82,000, or 2%, to $3.7 million
for the quarter ended March 31, 2001 from $3.8 million for the quarter ended
March 31, 2000. One customer accounted for more than 10% of revenue for the
quarter ended March 31, 2001. A different customer accounted for more than 10%
of revenue for the quarter ended March 31, 2000.

    Product Revenue. Product revenue decreased by $1.2 million, or 60%, to
$837,000 for the quarter ended March 31, 2001 from $2.1 million for the quarter
ended March 31, 2000. The decline was largely caused by a downturn in spending
on information technology focused on the internet in the United States which
adversely affected product license sales. Product revenue as a percentage of
total revenue decreased to 23% for the quarter ended March 31, 2001 from 55% for
the quarter ended March 31, 2000. We anticipate that revenue from software
licenses will represent a majority of our revenues in the future. Although
product revenue for the period ending March 31,


                                       9
<PAGE>   10

2001 was lower than historical periods, we believe that product revenue will
increase in future periods.

    Service Revenue. Service revenue increased by $1.2 million, or 69%, to $2.8
million for the quarter ended March 31, 2001 from $1.7 million for the quarter
ended March 31, 2000. Approximately $756,000 of the increase in the dollar
amount of service revenue was attributable to increased implementation and
consulting services chiefly in connection with product license sales from prior
periods, as well as new consulting engagements not connected to product license
sales. The balance of the increase was attributable to greater sales of
maintenance contracts associated with higher dollar value sales of software
licenses in prior periods.

    Cost of Product Revenue. Cost of product revenue consists primarily of
royalties associated with third-party software embedded in our software products
and software product costs, such as user manuals, packaging and media costs.
Cost of product revenue decreased by $9,000, or 7%, to $119,000 for the quarter
ended March 31, 2001 from $128,000 for the quarter ended March 31, 2000. The
decrease was attributable to the reduction in software license fees. Cost of
product revenue as a percentage of product revenue increased to 14% for the
quarter ended March 31, 2001 from 6% for the quarter ended March 31, 2000. The
increase is due to printing and reproduction costs incurred on lower software
license sales. We expect printing and reproduction costs to increase at a lower
rate in proportion to software license sales in future quarters.

    Cost of Service Revenue. Cost of service revenue consists primarily of
salaries, benefits and associated overhead costs of our professional services
organization. Cost of service revenue, excluding stock-based compensation,
increased by $1.5 million, or 83%, to $3.3 million for the quarter ended March
31, 2001 from $1.8 million for the quarter ended March 31, 2000. Substantially
all of the increase was attributable to an increased number of personnel in our
professional services organization, costs related to hiring and training this
personnel, building a management and operational infrastructure, and an increase
in allocated facilities costs. The investment in increased personnel has
resulted in the cost of service revenue exceeding our service revenue. Cost of
service revenue, excluding stock-based compensation, as a percentage of service
revenue increased to 116% for the quarter ended March 31, 2001 from 107% for the
quarter ended March 31, 2000.

    Sales and Marketing Expenses. Sales and marketing expenses consist
primarily of personnel costs, including related overhead costs and commissions,
as well as travel and entertainment expenses, trade show and other promotional
expenses, advertising, and other marketing costs. Sales and marketing expenses,
excluding stock-based compensation, increased by $3.4 million, or 82%, to $7.4
million for the quarter ended March 31, 2001 from $4.1 million for the quarter
ended March 31, 2000. Approximately $2.2 million of the increase was due to
increased personnel in our sales and marketing departments. Approximately
$612,000 of the increase was due to a change in the sales compensation
structure. The balance of the increase was attributable to increased marketing
communications expenditures associated with product introductions and efforts to
create increased awareness of our products and services, as well as in increase
in allocated facilities costs. Sales and marketing expenses, excluding
stock-based compensation, as a percentage of total revenue increased to 202% for
the quarter ended March 31, 2001 from 108% for the quarter ended March 31, 2000.
The increase was due to the hiring of additional personnel and greater marketing
expenses associated with lead generation efforts, as well as lower than expected
product revenue. We expect that sales and marketing expenses will stabilize or
decrease in the near term, and in the long-term, increase in dollar amount due
to increased commissions associated with higher revenues, continued investment
in international distribution capability, and support for new product launches,
brand awareness programs, international expansion and lead generation efforts.

    Research and Development Expenses. Research and development expenses
consist primarily of salaries, benefits and related overhead costs attributable
to our research and development organization, as well as the cost of
consultants. Research and development expenses, excluding stock-based
compensation, increased by $293,000,

                                       10
<PAGE>   11
or 12%, to $2.8 million for the quarter ended March 31, 2001 from $2.5 million
for the quarter ended March 31, 2000. Approximately $440,000 of the increase was
attributable to increased staffing and associated support for software engineers
required to expand and enhance our product offerings, as well as an increase in
allocated facilities costs. The added costs were offset by a decrease of
approximately $147,000 in external contractor costs. Research and development
expenses, excluding stock-based compensation, as a percentage of total revenue
increased to 75% for the quarter ended March 31, 2001 from 66% for the quarter
ended March 31, 2000, primarily due to increased staffing costs, as well as
lower than expected product revenue. We believe that research and development
expenses will stabilize or decrease in the near term, and in the long-term
increase in dollar amount as we hire additional research and development
personnel.

    General and Administrative Expenses. General and administrative expenses
consist primarily of salaries, benefits and overhead costs associated with our
executive, finance, human resource, legal, accounting and internal information
system functions, as well as amortization of intangible assets. General and
administrative expenses, excluding stock-based compensation, increased by
$988,000, or 59%, to $2.7 million for the quarter ended March 31, 2001 from $1.7
million for the quarter ended March 31, 2000. Approximately $574,000 of the
increase was the result of increased staffing and associated expenses necessary
to manage and support our growth. An additional $253,000 of the increase was
attributable to an increase in the provision for bad debts and $83,000 was
attributable to the amortization of intangible assets related to the company's
acquisition of a German distributor of software in October 2000. The balance of
the increase was attributable to increased professional services costs, as well
as an increase in allocated facilities costs. General and administrative
expenses, excluding stock-based compensation, as a percentage of total revenue
increased to 73% for the quarter ended March 31, 2001 from 45% for the quarter
ended March 31, 2000 due primarily to an increase in personnel costs and
provision for bad debts, as well as lower than expected product revenue. We
expect that general and administrative expenses will stabilize or decrease in
the near-term, and in the long-term increase in dollar amount as we expand our
operations and infrastructure to support our planned future growth.

    Stock-based Compensation. We incurred stock-based compensation expense of
$732,000 and $769,000 for the quarters ended March 31, 2001 and 2000,
respectively. Amortization of deferred stock-based compensation recognized for
the three months ended March 31, 2001 and 2000 was $445,000 and $418,000,
respectively. Amortization of the deferred expense is attributable to the
issuance of stock options with exercise prices less than the amount subsequently
determined to be the fair market value of the underlying stock for financial
reporting purposes on the date of grant. These options generally vest over four
years or less. In addition, during the three months ended March 31, 2000, the
Company recorded stock-based compensation expense of $351,000 related to a
separation agreement entered into with a former employee. During the quarter
ended March 31, 2001, $287,000 of stock-based compensation expense was
attributable to stock granted in connection with the acquisition of a German
distributor of software in October, 2000. The remaining deferred compensation
expense of approximately $5.9 million will be amortized ratably over the
remaining vesting periods of the stock and options, and will affect periods
ending after March 31, 2001.

    Other Income. Other income consists of interest income, interest expense,
other income, other expenses, foreign exchange gains and losses, and realized
gain or loss on the sale of marketable securities or the disposal of property,
plant or equipment. Other income decreased by $1.0 million to $450,000 for the
quarter ended March 31, 2001 from $1.5 million in the quarter ended March 31,
2000. The decrease is due to approximately $1.1 million of realized gains on
marketable securities sold in the quarter ended March 31, 2000, offset by higher
interest income earned on larger average outstanding cash and investment
balances during the quarter ended March 31, 2001.

                                       11
<PAGE>   12

RECENT ACCOUNTING PRONOUNCEMENTS

    In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities - a
replacement of FASB Statement No. 125". SFAS No. 140 revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of SFAS
No. 125's provisions without reconsideration. This Statement is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001. This Statement is effective for recognition and
reclassification of collateral and for disclosures related to securitization
transactions and collateral for fiscal years ending after December 15, 2000. We
do not expect the adoption of SFAS No. 140 to have a material impact on our
financial position or results of operations.

LIQUIDITY AND CAPITAL RESOURCES

    Since our inception, we have financed our operations primarily through
private sales of preferred stock, which generated net proceeds of $35.0 million,
and with the net proceeds of $80.3 million from our initial public offering in
February 2000. To a lesser extent, we have financed our operations through debt
and lease financing. As of March 31, 2001, we had $51.7 million in cash and cash
equivalents, restricted cash, and short and long-term investments, a decrease of
$3.2 million from $54.9 million as of December 31, 2000. Of the $51.7 million
and $54.9 million in cash and cash equivalents, restricted cash, and short and
long-term investments on March 31, 2001 and December 31, 2000, respectively,
$1.7 million is restricted cash that serves as collateral for our obligations
under the lease of our headquarters in Cambridge, MA. This restricted cash is
classified as a long-term other asset.

    We used $5.3 million of cash in operations in the quarter ended March 31,
2001 compared to $7.3 million in operations in the quarter ended March 31, 2000.
For the quarter ended March 31, 2001, cash used by operating activities was
primarily attributable to our net loss of $12.9 million. This was offset by
decreases in accounts receivable of $4.5 million and in prepaid and other
current assets of $433,000, an increase in accrued expenses of $693,000, and
non-cash charges of $1.2 million for depreciation and amortization and $732,000
for stock-based compensation.

    Our investing activities resulted in net cash provided of $20.6 million for
the quarter ended March 31, 2001 and net cash used of $62.5 million for the
quarter ended March 31, 2000. For the quarter ended March 31, 2001, $20.8
million of cash was provided by the net purchases and sales of restricted cash,
short-term investments and marketable securities and $214,000 was used for the
purchases of fixed assets. For the quarter ended March 31, 2000, approximately
$61.5 million of cash was used for the purchase of investments and marketable
securities and approximately $2.2 million was used for investment in capital
expenditures.

    Capital expenditures were $214,000 for the quarter ended March 31, 2001, and
$2.2 million for the quarter ended March 31, 2000. Our capital expenditures
consist primarily of purchases of property and equipment, including computer
equipment and software. We expect that our capital expenditures will increase in
the future as we continue to enhance and expand our information systems.

    Cash provided by financing activities was $2.3 million for the quarter ended
March 31, 2001 and $80.7 million for the quarter ended March 31, 2000. The
principal source of financing for the quarter ended March 31, 2000 was our
initial public offering in February, 2000. The principle sources of financing
for the quarter ended March 31, 2001 were two sale and leaseback agreements in
which we sold certain fixed assets to a third party and subsequently leased the
property from the same third party.

    We are a party to a subordinated debt agreement under which we have obtained
a term loan of $3.0 million and an equipment line of credit of up to $1.0
million. The term loans and the equipment line are payable in 36 monthly
installments. As of March 31, 2001, we had $1.1 million outstanding under the
term loan agreement and $648,000 outstanding under the equipment line. No
additional amounts are available for

                                       12
<PAGE>   13

borrowing under the term loan agreement. In order to lease additional equipment
under the equipment line of credit, we must not be in default under the
equipment line or under any other agreement, and there must not have been a
material change in our credit standing or in our ability to perform our
obligations under the equipment line. We believe we were in compliance with
these conditions as of March 31, 2001.

    In March 2001, we entered into two separate sale and leaseback agreements in
which certain of our assets, consisting primarily of computer hardware, were
sold to a third party and subsequently leased back to us. The lease terms are 24
and 36 months, respectively. Both leases have been accounted for as capital
leases on the balance sheet. As of March 31, 2001 the outstanding balances on
these two leases are $1.2 million and $1.5 million, respectively. Related to
these transactions, we recorded a deferred gain of $437,000, which is being
recognized ratably over the term of the lease through other income.

    While we anticipate that our operating expenses will stabilize or decrease
in the short-term, over the long-term we expect to experience significant growth
in operating expenses in order to execute our business plan, particularly
research and development and sales and marketing expenses. As a result, we
anticipate that our operating expenses, as well as planned capital expenditures,
will constitute a material use of our cash resources. In addition, we may
utilize cash resources to fund acquisitions of or investments in complementary
products, services, businesses, or technologies. We believe that the net
proceeds from the sale of common stock in our initial public offering will be
sufficient to meet our working capital and capital expenditure requirements for
at least the next 12 months. Thereafter, we may find it necessary to obtain
additional equity or debt financing. Any needed financing may not be available
to us on commercially reasonable terms, if at all.


RISK FACTORS

The following is a discussion of certain factors that currently affect or may
affect our business, operating results and/or financial condition. Anyone making
an investment decision with respect to our capital stock or other securities is
cautioned to carefully consider these factors, along with the factors discussed
under the heading "Risk Factors" in our Annual Report on Form 10-K for the year
ended December 31, 2000 (File No. 0-29721).

OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO PREDICT OUR FUTURE
OPERATIONS

    Although we were formed in 1994, our current business operations have a
limited history. We introduced the first version of our NetGenesis product (then
called net.Analysis), and related product and services, in January 1996 and
recorded our first revenue from this product and related services in February
1996. Accordingly, there is limited information about our company with which to
evaluate our business and prospects. Before buying our common stock,
consideration should be given to the risks and difficulties frequently
encountered by early stage companies in new and rapidly evolving markets,
particularly those companies whose businesses depend on the Internet.

WE HAVE A HISTORY OF LOSSES, EXPECT TO INCUR SUBSTANTIAL LOSSES AND NEGATIVE
OPERATING CASH FLOWS AND MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY IN THE FUTURE

    We have not achieved profitability since our inception in 1994. As a result
of ongoing operating losses, we had an accumulated deficit of $67.0 million at
March 31, 2001. We expect to continue to incur losses and negative cash flow
from operations in the near term. While we expect operating expenses and capital
expenditures to stabilize or decrease in the near term, we will need to generate
significant revenue to achieve profitability. Also, in the long-term, we expect
operating expenses and capital expenditures to increase as we increase sales and
marketing operations, develop new distribution channels, fund greater levels of
research and development, broaden professional consulting services and support,
and improve operational and financial systems. We will therefore need to
continue to generate substantial revenue to achieve and maintain profitability.
We do not believe that we can sustain in the long-term the percentage rates at
which our revenue has grown in recent quarters. We may not be able to sustain or
increase profitability or cash flows from operations on a quarterly or annual
basis in the

                                       13
<PAGE>   14

future. Our failure to achieve or maintain profitability may materially and
adversely affect the market price of our common stock.

WE EXPECT OUR REVENUE AND RESULTS OF OPERATIONS TO FLUCTUATE. THE MARKET PRICE
OF OUR COMMON STOCK WOULD LIKELY FALL IF OUR QUARTERLY RESULTS ARE LOWER THAN
THE EXPECTATIONS OF SECURITY ANALYSTS OR STOCKHOLDERS

    We have experienced substantial fluctuations in both our annual and
quarterly revenue and results of operations, and we expect those fluctuations to
continue for the foreseeable future. We believe the following factors are those
most likely to cause our revenue and results of operations to fluctuate:

-        uncertain demand for our products and services
-        changes in the market for e-customer intelligence software
-        adverse economic conditions in the United States or Europe
-        the timing of sales and delivery of our products and services
-        the timing of customer implementations of our products
-        the mix of revenue derived from our products and services
-        timing of introductions of new products and services by us or our
         competitors
-        changes in underlying terms of our contracts
-        seasonal trends in our customers' business activity
-        timing of hiring of personnel and changes in productivity of our
         professional services personnel and direct sales personnel

    If our revenue or results of operations fall below the expectations of
securities analysts or investors, the market price of our common stock could
fall. We budget our expenses in part according to the revenue we forecast. A
significant percentage of our expenses, particularly salaries and rent, are
relatively fixed. As a result, if our revenue falls below our expectations, we
may be unable to curtail our expenses quickly enough to avoid losses greater
than expected. As a result, our results of operations may be volatile and
difficult to predict. We do not believe that period-to-period comparisons of our
revenue and operating results are necessarily meaningful. You should not rely on
the results of any one quarter or series of quarters as an indication of future
performance.

WE PARTICIPATE IN THE UNPROVEN MARKET FOR E-CUSTOMER INTELLIGENCE SOFTWARE,
WHICH MAKES THE DEMAND FOR OUR PRODUCTS UNCERTAIN

    The market for e-customer intelligence products and services is in an early
stage of development and may not continue to grow. Accordingly, the demand for
our products is uncertain. Many companies in our target markets are unaware that
e-customer intelligence software such as ours is available or beneficial and may
choose to allocate their resources elsewhere, including to internally developed
analytic capabilities. Moreover, many companies may continue to rely on
traditional offline customer intelligence methods or internally-developed
applications. In order for us to be successful, our potential customers must
recognize the value of and decide to invest in e-customer intelligence software,
and, in particular, adopt our product. The recent downturn in the United States
economy has caused many of our customers to reduce their spending on information
technology products relating to the internet, adversely affecting current demand
for e-customer intelligence software such as ours. Any failure of this market to
continue to develop, including as a result of continued adverse economic
conditions, would seriously harm our business.

MOST OF OUR REVENUE EACH QUARTER IS DERIVED FROM A SMALL NUMBER OF LARGE ORDERS.
IF WE FAIL TO COMPLETE ENOUGH LARGE ORDERS IN ANY QUARTER, OUR REVENUE COULD BE
SIGNIFICANTLY LOWER THAN EXPECTED

    We derive a significant portion of our revenue in each quarter from a small
number of large orders. For example, during the quarters ended March 31, 2001
and 2000, at least one customer accounted for more than 10% of our total
revenue. Our quarterly operating results could be adversely affected if we were
unable to complete one or more large orders in any quarter.

                                       14
<PAGE>   15

OUR SALES CYCLES ARE LONG AND UNPREDICTABLE, MAKING IT DIFFICULT TO FORECAST OUR
REVENUES AND BUDGET OUR EXPENSES

    Our sales cycles are long and unpredictable, in part because we generally
need to educate potential customers about the benefits of e-customer
intelligence software. In addition, we believe that, for many of our potential
customers, the purchase of our software and services can represent a significant
portion of their web site budget and a substantial commitment of personnel
resources. As a result, we experience widely varying sales cycles that typically
range from two to six months or more. Our long and varying sales cycles make it
difficult to predict the quarter in which particular sales may occur and,
therefore, to forecast our revenue and budget our expenses. Moreover, a
significant portion of our sales tend to occur within the last month of a
quarter, making it difficult to predict revenue until late in the quarter and to
adjust expenses accordingly.

OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED BY SMALL DELAYS IN CUSTOMER
ORDERS OR PRODUCT INSTALLATIONS

    Small delays in customer orders can cause significant variability in our
license revenue and operating results for any particular period. We derive a
substantial portion of our revenue from the sale of software products and
related services. Our revenue recognition policy generally permits us to
recognize revenue for product license fees upon shipment and professional
services upon performance. Any end of quarter delays in orders for delivery or
product installation schedules could harm operating results for that quarter.

DIMINUTION OR CONSOLIDATION OF OUR CLIENT AND PROSPECT BASE COULD LIMIT OUR
FUTURE REVENUE STREAMS, CAUSING AN ADVERSE AFFECT ON OUR REVENUE

    In recent months, a substantial number of businesses that operate over the
internet have ceased or reduced the scope of their operations. In addition,
consolidation continues to play an important role in the strategic initiatives
of our client and prospect base. To the extent that our current or potential
customers cease their operations or combine their businesses with companies that
already use our technology, or technologies similar to ours, the continued
demand for our product and service offerings could be reduced or eliminated, and
our future revenue streams could be adversely affected.

WE FACE INTENSE COMPETITION, AND IF WE ARE UNABLE TO COMPETE SUCCESSFULLY, WE
COULD EXPERIENCE REDUCED DEMAND FOR OUR PRODUCTS AND SERVICES, PRICE REDUCTIONS
AND REDUCED GROSS MARGINS FOR OUR PRODUCTS AND SERVICES, ANY OF WHICH WOULD
SERIOUSLY HARM OUR BUSINESS

    Even though the market for e-customer intelligence software and other web
site analysis software is immature, it is already intensely competitive,
fragmented, evolving and subject to rapid technological change. We expect
competition to intensify in the future. Increased competition could result in
reduced demand for our products and services, price reductions and reduced gross
margins for our products and services, any of which could seriously harm our
business.

    We may not be able to compete successfully against current and future
competitors. Many of our competitors have longer operating histories and
significantly greater financial, technical, marketing and other resources than
we do. They may also have significantly greater name recognition and a larger
installed base of customers. In addition, many of our competitors have
well-established relationships with our current and potential customers and have
extensive knowledge of our target markets. As a result, our competitors may be
able to respond more quickly to evolving industry standards and changes in
customer requirements, or to devote greater resources to the development,
promotion and sale of their products than we can. In the past, we have lost
potential customers to competitors for various reasons and may continue to do
so.

                                       15
<PAGE>   16

OUR ABILITY TO INCREASE REVENUE DEPENDS ON EXPANDING OUR DIRECT SALES FORCE,
WHICH MAY BE DIFFICULT BECAUSE OF THE SHORTAGE OF QUALIFIED SALES PERSONNEL AND
BECAUSE IT TAKES TIME FOR NEW HIRES TO BECOME PRODUCTIVE

    If we are unable to significantly expand our direct sales force, we may not
increase our market share or revenue, which could seriously harm our business.
To date, we have derived the substantial majority of our revenue from the
efforts of our direct sales force. We believe we must increase the size and
productivity of our direct sales force in order to increase revenue. Competition
for qualified sales personnel is intense, and we may not be able to hire a
sufficient number of sales people with the skills we need. In addition, the
competition for qualified sales personnel may make it difficult to retain the
personnel we have hired or hire in the future. Moreover, the technical nature of
our products lengthens the time it takes for our new sales people to become
productive, typically three to six months. This lag in productivity may make it
more difficult to meet our sales growth targets. Further, we may not generate
sufficient sales to offset the increased expense resulting from growing our
sales force, and we may be unable to manage a larger sales force.

IF WE ARE UNABLE TO EXPAND OUR INDIRECT SALES THROUGH INTERNET-ORIENTED SYSTEMS
INTEGRATORS, RESELLERS, ORIGINAL EQUIPMENT MANUFACTURERS AND APPLICATION SERVICE
PROVIDERS, WE MAY NOT MAINTAIN OR INCREASE OUR MARKET SHARE OR REVENUE, WHICH
COULD SERIOUSLY HARM OUR BUSINESS

    Our strategy includes developing relationships with a variety of
Internet-oriented systems integrators, resellers, original equipment
manufacturers and application service providers, in the United States and
abroad, to augment the efforts of our direct sales force. These third parties
may not succeed in marketing or selling our products and services. We have
little or no control over the activities of these third parties or the viability
of their businesses, and poor performance by any of them could injure our
reputation, create liabilities for us and seriously harm our business. These
third parties may also market and sell competing products and services, which
could adversely affect sales of our products and services. We may be unable to
effectively manage potential conflicts among these third parties. Our reliance
on these third parties may also increase our credit risk because we effectively
bear the risk of non-payment by both the third parties and their customers. Any
failure by these parties to pay for our products and services in a timely manner
could reduce our cash flows and harm our financial condition.

BECAUSE THERE IS INTENSE COMPETITION FOR QUALIFIED PERSONNEL IN OUR INDUSTRY, WE
MAY NOT BE ABLE TO RECRUIT OR RETAIN THE PERSONNEL WE NEED, WHICH COULD
ADVERSELY AFFECT OUR ABILITY TO ACHIEVE OUR BUSINESS OBJECTIVES

    Our ability to achieve our business objectives could be adversely affected
if we cannot identify, attract, hire, train, retain and motivate qualified
personnel. In particular, we are seeking to hire highly skilled systems
engineers and other technical and engineering personnel and employees for our
professional services organization. Because of the technical nature of our
products, it typically takes several months to train our professional service
personnel to provide services effectively. If we are unable to expand and train
our professional services staff, we could be unable to meet customer demand for
our services, which could cause customer dissatisfaction and lost sales. Our
headquarters are located in the metropolitan Boston, Massachusetts area, and
competition for qualified personnel in this area, as well as the other areas
where we need personnel, is intense. Competition is particularly strong for
qualified systems engineers and other software development and technical
personnel. Many other employers are able to offer significantly more attractive
compensation and benefits than we do. We may be unable to recruit and retain the
personnel we need. In addition, a significant portion of our employees
compensation is in the form of stock options at exercise prices significantly
above current market value. This may affect our ability to retain these
employees. Our business would be seriously harmed if we are unable to retain our
existing employees or to hire the other highly qualified personnel we need.


                                       16
<PAGE>   17

THE EXPANSION OF OUR BUSINESS HAS PLACED, AND CONTINUES TO PLACE, A SIGNIFICANT
STRAIN ON OUR MANAGEMENT, OPERATING SYSTEMS AND RESOURCES AND COULD SERIOUSLY
HARM US

    Our failure to properly manage the expansion of our business could seriously
harm us. Until recently, our business has experienced significant and rapid
expansion that has placed, and continues to place, significant demands on our
administrative, operational, and financial personnel and systems. Additional
expansion by us may further strain our management, financial, and other
resources. There can be no assurance that our systems, procedures, controls, and
existing space will be adequate to support expansion of our operations. Our
future operating results will substantially depend on the ability of our
officers and key employees to manage changing business conditions and to
implement and improve our operational, financial control and reporting systems.
If we are unable to respond to and manage changing business conditions, the
quality of our services and our results of operations could be materially
adversely affected.

FUTURE EXPANSION OF OUR INTERNATIONAL OPERATIONS WILL REQUIRE SIGNIFICANT
MANAGEMENT ATTENTION AND FINANCIAL RESOURCES AND OUR EFFORTS TO EXPAND
INTERNATIONALLY MAY NOT SUCCEED

    We intend to expand our international operations and international sales and
marketing efforts, particularly in Europe and Asia. We currently have offices in
the United Kingdom, Canada, Germany, Sweden, and Australia, and are pursuing
business through indirect channels in other European countries and in Japan. We
have limited experience in developing localized versions of our software
products and in marketing, selling and distributing our software and services
internationally. To successfully expand international sales, we must expand our
international operations, recruit additional international sales and support
personnel, and expand our international distribution channels. This
international expansion strategy will require significant management attention
and financial resources, and we may not be successful in implementing our
strategy. Our failure to manage these risks adequately could seriously harm our
business.

IF REVENUES DO NOT MEET INTERNAL OR ANALYST EXPECTATIONS, WE MIGHT BE REQUIRED
TO IMPLEMENT EXPENSE REDUCTION PROGRAMS, WHICH COULD CAUSE SIGNIFICANT STRAIN ON
REMAINING PERSONNEL AND ADVERSE EFFECTS ON OUR RESULTS OF OPERATIONS

    Our personnel and expense levels are planned to support anticipated levels
of sales of our products and services. In April 2001, we announced that we
had reduced expenses by means of an employee termination and facilities
consolidation. If revenues do not meet internal or analyst expectations, we
might be required to implement further expense reduction programs, which could
include additional reductions in our headcount. In such circumstances, the
remaining personnel could feel significant strain in performing their roles and
responsibilities and our ability to sell and support our products and to develop
new and enhanced products could be adversely affected.

WE MAY NEED TO ACQUIRE COMPLEMENTARY PRODUCTS, SERVICES, BUSINESSES OR
TECHNOLOGIES TO REMAIN COMPETITIVE. ACQUISITIONS MAY BE UNAVAILABLE TO US OR MAY
EXPOSE US TO RISKS THAT COULD NEGATIVELY AFFECT OUR OPERATING RESULTS

    We believe our customers will increasingly demand additional product
capabilities, features and services. Our internal resources may be inadequate to
meet those demands on a timely basis. As a result, we may need to acquire
products, services, businesses, technologies or other capabilities in order to
remain competitive. Our failure to meet customer demands could seriously harm
our business. We may be unable to successfully identify or acquire on
commercially reasonable terms the products, services, businesses, technologies
or capabilities that we need. Many of our competitors have greater financial
resources and more well-established industry relationships than we do, and may
therefore compete more effectively for acquisition opportunities. If we make an
acquisition, we may be exposed to additional risks that could seriously harm our
business, including the following:


                                       17
<PAGE>   18

-        acquired products, businesses, services, technologies and capabilities
         may not meet customer needs or may not achieve or sustain widespread
         market acceptance

-        we may encounter difficulties in assimilating acquired products,
         services, businesses, technologies and capabilities

-        we may encounter difficulties in integrating acquired personnel and
         operations

-        acquired products, services, businesses, technologies and capabilities
         may result in decreased revenue from our existing products and services

    Acquisitions could disrupt our ongoing business, distract our employees,
increase our expenses and adversely affect our results of operations. We could
issue equity securities to pay for an acquisition, which could dilute the equity
interests of our existing stockholders. In addition, acquisitions may involve
investment-related or other charges and amortization of acquired technology,
goodwill and other intangible assets, which may adversely affect our results of
operations.

IF ANY TECHNOLOGIES EMBEDDED IN OUR PRODUCTS BECOME UNAVAILABLE TO US, PRODUCT
FUNCTIONALITY COULD SUFFER, CAUSING AN ADVERSE EFFECT ON OUR REVENUE

    Currently, certain third-party technologies are embedded into our product,
providing additional advanced functionality of our software for our customers,
pursuant to license agreements with such third parties. Most of these license
agreements are non-exclusive, are for limited terms, and may be terminated by
the other party if we default in our obligations. If these license agreements
were terminated or if these technologies were otherwise no longer available to
us, product functionality of our software could suffer as we attempt to replace
the technologies, causing an adverse affect on our quarterly results.

OUR BUSINESS AND PROSPECTS WOULD SUFFER IF WE ARE UNABLE TO PROTECT OUR
INTELLECTUAL PROPERTY RIGHTS

    Our success depends in large part on our intellectual property, particularly
our software. If we fail to successfully enforce our intellectual property
rights, other companies might copy our technology or introduce products or
services that compete with ours. This could reduce our revenues and weaken our
competitive position. We rely solely on a combination of copyright, patent,
trademark and trade secrets law, assignment of invention and confidentiality
agreements, confidentiality procedures and licensing arrangements to establish
and protect our intellectual property rights. Currently, we have two pending
patent applications and no issued patents. Our efforts to protect our
intellectual property may be inadequate. Existing patent, trade secret,
copyright and trademark laws offer only limited protection, and we may be
unsuccessful in obtaining that protection, or our efforts to obtain that
protection may be opposed by others. In addition, the laws of some foreign
countries where we market our products and services do not protect intellectual
property rights to the same extent as do the laws of the United States. We may
be required to spend significant resources to monitor infringement of and
enforce our intellectual property rights. Third parties could copy or otherwise
obtain and use our products or technology without our authorization. They could
also independently develop similar technology that may infringe our intellectual
property rights. We may not be able to detect infringement and may lose our
competitive position in the market before we do so. Competitors may also design
around our technology or develop competing technologies. If this occurs, our
business and prospects would be materially and adversely affected.

OTHERS MAY BRING INFRINGEMENT CLAIMS AGAINST US WHICH COULD HARM OUR BUSINESS,
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

    Reliance on intellectual property rights is pervasive in our industry, and
we expect that as competition intensifies, companies will continue to pursue
vigorous enforcement of their intellectual property rights through litigation
and other means. As a result, third parties may claim that our products or
services infringe their intellectual property rights. Any such claim could
seriously harm our business, results of operations and financial condition. We
have not performed a

                                       18
<PAGE>   19

comprehensive analysis of patents that may limit our ability to do business. An
increasing number of companies are seeking and obtaining patents regarding
methods of doing business on the Internet, and valid patents that apply to our
methods of doing business may have been issued or maybe issued in the future
without our knowledge. Defending any claim of intellectual property
infringement, regardless of merit, is expensive and time-consuming and may
distract our management's attention away from our business. As a result of any
claim or anticipated claim, we may agree or be forced to:

-        pay substantial damages
-        cease selling or using products and services that incorporate the
         infringed intellectual property
-        obtain a license for the infringed intellectual property, which might
         not be available on commercially reasonable terms or which could
         adversely affect our results of operations and financial condition
-        attempt to modify our products and services to avoid infringing others'
         intellectual property rights, which we might be unable to do at all or
         quickly enough to prevent serious harm to our competitive position in
         the market
-        refund portions of license fees paid to us if other remedies are
         unavailable

WE COULD BE NAMED IN LAWSUITS REGARDING THE ENABLEMENT OF PRIVACY VIOLATIONS,
WHICH COULD DISTRACT PERSONNEL FROM THEIR PRESENT ROLES AND RESPONSIBILITIES, AS
WELL AS ADVERSELY EFFECT OUR RESULTS OF OPERATIONS

    Recent lawsuits have been filed against other companies by individuals and
organizations claiming privacy violations with respect to improper use of their
information that was gathered from web site activity. Because our software
analyzes information regarding usage of our customers' web sites, customers may
use our software to generate personally identifiable information about users of
their sites. While we do not control how our customers may use this information,
we could be named in lawsuits regarding the enablement of privacy violations.
Any such litigation could result in liability to us, could distract personnel
from their present roles and responsibilities, and adversely affect our results
of operations.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD PREVENT
OR DELAY A CHANGE IN CONTROL OF OUR COMPANY

    Provisions of our certificate of incorporation and by-laws may discourage,
delay or prevent a merger, acquisition or change of control that a stockholder
may consider favorable. These provisions could also discourage proxy contests
and make it more difficult for stockholders to elect directors and take other
corporate actions. The existence of these provisions could limit the price that
investors might be willing to pay in the future for shares of our common stock.
These provisions include:

-        authorizing the issuance of "blank check" preferred stock - providing
         for a classified board of directors with staggered, three-year terms
-        providing that directors may only be removed for cause by a two-thirds
         vote of stockholders
-        limiting the persons who may call special meetings of stockholders
-        prohibiting stockholder action by written consent
-        establishing advance notice requirements for nominations for election
         to the board of directors and for proposing matters to be submitted to
         a stockholder vote

    Delaware law may also discourage, delay or prevent someone from acquiring or
merging with our company or obtaining control of our company.

A LARGE PERCENTAGE OF OUR OUTSTANDING COMMON STOCK IS HELD BY A SMALL NUMBER
OF INVESTORS, WHICH CREATES LOW TRADING VOLUME IN OUR STOCK, FOR WHICH EVEN
RELATIVELY SMALL TRADES COULD CAUSE FLUCTUATIONS IN THE PRICE OF OUR STOCK

    As of May 7, 2001, our common shares issued and outstanding totaled
21,862,978. A significant portion of this amount is held by a small number of
investors, which

                                       19
<PAGE>   20

limits the amount of trading volume in the public market. Because of this
limited liquidity, even relatively small volumes of stock traded over a short
period of time could create a large supply of stock with limited demand, causing
an adverse effect on the value of our common stock.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company is exposed to the impact of interest rate changes, foreign
currency fluctuation, and changes in the market values of its investments.

INTEREST RATE RISK

    Our exposure to market rate risk for changes in interest rates relate
primarily to our investment portfolio. As of March 31, 2001, we had cash and
cash equivalents of $33.1 million and short-term investments and marketable
securities of $16.6 million. We have not used derivative financial instruments
in our investment portfolio. We invest our excess cash in cash and cash
equivalents, which consist of financial instruments with purchased maturities of
three months or less, and short and long-term investments, which consist of debt
instruments of the U.S. Government and its agencies, and in high-quality
corporate issuers. We protect and preserve our invested funds by seeking to
limit default, market and reinvestment risk. Our investment policy allows us to
invest in a portfolio with a maximum average maturity of three months and a
maximum maturity on any one security of two years. Investment in both fixed rate
and floating rate interest-earning instruments carries a degree of interest rate
risk. The fair market value of fixed rate securities may be adversely affected
by a rise in interest rates, while floating rate securities may produce less
income than expected if interest rates fall. Based upon our balance of cash and
cash equivalents and short-term investments and marketable securities, a
decrease in interest rates of 0.5% would cause a corresponding decrease in our
annual interest income by approximately $249,000. Due in part to these factors,
our future investment income may fall short of expectations due to changes in
interest rates or we may suffer losses in principal if forced to sell securities
that have declined in market value due to changes in interest rates.

FOREIGN CURRENCY RISK

     The majority of our operations are based in the United States and,
accordingly, the majority of our transactions are denominated in U.S. dollars.
However, we have foreign-based operations where transactions are denominated in
foreign currencies and are subject to market risk with respect to fluctuations
in the relative value of currencies. Currently, we have operations in Australia,
Canada, Germany, Sweden and the United Kingdom and conduct transactions in the
local currency of each location. The impact of fluctuations in the relative
value of other currencies was not material for the three months ended March 31,
2001. We do not use derivative financial instruments, which are ineligible
investments under our investment policy guidelines.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is not involved in any legal proceedings that are material to its
business or financial condition.

ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS

a.      Not applicable

b.      Not applicable

c.      Not applicable

d.      Use of Proceeds from Sale of Registered Securities.

On February 29, 2000 we completed an initial public offering of our common
stock,


                                       20
<PAGE>   21
$0.001 par value. The managing underwriters in the offering were Chase
Securities, Inc., Deutsche Bank Securities, Inc., and U.S. Bancorp Piper
Jaffray, Inc. (the "Underwriters"). The shares of common stock sold in the
offering were registered under the Securities Act on a Registration Statement on
Form S-1 (the "Registration Statement") (File No. 333-93335) that was declared
effective by the Securities and Exchange Commission on February 28, 2000. The
offering commenced on February 29, 2000, on which date the 4,887,500 shares of
common stock registered under the Registration Statement (including 637,500
shares issued upon exercise of the underwriters' over-allotment option) were
sold at a price of $18.00 per share. The aggregate underwriting discounts and
commissions to the Underwriters were $6.2 million and the aggregate net proceeds
to the Company were approximately $80.3 million after deducting offering
expenses of $1.5 million. Through March 31, 2001, we have applied the net
proceeds of the offering approximately as follows: $23.0 million for working
capital; $9.8 million for purchases of fixed assets; $1.2 million for
acquisition related costs and, $1.8 million for the repayment of principal on
our indebtedness and capital lease obligations. The balance of the net proceeds,
in the amount of $44.5 million, has been invested in temporary investments,
consisting primarily of high-grade government agency and corporate bonds,
pending their future application.

We currently expect to use the balance of net proceeds primarily for working
capital and general corporate purposes, including funding product development
and expanding the sales and marketing organization. The amounts and timing of
these expenditures will vary depending on a number of factors, including the
amount of cash generated by our operations, competitive and technological
developments and the rate of growth, if any, of our business. In addition, we
may use a portion of the net proceeds for further development of our product
lines through acquisitions of products, technologies and businesses.

None of our offering expenses or the net proceeds of the offering were paid
directly or indirectly to any director, officer, general partner of NetGenesis
or their associates, persons owning 10% or more of any class of equity
securities of NetGenesis, or any affiliate of NetGenesis.

ITEM 3. DEFAULT 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

INDEX TO EXHIBITS
<TABLE>
<CAPTION>

Exhibit Number             Exhibit Description
--------------             -------------------
<S>                        <C>
* 3.1                      Amended and Restated Certificate of Incorporation of net.Genesis Corp., as currently in effect

* 3.2                      Amended and Restated By-Laws of net.Genesis Corp.
* 3.3                      Specimen certificate for common stock of net.Genesis Corp.
</TABLE>

    * Incorporated by reference to the Registrant's Registration Statement on
Form S-1, File No. 333-93335.

b) Reports on Form 8-K

None.



                                       21
<PAGE>   22

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, NetGenesis Corp. has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cambridge, Massachusetts, as of May 11, 2001.

                                                NETGENESIS CORP.
                                                BY: /s/ Christopher A. Hanson
                                                   -------------------------
                                                Christopher A. Hanson
                                                Chief Financial Officer,
                                                Executive Vice President,
                                                and Treasurer

Date:  May 11, 2001


                                       22