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

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q/A

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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                                       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 0-28064

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

                DELAWARE                               77-0378215
     (State or other jurisdiction of                (I.R.S. Employer
      incorporation or organization)             Identification Number)

                                  555 Broadway
                         Redwood City, California 94063
                    (Address of principal executive offices)

                                 (650) 568-6000
              (Registrant's telephone number, including area code)

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

Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 October 31, 1998 there were 51,595,900 shares of the Registrant's 
Common Stock outstanding.

================================================================================
<PAGE>   2
Items 1 and 2 of the Company's Quarterly Report on Form 10Q for the Quarter
ended September 30, 1998 are amended to read as follows:

PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                                  EXCITE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                  SEPTEMBER 30,       DECEMBER 31,
                                                                     1998                1997
                                                                  --------------      ------------
                                                                  (unaudited)(2)              (1)
                                                                      
<S>                                                               <C>                 <C>
ASSETS
Current assets:
   Cash and cash equivalents                                       $  27,460           $  15,366
   Short-term investments                                             11,573              16,398
   Restricted investments                                              1,279                 302
   Accounts receivable                                                36,922              20,907
   Related party receivable                                            3,105                 174
   Prepaid Netscape distribution costs and trademarks,
      current portion                                                 43,991                  --
   Prepaid expenses and other current assets                           3,617               1,975
                                                                   ---------           ---------
      Total current assets                                           127,947              55,122

Property and equipment                                                26,471              15,143
Investment in affiliated company                                         713                  --
Prepaid Netscape distribution costs and trademarks                    32,758                  --
Intangible assets                                                      9,940               1,771
Other assets                                                           2,654               4,657
                                                                   ---------           ---------
                                                                   $ 200,483           $  76,693
                                                                   =========           =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Bank line of credit and other notes payable                     $   6,100           $   6,100
   Accounts payable                                                    6,781               5,717
   Accrued compensation                                                8,162               4,794
   Capital lease obligations, current portion                          5,771               3,178
   Non-lease financing, current portion                                1,158               1,176
   Related party liabilities                                           2,008               1,575
   Other accrued liabilities                                          13,484               9,612
                                                                   ---------           ---------
      Total current liabilities                                       43,464              32,152

Capital lease obligations                                              9,967               3,076
Non-lease financing                                                    2,023               1,613
Convertible note                                                       5,000               5,000
Stockholders' equity:
   Convertible preferred stock                                           813               9,518
   Common stock                                                           52                  39
   Additional paid-in-capital                                        270,130             122,874
   Deferred compensation                                              (1,032)             (1,440)
   Unrealized gain on available-for-sale investments                     (98)                 15
   Accumulated deficit                                              (129,836)            (96,154)
                                                                   ---------           ---------
      Total stockholders' equity                                     140,029              34,852
                                                                   ---------           ---------
                                                                   $ 200,483           $  76,693
                                                                   =========           =========
</TABLE>

(1)  Derived from audited financial statements as of December 31, 1997.

(2)  See Note 9 "Restatement of Financial Statements".

            See notes to condensed consolidated financial statements.


                                       2
<PAGE>   3
                                         EXCITE, INC.
                       CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                       (In thousands, except per share data; unaudited)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                         NINE MONTHS ENDED
                                                           SEPTEMBER 30,                             SEPTEMBER 30,
                                                  -----------------------------             ------------------------------
                                                    1998                 1997                  1998                 1997
                                                  --------             --------             ---------             --------
                                                     (1)                                        (1)
<S>                                               <C>                  <C>                  <C>                   <C>     
Revenues                                          $ 44,004             $ 15,962             $ 100,010             $ 33,566

Cost of revenues:
  Hosting costs                                      4,447                2,518                10,902                6,054
  Royalties and other cost of revenues               3,277                1,145                 8,875                2,241
  Amortization of purchased technology                  --                1,939                    --                6,276
                                                  --------             --------             ---------             --------
        Total cost of revenues                       7,724                5,602                19,777               14,571
                                                  --------             --------             ---------             --------
Gross profit                                        36,280               10,360                80,233               18,995

Operating expenses:
  Research and development                           8,151                4,332                21,342               11,015

  Sales and marketing                               16,294                7,858                41,286               21,338

  Distribution license fees and data
     acquisition costs                               5,664                3,216                14,829                4,953
  General and administrative                         4,264                2,837                10,948                5,969

  In-process technology                                 --                   --                 6,200                2,346

  Merger and acquisition related
     costs, including amortization of
     goodwill and other purchased
     intangibles                                     1,177                  530                 4,074                1,946

  Amortization of prepaid Netscape
        service                                      7,574                   --                10,099                   --
                                                  --------             --------             ---------             --------
        Total operating expenses                    43,124               18,773               108,778               47,567
                                                  --------             --------             ---------             --------
Operating loss                                      (6,844)              (8,413)              (28,545)             (28,572)

Net interest income (expense) and
   other                                              (141)                 164                  (984)                 163
Equity share of losses of affiliated
   company                                            (614)                  --                (1,644)                  --
                                                  --------             --------             ---------             --------
Net loss                                          $ (7,599)            $ (8,249)            $ (31,173)            $(28,409)
                                                  ========             ========             =========             ========
Basic and diluted net loss per share              $  (0.15)            $  (0.27)            $   (0.68)            $  (1.07)
                                                  ========             ========             =========             ========
Shares used in computing net loss per
   share                                            50,339               31,104                46,130               26,463
                                                  ========             ========             =========             ========
</TABLE>

(1)  See Note 9 "Restatement of Financial Statements".

            See notes to condensed consolidated financial statements.


                                       3
<PAGE>   4
                                  EXCITE, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands, unaudited)

<TABLE>
<CAPTION>
                                                                     NINE MONTHS ENDED
                                                                       SEPTEMBER 30,
                                                                 -------------------------
                                                                   1998             1997
                                                                 --------         --------
<S>                                                              <C>              <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:                               (1)
   Net loss                                                      $(31,173)        $(28,409)

   Adjustments to reconcile net loss to net
    cash used in operating activities:
     Amortization of deferred compensation                            705              119
     Depreciation                                                   8,525            4,215
     Amortization of intangibles                                    2,632            8,222
     In-process technology                                          6,200            2,346
     Amortization of Netscape service, distribution                13,128               --
        costs and trademarks
     Loss on disposal of property and equipment                        94               --
     Equity share of losses in affiliated company                   1,644               --
     Changes in assets and liabilities:
       Accounts receivable                                        (15,515)          (9,986)
       Related party receivable                                    (2,498)              --
       Prepaid Netscape distribution costs and trademarks         (70,000)              --
       Prepaid expenses and other current assets                   (1,670)          (1,170)
       Other assets                                                 2,003           (4,159)
       Accounts payable                                               771           (3,695)
       Accrued compensation                                         2,870            2,116
       Other accrued liabilities                                    3,462           (2,122)
                                                                 --------         --------
         Net cash used in operating activities                    (78,822)         (32,523)
                                                                 --------         --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment                             (6,771)          (7,103)
   Proceeds from disposal of property and equipment                   153               --
   Purchases of investments                                       (20,121)         (33,964)
   Sales and maturities of investments                             24,973           24,371
   Investment in affiliated company                                (2,357)            (290)
                                                                 --------         --------
         Net cash used in investing activities                     (4,123)         (16,986)
                                                                 --------         --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on capital lease and other financing
      obligations                                                  (3,012)            (606)
   Proceeds from bank lines of credit and other notes               6,000            6,000
      payable
   Payments on bank lines of credit and other notes
      payable                                                      (6,574)          (1,100)
   Proceeds from sale of redeemable convertible
      preferred stock                                                  --            6,385
   Proceeds from issuance of common stock                          98,625           39,756
                                                                 --------         --------
         Net cash provided by financing activities                 95,039           50,435
                                                                 --------         --------
Net increase in cash and cash equivalents                          12,094              926
Cash and cash equivalents at beginning of period                   15,366            3,971
                                                                 --------         --------
Cash and cash equivalents at end of period                       $ 27,460         $  4,897
                                                                 ========         ========

NON-CASH FINANCING ACTIVITIES:
   Amendment of common stock warrant to preferred stock          $     --         $  1,625
   warrant
   Property and equipment acquired under capital leases
      and other non-lease financing                                15,665            2,045
   Conversion of preferred stock to common stock                    8,705            3,232
   Issuance of preferred stock                                         --            1,720
</TABLE>

(1)  See Note 9 "Restatement of Financial Statements".

            See notes to condensed consolidated financial statements.


                                       4
<PAGE>   5
                                  EXCITE, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Business

    Excite, Inc. ("Excite" or the "Company"), formerly Architext Software, Inc.,
which was formed in June 1994, is a global Internet media company offering
consumers and advertisers comprehensive Internet navigation services with
extensive personalization capabilities. The Excite Network consists of the
Excite (www.excite.com) and WebCrawler (www.webcrawler.com) brands, which
provide a gateway to the World Wide Web (the "Web") that organizes, aggregates
and delivers information to meet the needs of individual consumers. Designed to
help consumers navigate the Web, the Excite Network contains a suite of
specialized information services, organized under numerous topical channels
which combine proprietary search technology, editorial Web reviews, aggregated
content from third parties, bulletin boards, chat and other community features
and personalization capabilities. Localized versions of Excite are available in
Australia, China, France, Germany, Italy, Japan, Sweden, the Netherlands and the
United Kingdom. The Company conducts its business within two industry segments,
including the selling of banner and sponsorship advertising on the Excite
Network to customers in various industries, and, through the merger with
MatchLogic, Inc.("MatchLogic") (see Note 2), ad serving and targeting services.

  Basis of Presentation

     The unaudited condensed consolidated financial statements have been
prepared by the Company and reflect all adjustments, which are in the opinion of
management, necessary for a fair presentation of the interim periods presented.
The results of operations for the three and nine months ended September 30, 1998
are not necessarily indicative of the results to be expected for any subsequent
quarter or for the entire year ending December 31, 1998. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the Securities and Exchange Commission's rules and
regulations. A condensed consolidated statement of comprehensive loss has not
been presented because the components of comprehensive loss are not material.

    These unaudited condensed consolidated financial statements and notes
included herein should be read in conjunction with the Company's audited
consolidated financial statements and notes as included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 as filed with the
Securities and Exchange Commission on March 31, 1998 and the Company's audited
supplemental consolidated financial statements reflecting the combined
operations of the Company and MatchLogic, a company that the Company acquired in
February 1998 in a transaction accounted for as a pooling of interests, as
included in the Company's Current Report on Form 8-K as filed with the
Securities and Exchange Commission on May 15, 1998.

  Use of Estimates

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the unaudited condensed
consolidated financial statements and accompanying notes. Actual results may
differ from those estimates.

  Revenue Recognition

    Advertising revenues are derived principally from short-term advertising
contracts in which the Company guarantees a minimum number of impressions (a
view of an advertisement by a consumer) for a fixed fee. To the extent that
impression deliveries are not met, the Company defers recognition of the
corresponding revenues. The Company has also entered into a number of
longer-term advertising and commerce sponsorship agreements. These agreements
generally involve more integration with Excite services and provide for more
varied sources of revenue to Excite over the term of the agreements, which
average between 2 to 3 years. Under these agreements, Excite earns fees for
generating impressions, which in some instances are guaranteed. These revenues,
as well as other revenues, are generally recognized ratably over the term of the
agreements, provided that the Company does not have any significant remaining
obligations and collection of the resulting receivable is probable. To the
extent that impression deliveries are falling short of the guarantees, the
Company defers recognition of the corresponding revenues. The 


                                       5
<PAGE>   6
                                  EXCITE, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

terms of a number of these agreements provide that revenues from advertising and
electronic commerce transactions are to be shared between the advertiser and
Excite as realized.

  Stock Split

    In June 1998, the Board of Directors declared a two-for-one stock split
which was in the form of a 100% stock dividend. The dividend was paid on July
20, 1998 to stockholders of record on July 6, 1998. All of the share and per
share data have been adjusted to reflect this stock split.

  Per Share Amounts

    The Company has excluded all convertible debt, convertible preferred stock,
warrants and employee stock options from the computation of basic and diluted
earnings per share because all such securities are anti-dilutive for all periods
presented. In February 1998, all of the shares of Preferred Stock that were
outstanding at December 31, 1997 converted into an equivalent number of shares
of Common Stock as part of the merger with MatchLogic (see Note 2). The
following table sets forth the computation of basic and diluted earnings per
share for the three and nine months ended September 30, 1998 and 1997 (In
thousands, except per share data; unaudited):

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                          SEPTEMBER 30,                        SEPTEMBER 30,
                                                  ---------------------------           ---------------------------
                                                    1998               1997               1998               1997
                                                  --------           --------           --------           --------
<S>                                               <C>                <C>                <C>                <C>      
Net loss                                          $ (7,599)          $ (8,249)          $(31,173)          $(28,409)
                                                  ========           ========           ========           ========
   Weighted average shares outstanding              50,969             32,470             46,897             27,596
   Weighted average common shares issued
     subject to repurchase agreements                 (630)            (1,366)              (767)            (1,133)
                                                  --------           --------           --------           --------
Shares used to compute basic and diluted
     net loss per share                             50,339             31,104             46,130             26,463
                                                  ========           ========           ========           ========
Basic and diluted net loss per share              $  (0.15)          $  (0.27)          $  (0.68)          $  (1.07)
                                                  ========           ========           ========           ========
</TABLE>

Reclassifications

    Certain previously reported amounts have been reclassified to conform to the
current presentation format.

2.  BUSINESS COMBINATIONS

    Excite completed the following acquisitions for the nine months ended
September 30, 1998:

<TABLE>
<CAPTION>
                                                         Shares of Excite   Shares of Options
                                                           Common Stock        and Warrants
Company Acquired                       Date Acquired          Issued             Assumed
-------------------------------        --------------    ----------------    ----------------
<S>                                    <C>       <C>     <C>                 <C>
MatchLogic, Inc. ("MatchLogic")        February  1998        6,122,240          1,048,838
Classifieds2000, Inc.                  April     1998        1,729,742             50,238
("Classifieds2000")
Throw, Inc. ("Throw")                  April     1998          329,790            318,018
</TABLE>

    In February 1998, the Company acquired MatchLogic, a private company
providing advertisers and agencies with Internet advertising management services
that began operations in May 1997, in a merger transaction accounted for as a
pooling of interests. In connection with the acquisition of MatchLogic, the
Company incurred approximately $700,000 in merger related expenses primarily for
legal and other professional fees in the first quarter of 1998. All consolidated
financial information has been restated to reflect the combined operations of
the Company and MatchLogic.

     Separate results of the combined entities through the periods preceding the
merger (February 2, 1998) are as follows (In thousands, unaudited):


                                       6
<PAGE>   7
                                  EXCITE, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                              PERIOD            NINE MONTHS
                                              ENDED                ENDED
                                         FEBRUARY 2, 1998    SEPTEMBER 30, 1997
                                         ----------------    ------------------
<S>                                      <C>                 <C>
Revenues:
  Excite                                     $  5,598             $ 31,432
  MatchLogic                                      376                2,134
                                             --------             --------
                                             $  5,974             $ 33,566
                                             ========             ========
Net loss:
  Excite                                     $ (1,656)            $(22,410)
  MatchLogic                                   (1,388)              (5,999)
                                             --------             --------
                                             $ (3,044)            $(28,409)
                                             ========             ========
</TABLE>

     There were no significant inter-company transactions between the two
companies and no significant conforming accounting adjustments.

     In April 1998, the Company acquired Classifieds2000, a provider of
Web-based classified ads that began operations in July 1996, in a transaction
accounted for as a pooling of interests. In connection with the acquisition of
Classifieds2000, the Company incurred approximately $743,000 in merger-related
expenses primarily for legal and other professional fees in the second quarter
of 1998. The results of operations and financial position of Classifieds2000
were not material to the Company's consolidated financial statements in any
period, and therefore, amounts prior to the date of acquisition were not
combined with the Company's financial statements.

     In April 1998, the Company acquired Throw, a developer of community
products that began operations in April 1996, in a transaction accounted for as
a purchase. The total purchase price was allocated to the acquired assets and
liabilities based on their estimated fair values as of the date of the
acquisition. This included an original purchase price allocation of
approximately $800,000 to other intangibles assets, which were being amortized
on a straight-line basis through 1999 and approximately, $16.2 million was
allocated to in-process technology and charged to operations at the time of
acquisition. Accordingly, the Company expensed this amount in its originally
reported June 30, 1998 operating results.

     In response to recent Securities and Exchange Commission (the "SEC")
interpretative guidance surrounding acquisition-related in-process research and
development, the Company has revised the original accounting for the purchase
price allocation related to the 1998 acquisition of Throw and the related
amortization of intangibles. This adjustment decreased the amount previously
allocated to in-process technology by $10.0 million, which has been capitalized
as goodwill and will be amortized on a straight-line basis over three years. As
a result, in the second quarter of 1998, the Company allocated $6.2 million to
in-process technology, and during the nine months ended September 30, 1998, the
Company amortized a total of $1.8 million and has restated its condensed
consolidated financial statements as of and for the three and nine months ended
September 30, 1998. The effect of this restatement is summarized in Note 9.
Pro-forma results of operations have not been presented because the effect of
this acquisition was not material to the Company's consolidated financial
position, results of operations, and cash flows.

     To determine the value of the in-process research and development, the
Company considered, among other factors, the state of development of each
project, the time and cost needed to complete each project, expected income, and
associated risks which included the inherent difficulties and uncertainties in
completing the project and thereby achieving technological feasibility and risks
related to the viability of and potential changes to future target markets. This
analysis results in amounts assigned to in-process research and development
projects that had not yet reached technological feasibility and does not have
alternative future uses.

3.   JOINT VENTURES

     In August 1998, the Company and Telecom Italia S.p.A. ("Telecom Italia")
entered into a joint venture agreement to form Excite Italia BV ("Excite
Italia"). The new company, Excite Italia, which is owned 50% by Excite and 50%
by Telecom Italia, will program certain portions of www.tin.lit, the Internet
site of TIN, a division of Telecom Italia and one of Italy's Internet access
providers, as well as provide an Italian language search directory service under
the Excite brand. Telecom Italia has committed to provide the initial start-up
capital for the venture,

                                       7
<PAGE>   8
                                  EXCITE, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

while Excite will provide the core technology, related services and brand name.
The cash contributed by Telecom Italia to Excite Italia is in the form of a loan
and is capped at approximately 10.5 billion Lira (approximately US$6.4 million
at September 30, 1998). Excite will account for its interest in the joint
venture under the equity method.

    In August 1998, the Company and LibertyOne Limited ("LibertyOne") entered
into a joint venture agreement to form Excite Asia Pacific Pty Ltd ("Excite Asia
Pacific"). The new company, Excite Asia Pacific, is owned 50% by Excite and 50%
by LibertyOne and will build an Excite branded, advertising and commerce
supported Web portal for the Australian and the Asia-Pacific Internet markets.
LibertyOne will contribute a total of 10.0 million Australian Dollars
(approximately US$5.9 million at September 30, 1998) for a 50% equity ownership
in Excite Asia Pacific. Excite will provide the core technology, related
services and brand name for the remaining 50% equity ownership in Excite Asia
Pacific. Excite will account for its interest in the joint venture under the
equity method.

4.  SALE OF COMMON STOCK

    In May 1998, the Company filed a registration statement on Form S-3 with the
United States Securities and Exchange Commission for the sale of shares of the
Company's Common Stock in a public offering. The Company sold 3,105,000 shares
of Common Stock in June 1998 at a price of $31.50 per share. Of the 3,105,000
shares sold, 2,870,000 shares (including 405,000 shares which were purchased on
the exercise of the underwriters over-allotment option) were offered directly by
the Company and 325,000 shares were offered by selling shareholders. The Company
did not receive any proceeds from the sale of shares by selling stockholders.
Proceeds to the Company from this offering were approximately $84.3 million net
of offering costs.

5.  DELAWARE REINCORPORATION

    The Company was incorporated on June 9, 1994 in California and
reincorporated in Delaware on August 27, 1998. The Company's Preferred Stock and
Common Stock have a par value of $0.001 per share. The classification of the
capital accounts reflects the effect of the reincorporation for all periods
presented.

6.  SEGMENT INFORMATION

    The Company operates in the Internet navigation industry and the Internet ad
serving and targeting business segments. Prior to the merger with MatchLogic,
the Company operated only in the Internet navigation industry. The Company's
management has determined the operating segments based upon how the business is
managed and operated. MatchLogic, which provides Internet ad serving and
targeting services, operates as an independent subsidiary of Excite with its own
sales force, research and development and operations departments.

  Information by Operating Segment is as follows (In thousands; unaudited):

<TABLE>
<CAPTION>
                                               INTERNET          AD SERVING
                                              NAVIGATION        AND TARGETING           TOTAL
                                              ----------        -------------         ---------
<S>                                           <C>               <C>                   <C>
Three Months Ended September 30, 1998
Operating information:
  Revenues from external customers             $  34,633           $  9,371           $  44,004
  Distribution license fees and data               3,608              2,056               5,664
    acquisition costs
  Segment operating income (loss)                 (7,261)               417              (6,844)

Nine Months Ended September 30, 1998
Operating information:
  Revenues from external customers             $  84,090           $ 15,920           $ 100,010
  Distribution license fees and data              11,280              3,549              14,829
    acquisition costs
  Segment operating loss                         (21,651)            (6,894)            (28,545)

Balance sheet information:
  Total assets                                 $ 185,429           $ 15,054           $ 200,483
</TABLE>


                                       8
<PAGE>   9
                                  EXCITE, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.  RELATED PARTY TRANSACTION

    In April 1998, the Company borrowed $50.0 million from a principal
stockholder. The loan bore interest at 5.9% per annum and was due no later than
October 30, 1998. In June 1998, the Company repaid the loan in full, plus
interest of approximately $410,000, with proceeds from the public offering. (See
Note 4).

8.  NETSCAPE AGREEMENT

    In April 1998, the Company and Netscape Communications Corporation
("Netscape") entered into a two-year agreement (the "Netcenter Agreement") with
respect to Netscape's recently announced "Netcenter" online service. Under the
Netcenter Agreement, the Company will provide programming and content for the
Co-Branded channels to be offered on Netscape's Netcenter online service and
will develop a Web search and directory service for Netscape (collectively, the
"Co-Branded Services"). In addition, the Company's Classifieds2000 service will
be featured as the provider of classified advertising (excluding career and job
posting classified ads) for the Netcenter service. The Company will also be
featured as a "premier provider" on the "Net Search" page of Netscape's Web site
and will also be similarly featured on the Netcenter "Netcenter Widget" tool.
The Company will be responsible for advertising sales for, and will pay to
Netscape a percentage of advertising revenues generated from, the Co-Branded
Netcenter channels, the search service and the directory service, and will also
be required to make payments based upon the amount of traffic generated from the
Net Search page and the Netcenter Widget tool. The Company has paid a total of
$70.0 million as a prepayment of its obligations under the Netcenter Agreement.
In addition, the Company has issued a warrant to Netscape to purchase 846,000
shares of the Company's Common Stock at an exercise price of approximately
$29.55 per share and a second warrant to purchase shares of the Company's Common
Stock at an aggregate exercise price of $10.0 million. The original fair value
assigned to the warrants was $16.1 million.

   The success of Netcenter, and the Co-Branded Services in particular, will be
substantially dependent on the amount of traffic on Netcenter. Although Netscape
has made certain exposure guarantees with respect to Netcenter over the term of
the Netcenter Agreement, there can be no assurance as to the timing of the
delivery of these guarantees or that these guarantees will be fulfilled. There
are no minimum guaranteed revenues under the Netcenter Agreement, and there can
be no assurance as to the level of revenues that the Company may generate from
the Co-Branded Services. Many of the services to be offered by Netcenter will
compete directly with those offered by the Excite Network. The level of
advertising revenues that may be generated by the Company from the Co-Branded
Services is subject to a number of risks and uncertainties, many of which are
beyond the Company's control. In addition, the Company expects to incur
significant costs to develop, host and sell advertising on the Co-Branded
Services, including the costs of hiring a significant number of additional
technical and sales personnel. The Company will not be reimbursed for any of
these costs.

    In the second quarter of 1998 the Company capitalized $29.3 million as
Prepaid Distribution Fees and charged $56.8 million to operations as a
non-recoverable portion of the prepayment to Netscape. The Company had
previously concluded that there was no reasonable basis to assume a probable
recovery of the value of the prepayment and warrants issued to Netscape.
Specifically, the Company had developed a valuation model to calculate the
anticipated incremental net revenues that would be earned from the Netcenter
Agreement over its term of two years. This model determined that an amount of
$56.8 million was not expected to be recovered from anticipated future revenue
streams. Accordingly, the Company expensed this amount in its originally
reported June 30 1998 operating results.

    After discussions with the Staff of the Securities and Exchange Commission
(the "SEC"), the Company has revised the original accounting for this
transaction and increased the fair value of the warrants issued to Netscape by
$3.8 million. The total consideration of $89.9 million has been capitalized as
Prepaid Netscape Distribution Costs and Trademarks. The amount capitalized
represents the amount of the sum of the prepayments ($70.0 million) and the
revised independent valuation of the warrants issued ($19.9 million) from the
Netcenter Agreement. The $89.9 million, representing the combined value of
marketing and distribution rights, trademarks and other exclusivities, which
extend over the term of the Netcenter Agreement, will be recognized ratably over
the term of the agreement as distribution services are received, commencing with
the launch of the service in June 1998. Prepaid Netscape Distribution Costs and
Trademarks consists of the following (In thousands; unaudited):


                                       9
<PAGE>   10
                                  EXCITE, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                    CAPITALIZED         AMORTIZATION
                                                   AMOUNTS AS OF       JUNE 1, 1998 TO      BALANCE AS OF
                                                      APRIL 30,         SEPTEMBER 30,       SEPTEMBER 30,
                                                        1998                 1998                1998
                                                   --------------      ---------------      --------------
<S>                                                <C>                 <C>                  <C>    
Prepaid distribution license fees and data            $ 29,285             $ (3,028)            $26,257
  acquisition costs
Prepaid Netscape service                                50,591               (8,432)             42,159
Prepaid trademark license                               10,000               (1,667)              8,333
                                                      --------             --------             -------
                                                      $ 89,876             $(13,127)            $76,749
                                                      ========             ========             =======
</TABLE>

    During the nine month period ended September 30, 1998, the Company amortized
$13.1 million to operations. The $13.1 million charge to operations is as
follows: $3.0 million is included in Distribution License Fees and Data
Acquisition Costs and $10.1 million is reported separately as Amortization of
Prepaid Netscape Service.

    In July 1998, Netscape exercised a portion of the warrant issued under the
Netcenter Agreement and paid approximately $5.9 million to purchase 200,000
shares of the Company's Common Stock.

9.  RESTATEMENT OF FINANCIAL STATEMENTS

    As disclosed in Note 2 and in Management's Discussion and Analysis, in
response to recent SEC interpretative guidance surrounding acquisition-related
in-process research and development, the Company has revised the original
accounting for the Throw acquisition. As a result, the Company has made an
adjustment to decrease the amount previously expensed as in-process technology.

    The effect of this adjustment on previously reported condensed consolidated
financial statements as of and for the three and nine month periods ended
September 30, 1998 is as follows (in thousands, except per share data;
unaudited):

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED                      NINE MONTHS ENDED
                                                     SEPTEMBER 30, 1998                     SEPTEMBER 30, 1998
                                               -----------------------------          -----------------------------
                                               AS REPORTED          RESTATED          AS REPORTED          RESTATED
                                               -----------          --------          -----------          --------
<S>                                            <C>                  <C>               <C>                  <C>
STATEMENT OF OPERATIONS:
In-process technology                                --             $    --              16,200               6,200

Merger and acquisition related costs,
   including amortization of goodwill
   and other purchased intangibles                  424               1,177               2,568               4,074

Operating loss                                   (6,091)             (6,844)            (37,039)            (28,545)

Net loss                                         (6,846)             (7,599)            (39,667)            (31,173)
                                                 ------             -------             -------             -------
Basic and diluted net loss per share             $(0.14)            $ (0.15)            $ (0.86)            $ (0.68)
                                                 ======             =======             =======             =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                             SEPTEMBER 30, 1998
                                                                                        ----------------------------
                                                                                        AS REPORTED         RESTATED
                                                                                        --------------      --------
<S>                                                                                     <C>                 <C>
BALANCE SHEET:
Intangible assets                                                                        $   1,446          $   9,940

Accumulated deficit                                                                      $(138,330)         $(129,836)
</TABLE>


                                       10
<PAGE>   11

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

FORWARD LOOKING STATEMENTS

    The following Management's Discussion and Analysis of Financial Condition
and Results of Operations contains forward-looking statements, which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including, without limitation, those risk factors set forth
under "Risk Factors that May Affect Future Results" included in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations.

    The following discussion also should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997, filed with the
Securities and Exchange Commission on March 31, 1998 and the Company's audited
supplemental consolidated financial statements and notes thereto included in the
Company's Current Report on Form 8-K as filed with the Securities and Exchange
Commission on May 15, 1998.

OVERVIEW

    The Company operates the Excite Network (which includes the Excite and
WebCrawler brands) and provides a gateway to the Web that organizes, aggregates
and delivers information to meet the needs of individual consumers. Excite, Inc.
was formed in June 1994 and, from its inception to September 1995, its operating
activities related primarily to recruiting personnel, raising capital,
purchasing operating assets, providing custom product development and consulting
services. The Company first launched its Excite search and directory service in
October 1995. In April 1997, the Company launched a channels-based format for
its service and content on the Excite brand to provide consumers with an
interface that reflects the way they navigate through other forms of media and
enables advertisers to more effectively reach target consumers. The Excite brand
currently includes 18 channels of topical interest such as Entertainment, Sports
and Money/Investing. In September 1997, the Company launched a similar
channels-based format for its WebCrawler brand that currently includes 20
channels.

    Historically, advertising revenues have been derived principally from
short-term advertising contracts in which the Company guarantees a minimum
number of impressions (a view of an advertisement banner by a consumer) for a
fixed fee. Such banner advertising revenue is dependent upon both the number of
impressions and the rate per thousand impressions ("CPMs") charged. The Company
generally charges higher rates for advertisements focused on targeted groups,
either by key-word associations or affiliations with specific content, than for
general rotation advertisements on the Excite Network. During its limited
operating history, the Company has experienced seasonal fluctuations in the
amount of banner advertisements purchased on its network, with advertisers
historically purchasing fewer advertisements in the first calendar quarter of
each year. Because the market for Web advertising is an emerging market,
additional seasonal patterns in Web advertising may develop in the future as the
market matures.

    In 1997, the Company also began entering into longer-term advertising and
commerce sponsorship agreements. These agreements generally involve more
integration with the Excite Network and provide for more varied sources of
revenue to Excite over the term of the agreements, which average from two to
three years. Under these agreements, Excite earns fees for generating
impressions that in some instances are guaranteed. Sponsorship customers
accounted for approximately 24% and 27% of advertising revenues for 1997 and the
nine months ended September 30, 1998, respectively. Revenues are generally
recognized ratably over the term of the agreement, provided that the Company
does not have any significant remaining obligations and collection of the
resulting receivable is probable. To the extent that impression deliveries are
falling short of the guarantees, the Company defers recognition of the
corresponding revenues. A number of these agreements also provide that revenues
or gross margins from advertising and electronic commerce transactions are to be
shared between the advertiser and Excite as realized. Revenues or margin sharing
recognized from such electronic commerce transactions were insignificant through
the third quarter of 1998, and are expected to be insignificant for the
remainder of 1998. The Company does not expect revenue growth relating to
sponsorship advertising revenues to continue at the current rate in future
periods as availability of exclusive sponsorships may be limited. See "Risk
Factors that May Affect Future Results -- Risks Related to Sponsorships" and
"-- Risks Associated with Banner Advertising."


                                       11
<PAGE>   12

   In April 1998, the Company and Netscape entered into a two-year agreement
(the "Netcenter Agreement"), under which the Company will, among other things,
provide, host and sell advertising for certain Co-Branded Services for
Netscape's Netcenter Service (the "Co-Branded Services"). In connection with the
Netcenter Agreement, the Company has paid to Netscape a total of $70.0 million
(the "Cash Payment"). Also in connection with the Netcenter Agreement, the
Company has issued to Netscape a warrant to purchase 846,158 shares of the
Company's Common Stock at an exercise price of approximately $29.55 per share
(the "First Warrant") and a second warrant to purchase shares of the Company's
Common Stock at an aggregate exercise price of $10.0 million (the "Second
Warrant", together with the First Warrant, the "Warrants"). The First Warrant is
exercisable for a two-year period commencing April 30, 1998. The Second Warrant
will be exercisable for a two-year period commencing April 30, 1999. The
exercise price per share of Common Stock covered by the Second Warrant will be
determined by dividing $10 million by the average closing price of the Company's
Common Stock for the thirty (30) most recent trading days ending on the third
trading day preceding April 30, 1999. The fair value of the first warrant and
the aggregate $10.0 million exercise price of the second warrant has been
estimated to be $19.9 million. The Cash Payment and the value assigned to the
Warrants totaling $89.9 million were capitalized as Prepaid Netscape
Distribution Costs and Trademarks during the second quarter of 1998 and are
being amortized over the two-year term of the Netcenter Agreement. The remaining
amount to be expensed under the Netcenter Agreement as of September 30, 1998, is
separated into two components as follows: the amount which represents the
anticipated future net revenues from the Netcenter Agreement ($26.3 million)
will be charged to Distribution License Fees and Data Acquisition Costs, and the
remaining amount ($50.5 million) representing the combined value of marketing
and distribution rights, trademarks and other exclusivities will be charged
ratably over the term of the Agreement to Amortization of Prepaid Netscape
Service.

    Under the Netcenter Agreement, the Company will only recognize revenues
generated from the Co-Branded Services and not from any other part of Netcenter.
A portion of the revenues will be credited against the Company's revenue-sharing
obligation to Netscape until the Company recoups a specified amount of the Cash
Payment. Thereafter, the Company must pay Netscape a portion of additional
revenues generated from the Co-Branded Services. The Company does not expect
that the revenue generated from the Co-Branded Services will exceed 10% of the
Company's total revenue over the term of the Netcenter Agreement. The Company
has incurred and anticipates that it will continue to incur expenses for the
start-up and development of the services contemplated in the Netcenter
Agreement, including the costs of personnel, content creation, facilities and
depreciation of assets purchased for the Netcenter Service. Unless Netscape
generates impressions significantly greater than the guaranteed amount as
specified in the Agreement, the increased revenues to the Company resulting from
the Co-Branded services under the Netcenter Agreement will not be sufficient to
recover the combined costs of the prepayment, the warrant value and the
incremental operating costs that will be incurred by the Company as a result of
the Agreement. On this basis, the Company anticipates that the Netcenter
Agreement will serve to generate losses for the Company during its term.

   Netscape has made guarantees for the number of times a link to Excite is
displayed on the NetSearch page. Since the launch of the Netcenter Co-Branded
Service in June 1998, the actual delivery of impressions has been significantly
below expectations. However, Netscape and the Company have agreed to implement
certain changes that may result in an improvement in impression delivery and are
exploring other various ways to correct the impression shortfall. There are no
interim, month to month or quarterly performance milestones to the Agreement. If
Netscape does not achieve its impression guarantees within the two year term of
the Agreement, then the term would be extended until the guarantees are met. To
the extent the impression flow from Netscape falls short of the guaranteed
level, the Company's ability to recover the prepayment within the term of the
Agreement may be impaired. See "Risk Factors that May Affect Future
Results--Risks Related to Netcenter Agreement."

    During 1998, the Company has acquired a number of businesses, technologies,
services and content. In April 1998, the Company acquired Throw, a developer of
community products, issued approximately 330,000 shares of its Common Stock,
assumed options and warrants to purchase up to an aggregate of approximately
318,000 shares of its Common Stock. Also in April 1998, the Company acquired
Classifieds2000, a provider of online classified ads. The Company issued
approximately 1,730,000 shares of its Common Stock to former stockholders of
Classifieds2000 and assumed options and warrants to purchase up to approximately
50,000 shares of its Common Stock. In February 1998, the Company acquired
MatchLogic, a provider of solutions for the management and optimization of
Internet advertising campaigns. The Company


                                       12
<PAGE>   13
issued approximately 6,100,000 shares of its Common Stock to former stockholders
of MatchLogic and assumed options and warrants to purchase up to approximately
1,049,000 shares of its Common Stock. The acquisition of MatchLogic and
Classifieds2000 were accounted for as a pooling of interests and the acquisition
of Throw was accounted for as a purchase.

    All financial information for dates and periods prior to the merger with
MatchLogic has been restated to reflect the combined operations of the Company
and MatchLogic. Financial information for dates and periods prior to the
acquisition of Classifieds2000 has not been restated to reflect the combined
operations of the Company and Classifieds2000, as Classifieds2000's results of
operations were not material to the Company's consolidated financial statements
in any historical period. The Company's financial information reflects the
combined operations of the Company and Throw subsequent to the acquisition. See
Note 2 and "Risk Factors that May Affect Future Results--Acquisition Strategy;
Integration of Past and Future Acquisitions."

    The Company has incurred significant operating losses since inception, and
as of September 30, 1998, the Company had an accumulated deficit of
approximately $129.8 million. Although the Company experienced significant
revenue growth during 1997 and the first nine months of 1998, there can be no
assurance that this growth rate will be sustained or that revenues will continue
to grow or that historical operating results will be indicative of future
operating results. In addition, as the Company has grown, its operating expenses
have increased, and the Company expects that its operating expenses will
continue to increase as a result of its acquisitions, the performance of its
obligations under the Netcenter Agreement, its increased sales and marketing
efforts, its increased funding for development activities and the increased
general and administrative staff needed to support the Company's growth. To the
extent that revenues do not grow at anticipated rates or that increases in such
operating expenses precede or are not subsequently followed by commensurate
increases in revenues, or that the Company is unable to adjust operating expense
levels accordingly, the Company's business, results of operations and financial
condition will be materially and adversely affected. There can be no assurance
that in the future the Company will be profitable on a quarterly or annual
basis.

RESULTS OF OPERATIONS

REVENUES

    Revenues were $44.0 million for the third quarter of 1998, as compared to
$16.0 million for the third quarter of 1997, an increase of $28.0 million or
176%. For the first nine months of 1998 and 1997, revenues were $100.0 million
and $33.6 million, respectively, an increase of $66.4 million or 198%. This
increase in both periods is primarily the result of an increase in the number of
advertisers purchasing advertising banners on the Company's Web sites, an
increase in sponsorship advertising revenue, and to a lesser extent, an increase
in sales of targeted advertisements with higher rates. Also contributing to the
increase in revenues was the increased revenues attributable to MatchLogic,
which began operations in May 1997. Revenues from international operations were
not significant during the three and nine months ended September 30, 1998 and
1997.

    The Company expects to continue to derive a substantial amount of its total
revenues from selling advertisements. Because the market for advertising on the
Web is intensely competitive, advertising rates could be subject to pricing
pressures in the future. If the Company is forced to reduce its advertising
rates or experiences lower CPMs (price per thousand impressions) as a result of
such competition or otherwise, future revenues could be adversely affected.

COST OF REVENUES

    Cost of revenues consists primarily of: hosting costs; royalties and other
cost of revenues; and amortization of purchased technology. Hosting costs relate
to the maintenance and technical support of the Excite Network, and are
comprised principally of personnel costs, telecommunications costs, equipment
depreciation and overhead allocations. Royalties and other cost of revenues
include expenses related to royalties, license agreements and revenue sharing
agreements for content and other services such as email and chat room services.
For the third quarter and first nine months of 1997, the Company recognized
amortization of purchased technology of $1.9 million and $6.3 million,
respectively, related to the WebCrawler acquisition. There were no corresponding
costs for the comparable periods in 1998 as the cost of the technology was fully
amortized at December 31, 1997.


                                       13
<PAGE>   14
    Total cost of revenues increased in absolute dollars by $2.1 million to $7.7
million, or 18% of revenues for the third quarter of 1998, from $5.6 million, or
35% of revenues for the comparable period in the prior year. For the current
year to date, total cost of revenues increased by $5.2 million to $19.8 million,
or 20% of revenues, from $14.6 million, or 43% of revenues for the comparable
period in the prior year. Hosting costs for the third quarter of 1998 increased
in absolute dollars by $1.9 million to $4.4 million, or 10% of revenues, from
$2.5 million, or 16% of revenues for the comparable period in the prior year.
For the current year to date, hosting costs increased by $4.8 million to $10.9
million, or 11% of revenues, from $6.1 million, or 18% of revenues for the
comparable period in the prior year. The increase in hosting costs is due
primarily to increased personnel expenses and equipment costs relating to
maintaining and supporting the Company's Web sites and services. Royalties and
other cost of revenues increased in absolute dollars by $2.1 million to $3.3
million, or 7% of revenues, for the third quarter 1998 from $1.2 million, or 7%
of revenues for the comparable period in the prior year. For the current year to
date, royalties and other cost of revenues increased by $6.7 million to $8.9
million, or 9% of revenues, from $2.2 million, or 7% of revenues for the
comparable period in the prior year. The increase in royalties and other cost of
revenues was primarily due to increased royalties and margin sharing payments
from revenue sharing agreements.

    Excluding amortization of purchased technology, total cost of revenues
increased by $4.1 million to $7.7 million, or 18% of revenues for the third
quarter of 1998, from $3.6 million, or 23% of revenues for the comparable period
in the prior year. Excluding amortization of purchased technology, total cost of
revenues for the first nine months of 1998 increased by $11.5 million to $19.8
million, or 20% of revenues from $8.3 million, or 25% of revenues for the
comparable period in the prior year.

    Cost of revenues in future periods is expected to increase in absolute
dollars and may increase as a percentage of revenues as the Company increases
costs to support expanded services and content. The Company also expects to
experience increased hosting costs in connection with performing its obligations
under the Netcenter Agreement and to experience increased royalties and other
cost of revenues as a result of the revenue sharing provisions of the Netcenter
Agreement.

GROSS PROFIT

    Gross profit increased by $25.9 million or 250% to $36.3 million or 82% of
revenues for the third quarter of 1998, from $10.4 million or 65% of revenue for
the comparable period in the prior year. For the first nine months of 1998,
gross profit increased by $61.2 million or 322% to $80.2 million or 80% of
revenues, from $19.0 million or 57% of revenue for the comparable period in
1997. The increase in gross profit in absolute dollars and as a percentage of
revenues was primarily due to the fact that revenues grew at a faster rate than
hosting costs and royalties and other cost of revenues, a favorable mix of
advertising services, and the elimination of amortization of purchased
technology discussed above. In the future, gross profit may be affected by the
types of advertisements sold and revenue sharing provisions of distribution and
content agreements. These items have negatively affected gross profit in the
past and may continue to negatively affect it in the future. Furthermore,
pursuant to the provisions of certain agreements with operators of Web access
points and with content providers, the Company shares advertising revenues based
upon the number of consumers directed to its network. A low level of targeted
advertising as a percentage of total advertising sold, a decrease in targeted or
mass Web advertising rates or an increase in the Company's advertising revenue
sharing obligations could adversely affect gross margins in the future.

OPERATING EXPENSES

    Research and Development. Research and development expenses consist
principally of engineering and editorial personnel costs, equipment
depreciation, consulting fees, supplies and allocation of overhead. Research and
development expenses for the third quarter of 1998 increased to $8.2 million, or
19% of revenues, from $4.3 million, or 27% of revenues in the comparable period
of the prior year. Research and development expenses for the first nine months
of 1998 increased to $21.3 million, or 21% or revenues, from $11.0 million, or
33% of revenues in the comparable period of the prior year. The increase in
absolute dollars was primarily attributable to increased expenses as a result of
the Classifieds2000 and Throw acquisitions, as well as an increase in
engineering and editorial headcount to support the Company's channels format and
personalization capabilities for the Excite Network. The Company believes that a
significant level of research and development expense is required to remain
competitive and, accordingly, the Company anticipates that it will continue to


                                       14
<PAGE>   15
devote substantial resources to research and development and that these costs
will increase in absolute dollars in future periods. The Company also expects to
continue to experience increased research and development expenses in order to
integrate any technologies acquired in the future and provide programming and
content for the Co-Branded Services of Netcenter.

    Sales and Marketing. Sales and marketing expenses consist principally of
sales and marketing personnel costs, agency and consulting fees, commissions,
promotional and advertising expenses and allocation of overhead. Sales and
marketing expenses for the third quarter of 1998 increased to $16.3 million, or
37% of revenues, from $7.9 million, or 49% of revenues, in the comparable period
of the prior year. For the current year to date, sales and marketing expenses
increased to $41.3 million, or 41% of revenues, from $21.3 million, or 64% of
revenues in the comparable period for the prior year. The increase in absolute
dollars was primarily due to the hiring of additional sales and marketing
personnel and increased sales and marketing expenses resulting from the
acquisition of Classifieds2000. Promotional expenses remained relatively
constant in the third quarter and first nine months of 1998, as compared to the
same period of the prior year as the prior year period included costs associated
with a national media campaign that started in the fourth quarter of 1996. The
Company expects to continue to incur significant promotional and advertising
expenses and anticipates that these costs will increase in absolute dollars in
future periods as the Company promotes its brands and introduces new services in
order to create and maintain brand loyalty among customers. The Company also
expects to continue to experience increased sales and marketing expenses as it
is responsible for all advertising sales on the Co-Branded Services of
Netcenter.

    Distribution License Fees and Data Acquisition Costs. Distribution license
fees and data acquisition costs consist principally of fees paid to third-party
Internet companies such as Netscape to provide entry points to the Excite
Network and costs to update and maintain the ad targeting and tracking database
which is continually being updated by the Company's MatchLogic subsidiary.
Distribution license fees and data acquisition costs were $5.7 million for the
third quarter of 1998, as compared to $3.2 million for the comparable period in
1997. For the current year to date, distribution license fees and data
acquisition costs were $14.8 million, compared to $5.0 million for the
comparable period in the prior year. The 1998 costs included distribution
license fees related to agreements previously entered into with Netscape in
March 1997, which have expired, as well as data acquisition costs incurred by
MatchLogic during the period. In addition, in the third quarter of 1998, a total
of $2.2 million was amortized to Distribution License Fees and Data Acquisition
Costs relating to the April 1998 Netcenter Agreement. See "Risk Factors that May
Affect Future Results--Risks Related to Netcenter Agreement."

    In the future, high traffic Web sites, Internet service providers, providers
of Web browsers or other distribution channels could require cash payments or
other types of consideration as compensation for listing or promoting the Excite
Network, which could result in increased distribution license fees.

    General and Administrative. General and administrative expenses consist
principally of administrative and executive personnel costs, provision for
doubtful accounts, fees for professional services and allocation of overhead.
General and administrative expenses for the third quarter of 1998 increased to
$4.3 million, or 10% of revenues, from $2.8 million, or 18% of revenues, in the
comparable period of the prior year. General and administrative expenses for the
first nine months of 1998 increased to $10.9 million, or 11% of revenues, from
$6.0 million, or 18% of revenues, in the comparable period of the prior year.
The increase in absolute dollars is primarily due to increased personnel costs
to support the expansion and infrastructure of the Company's operations and
international expansion efforts. In particular, the acquisition of
Classifieds2000 and the growth in the Company's finance and administrative
departments contributed to this increase. The Company anticipates that its
general and administrative expenses may continue to increase in absolute dollars
as the Company expands its administrative and executive staff, adds
infrastructure and integrates acquired technologies and businesses. In addition,
the Company plans to continue to run MatchLogic as an independent subsidiary
with its own administrative function.

    In-Process Technology. During the first nine months of 1998 and 1997, the
Company incurred charges for in-process technology of $6.2 million and $2.3
million, respectively. The Company acquired Throw in April 1998, accounted for
the transaction as a purchase, and of the total purchase price, $6.2 million was
allocated to in-process technology and charged to operations in the second
quarter of 1998. The 1997 charge of $2.3 million related to the value of
acquired in-process technology that had not reached technological feasibility


                                       15
<PAGE>   16
at the time of MatchLogic's formation in May 1997. To determine the value of the
in-process technology, the Company considered, among other factors, the state of
development of each project, the time and cost needed to complete each project,
expected income, and associated risks which included the inherent difficulties
and uncertainties in completing the project and thereby achieving technological
feasibility and risks related to the viability of and potential changes to
future target markets. This analysis results in amounts assigned to in-process
research and development projects that had not yet reached technological
feasibility and do not have alternative future uses.

    Other Merger and Acquisition Related Costs, including Amortization of
Goodwill and Other Intangible Assets. During the third quarter of 1998 and 1997,
the Company incurred merger and acquisition related costs of $1.2 million and
$530,000, respectively. During the first nine months of 1998 and 1997, the
Company incurred merger and acquisition related costs of $4.1 million and $1.9
million, respectively. In 1998, the Company incurred charges of approximately
$743,000 and $700,000 for the acquisition of Classifieds2000 and MatchLogic,
respectively, and incurred charges relating to the amortization of goodwill and
other purchased intangibles resulting from the acquisition of Throw and the
Webcrawler acquisition. The 1997 costs primarily relate to the amortization of
goodwill and other purchased intangibles resulting from the WebCrawler
acquisition.

    Amortization of Prepaid Netscape Service. During the three and nine month
periods ended September 30,1998, the Company incurred costs of $7.6 million and
$10.1 million, respectively, related to the amortization of the Prepaid Netscape
Service associated with the April 1998 Netcenter Agreement, which has an
original term of two years. The Company anticipates incurring a total
amortization charge of approximately $7.6 million per quarter relating to the
Netcenter Agreement for the duration of the Agreement, which is currently
scheduled to expire in June 2000.

    Net Interest Income (Expense) and Other. Net interest income (expense) and
other decreased to an overall net expense of $141,000 for the third quarter of
1998, compared to an overall net income of $164,000 for the comparable period of
the prior year. Current year to date, net interest income (expense) and other
decreased to an overall net expense of $984,000 compared to an overall net
income of $163,000 for the comparable period of the prior year. This decline is
due primarily to an increase in interest expense resulting from the $50 million
note payable due to Intuit, as well as additional capital lease obligations,
non-lease financing obligations and the convertible note issued to Itochu
Corporation. The overall increase in interest expense was partially offset by an
increase in interest income earned on cash received in June 1998 from the
Company's public offering, which was used to fund operations and its obligations
under the Netcenter Agreement.

    Equity Share of Losses of Affiliated Company. In October 1997, the Company
and Itochu Corporation and certain affiliated entities (collectively "Itochu")
entered into a joint venture agreement with respect to the Company's
wholly-owned subsidiary, Excite Japan, in order to provide Web-based information
services to the Japanese market. The Company currently holds, and intends to
retain, a 50% equity interest in Excite Japan. For the three and nine months
ended September 30, 1998, the Company's share of the losses of Excite Japan was
$614,000 and $1.6 million, respectively. The Company expects that it will record
increased losses from Excite Japan for at least the remainder of 1998.

YEAR 2000 IMPLICATIONS

    Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field and cannot distinguish 21st
century dates from 20th century dates. These date code fields will need to
distinguish 21st century dates from 20th century dates and, as a result, many
companies' software and computer systems may need to be upgraded or replaced in
order to comply with such "Year 2000" requirements. The Company's business is
dependent on the operation of numerous systems that could potentially be
adversely impacted by Year 2000 related problems. Those systems include, among
others: hardware and software systems used by the Company to deliver services to
its customers (including the Company's proprietary software systems as well as
hardware and software supplied by third parties); communications networks, such
as the Internet, which the Company depends on to provide services; the internal
systems of the Company's customers, users and suppliers; the hardware and
software systems used internally by the Company in the management of its
business; and non-information technology systems and devices used by the Company
in its business, such as telephone and building systems.


                                       16
<PAGE>   17
    The Company has conducted an initial review of its proprietary software
systems, and has determined that there are no significant Year 2000 issues
within the Company's proprietary systems or services. Although the Company
believes that its proprietary systems are Year 2000 compliant, the Company
utilizes third-party equipment and software in the management of its business
that may not be Year 2000 compliant. Failure of such third-party equipment or
software to operate properly with regard to the Year 2000 and thereafter could
require the Company to incur unanticipated expenses to remedy any problems,
which may have a material adverse effect on the Company's business, results of
operations and financial condition.

    Furthermore, the Company has not fully determined its vendors, joint venture
partners and content partners progress in identifying and addressing systems
that could potentially be impacted by Year 2000 related problems. The Company
intends to continue its efforts to monitor the Year 2000 compliance of vendors,
joint venture partners and content partners. In the event any third parties
cannot timely provide the Company with content, products, services or systems
that meet the Year 2000 requirements, the content on the Company's services,
access to the Company's services, the ability to offer page views, products,
services and the ability to recognize or process sales may be materially
adversely affected. This may also have a material adverse effect on the
Company's business, results of operations and financial condition.

    In addition, the purchasing patterns of advertisers may be affected by Year
2000 issues as companies expend significant resources to correct their current
systems for Year 2000 compliance. These expenditures may result in reduced funds
available for Internet advertising or sponsorship of Internet services, which
may have a material adverse effect on the Company's business, results of
operations and financial condition.

    While Year 2000 costs incurred to date have not been material, the Company
does expect to incur internal staff costs as well as consulting and other
expenses to remedy any Year 2000 related problems. The Company has no reasonable
estimate of the costs associated with achieving Year 2000 readiness nor if these
costs will be material. Additional costs incurred may include, but are not
limited to, the cost of correcting our internal systems and the cost of
implementing necessary contingency plans.

    While the Company is dedicating resources toward attaining Year 2000
readiness, there is no assurance that the Company will be successful in our
efforts to address all Year 2000 issues. The Company does not presently have a
contingency plan for handling Year 2000 problems that are not detected and
corrected prior to their occurrence. Any failure of the Company to address
unforeseen Year 2000 issues may have a material adverse effect on the Company's
business, results of operations and financial condition.

    The above discussion regarding costs, risks and estimated completion dates
for the Year 2000 is based on the Company's best estimates given information
that is currently available, and is subject to change.

LIQUIDITY AND CAPITAL RESOURCES

    At September 30, 1998 the Company had $39.0 million in unrestricted cash,
cash equivalents and short-term investments, an increase of $7.3 million from
December 31, 1997. The Company maintains its cash and cash equivalents in
short-term and medium-term investment-grade interest-bearing securities until
required for other purposes.

    The Company's operating activities for the first nine months of 1998 and
1997 used cash of approximately $78.8 million and $32.5 million, respectively.
The increased use of cash in 1998 was mainly attributable to the $70.0 million
cash prepayment to Netscape under the Netcenter Agreement. The Company borrowed
$50.0 million from Intuit, which is a principal stockholder of the Company, in
April 1998 to fund a portion of this payment to Netscape. In June 1998, the
Company repaid the loan in full, plus interest of approximately $410,000, with
proceeds from the Company's public offering, which closed in June 1998.

    Investing activities for the first nine months of 1998 and 1997 used cash of
$4.1 million and $17.0 million, respectively. In the first nine months of 1998
and 1997, cash was used for purchases of short-term investments, property and
equipment, and contributions towards its investment in Excite Japan, offset by
the sales of short-term investments. Capital expenditures have been, and future
expenditures are anticipated to be, primarily for facilities and equipment to
support expansion of the Company's operations and management information
systems. The Company expects that its capital expenditures will increase as its
employee base grows. As of September 30, 1998, the Company did not have any
material commitments for capital expenditures, although the Company anticipates
that its planned purchases of capital equipment and leasehold improvements will
require additional expenditures during the remainder of 1998, a portion of which
may be financed through


                                       17
<PAGE>   18
equipment leases and bank borrowings. At September 30, 1998 the Company had $3.1
million available on equipment lease lines, and the Company believes that
additional lease financing will be available to it if necessary.

    Financing activities for the first nine months of 1998 and 1997 generated
cash of $95.0 million and $50.4 million, respectively. Financing activities for
the first nine months of 1998 primarily consisted of cash received in connection
with the issuance of stock through the Company's public offering which was
completed in June 1998 and, to a lesser extent, option exercises under the
Company's equity incentive plan and warrants exercised by Netscape in July 1998.
Financing activities for the first nine months of 1997 primarily consisted of a
bank line of credit borrowing of $6.0 million and the sale of Common Stock to
Intuit.

    In 1997, the Company entered into and borrowed on a $6.0 million line of
credit. The Company is currently negotiating a new line of credit.

    To date, the Company has had limited international operations and its
exposure to foreign currency exchange rate fluctuations has been minimal. The
Company evaluates its foreign currency exchange rate exposure on an ongoing
basis.

    The Company has completed a number of mergers and acquisitions in the past,
and expects to make other acquisitions and investments in joint ventures in the
future. These mergers resulted in significant increases in headcount and
overhead, as well as the assumption and payment of additional liabilities. While
the Company believes that such transactions have been and will continue to be in
the best interests of the Company and its stockholders, these transactions
involve risks and may require additional cash investments by the Company.

    The Company believes the existing working capital balance together with cash
flows generated from advertising revenues will be sufficient to meet its
anticipated cash needs for working capital, capital expenditures and business
expansion for at least the next twelve months. The Company may need to raise
additional funds sooner in order to fund more rapid expansion, to develop new or
enhanced services or products, to respond to competitive pressures or to acquire
complementary products, businesses or technologies. If additional funds are
raised through the issuance of equity or convertible debt securities, the
percentages ownership of the stockholder of the Company will be reduced,
stockholders may experience additional dilution and such securities may have
rights, preferences or privileges senior to those of the holders of the
Company's common stock.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

   Limited Operating History; No Assurance of Profitability. The Company was
founded in June 1994 and generated only limited revenues prior to 1996.
Accordingly, the Company has a limited operating history upon which an
evaluation of the Company and its current business can be based. In addition,
the Company's business model is evolving and relies substantially upon the sale
of Web advertising. The Company's business must be considered in light of the
risks, expenses and problems frequently encountered by companies in their early
stages of development, particularly companies in new and rapidly evolving
markets such as Web advertising. Specifically, such risks include, without
limitation: the inability of the Company to maintain and increase levels of
traffic on the Excite Network; the inability of the Company to derive sufficient
revenues from the Co-Branded Services of Netscape's Netcenter service and the
additional costs the Company expects to incur in order to perform its
obligations under the Netcenter Agreement; the inability of the Company to
effectively integrate the technology and operations of acquired businesses or
technologies with its operations, increased operating expenses as a result of
the Company's recent acquisitions, the inability of the Company to expand its
international operations, particularly in light of the Company's limited
operating experience in the international market; the failure by the Company to
continue to develop and extend the Excite and WebCrawler brands; the inability
of the Company to meet minimum guaranteed impressions under sponsorship
agreements; the inability of the Company to develop or acquire content for its
services; the inability of the Company to generate commerce-related revenues;
the failure of the Company to anticipate and adapt to a developing market; the
introduction and development of equal or superior services or products by
competitors, particularly in light of the fact that Microsoft and Netscape,
operators of two of the most heavily-trafficked Web sites, offer competitive
services; the failure of the market to adopt the Web as an advertising and
commercial medium; reductions in market prices for Web advertising as a result
of competition or otherwise; the inability of the Company to achieve higher cost
per thousand impressions ("CPM") rates for targeted advertising or to increase


                                       18
<PAGE>   19
the percentage of its advertising inventory sold; government regulation; the
inability of the Company to identify, attract, retain and motivate qualified
personnel; and general economic conditions. There can be no assurance that the
Company will be successful in addressing such risks.

   Potential Fluctuations in Quarterly Results; Unpredictability of Future
Revenues. The Company's operating results have varied on a quarterly basis
during its limited operating history and the Company expects to experience
significant fluctuations in future quarterly operating results. Such
fluctuations have been and may in the future be caused by numerous factors, many
of which are outside the Company's control, including but not limited to:
specific economic conditions relating to the Internet and the Web; usage of the
Web; demand for advertising on the Excite Network as well as demand for
Web-based advertising in general; changes in advertising rates as a result of
competition or otherwise; seasonal trends in advertising sales; the advertising
budgeting cycles of advertisers; incurrence of charges in connection with the
Netcenter Agreement, the Company's distribution relationships and acquisitions;
demand for the Company's services; incurrence of costs relating to acquisitions
of businesses or technologies; introduction or enhancement of new or existing
services by the Company and its competitors; market acceptance of new services;
delays in the introduction of services or enhancements by the Company or its
competitors; mix of types of advertisements sold, such as the amount of targeted
advertising, which generally has higher CPM rates, sold as a percentage of total
advertising sold; capacity constraints and dependencies on computer
infrastructure; and general economic conditions.

   Due to all of the foregoing factors, the Company's quarterly revenues and
operating results are difficult to forecast. The Company believes that
period-to-period comparisons of its results of operations will not necessarily
be meaningful and should not be relied upon as an indication of future
performance. Also, it is likely that in some future quarter or quarters the
Company's operating results will be below the expectations of public market
analysts and investors. In such event, the price of the Company's Common Stock
would be materially and adversely affected.

    Risks Related to Netcenter Agreement. Under the Netcenter Agreement, the
Company will only receive revenues generated from the Co-Branded Services and
not from any other part of the Netcenter Service. In addition, the Company must
pay Netscape a portion of such revenues after it recoups a majority of the Cash
Payment. Thereafter, the Company must pay Netscape a percentage of the revenues
received from the Co-Branded Services. There are no minimum guaranteed revenues
under the Netcenter Agreement, and there can be no assurance as to the level of
revenues that the Company will generate from the Co-Branded Services. The level
of advertising revenues generated by the Company from the Co-Branded Services is
subject to a number of risks and uncertainties, many of which are beyond the
Company's control. These include general risks associated with providing an
advertising-supported Internet service, uncertainty as to whether the Company
can increase its sales and marketing capabilities in order to sell sufficient
advertising on the Co-Branded Services, pricing competition from Netscape as a
result of advertising sold on the parts of Netcenter other than the Co-Branded
Services, and risks that channels on Netcenter other than the Co-Branded
Channels (such as a business channel and a sports channel) may be potentially
more attractive to advertisers than the Co-Branded Services. Because Netscape is
responsible for programming the Netcenter home page and other portions of
Netcenter that are not Co-Branded, Excite is relying upon Netscape's programming
of the Netcenter home page and other portions of Netcenter to create a
demographic mix of traffic flows that is similar to that experienced by the
Company. Netscape has no experience in such activities. As a result, the Company
has no means of controlling the programming on these pages so as to maximize the
exposure of the Co-Branded channels and search services. The Company also has
little means of controlling the mix of traffic to the Co-Branded channels and
search service, which could have different revenue opportunities to the Company
as advertisers may be willing to pay more to advertise on certain content
channels. There can be no assurance that the Company can generate substantial
revenues from the Co-Branded Services to recoup the portion of the Cash Payment
against which the Company's revenue sharing obligations will be offset, or to
recoup costs incurred by the Company under the Netcenter Agreement.

    The Company has hired a significant number of technical and sales personnel
and is incurring additional overhead costs in order to develop, host and sell
advertising on the Co-Branded Services. The Company will not be reimbursed for
these costs. The failure to generate revenues from the Co-Branded Services
sufficient to recoup these additional costs would have a material adverse effect
on the Company's business, results of operations and financial condition.


                                       19
<PAGE>   20
   The success of Netcenter, and the Co-Branded Services in particular, will be
substantially dependent on the amount of traffic on Netcenter. Although Netscape
has made certain exposure guarantees with respect to Netcenter over the term of
the Netcenter Agreement, there can be no assurance that these guarantees will be
fulfilled. There is intense competition for attracting Web users, which
competition may be exacerbated by the upcoming release of Microsoft's Windows 98
operating system. Furthermore, many current Web users may not choose to utilize
Netcenter over other available Internet services. Any failure of Netcenter to
attract substantial user traffic would materially and adversely affect the
Company's business, results of operations and financial condition. Additionally,
the Netcenter Agreement provides that all page views generated from the
Co-Branded Services shall be deemed to be traffic attributable to Netscape. As a
result, the Company may not receive credit, under certain audience measurement
statistics, which are commonly used by advertisers in making their advertising
placements, for traffic generated through the Co-Branded Services.

   As part of the Netcenter Agreement, the Excite Network will also be featured
as a "premier provider" on Netscape's Net Search page, and will be similarly
featured on the "Netcenter Widget" tool, which will be accessible from
Netcenter. Because Netscape only guarantees a specified number of impressions
from its Net Search page (as compared to a number of users who "click through"
to the Excite Network), there can be no assurance that this new "premier
provider" arrangement will result in significant increases in traffic on the
Excite Network. Although Netscape has guaranteed a minimum number of users who
"click through" to the Excite Network from the Netcenter Widget, Netscape is not
obligated to keep this tool on Netcenter after the first six months of the term
of the Netcenter Agreement. Accordingly, there can also be no assurance that
this tool will provide the Excite Network with significant amounts of traffic.
In entering into the Netcenter Agreement, Excite has assumed that "click
throughs" from the Netsearch page will be similar to the historical performance
of the Netsearch page experienced by Excite over the prior two agreements with
Netscape. The "click through" rate is influenced by brand strength of the search
provider, and by the layout and programming of the Netsearch page itself. Thus,
Excite's projections for the Co-Branded search service are dependent on
Netscape's ability to establish its brand as a search provider and its ability
to program the site to maintain the historical level of "click throughs." Under
performance, in terms of users clicking through from the home page to the
Co-Branded channels or to Excite services, would negatively impact Excite's
expectations for the Agreement.

   The distribution of traffic from Netscape to Excite throughout the term of
the Netcenter Agreement significantly impacts Excite's ability to recoup the
amount it has prepaid under the Netcenter Agreement. Although Netscape has made
certain traffic exposure guarantees, there can be no assurance that these
guarantees will be fulfilled within the two-year term of this contract. Nor is
there a guarantee that the timing of the delivery of these impressions during
this period will be consistent with the assumptions made in the Company's
determination of the value of the Netcenter Agreement, as Netscape is not
obligated to meet these guarantees on any specific schedule and, if the delivery
of Netscape's traffic guarantees is more heavily weighted toward the end of the
contract term than projected, Excite's expectations as to the net present value
of the Agreement would be negatively impacted.

   Upon the termination of the Netcenter Agreement (other than a termination in
connection with certain acquisitions of or by Netscape), Netscape will have a
perpetual, irrevocable license to utilize certain technology used by Excite to
the Co-Branded Services. Netscape will also have the right to sublicense this
technology to third parties. As a result, upon termination of the Netcenter
Agreement, Netscape will be able to operate Netcenter independently, without any
royalty or payment obligations to Excite. In addition, if Netscape sublicenses
this technology to a third party, the Excite Network could face additional
competition, which could have a material adverse effect on the Company's
business, results of operations and financial condition.

   The Netcenter Agreement is subject to termination if the Company materially
breaches its obligations under the Netcenter Agreement. In addition, if Netscape
believes that the Company's Excite service or that the content provided by
Excite for the Netcenter service contains any content that Netscape deems likely
to cause it material harm, Netscape may terminate the Netcenter Agreement if the
Company has not revised such objectionable content within five days after notice
from Netscape. In the event of such terminations, Netscape will not be obligated
to refund any portion of the amounts prepaid by the Company and the Company will
not be entitled to receive any reimbursement for its costs incurred in
performing its obligations under the Netcenter Agreement. Moreover, many of the
Company's obligations to be performed under the Netcenter Agreement must be
performed according to standards determined by Netscape at its sole discretion.


                                       20
<PAGE>   21
   Many of the services to be offered by Netcenter will compete directly with
those offered by the Excite Network. There can be no assurance that this
increased competition for Web users or advertisers will not have a material
adverse effect on the Company's business, results of operations and financial
condition.

   Acquisition Strategy; Integration of Past and Future Acquisitions. The
Company has in the past acquired, and may in the future acquire, businesses,
technologies, services, product lines, content databases, or access to content
databases that are complementary to the Company's business. Acquisitions involve
a number of special risks, including, among other things, the difficulty of
assimilating the technologies, operations and personnel of acquired companies
with those of the Company, the potential disruption of the Company's business,
the diversion of resources, the incurrence of acquisition-related expenses, the
write-off or amortization of intangible assets, the assumption of unknown
liabilities, the inability to maintain uniform standards, controls, procedures
and policies and the impairment of relationships with employees and strategic
partners as a result of such acquisitions or the integration of new personnel.
Any failure to successfully address these acquisition-related risks could have a
material adverse effect on the Company's business, results of operations and
financial condition.

   Risks Related to Sponsorships. The Company derives a substantial portion of
its revenues from sponsorship arrangements with third parties to provide
sponsored services and placements on the Excite Network. In connection with
these arrangements, the Company may receive sponsorship fees, and in connection
with certain of its more recent arrangements it may receive a portion of
transaction revenues received by such sponsors from users originated through the
Excite Network. These arrangements expose the Company to potentially significant
financial risks, including the risk that the Company fails to deliver required
minimum levels of user impressions (in which case, these agreements are
typically subject to termination) and that third party sponsors do not renew the
agreements at the end of their term. These arrangements also require the Company
to integrate sponsors' content with the Company's services, which can require
the dedication of resources and significant programming and design efforts to
accomplish. There can be no assurance that the Company will be able to attract
additional sponsors or that it will be able to renew existing sponsorship
arrangements when they expire. In addition, the Company has granted exclusivity
provisions to certain of its sponsors, and may in the future grant additional
exclusivity provisions. Such exclusivity provisions may have the effect of
preventing the Company, for the duration of such exclusivity arrangements, from
accepting advertising or sponsorship arrangements with respect to portions of a
channel or service, an entire channel, across an entire service or over the
entire Excite Network. The inability of the Company to enter into further
sponsorship or advertising arrangements as a result of its exclusivity
arrangements or otherwise could have a material adverse effect on the Company's
business, results of operations and financial condition.

   Risks Associated with Banner Advertising. The Company derives a substantial
portion of its revenues from the sale of banner advertisements on the Excite
Network. A majority of the Company's customers purchasing banner advertisements
purchase these advertisements on a short-term basis, and many of these customers
may terminate their advertising commitments at any time without penalty.
Consequently, there can be no assurance that these customers will continue or
increase their level of advertising on the Excite Network or that these
customers will not move their advertising to competing Web sites or to other
traditional media. Therefore, there can be no assurance that the Company will be
successful in maintaining or increasing the amount of banner advertising on the
Excite Network, and the failure to do so would have a material adverse effect on
the Company's business, results of operations and financial condition.

   Developing Market; Dependence on Continued Growth in Use of the Web. The
market for the Company's services has recently begun to develop, is rapidly
evolving and is characterized by an increasing number of market entrants who
have introduced or developed services and products for use on the Web or who
seek to derive significant revenues from the sale of advertisements on the Web.
The Company is highly dependent upon the increased use of the Web for
information, publication, distribution and commerce, and there can be no
assurance that the use of the Web for these purposes will continue to grow at
its current rate or at all. The growth of the use of the Web may be inhibited
for a number of reasons, including, but not limited to, potentially inadequate
development of network infrastructure, security concerns, inconsistent quality
of service, lack of availability of cost-effective, high-speed service and
government regulations. To the extent that use of the Web continues to grow,
there can be no assurance that the Internet infrastructure will continue to
support the demands placed on it by such growth or that the performance or
reliability of the Internet will not be adversely affected. In addition, the Web
as an advertising medium has not been available for a sufficient period of time
to gauge its effectiveness as compared with traditional advertising media, and
therefore the Web is an


                                       21
<PAGE>   22
unproven medium for advertising-supported services. Accordingly, the Company's
future operating results will depend substantially upon the increased use of the
Web for information, publication, distribution and commerce and the emergence of
the Web as an effective advertising medium.

   The Company's ability to generate significant advertising revenues will also
depend on, among other things, the development of a large base of users of the
Company's services possessing demographic characteristics attractive to
advertisers, the ability of the Company to accurately measure its user base and
the ability of the Company to develop or acquire effective advertising delivery
and measurement systems. Many of the Company's advertisers have only limited
experience with the Web as an advertising medium, have not yet devoted a
significant portion of their advertising expenditures to Web-based advertising,
and may not find such advertising to be effective for promoting their products
and services relative to traditional print and broadcast media. The adoption of
Web advertising, particularly by those entities that have historically relied
upon traditional media for advertising, requires the acceptance of a new way of
conducting business and exchanging information. Entities that already have
invested substantial resources in other methods of conducting business may be
reluctant to adopt a new strategy that may limit or compete with their existing
efforts. There can be no assurance that the market for Web advertising will
continue to emerge or become sustainable. If the market fails to develop or
develops more slowly than expected, the Company's business, results of
operations and financial condition could be materially and adversely affected.
No standards have been widely accepted for the measurement of the effectiveness
of Web-based advertising, and there can be no assurance that such standards will
develop sufficiently to support the Web as an effective advertising medium.
There can be no assurance that advertisers will continue to accept the Company's
or other third-party measurements of impressions, or that such measurements will
not contain errors. In such event, the Company's advertising revenues could be
materially adversely affected, which would have a material adverse effect on the
Company's business, results of operations and financial condition.

   In addition, there is intense competition in the sale of advertising on the
Web, resulting in a wide range of rates quoted and a variety of pricing models
offered by different vendors for a variety of advertising services, which makes
it difficult to project future levels of advertising revenues and rates. It is
also difficult to predict which pricing models will be adopted by the industry
or advertisers. For example, advertising rates based on the number of "click
throughs," or user requests for additional information made by clicking on the
advertisement from the Company's network to the advertiser's Web pages, instead
of rates based solely on the number of impressions displayed on users' computer
screens, would materially adversely affect the Company's revenues. As a result
of these risks, there can be no assurance that the Company will be successful in
generating significant future advertising revenues from Web-based advertising,
and the failure to do so would have a material adverse effect on the Company's
business, results of operations and financial condition.

   Further, there can be no assurance that advertisers will determine that
banner advertising, the delivery of which currently comprises a substantial
portion of the Company's revenues, is an effective or attractive advertising
medium, and there can be no assurance that the Company will effectively
transition to any other forms of Web advertising should they develop and achieve
market acceptance. Moreover, "filter" software programs that limit or prevent
advertising from being delivered to a Web user's computer are available.
Widespread adoption of such software by users could have a material adverse
effect upon the commercial viability of Web advertising, which would have a
material adverse effect on the Company's business, results of operations and
financial condition.


                                       22
<PAGE>   23
                                   SIGNATURES

       In accordance with the requirements of the Securities Exchange Act, the
Registrant has caused this Amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                        EXCITE, INC.


Date:  January 27, 1999                 By:  /s/ ROBERT C. HOOD
                                             -----------------------------------
                                             Robert C. Hood
                                             Executive Vice President,
                                             Chief Administrative Officer and
                                             Chief Financial Officer


                                       23
<PAGE>   24
                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
 Exhibit
  Number             Description
-----------          -----------
<S>                  <C> 
  27.01              Financial Data Schedule
</TABLE>