<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q
                                ---------------

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
           OF THE SECURITIES EXCHANGE ACT OF 1934
</TABLE>

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

                         COMMISSION FILE NUMBER

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

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

<TABLE>
<S>                                         <C>
              DELAWARE                                   88-0361536
      (State of incorporation)              (I.R.S. Employer Identification No.)
</TABLE>

                        300 MONTGOMERY STREET, SUITE 300
                        SAN FRANCISCO, CALIFORNIA 94104
                                 (415) 288-2500
         (Address and telephone number of principal executive offices)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                        COMMON STOCK, $0.0001 PAR VALUE
                                (Title of class)

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

    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /

    The number of shares outstanding of Registrant's Common Stock, $0.0001 par
value, were 20,461,673 at September 30, 1999.

--------------------------------------------------------------------------------
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<PAGE>
                                 XOOM.COM, INC.
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                  PAGE
                                                                                --------
<S>      <C>      <C>                                                           <C>
Part I            FINANCIAL INFORMATION

         Item 1.  Condensed Consolidated Financial Statements (Unaudited)

                  Condensed Consolidated Balance Sheets--September 30, 1999
                    and December 31, 1998.....................................      1

                  Condensed Consolidated Statements of Operations for the
                    three and nine months ended September 30, 1999 and 1998...      2

                  Condensed Consolidated Statements of Cash Flows for the nine
                    months ended September 30, 1999 and 1998..................      3

                  Notes to Condensed Consolidated Financial Statements........      4

         Item 2.  Management's Discussion and Analysis of Financial Condition
                    and Results of Operations.................................     13

         Item 3.  Quantitative and Qualitative Disclosures about Market
                    Risk......................................................     27

Part II           OTHER INFORMATION

         Item 1.  Legal Proceedings...........................................     41

         Item 2.  Changes in Securities and Use of Proceeds...................     41

         Item 3.  Quantitative and Qualitative Disclosures about Market
                    Risk......................................................     42

         Item 6.  Exhibits and Reports on Form 8-K............................     43

                  Signature...................................................     44
</TABLE>
<PAGE>
                                 XOOM.COM, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,   DECEMBER 31,
                                                                  1999            1998
                                                              -------------   ------------
<S>                                                           <C>             <C>
                                          ASSETS
Current assets:
  Cash, cash equivalents and marketable securities..........    $198,925        $ 56,575
  Accounts receivable, net..................................       4,032           1,368
  Inventories...............................................         518             322
  Other current assets......................................       3,747             308
                                                                --------        --------
    Total current assets....................................     207,222          58,573
Fixed assets, net...........................................       7,643           2,071
Investments.................................................      69,780              --
Intangible assets, net......................................      95,537           5,517
Other assets, including a restricted balance of $4,500 at
  September 30, 1999........................................       8,890             713
                                                                --------        --------
      Total assets..........................................    $389,072        $ 66,874
                                                                ========        ========

                           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................    $  5,115        $  1,229
  Accrued compensation and related expenses.................       1,355             497
  Other accrued liabilities.................................       2,831           1,568
  Notes payable.............................................         241           1,276
  Deferred revenue..........................................       2,409             443
  Contingency accrual.......................................       1,000           1,000
                                                                --------        --------
    Total current liabilities...............................      12,951           6,013
Deferred revenue, less current portion......................       2,380              --
Other long-term liabilities.................................         456             528
Commitments and contingencies
Stockholders' equity:
  Preferred stock, $0.0001 par value:
    Authorized shares--5,000,000
    Issued and outstanding shares--none in 1999 and 1998....          --              --
  Common stock, $0.0001 par value:
    Authorized shares--40,000,000
    Issued and outstanding shares--20,461,673 and 13,699,555
      in 1999 and 1998, respectively........................     407,669          75,606
  Notes receivable from stockholders........................        (995)             --
  Deferred compensation.....................................        (409)           (904)
  Accumulated deficit.......................................     (32,980)        (14,369)
                                                                --------        --------
    Total stockholders' equity..............................     373,285          60,333
                                                                --------        --------
      Total liabilities and stockholders' equity............    $389,072        $ 66,874
                                                                ========        ========
</TABLE>

                            See accompanying notes.

                                       1
<PAGE>
                                 XOOM.COM, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED     NINE MONTHS ENDED
                                                            SEPTEMBER 30,         SEPTEMBER 30,
                                                         -------------------   -------------------
                                                           1999       1998       1999       1998
                                                         --------   --------   --------   --------
<S>                                                      <C>        <C>        <C>        <C>
Net revenue:
  E-commerce...........................................  $  4,324   $ 1,532    $ 10,257   $ 3,366
  Advertising..........................................     4,552       598       9,527       953
  Licensing............................................        80       170         119       546
                                                         --------   -------    --------   -------
    Total net revenue..................................     8,956     2,300      19,903     4,865
Cost of net revenue:
  Cost of e-commerce...................................     2,809     1,067       7,458     1,965
  Cost of advertising..................................       108        --         183        --
  Cost of licensing....................................         4         7           4        35
                                                         --------   -------    --------   -------
    Total cost of net revenue..........................     2,921     1,074       7,645     2,000
                                                         --------   -------    --------   -------
Gross profit...........................................     6,035     1,226      12,258     2,865

Operating expenses:
  Operating and development............................     3,008     1,209       5,708     2,558
  Sales and marketing..................................     5,969       853      13,507     1,570
  General and administrative...........................     3,180     1,059       6,846     2,158
  Amortization of deferred compensation................        90       304         495     1,111
  Purchased in-process research and development........        --       130       2,603       790
  Amortization of intangible assets....................     5,532       741       7,836     1,087
                                                         --------   -------    --------   -------
    Total operating expenses...........................    17,779     4,296      36,995     9,274
                                                         --------   -------    --------   -------
Loss from operations...................................   (11,744)   (3,070)    (24,737)   (6,409)
Other income, net......................................     3,180        17       6,123        17
                                                         --------   -------    --------   -------
Net loss...............................................  $ (8,564)  $(3,053)   $(18,614)  $(6,392)
                                                         ========   =======    ========   =======
Net loss per share--basic and diluted..................  $  (0.44)  $ (0.35)   $  (1.11)  $ (0.89)
                                                         ========   =======    ========   =======
Number of shares used in per share calculation--basic
  and diluted..........................................    19,655     8,710      16,780     7,172
                                                         ========   =======    ========   =======
</TABLE>

                            See accompanying notes.

                                       2
<PAGE>
                                 XOOM.COM, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                 NINE MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                              -----------------------
                                                                1999           1998
                                                              ---------      --------
<S>                                                           <C>            <C>
CASH USED IN OPERATING ACTIVITIES:
  Net loss..................................................  $ (18,614)     $(6,392)
  Adjustments to reconcile net loss to net cash (used in)
    provided by operating activities:
Purchased in-process research and development...............      2,603          790
Depreciation and amortization...............................      1,280          481
Amortization of intangible assets...........................      7,836        1,087
Amortization of deferred compensation.......................        495        1,111
Issuance of common stock in exchange for Classic Media
  Holdings license rights...................................         --          100
Issuance of stock options to consultants....................         --          189
Issuance of common stock to directors and consultants.......        638           87
Changes in operating assets and liabilities:
      Accounts receivable...................................     (2,517)        (634)
      Inventories...........................................       (196)        (379)
      Other current assets..................................     (3,433)        (116)
      Intangible assets.....................................         --          (24)
      Other assets..........................................     (7,577)      (1,426)
      Accounts payable......................................      3,886        1,047
      Accrued compensation and related expenses.............        530          289
      Other accrued liabilities.............................       (729)         645
      Deferred revenue......................................        858           --
                                                              ---------      -------
NET CASH USED IN OPERATING ACTIVITIES.......................    (14,940)      (3,145)
CASH USED IN INVESTING ACTIVITIES:
  Purchases of fixed assets.................................     (6,169)      (1,099)
  Purchase of investments...................................   (198,450)          --
  Maturities of investments.................................     18,500           --
  Cash paid in connection with the purchase of certain
    assets from Revolutionary Software, Inc.................         --          (20)
  Business combinations, net of cash acquired...............       (901)        (329)
                                                              ---------      -------
NET CASH USED IN INVESTING ACTIVITIES.......................   (187,020)      (1,448)
CASH PROVIDED BY FINANCING ACTIVITIES:
  Proceeds from issuance of common stock in secondary public
    offering................................................    166,597           --
  Proceeds from issuance of common stock....................     55,000        5,532
  Proceeds from exercise of stock options...................      1,836           --
  Proceeds from issuance of notes payable to stockholders...         --          335
  Principal payments on capital lease obligations...........        (31)          (2)
  Repayment of notes payable................................       (608)        (311)
                                                              ---------      -------
NET CASH PROVIDED BY FINANCING ACTIVITIES...................    222,794        5,554
                                                              ---------      -------
Net increase in cash and cash equivalents...................     20,834          961
Cash and cash equivalents at beginning of period............     54,575            6
                                                              ---------      -------
Cash and cash equivalents at end of period..................  $  75,409      $   967
                                                              =========      =======
SUPPLEMENTAL DISCLOSURES:
NON-CASH TRANSACTIONS:
  Issuance of common stock in connection with business and
    technology acquisitions.................................  $ 101,055      $ 3,618
                                                              =========      =======
  Issuance of notes payable in conjunction with business and
    technology acquisitions.................................  $      --      $ 3,025
                                                              =========      =======
  Investment in a company in connection with a media
    contract................................................  $   5,000      $    --
                                                              =========      =======
  Issuance of common stock in exchange for stock
    subscriptions receivable................................  $     995      $   261
                                                              =========      =======
  Issuance of common stock in exchange for cancellation of
    notes payable to stockholder............................  $      --      $   150
                                                              =========      =======
  Common stock issued to satisfy Paralogic Corporation legal
    obligation..............................................  $      --      $   165
                                                              =========      =======
  Deferred compensation resulting from grant of stock
    options.................................................  $      --      $ 2,002
                                                              =========      =======
  Fixed assets acquired under capital leases................  $     125      $   162
                                                              =========      =======
  Value of equity securities received in exchange for
    entering into strategic alliances.......................  $     429      $    --
                                                              =========      =======
  Value of warrant received in connection with ValueVision
    International, Inc. strategic alliance..................  $   6,343      $    --
                                                              =========      =======
  Value of warrant issued in connection with ValueVision
    International, Inc. strategic alliance..................  $   6,937      $    --
                                                              =========      =======
CASH FLOW INFORMATION:
  Cash paid for interest....................................  $      59      $    --
                                                              =========      =======
</TABLE>

                            See accompanying notes.

                                       3
<PAGE>
                                 XOOM.COM, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

    The condensed consolidated financial statements as of September 30, 1999 and
1998 and for the three and nine-month periods then ended are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The condensed
consolidated financial statements as of September 30, 1999 should be read in
conjunction with the consolidated financial statements and notes thereto,
together with management's discussion and analysis of financial condition and
results of operations, contained in the Company's Annual Report to Stockholders
incorporated by reference in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1998. The results of operations for the three and
nine months ended September 30, 1999 are not necessarily indicative of the
results for the entire fiscal year ending December 31, 1999.

2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS

    During the nine months ended September 30, 1999, the Company made business
acquisitions described in the paragraphs that follow, each of which has been
accounted for as a purchase. The condensed consolidated financial statements
include the operating results of each business from the date of acquisition.

    PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT. The amounts allocated to
purchased research and development were determined through established valuation
techniques in the high-technology Internet industry and were expensed upon
acquisition, because technological feasibility had not been established and no
future alternative uses existed. The values assigned to purchased in-process
technology were determined by identifying the on-going research projects for
which technological feasibility had not been achieved and assessing the state of
completion of the research and development effort. The state of completion was
determined by estimating the costs and time incurred to date relative to those
costs and time to be incurred to develop the purchased in-process technology
into commercially viable products, estimating the resulting net cash flows only
from the percentage of research and development efforts complete at the date of
acquisition, and discounting the net cash flows back to their present value. The
discount rate included a factor that took into account the uncertainty
surrounding the successful development of the purchased in-process technology
projects.

    PURCHASED TECHNOLOGY. To determine the values of purchased technology, the
expected future cash flows of the existing developed technologies were
discounted taking into account the characteristics and applications of the
product, the size of existing markets, growth rates of existing and future
markets as well as an evaluation of past and anticipated product lifecycles.

    ACQUIRED WORKFORCE. To determine the values of the acquired workforce,
employees were identified who would require significant cost to replace and
train. Then each employee's fully-burdened cost (salary, benefits, overhead),
the cost to train the employee, and the recruiting costs (locating,
interviewing, hiring) were estimated. These costs were then summed up and tax
effected to estimate the value of the assembled workforce.

    Amounts allocated to purchased technology, goodwill and other intangible
assets for the business acquisitions that follow are being amortized on a
straight-line basis over periods of three to four years.

                                       4
<PAGE>
                                 XOOM.COM, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS (CONTINUED)

FOCUSED PRESENCE, INC.

    On April 1, 1999, the Company acquired 100% of the outstanding shares
Focused Presence, Inc., a company that operates a global directory of small
businesses. The purchase consideration consisted of 21,894 shares of the
Company's common stock with an estimated fair value of $77.23 per share, and
acquisition costs of approximately $4,000. The Company accounted for this
acquisition as a purchase.

    The purchase consideration was allocated to the acquired assets and assumed
liabilities based on fair values as follows (in thousands):

<TABLE>
<S>                                                           <C>
Cash........................................................  $    1
Other current assets........................................      61
Fixed assets, net...........................................       3
Goodwill....................................................   1,760
Liabilities assumed.........................................    (130)
                                                              ------
Total purchase consideration................................  $1,695
                                                              ======
</TABLE>

MIGHTYMAIL NETWORKS, INC.

    On May 3, 1999, the Company acquired 100% of the outstanding shares of
MightyMail Networks, Inc., a developer of an enhanced e-mail product that
enables customization of e-mail according to user preferences. The purchase
consideration consisted of 268,761 shares of the Company's common stock with an
estimated fair value of $72.10 per share, the assumption of 9,061 and 12,121
employee stock options at a price per share of $70.47 and $55.91, respectively,
and acquisition costs of approximately $300,000. In addition, 67,186 shares of
the Company's common stock were placed into an escrow account. Of the shares
held in escrow, 25% will be released in November 1999 and in May 2000, if
certain performance objectives are met, and the remaining 50% will be released
in May 2000, upon the expiration of certain indemnification obligations.

    The purchase consideration was allocated to the acquired assets and assumed
liabilities based on fair values as follows (in thousands):

<TABLE>
<S>                                                           <C>
Accounts receivable.........................................  $    19
Net fixed assets............................................      132
Other long-term assets......................................       50
Notes receivable from stockholders..........................      995
Purchased in-process research and development charged to
  operations in the quarter ended June 30, 1999.............    1,082
Purchased technology........................................    3,321
Acquired workforce..........................................      176
Goodwill....................................................   17,735
Liabilities assumed.........................................     (396)
                                                              -------
Total purchase consideration................................  $23,114
                                                              =======
</TABLE>

                                       5
<PAGE>
                                 XOOM.COM, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS (CONTINUED)

NET FLOPPY, INC.

    On May 5, 1999, the Company acquired 100% of the outstanding shares of Net
Floppy, Inc., a provider of online file storage for web users. The purchase
consideration consisted of 7,528 shares of the Company's common stock with an
estimated fair value of $72.10 per share, approximately $560,000 in cash, and
approximately $57,000 of acquisition costs. In addition, 7,526 shares of the
Company's common stock were placed into an escrow account. Of the shares held in
escrow, 50% will be released if certain performance objectives are met in
November 1999 and 50% will be released in May 2000, upon the expiration of
certain indemnification obligations.

    The purchase consideration was allocated to the acquired assets and assumed
liabilities based on fair values as follows (in thousands):

<TABLE>
<S>                                                           <C>
Accounts receivable and other current assets................  $    2
Goodwill....................................................   1,443
Liabilities assumed.........................................      (5)
                                                              ------
Total purchase consideration................................  $1,440
                                                              ======
</TABLE>

PARALOGIC SOFTWARE CORPORATION

    On June 16, 1999, the Company acquired 100% of the outstanding shares of
Paralogic Software Corporation, a provider of Java-based community products and
services, such as customizable chat rooms, discussion boards, guestbooks and
event calendars. The purchase consideration consisted of 654,018 shares of
common stock with an estimated fair value of $47.13 per share, the assumption of
82,733 and 12,001 employee stock options at a price per share of $46.67 and
$33.05, respectively, and acquisition costs of approximately $315,000.

    The purchase consideration was allocated to the acquired assets and assumed
liabilities based on fair values as follows (in thousands):

<TABLE>
<S>                                                           <C>
Cash........................................................  $   134
Accounts receivable and other current assets................       21
Net fixed assets............................................       43
Purchased in-process research and development charged to
  operations in the quarter ended June 30, 1999.............    1,521
Purchased technology........................................    4,986
Acquired workforce..........................................       81
Goodwill....................................................   28,639
Liabilities assumed.........................................      (29)
                                                              -------
Total purchase consideration................................  $35,396
                                                              =======
</TABLE>

LIQUIDMARKET, INC.

    On August 3, 1999, the Company acquired 100% of the outstanding shares of
LiquidMarket, Inc., the developer of a next-generation on-line comparison
shopping guide and purchasing service. The purchase

                                       6
<PAGE>
                                 XOOM.COM, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS (CONTINUED)

consideration consisted of 718,224 shares of common stock with an estimated fair
value of $40.70 per share, the assumption of 54,490, 52,948, and 23,132 employee
stock options at a price per share of $40.29, $40.06, and $26.90, respectively,
and acquisition costs of approximately $300,000. In addition, 212,202 shares of
the Company's common stock were placed into an escrow account. Of the shares
held in escrow, 50% will be released on various milestone dates prior to
June 2000, upon the completion of certain performance objectives, and 50% will
be released in August 2000, upon the expiration of certain indemnification
obligations.

    The purchase consideration was allocated to the acquired assets and assumed
liabilities based on fair values as follows (in thousands):

<TABLE>
<S>                                                           <C>
Cash........................................................  $   378
Accounts receivable and other current assets................        5
Net fixed assets............................................      362
Purchased technology........................................   16,700
Acquired workforce..........................................      321
Goodwill....................................................   21,116
Liabilities assumed.........................................     (135)
                                                              -------
Total purchase consideration................................  $38,747
                                                              =======
</TABLE>

PRIVATE ONE, INC.

    On August 3, 1999, the Company acquired 100% of the outstanding shares of
Private One, Inc., a designer and developer of a secure e-mail software service.
The purchase consideration consisted of 47,999 shares of common stock with an
estimated fair value of $40.70 per share and acquisition costs of approximately
$3,000. In addition, 12,000 shares of the Company's common stock will be placed
into an escrow account. Of the shares held in escrow, 25% will be released in
February 2000, and 25% in August 2000, or upon the completion of certain
milestones, whichever is earlier. The remaining 50% of the shares held in escrow
will be released in August 2000, upon the expiration of certain indemnification
obligations.

    The purchase consideration was allocated to the acquired assets and assumed
liabilities based on fair values as follows (in thousands):

<TABLE>
<S>                                                           <C>
Cash........................................................  $    1
Net fixed assets............................................      16
Goodwill....................................................   2,209
Liabilities assumed.........................................     (25)
                                                              ------
Total purchase consideration................................  $2,201
                                                              ======
</TABLE>

                                       7
<PAGE>
                                 XOOM.COM, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS (CONTINUED)

SUMMARY OF PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT, PURCHASED TECHNOLOGY
AND ACQUIRED WORKFORCE. The intangible assets, as of September 30, 1999,
including all acquisitions, are summarized as follows (in thousands):

<TABLE>
<S>                                                           <C>
Acquired workforce..........................................  $    578
Purchased technology........................................    27,362
Goodwill....................................................    77,275
                                                              --------
Intangible assets...........................................   105,215
Accumulated amortization....................................    (9,678)
                                                              --------
Intangible assets, net......................................  $ 95,537
                                                              ========
</TABLE>

    The total purchased in-process research and development that had no
alternative future use, and as such was charged to operations in the nine months
ended September 30, 1999, is summarized below (in thousands):

<TABLE>
<S>                                                           <C>
MightyMail Networks, Inc....................................  $1,082
Paralogic Software Corporation..............................   1,521
                                                              ------
Total purchased in-process research and development.........  $2,603
                                                              ======
</TABLE>

    The following unaudited pro forma summary represents the consolidated
results of operations as if all the acquisitions to date had occurred at the
beginning of the periods presented.

<TABLE>
<CAPTION>
                                                             PERIOD ENDED
                                                             SEPTEMBER 30,
                                                          -------------------
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)                 1999       1998
-------------------------------------------               --------   --------
                                                              (UNAUDITED)
<S>                                                       <C>        <C>
Pro forma net revenue...................................  $ 20,318   $  5,364
Pro forma loss from operations..........................   (47,368)   (27,780)
Pro forma net loss......................................   (41,234)   (27,763)
Pro forma net loss per share-basic and diluted..........     (2.10)     (2.59)
Number of shares used in pro forma per share
  calculation-basic and diluted.........................    19,655     10,727
</TABLE>

    The pro forma results are not necessarily indicative of what actually would
have occurred if the acquisitions had been in effect for the entire period
presented and are not intended to be a projection of future results. In-process
research and development charges of $2,603,000 and $460,000 were excluded from
the pro forma net loss and pro forma net loss per share figures for the periods
ended September 30, 1999 and 1998, respectively.

NBC INTERNET, INC.

    On May 9, 1999, the Company, certain subsidiaries of the Company, SNAP! LLC,
National Broadcasting Company, Inc., and certain of its affiliates and
CNET, Inc. entered into a series of definitive agreements relating to the
formation of a new company to be named NBC Internet, Inc. On each of

                                       8
<PAGE>
                                 XOOM.COM, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS (CONTINUED)

June 11, 1999, and July 8, 1999, an amendment to one of each of the definitive
agreements was signed. The terms of the original agreement and each amendment
are filed with the Securities and Exchange Commission. On November 24, 1999 the
Company will be convening a meeting of the stockholders to ratify and approve
the NBC Internet, Inc. related agreements.

3. CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

    The Company has classified all marketable securities as available-for-sale.
Available-for-sale securities are carried at amounts that approximate fair
market value based on quoted market prices. Realized gains and losses and
declines in value judged to be other-than-temporary on available-for-sale
securities are included in interest income. Interest on securities classified as
available-for-sale is also included in interest income.

    The following is a summary of available-for-sale securities (in thousands):

<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,   DECEMBER 31,
                                                          1999            1998
                                                      -------------   ------------
<S>                                                   <C>             <C>
Demand and money market instrument accounts.........    $ 75,825        $  8,731
Corporate bonds and notes...........................      98,614          36,444
Market auction preferred stock......................      24,300          11,400
Equity investments..................................         186              --
                                                        --------        --------
  Total available-for-sale securities...............     198,925          56,575
Less amounts included in cash and cash
  equivalents.......................................     (75,409)        (54,575)
                                                        --------        --------
  Marketable securities.............................    $123,516        $  2,000
                                                        ========        ========
</TABLE>

    The cost of securities sold is based on the specific identification method.
All available-for-sale securities at September 30, 1999 have maturity dates in
1999 and 2000. In addition the Company had long-term marketable securities of
$58.6 million as of September 30, 1999.

4. NOTES RECEIVABLE FROM STOCKHOLDERS

    On June 16, 1999, in connection with its acquisition of MightyMail
Networks, Inc., the Company assumed stock subscriptions receivable from related
parties in exchange for shares of common stock. As of September 30, 1999,
outstanding stock subscriptions receivable amounted to approximately $995,000.
All amounts mature by April 2002 and bear interest at a rate of 5.28% per annum.

5. COMMITMENTS

    In August 1999, the Company entered into a 10-year non-cancelable lease
agreement for approximately 187,000 square feet of office space located in San
Francisco, California. Minimum lease commitments for the years ended
December 31, 1999, 2000, 2001, 2002, 2003, and thereafter are approximately
$339,000, $4,707,000, $5,655,000 $5,655,000, $5,655,000, and $34,539,000,
respectively. In August 1999, in connection with the lease agreement, the
Company entered into an irrevocable letter of credit with a commercial bank in
the amount of $4,500,000 as a security deposit payable to the landlord, the
amount of which is included in other assets for the period ended September 30,
1999.

                                       9
<PAGE>
                                 XOOM.COM, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. STOCKHOLDERS' EQUITY

SECONDARY PUBLIC OFFERING

    On April 9, 1999, the Company completed a secondary public offering of its
common stock and issued 4,600,000 shares (including 600,000 shares issued in
connection with the exercise of the underwriter over-allotment option) at a
price of $66.00 per share. Of the 4,600,000 shares of common stock sold in the
offering, 2,659,800 were sold by the Company and 1,940,200 shares were sold by
existing stockholders. The Company received net proceeds from the offering of
approximately $167 million.

INVESTMENT FROM NATIONAL BROADCASTING COMPANY, INC.

    On July 29, 1999, the Company issued 960,028 shares to National Broadcasting
Company, Inc. for $57.29 per share in connection with a Stock Purchase Agreement
dated June 11, 1999. The Company received proceeds of $55.0 million. The Stock
Purchase Agreement is filed on Form 8-K with the Securities and Exchange
Commission.

WARRANTS

    On September 13, 1999, the Company entered into a strategic alliance with
SNAP! LLC and ValueVision International, Inc. whereby the parties entered into
re-branding and electronic commerce agreements, including television home
shopping, Internet shopping and direct e-commerce initiatives. Under the terms
of the agreements, SNAP granted ValueVision a ten-year, exclusive license to
SNAP's "SnapTV" trade-mark for the purpose of operating a television home
shopping service and a Website at www.snaptv.com. ValueVision
International, Inc.'s television home shopping network, currently called
ValueVision, will be re-branded as SnapTV. Xoom.com will become the direct
electronic commerce partner for SnapTV, managing the customer database, e-mail
marketing and other sales efforts. Direct online shopping offers will include
Xoom.com products and services, as well as SnapTV merchandise. ValueVision and
Xoom.com will share revenues from all such initiatives. As part of the
agreements, ValueVision and Xoom.com entered into a warrant purchase agreement
whereby Xoom.com agreed to purchase a warrant for 404,760 shares of ValueVision
common stock at an exercise price of $24.71 per share, and ValueVision agreed to
purchase a warrant for 244,004 shares of Xoom.com common stock at an exercise
price of $40.89 per share. The fair value of the warrant the Company received
from ValueVision was deemed to be $6.3 million, and the fair value of the
warrant the Company granted to ValueVision was deemed to be $6.9 million. The
value of the warrant received by Xoom.com was recorded as a long-term
investment. The value of the warrant granted by the Company was recorded as an
addition to stockholders' equity. The difference in value was recorded as a
deferred charge, which will be charged to sales and marketing expense over the
warrant's estimated life. The warrants may be exercised after the closing of the
proposed NBCi merger agreement until September 12, 2004. In the event the
transactions contemplated in the merger agreement do not occur by December 31,
1999, the warrants shall terminate. These rights and obligations of Xoom.com and
SNAP will be assigned to and assumed by NBC Internet, Inc. following
consummation of the transactions contemplated in the NBC Internet, Inc. merger
agreement.

1998 EMPLOYEE STOCK PURCHASE PLAN

    The Company's 1998 Employee Stock Purchase Plan was terminated by the Board
of Directors in May 1999.

                                       10
<PAGE>
                                 XOOM.COM, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7. NET LOSS PER SHARE

    Basic and diluted net loss per share is calculated using the weighted
average number of common shares outstanding. Diluted net loss per share is
computed using the weighted average number of common shares outstanding and
dilutive common stock equivalents outstanding during the period. Common
equivalent shares from stock options (using the treasury stock method) are
excluded from the computation of net loss per share as their effect is
anti-dilutive.

8. COMPREHENSIVE INCOME (LOSS)

    As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130") which
establishes new rules for the reporting and display of comprehensive income
(loss) and its components. The adoption of this Statement had no impact on the
Company's net loss or stockholders' equity. SFAS 130 requires unrealized gains
and losses on the Company's available-for-sale securities to be included in
other comprehensive loss.

    The components of the Company's comprehensive loss are as follows (in
thousands):

<TABLE>
<CAPTION>
                                             THREE MONTHS           NINE MONTHS
                                                 ENDED                 ENDED
                                             SEPTEMBER 30,         SEPTEMBER 30,
                                          -------------------   -------------------
                                            1999       1998       1999       1998
                                          --------   --------   --------   --------
<S>                                       <C>        <C>        <C>        <C>
Net loss................................  $(8,564)   $(3,053)   $(18,614)  $(6,392)
Unrealized gain on investments..........      421         --           3        --
                                          -------    -------    --------   -------
Comprehensive loss......................  $(8,143)   $(3,053)   $(18,611)  $(6,392)
                                          =======    =======    ========   =======
</TABLE>

9. LEGAL PROCEEDINGS

    In January 1998, the Company became aware that Imageline, Inc. ("Imageline")
claimed to own the copyright in certain images that a third party, Sprint
Software Pty Ltd ("Sprint") had licensed to the Company. Some clip art images
that Imageline alleged infringed Imageline's copyright were included by the
Company in versions of the Company's Web Clip Empire product and licensed by the
Company to third parties, including other software clip publishers. The
Company's contracts with such publishers require the Company to indemnify the
publisher if copyrighted material licensed from the Company infringes a
copyright. Imageline claims that the Company's infringement of Imageline's
copyrights is ongoing. The Company and Imageline had engaged in discussions, but
were unable to reach any agreement regarding a resolution of this matter.

    On August 27, 1998, the Company filed a lawsuit in the United States
District Court for the Eastern District of Virginia against Imageline, certain
parties affiliated with Imageline, and Sprint regarding the Company's and its
licensees' alleged infringement on Imageline's copyright in certain clip art
that the Company licensed from Sprint. The lawsuit seeks, among other relief,
disclosure of information from Imageline concerning the alleged copyright
infringement, a declaratory judgment concerning the validity and enforceability
of Imageline's copyrights and copyright registrations, a declaratory judgment
regarding damages, if any, owed by the Company to Imageline, and indemnification
from Sprint for damages, if any, owed by the Company to Imageline. There is no
contractual limitation on Sprint's indemnification. While the Company is seeking
indemnification from Sprint for damages, if any, there can be no assurance that
Sprint will be able to fulfill the indemnity obligations under its license
agreements with the Company. In addition, the Company may be subject to claims
by third parties seeking indemnification from the Company in connection with the
alleged infringement of the Imageline copyrights.

                                       11
<PAGE>
                                 XOOM.COM, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. LEGAL PROCEEDINGS (CONTINUED)

    On September 17, 1998, Imageline filed a counterclaim, which Imageline
amended in January 1999, seeking up to $60 million in damages. In March 1999,
the parties completed the discovery process and filed separate motions for
summary judgment.

    On April 5, 1999, the Court granted one of the Company's motions for partial
summary judgment and stayed the case to allow Imageline to file all necessary
copyright registration applications to cover the clip art images.

    Based on the discussions with Imageline, the Company believes the range of
liability related to this matter is from $0 up to $10,000,000; however, the
Company believes it is unlikely that the liability would exceed $1,000,000.
Accordingly, the Company reserved $1,000,000 for this potential liability in a
prior period. The Company believes that the $1,000,000 accrual represents a
reasonable estimate of the loss that could be incurred in the Imageline dispute.
Based on information available to date management does not believe that the
outcome of this matter will have a material effect on the Company's financial
position, results of operations and cash flows over and above the $1,000,000
accrued in the 1998 financial statements. If not successful in defending this
claim, the resulting outcome could have a material adverse impact on the
Company's business, results of operations, cash flows and financial condition in
a particular period.

    Zoom Telephonics, Inc. filed a lawsuit against the Company in
September 1998 alleging trademark infringement and related statutory violations.
The Company was not served with Zoom Telephonics' complaint until January 1999.
Zoom Telephonics has demanded that the Company stop using the XOOM trademark and
has asked for an unspecified amount of money damages. The Company responded to
the complaint in February 1999. In April 1999, Zoom Telephonics filed a motion
for a preliminary injunction to stop the Company from using any mark containing
"Xoom." In June 1999 the Company filed an opposition to Zoom Telephonics' motion
for preliminary injunction. A hearing on the motion was held on September 30,
1999. On October 7, 1999 the court denied Zoom Telephonics' motion for a
preliminary injunction but allowed Zoom Telephonics to request the court to
reconsider the motion if the Xoom.com merger does not close by October 31, 1999.
On November 3, 1999 Zoom Telephonics filed a motion to renew their previous
motion for preliminary injunction. The Company intends to respond to Zoom
Telephonics' most recent motion. Although the Company believes that the claims
asserted by Zoom Telephonics are without merit, such litigation could have a
material adverse effect on the Company's business, results of operations and
financial condition, particularly if such litigation forces the Company to make
substantial changes to its name and trademark usage.

    On October 4, 1999, John G. Balletto ("Balletto") filed a lawsuit against
Xoom.com in September 1999 in the San Francisco Superior Court alleging breach
of contract and specific performance. Balletto has alleged that in connection
with a loan which Xoom.com obtained from Sand Hill Capital LLC in 1998 and
pursuant to an oral contract with Xoom.com, Balletto is entitled to a finder's
fee. Balletto has sought specific performance of the alleged oral agreement by
having the court direct Xoom.com to issue 33,784 shares of Common Stock to
Balletto and such other relief that the Court may deem just and proper. Xoom.com
believes that this lawsuit is without merit and intends to defend the suit
vigorously. Xoom.com does not believe that the outcome of this matter will
materially adversely impact its results of operations, cash flows, or financial
position. However, depending on the amount and timing, an unfavorable resolution
could have a material adverse effect on Xoom.com's results of operations,
financial position or cash flows in a particular period.

                                       12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

    THE DISCUSSION IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" CONTAINS TREND ANALYSES AND OTHER
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934. ALL
STATEMENTS, TREND ANALYSES AND OTHER INFORMATION CONTAINED HEREIN RELATIVE TO
MARKETS FOR XOOM.COM's SERVICES AND PRODUCTS AND TRENDS IN REVENUE, AS WELL AS
OTHER STATEMENTS INCLUDING SUCH WORDS AS "ANTICIPATE," "BELIEVE," "PLAN,"
"ESTIMATE," "EXPECT," "GOAL," AND "INTEND" AND OTHER SIMILAR EXPRESSIONS
CONSTITUTE FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO BUSINESS AND ECONOMIC RISKS, AND XOOM.COM'S ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE SET FORTH IN THE FORWARD-LOOKING STATEMENTS AS A
RESULT OF THE PROPOSED MERGER WITH SNAP! LLC AND NBC MULTIMEDIA CORPORATION,
WHICH IS EXPECTED TO CLOSE IN THE FOURTH QUARTER OF 1999, AND OTHER FACTORS SET
FORTH ELSEWHERE HEREIN, INCLUDING "CERTAIN RISK FACTORS WHICH MAY IMPACT FUTURE
OPERATING RESULTS," PAGE 28, AS WELL AS FACTORS SET FORTH IN XOOM.COM'S ANNUAL
REPORT ON FORM 10-K.

GENERAL

    We were incorporated in April 1996 and commenced offering products for sale
on our Web site in March 1997. From inception through December 1996, we had no
sales and our operating activities related primarily to developing necessary
computer infrastructure, recruiting personnel, raising capital and initial
planning and development of the Xoom.com site. For the period beginning with the
operation of the Xoom.com site through December 31, 1997, we continued these
activities and focused on building sales momentum, establishing relationships
with manufacturers, marketing the Xoom.com brand and establishing customer
service and fulfillment operations.

    From inception through September 30, 1999, we generated total net revenue of
approximately $29.1 million. Since January 1998, the number of members has grown
from 100,000 to 11.5 million as of November 10, 1999.

    We have not achieved profitability on a quarterly or annual basis to date,
and anticipate that we will incur net losses for the foreseeable future. The
extent of these losses will depend, in part, on the amount and rates of growth
in our net revenue from e-commerce and advertising. We expect our operating
expenses to increase significantly, especially in the areas of sales and
marketing and brand promotion. As a result, we will need to increase our
quarterly net revenue to achieve profitability. We believe that period-to-period
comparisons of our operating results are not meaningful and that you should not
rely upon the results for any period as an indication of future performance. Our
business, results of operations and financial condition will be materially and
adversely affected if:

    - net revenue does not grow at anticipated rates;

    - increases in operating expenses are not offset by commensurate increases
      in net revenue; or

    - we are unable to adjust operating expense levels in light of net revenue.

    We expect operating expenses will continue to increase in the future as we
continue to seek to expand our business. To the extent that these expenses are
not accompanied by an increase in net revenue, our business, results of
operations and financial condition could be materially adversely affected. Our
operating losses might increase in the future, and we cannot guarantee that we
will ever achieve or sustain profitability. See "Certain Risk Factors Which
Might Impact Future Operating Results -We cannot assure you that we will be
profitable because we have operated our business only for a short period of
time."

                                       13
<PAGE>
    Since January 1, 1999, we have entered into various business and technology
acquisitions, license arrangements and strategic alliances in order to build our
communities, provide community-specific content, generate additional traffic,
increase the number of members and establish additional sources of net revenue.
In April 1999, we acquired Focused Presence, Inc., a company that operates a
global directory of small businesses, for approximately $1.7 million. In
May 1999, we acquired Net Floppy, Inc, a provider of online file storage for Web
users for approximately $1.4 million, and we acquired MightyMail
Networks, Inc., a developer of an enhanced e-mail product that enables
customization of e-mail according to user preferences for approximately
$23.1 million. In June 1999, we acquired Paralogic Software Corporation, which
provides Web site authoring and community building tools, such as Java based
community products and services, including customizable chat rooms, discussion
boards, guestbooks and event calendars, for approximately $35.4 million. In
August 1999, we acquired LiquidMarket Inc., the developer of a next-generation
on-line comparison shopping guide and purchasing service, for approximately
$38.7 million, and we acquired Private One, Inc., a designer and developer of a
secure e-mail software service, for approximately $2.2 million.

    Because most Internet business acquisitions involve the purchase of
significant amounts of intangible assets, acquisitions of such businesses also
result in the recording of goodwill, purchased technology, and acquired
workforce, and significant charges for purchased in-process research and
development. During the three months ended September 30, 1999, we expensed $0
for purchased in-process research and development and $5.5 million for the
amortization of goodwill, purchased technology, and acquired workforce. During
the same period ended September 30, 1998, we expensed $130,000 for purchased
in-process research and development and $741,000 for the amortization of
goodwill and purchased technology. During the nine months ended September 30,
1999, we expensed $2.6 million for purchased in-process research and development
and $7.8 million for the amortization of goodwill, purchased technology, and
acquired workforce. During the same period ended September 30, 1998, we expensed
$790,000 for purchased in-process research and development and $1.1 million for
the amortization of goodwill and purchased technology.

    We intend to continue making acquisitions to increase online reach and
membership and to seek additional strategic alliances with content and
distribution partners, including alliances that create co-branded sites through
which we market our services. Acquisitions carry numerous risks and
uncertainties, including:

    - difficulties in integrating operations, personnel, technologies, products
      and the information systems of the acquired companies;

    - diversion of management's attention from other business concerns;

    - risks of entering geographic and business markets in which we have little
      or no prior experience; and

    - potential loss of key employees of acquired entities.

    We cannot guarantee that we will be able to successfully integrate any
businesses, products, technologies or personnel that might be acquired in the
future. A failure to successfully integrate acquired entities or assets could
have a material adverse effect on our business, results of operations and
financial condition. In addition, we cannot guarantee that we will be successful
in identifying and closing transactions with potential acquisition candidates.
See "Certain Risk Factors Which Might Impact Future Operating Results--If we are
unable to successfully integrate future acquisitions into our operation, then
our business and results of operations could be adversely affected."

    International sales comprised approximately 12% of total net revenue for the
three months ended September 30, 1999 and they represented 27% of total net
revenue for the same period ended September 30, 1998. This consisted of
$1.1 million in net revenue for the three months ended September 30, 1999 and
$618,000 in net revenue for the same period ended September 30, 1998.
International sales comprised

                                       14
<PAGE>
approximately 14% of total net revenue for the nine months ended September 30,
1999 and 29% of total net revenue for the same period ended September 30, 1998.
This consisted of $2.8 million in net revenue during the nine months ended
September 30, 1999 and $1.4 million in net revenue during the same period ended
September 30, 1998. The decreases in the percentage of international revenue in
both periods are due to the overall increase in domestic revenue. See "Certain
Risk Factors Which Might Impact Future Operating Results--Our international
operations are subject to risks that could have a material adverse effect on our
results of operations."

    We may need to increase our inventory levels in the future to support a
wider base of e-commerce products and to take advantage of volume purchase
discounts. We contract with a third party warehousing and order fulfillment
company to stock inventory and ship products directly to customers. We take
title to this inventory, have responsibility for this inventory, and record
inventory on our balance sheet until the final shipment to customers or other
disposition of the inventory. There are inherent risks and costs in stocking
inventory and coordinating with a third party warehousing and order fulfillment
company. These risks include, but are not limited to, product obsolescence,
excess inventory, and inventory shortages resulting in unfulfilled orders, which
could materially adversely affect operating results in the future. See "Certain
Risk Factors Which Might Impact Future Operating Results--Any failure of our
network infrastructure could have a material adverse effect on our results of
operations" and--"We depend on our vendors and suppliers."

    As a strategic response to changes in the competitive environment, we might
from time to time make certain pricing, service or marketing decisions or pursue
business combinations that could have a material adverse effect on our business,
results of operations and financial condition. In order to accelerate the
promotion of our brands, we intend to significantly increase our marketing
budget, which could materially and adversely affect our business, results of
operations and financial condition. We expect to experience seasonality in our
business, with user traffic on the Xoom.com site potentially being lower during
the summer and year-end vacation and holiday periods when overall usage of the
Web is lower. Additionally, seasonality may significantly affect our advertising
revenue during the first and third calendar quarters, as advertisers
historically spend less during these periods. Because Web-based commerce and
advertising is an emerging market, additional seasonal and other patterns may
develop in the future as the market matures. Any seasonality is likely to cause
quarterly fluctuations in our operating results, and these patterns could have a
material adverse effect on our business, results of operations and financial
condition.

                                       15
<PAGE>
RESULTS OF OPERATIONS

    The following table presents certain consolidated statement of operations
data for the periods indicated as a percentage of total net revenue.

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED          NINE MONTHS ENDED
                                                            SEPTEMBER 30,               SEPTEMBER 30,
                                                        ----------------------      ----------------------
                                                          1999          1998          1999          1998
                                                        --------      --------      --------      --------
<S>                                                     <C>           <C>           <C>           <C>
Net revenue:
  E-commerce..........................................     48.3 %        66.6 %        51.5 %        69.2 %
  Advertising.........................................     50.8          26.0          47.9          19.6
  Licensing...........................................      0.9           7.4           0.6          11.2
                                                        -------       -------        ------        ------
    Total net revenue.................................    100.0         100.0         100.0         100.0
Cost of net revenue:
  Cost of e-commerce..................................     31.4          46.4          37.5          40.4
  Cost of advertising revenue(1)......................      1.2            --           0.9            --
  Cost of licensing...................................       --           0.3            --           0.7
                                                        -------       -------        ------        ------
    Cost of net revenue...............................     32.6          46.7          38.4          41.1
                                                        -------       -------        ------        ------
Gross profit..........................................     67.4          53.3          61.6          58.9
Operating expenses:
Operating and development.............................     33.6          52.6          28.7          52.6
  Sales and marketing.................................     66.6          37.1          67.9          32.3
  General and administrative..........................     35.5          46.0          34.4          44.4
  Purchased in-process research and development.......       --           5.7          13.1          16.2
  Amortization of deferred compensation...............      1.0          13.2           2.5          22.8
  Amortization of intangible assets...................     61.8          32.2          39.4          22.3
                                                        -------       -------        ------        ------
    Total operating expenses..........................    198.5         186.8         186.0         190.6
                                                        -------       -------        ------        ------
Loss from operations..................................   (131.1)       (133.5)       (124.4)       (131.7)
Other income, net.....................................     35.5           0.7          30.8           0.3
                                                        -------       -------        ------        ------
Net loss..............................................    (95.6)%      (132.8)%       (93.6)%      (131.4)%
                                                        -------       -------        ------        ------
</TABLE>

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

(1) There were no material costs of advertising revenue during 1998.

NET REVENUE

    Total net revenue for the three months ended September 30, 1999 was
$9.0 million, an increase of approximately $6.7 million over revenues of
$2.3 million for the three months ended September 30, 1998. Total net revenue
for the nine months ended September 30, 1999 was $19.9 million, an increase of
approximately $15.0 million over revenues of $4.9 for the nine months ended
September 30, 1998. The increases in both the three-month and nine-month periods
were primarily due to the following three factors: (A) the expansion of our
membership base; (B) an increase in the frequency of e-mail offerings and
broader product offerings (which resulted in an increase in product sales
through e-commerce); and (C) an increase in Web-based advertising (our higher
Web site traffic increased our attractiveness to advertisers).

E-COMMERCE REVENUE

    E-commerce revenue consists of on-line product sales (inclusive of shipping
and handling fees), as well as fees paid to Xoom.com for co-branded email-based
product offers and for customer referrals. E-commerce revenue increased to
$4.3 million in the three months ended September 30, 1999 from

                                       16
<PAGE>
$1.5 million in the three months ended September 30, 1998. E-commerce revenue
increased to $10.3 million in the nine months ended September 30, 1999 from
$3.4 million in the nine months ended September 30, 1998. The increases in net
revenue in both periods are primarily due to the expansion of our membership
base, which resulted in an increase in product sales, as well as expansion of
the breadth of products offered. The percentage of our total net revenue
attributable to e-commerce revenue decreased to 48.3% in the three months ended
September 30, 1999 from 66.6% in the three months ended September 30, 1998. The
percentage of our total net revenue attributable to e-commerce revenue decreased
to 51.5% in the nine months ended September 30, 1999 from 69.2% in the nine
months ended September 30, 1998. The decreases in both periods were due to the
fact that advertising revenue grew at a more rapid rate than e-commerce revenue
during the three and nine months ended September 30, 1999 as compared to the
three and nine months ended September 30, 1998. We expect e-commerce revenue to
continue to account for a large percentage of net revenue as we expand our
product offerings and increase our direct e-commerce response rates through
better member demographic information and targeting of product offers.

    We believe that offering our customers attractive prices is an essential
component of our business strategy. We may in the future increase the discounts
we offer our customers and may otherwise alter our pricing structures and
policies. We anticipate that any increase in discounts or price reductions will
reduce gross margins below those we experienced for the three and nine months
ended September 30, 1999 and 1998.

ADVERTISING REVENUE

    Advertising revenue increased to $4.6 million in the three months ended
September 30, 1999 from $598,000 in the three months ended September 30, 1998.
Advertising revenue increased to $9.5 million in the nine months ended
September 30, 1999 from $953,000 in the nine months ended September 30, 1998. Of
these increases, approximately $400,000 is related to advertising inventory sold
to SNAP! LLC. The percentage of our total net revenue attributable to
advertising revenue increased to 50.8% in the three months ended September 30,
1999 from 26.0% in the three months ended September 30, 1998. The percentage of
our total net revenue attributable to advertising revenue increased to 47.9% in
the nine months ended September 30, 1999 from 19.6% in the nine months ended
September 30, 1998. The increases in advertising revenue in each period in both
absolute dollars and in percentage of net revenue are primarily a result of the
increase in our membership, increased site traffic, and expansion of our
advertising sales force. As our membership base continues to grow and the demand
for advertising on our Web-site remains strong, we can expect that our
advertising revenues will continue to represent a large percentage of our
overall net revenue.

LICENSING REVENUE

    Licensing revenue decreased to $80,000 in the three months ended
September 30, 1999 from $170,000 in the three months ended September 30, 1998.
Licensing revenue decreased to $119,000 in the nine months ended September 30,
1999 from $546,000 in the three months ended September 30, 1998. As we expand
our e-commerce and advertising revenue, we can expect that licensing revenue
will continue to represent a small percentage of net revenue.

COST OF NET REVENUE

    Gross margins increased to 67.4% in the three months ended September 30,
1999 from 53.3% in the three months ended September 30, 1998. Gross margins
increased to 61.6% in the nine months ended September 30, 1999 from 58.9% in the
nine months ended September 30, 1998. Both increases were a result of a change
in the revenue mix. In the three and nine months ended September 30, 1999,
advertising sales (which have higher margins than e-commerce sales) generated
more of our overall revenue than e-commerce sales, as compared to the three and
nine months ended September 30, 1998.

                                       17
<PAGE>
COST OF E-COMMERCE REVENUE

    Cost of e-commerce revenue consists primarily of the costs of merchandise
sold to customers, credit card commissions, product fulfillment, and outbound
shipping and handling costs. Cost of e-commerce was $2.8 million for the three
months ended September 30, 1999 and it was $1.1 million for the same period
ended September 30, 1998. Cost of e-commerce revenue was $7.5 million for the
nine months ended September 30, 1999 and it was $2.0 million for the same period
ended September 30, 1998. The increase in absolute dollars of the cost of
e-commerce revenue in the three and nine months ended September 30, 1999 as
compared to the same period ended September 30, 1998 was primarily due to the
overall growth in e-commerce revenue.

    As a percentage of net revenue, the cost of e-commerce revenue was 31.4% for
the three months ended September 30, 1999 and it was 46.4% for the same period
ended September 30, 1998. As a percentage of net revenue, the cost of e-commerce
was 37.5% for the nine months ended September 30, 1999 and it was 40.4% for the
same period ended September 30, 1998. These decreases in percentages were
primarily due to the increase in sources of e-commerce revenue which have higher
margins, such as co-branded email-based product offers and customer referrals.

COST OF ADVERTISING REVENUE

    Cost of advertising revenue consists primarily of revenue sharing amounts we
pay to our customers for advertising sold on co-branded sites. Cost of
advertising revenue was $108,000 in the three months ended September 30, 1999,
and it was $183,000 in the nine months ended September 30, 1999. Cost of
advertising revenue was $0 in the three and nine months ended September 30,
1998. These increases are primarily a result of an increased demand for
advertising on co-branded Web sites, and the expansion of our advertising and
business development sales forces.

    As a percentage of net revenue, cost of advertising revenue was 1.2% in the
three months ended September 30, 1999 and it was 0.9% for the nine months ended
September 30, 1999. There was no material costs of advertising revenue in 1998.
We expect the cost of advertising revenue to continue to grow as a percentage of
net revenue.

COST OF LICENSING REVENUE

    Cost of licensing revenue consists primarily of royalties on net revenue
from license fees. Cost of licensing revenue was $4,000 for the three months
ended September 30, 1999 and it was $7,000 for the same period ended
September 30, 1998. Cost of licensing revenue was $4,000 during the nine months
ended September 30, 1999 and it was $35,000 during the same period ended
September 30, 1998. We expect that the cost of licensing revenue should continue
to be a small percentage of the total cost of revenues as compared to the cost
of e-commerce revenues.

    The mix of products we sell will impact our gross margins and the overall
mix of e-commerce revenue, advertising revenue and licensing revenue. We
typically recognize higher gross margins on advertising revenue and licensing
revenue. We expect that shifts in the mix of sales could adversely impact our
overall gross margin and could materially adversely impact our business, results
of operations and financial condition.

OPERATING AND DEVELOPMENT EXPENSES

    Operating and development expenses consist primarily of payroll and related
expenses for development and network operations personnel and consultants, costs
related to systems infrastructure including Web site hosting, and costs of
acquired content to enhance our Web site. Operating and development expenses
increased to $3.0 million in the three months ended September 30, 1999 from $1.2
in the three months ended September 30, 1998. Operating and development expenses
increased to $5.7 million in the nine months ended September 30, 1999 from
$2.6 million in the nine months ended September 30, 1998.

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<PAGE>
We believe operating and development expenses will increase significantly in the
future, especially in relation to Web site hosting costs, as our membership
grows, thus requiring additional bandwidth to support the many free services
offered to members. We believe that we will need to make significant investments
in our Web site to remain competitive. Therefore, we expect that our operating
and development expenses will continue to increase in absolute dollars for the
foreseeable future.

    Operating and development costs decreased as a percentage of total net
revenue to 33.6% in the three months ended September 30, 1999 from 52.6% in the
three months ended September 30, 1998. Operating and development costs decreased
as a percentage of total net revenue to 28.7% in the nine months ended
September 30, 1999 from 52.6% in the nine months ended September 30, 1998. The
decreases in operating and development expense as a percentage of total net
revenue in both periods were due to the overall growth in net revenue.

SALES AND MARKETING EXPENSES

    Sales and marketing expenses consist primarily of payroll and related
expenses for personnel engaged in sales, marketing, publishing and customer
support, as well as advertising and promotional expenditures. Sales and
marketing expenses increased to $6.0 million in the three months ended
September 30, 1999 from $853,000 in the three months ended September 30, 1998.
Sales and marketing expenses increased to $13.5 million in the nine months ended
September 30, 1999 from $1.6 million in the nine months ended September 30,
1998. The absolute dollar increases from period to period in sales and marketing
expenses were primarily attributable to increased personnel and related expenses
required to implement our sales and marketing strategy as well as increased
public relations and other promotional and advertising expenses. Additionally,
in connection with the proposed business combination of Xoom.com, SNAP! LLC and
certain Internet assets of NBC, we incurred a $424,000 charge related to the
cancellation of an advertising contract in the nine months ended September 30,
1999. We expect to continue hiring additional personnel and to pursue a branding
and marketing campaign. Therefore, we expect marketing and sales expenses to
continue to increase significantly in absolute dollars.

    Sales and marketing expenses increased as a percentage of total net revenue
to 66.6% in the three months ended September 30, 1999 from 37.1% in the three
months ended September 30, 1998. Sales and marketing expenses increased as a
percentage of total net revenue to 67.9% in the nine months ended September 30,
1999 from 32.3% in the nine months ended September 30, 1998. The increases in
sales and marketing expenses as a percentage of total net revenue in both
periods were due to the hiring of new sales and marketing personnel and other
promotional and advertising expenses.

GENERAL AND ADMINISTRATIVE EXPENSES

    General and administrative expenses consist primarily of payroll and related
costs for general corporate functions, including finance, legal, accounting,
business development, human resources, investor relations, facilities and
administration, as well as legal fees, insurance, and fees for professional
services and directors. General and administrative expenses increased to
$3.2 million in the three months ended September 30, 1999 from $1.1 million in
the three months ended September 30, 1998. General and administrative expenses
increased to $6.8 million in the nine months ended September 30, 1999 from
$2.2 million in the nine months ended September 30, 1998. The absolute dollar
increases from period to period in general and administrative expenses were
primarily due to increases in the number of general and administrative
personnel, as well as increases in professional services and facilities-related
expenses to support the growth of our operations. We expect general and
administrative expenses to increase in absolute dollars in future periods as we
expand our staff, and incur additional costs related the growth of our
operations.

    General and administrative expenses decreased as a percentage of total net
revenue to 35.5% in the three months ended September 30, 1999 from 46.0% in the
three months ended September 30, 1998. General and administrative expenses
decreased as a percentage of total net revenue to 34.4% in the nine

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<PAGE>
months ended September 30, 1999 from 44.4% in the nine months ended
September 30, 1998. The decreases in general and administrative expenses as a
percentage of total net revenue in both periods were due to the overall growth
in net revenue.

PURCHASED IN-PROCESS RESEARCH AND DEVELOPMENT

    For the three months ended September 30, 1999 there were no charges for the
cost of purchased in-process research and development, and for the same period
ended September 30, 1998 we recognized $130,000 in connection with the
acquisition of Pagecount, Inc.. For the nine months ended September 30, 1999 we
recognized the cost of purchased in-process research and development of
$2,603,000 in connection with the acquisitions of MightyMail Networks, Inc. and
Paralogic Software Corporation, and for the same period ended September 30, 1998
we recognized $790,000 in connection with the acquisitions of Paralogic
Corporation, the purchase of certain assets of Revolutionary Software, Inc, and
the acquisition of Pagecount, Inc.

ACQUISITIONS DURING THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1999

Mightymail Networks, Inc.

    In connection with the MightyMail Networks acquisition, we acquired
MightyMail Networks' e-mail platform. The MightyMail platform allows branding
material and marketing content to be placed within person-to-person e-mail that
is sent by individuals to individuals. The MightyMail application runs on an
Oracle database and Unix operating system. All the application code is written
using Java servlets, which are Java applets that run within a Web server
environment. The MightyMail application uses a three-tiered architecture common
to most Internet applications: an interface layer, an application layer, and a
database layer. In addition, MightyMail uses a custom mail agent that links into
a standard mail transfer agent. In the future, we expect that this custom mail
agent will be useable by any standard mail protocol for users who wish to run
the MightyMail application running in their own mail environment.

    At the time of the acquisition, version 1.0 of the MightyMail technology was
functional as a commercially viable product. However, the current product has
various e-mail options and is not a truly customizable product with a rich
library of content or business user interface. In fact, version 1.0 is
approximately half of the true customizable, rich-e-mail product originally
intended to be developed. At the time of the acquisition, MightyMail Networks
was developing a second version of the MightyMail Networks technology, which was
not completely functional as a commercially viable product. Version 2.0 of the
MightyMail technology will be fully customizable, have access to a rich library
of content, have the ability to add surveys, be compatible with corporate
servers, have e-mail wizards, allow end-users to create their own content and
enable the inclusion of photographs.

    The nature of the remaining estimated efforts necessary to develop version
2.0 of the MightyMail technology include:

    - Integration with Xoom.com's existing webmail system. This integration will
      bring MightyMail capabilities, which includes the ability to compose rich
      e-mail, to Xoom.com's existing account holders, which now exceed 700,000
      users.

    - Re-architecting of the MightyMail platform to be technically compatible
      with the Xoom.com technology infrastructure. The primary compatibility
      issue will be the integration of Apache Web server technology in place of
      the current Java Web Server from Sun Microsystems.

    As of the date of the technology's valuation, we estimated that 50% of the
research and development effort had been completed at the date of acquisition
and expected the remaining research and development efforts relating to the
completion of the version 2.0 MightyMail technology would require approximately
six months of effort from the date of valuation through its release date in the
fourth quarter of 1999. We estimated that three full-time engineers would be
required to complete the in-process projects. These projects included the use of
one full-time engineer for six months to work on the Apache Web server

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<PAGE>
integration efforts, and two full-time engineers for 6 months to work on the
MightyMail/XoomMail integration efforts. Accordingly, we have estimated that the
total estimated research and development costs to complete MightyMail version
2.0 are $170,000. We anticipate completion of the project in the fourth quarter
of 1999.

Paralogic Software Corporation

    In connection with the Paralogic Software Corporation acquisition, we
acquired Paralogic Software Corporation's product Anexa.com, a combination of
Web site authoring and community building tools that allows users to instantly
create comprehensive Web sites featuring multi-media albums, discussion forums,
events, chat, news announcements, classified ads, guest books, membership
databases and community administration. In connection with this acquisition we
also obtained ParaChat Professional, chat software that is licensed to
individuals and businesses. This software is hosted by a server and is supported
by a staff of engineers, both of which were acquired in conjunction with the
Paralogic Software Corporation acquisition. This is in contrast to the purchase
of the ParaChat Personal Network, which we acquired in connection with the
purchase of Paralogic Corporation in March 1998. The ParaChat Personal Network
is hosted by Xoom.com, and is based on a free chat service that Xoom.com members
can download on to their Web pages.

    At the time of acquisition, the current versions of Anexa.com and ParaChat
Professional did not represent the more robust, feature-rich products that
Paralogic Software Corporation envisioned and intended to develop in the twelve
months following the acquisition date. The future versions of these products are
expected to incorporate a number of significant additional features including
enhanced scalability as traffic is added, a relational database management
system, support capability, e-mail verification, improved directory services,
search capability, instant messaging, file sharing capability, home page
publishing, additional administration and management tools, calendar and address
book capabilities, polls, gift galleries, greeting cards, voice chat, and white
board functionality. The nature of the remaining estimated efforts necessary to
develop the acquired, incomplete new versions of Anexa.com and ParaChat
Professional into commercially viable products include:

    - ANEXA.COM. These changes fall into the following categories:

       (A) new features like Paralogic Instant Messenger, support for Uniplanet
           calendar and support for MightyMail mail;

       (B) feature enhancements and upgrades, like Media Albums Plus to handle
           MP3 files, moderated message boards and improved event notification;

       (C) user interface enhancements: administration tools; and

       (D) bug fixing.

    - PARACHAT PROFESSIONAL. These changes fall into the following categories:

       (A) new features like voice chat and HTML chat to extend the chat
           experience;

       (B) user interface enhancements; support for moderated events, such as
           the ability to accept or deny audience questions;

       (C) administration tools, like a filth filter and "Chat 911" to help
           manage abusive behavior in chat rooms;

       (D) support for internationalization; and

       (E) bug fixing.

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<PAGE>
    As of the date of the technology's valuation, we estimated that 17% of the
research and development effort had been completed at the date of acquisition
and expected the remaining research and development efforts relating to the
completion of the new versions of Anexa.com and ParaChat Professional technology
would require approximately nine months of effort from the date of valuation
through its expected release date of March 2000. These projects include the use
of eight engineers, spending 75% of their time on the project, for nine months,
to create the new versions of the products, at an estimated total cost to
complete of $576,000.

ACQUISITIONS DURING THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1998

Paralogic Corporation

    In connection with the Paralogic Corporation acquisition, we acquired
Paralogic Corporation's base of chat members, called the ParaChat Personal
Network, as well as the rights to use the underlying chat technology, called
ParaChat Personal. ParaChat Personal is designed to provide Web sites with an
option to offer chat technology without requiring Web site hosts to buy the
software, maintain or upgrade the software, or learn any additional skills
beyond what is necessary to construct a Web site. The chat software is
maintained on Xoom.com's server and the Web site host is provided bits of source
code or "tags" that are incorporated into the Web site. The tags interface via
the Internet with the ParaChat server, and thus provide the Web site with chat
capabilities. In exchange for the free service, the Web site host allows banner
advertising on its site.

    As of the date of the technology's valuation, we estimated that 55% of the
research and development effort had been completed at the date of acquisition
and expected the remaining research and development efforts relating to the
completion of the ParaChat Personal technology would require approximately six
months of effort from the date of valuation through its release date of
September 1, 1998. As of the date of valuation, we expected the benefit of the
acquired project to begin immediately after the estimated completion date. We
expected that the in-process project would be developed to technological
feasibility concurrent with the September 1998 release date. We estimated that
three full-time engineers would be required to complete the in-process projects.
These projects included the use of one full-time engineer for six months to work
on the external database connectivity efforts, one full-time engineer for six
months to work on the client layout efforts, and one full-time engineer for six
months to work on the management and control interface efforts. Accordingly, it
was determined that total estimated research and development costs-to-complete
for the ParaChat Personal in-process project were $112,500. We completed the
project by the scheduled date and the actual costs of completion were not
materially different than estimated.

Revolutionary Software, Inc.

    The technology that we acquired from Revolutionary Software was a Web-based
e-mail technology known as SiteMail. This in-process Web-based e-mail technology
was designed to allow users to receive and send e-mail through the Internet
using a Web browser. Since the technology was Web-based, it would allow for the
integration of e-mail functionality into Web sites and would be accessible by
any Web-connected device anywhere in the world. Furthermore, by integrating
e-mail into a specific site, it would force the subscriber to visit that site to
access e-mail, thereby increasing traffic. In addition, when users apply for
e-mail accounts at Web sites offering SiteMail, they are given the domain name
of that Web site or company. The personalization of the domain name in an e-mail
address has become an innovative way of promoting a company's name or Web site.

    As of the date of acquisition, we estimated that approximately 50% of the
research and development effort had been completed and expected the remaining
research and development efforts relating to the completion of the SiteMail
technology to continue from the date of acquisition through the release date of
November 1998. The remaining development effort was estimated to require
approximately 4.5 months of

                                       22
<PAGE>
engineering effort. We estimated that 3.5 full-time developers would be required
to complete this project. The total cost of remaining development was estimated
to be approximately $98,000. We completed the project by the scheduled date and
the actual costs of completion were not materially different than estimated.

Pagecount, Inc.

    In connection with the Pagecount acquisition, we acquired a Web page counter
product, titled Pagecount. This product is a banner page counter that tracks the
number of visitors that view a member's site. It further breaks down impression
statistics or page views by day, date, and time. Other statistics include a list
of locations from where the requests originated and the host names of up to 100
visitors. The software is maintained on the Pagecount server and tags are
integrated into the Web site, which interface with the Pagecount server. In
exchange for the use of the Pagecount service, a banner advertisement may be
placed on each counter image.

    We estimated that approximately 55% of the research and development effort
had been completed at the date of acquisition and expected the remaining
research and development efforts relating to the completion of the Pagecount
technology to continue from the date of acquisition through the release date of
mid-December 1998. The remaining development effort at the date of acquisition
was estimated to require approximately five months of engineering effort. We
estimated that 2.5 full-time developers would be required to complete this
project. The total estimated remaining development effort equates to a total
cost to complete of approximately $78,000. We completed the project by the
scheduled date and the actual costs of completion were not materially different
than estimated.

AMORTIZATION OF DEFERRED COMPENSATION

    We did not record any deferred stock compensation charges to equity during
the three months ended September 30, 1999 and we recorded charges to equity of
$1.0 million for the same period ended September 30, 1998. We did not record any
deferred stock compensation charges to equity during the nine months ended
September 30, 1999 and we recorded charges to equity of $2.0 million for the
same period ended September 30, 1998. The deferred compensation charges account
for the difference between the exercise price and the deemed fair value of
certain stock options we granted to our employees. We cannot guarantee that we
will not accrue additional charges, which could have a material adverse effect
on our business, results of operations and financial condition.

    The amortization of deferred compensation reflects the amortization of the
deferred stock compensation charges to equity. We have recorded amortization of
deferred compensation of $90,000 during the three months ended September 30,
1999 and we recorded $304,000 during the same period ended September 30, 1998.
We recorded amortization of deferred compensation of $495,000 during the nine
months ended September 30, 1999 and we recorded $1.1 million during the same
period ended September 30, 1998.

AMORTIZATION OF INTANGIBLE ASSETS

    Amortization of intangible assets totaled $5.5 million for the three months
ended September 30, 1999 and it was $741,000 for the same period ended
September 30, 1998. Amortization of intangible assets totaled $7.8 million for
the nine months ended September 30, 1999 and it totaled $1.1 million for the
same period ended September 30, 1998. The additional amounts recorded in the
three months ended September 30, 1999 represent amortization of intangible
assets and goodwill resulting from our acquisitions of LiquidMarket, Inc., and
Private One, Inc., amortized over periods ranging from 36 to 42 months. The
additional amounts recorded in the nine months ended September 30, 1999
represent amortization of intangible assets and goodwill resulting from our
acquisitions of Focused Presence, Inc., MightyMail Networks, Inc., Net
Floppy, Inc., Paralogic Software Corporation, LiquidMarket, Inc., and Private

                                       23
<PAGE>
One, Inc., amortized over periods ranging from 36 to 48 months. The amounts
recorded in the three months and the nine months ended September 30, 1998,
represent amortization of intangible assets and goodwill resulting from our
acquisitions of Paralogic Corporation, Global Bridges Technologies, Inc.,
Pagecount, Inc., and the purchase of certain assets of Revolutionary
Software, Inc., amortized over periods ranging from 24 to 42 months.

    For the acquisitions in the periods ended September 30, 1999, we have
determined the appropriateness of the estimated useful lives related to the
intangible assets based on general and specific analysis. In general, the
Internet is characterized by rapid technological change, changes in users and
customer requirements and preferences, frequent new product and service
introductions and the emergence of new industry standards and practices.

    The market for community-based direct selling channels on the Internet is
new and rapidly evolving, and competition for members, consumers, visitors and
advertisers is intense. In addition, we attract members to our Web site with a
variety of free services, including home pages, e-mail, chat rooms, electronic
newsletters, clip art and software libraries, online greeting cards and page
counters. In order to continue attracting members using these various methods,
the free services must be constantly updated and improved.

    With respect to the purchased technology associated with the business and
technology acquisitions, we considered the effects of obsolescence, demand,
competition, and other economic factors. Due to the rapid technological change
involved in the Internet, we estimated that new technologies would replace the
intangible assets relating to the purchased technology within periods ranging
from 24 to 48 months.

    With respect to the goodwill associated with the acquisitions, we considered
the effects of obsolescence, demand, competition, other economic factors and
expected actions of competitors and others. Based on these considerations, we
determined the positive effect of the acquisitions, and therefore the life of
the goodwill, to range from 24 to 48 months. See "Factors Affecting Operating
Results--If we are unable to integrate new technologies and standards
effectively, the results of our operations could be adversely affected,"--"Any
increase in competition could adversely affect our ability to maintain or
improve our position in the market relative to that of our competitors which
could have a material adverse effect on our business and results of operations"
and--"If we are unable to successfully integrate future acquisitions into our
operation, then our business and results of operations could be adversely
affected."

OTHER INCOME, NET

    Other income, net represents interest we earned on our cash and investments,
offset by interest expense we paid on our borrowings. We earned approximately
$3.2 million of interest income in the three months ended September 30, 1999 and
we earned $37,000 in the same period ended September 30, 1998. We have earned
approximately $6.2 million in interest income in the three months ended
September 30, 1999 and we earned $37,000 during the same period ended
September 30, 1998. This increase was primarily due to the increased cash
balances available to invest as a result of our initial public offering in
December 1998, our secondary public offering in April 1999, and the investment
from National Broadcasting Company in July 1999.

    Interest expense represents interest charges related to notes payable and
capital leases. We incurred approximately $25,000 of interest expense in the
three months ended September 30, 1999 and we incurred approximately $20,000 in
the same period ended September 30, 1998. We incurred approximately $90,000 of
interest expense in the nine months ended September 30, 1999, and we incurred
approximately $20,000 in the same period ended September 30, 1998.

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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

    Prior to our initial public offering, we financed our operations primarily
through the private placement of common stock. On December 9, 1998, we completed
our initial public offering of common stock, in which we issued 4,600,000 shares
of common stock at a price of $14.00 per share. Proceeds from the offering were
approximately $57.3 million, net of offering costs. On April 9, 1999, we
completed a secondary public offering of our common stock and issued 4,600,000
shares (including 600,000 shares issued in connection with the exercise of the
underwriter over-allotment option) at a price of $66.00 per share. Of the
4,600,000 shares of common stock sold in the offering, 2,659,800 were sold by
Xoom.com and 1,940,200 shares were sold by existing stockholders. Proceeds from
the follow-on offering were approximately $167 million, net of offering costs.
On July 29, 1999, we issued 960,028 shares to National Broadcasting
Company, Inc. for $57.29 per share in connection with a Stock Purchase Agreement
dated June 11, 1999. We received proceeds of $55.0 million.

    As of September 30, 1999, we had cash and cash equivalents and marketable
securities of approximately $198.9 million. We regularly invest excess funds in
short-term money market funds, government securities and commercial paper.

    Net cash used in operating activities for the nine months ended
September 30, 1999 was $14.9 million, and it was $3.1 million in the same period
ended September 30, 1998. Cash used in operating activities in the nine months
ended September 30, 1999 was primarily the result of net losses
($18.6 million), an increase in accounts receivable related to the growth of
advertising revenues ($2.5 million), and an increase in other assets
($7.6 million) related to an increase in long-term deposits, partially offset by
amortization of intangible assets ($7.8 million) and in-process research and
development charges ($2.6 million) related to our acquisitions, and an increase
in trade accounts payable ($3.9 million) related to the growth of our business.
In the nine months ended September 30, 1998, cash used in operating activities
was primarily the result of net losses ($6.4 million) and an increase in other
assets ($1.4 million), partially offset by amortization of intangible assets
($1.1 million), and in-process research and development charges ($790,000)
related to our acquisitions, the amortization of deferred compensation
($1.1 million) related to the granting of options to employees to purchase
common stock, and the increase in trade accounts payable ($1.0 million) related
to the overall growth of our business.

    Net cash used in investing activities in the nine months ended
September 30, 1999 was $187.0 million and it was $1.4 million in the same period
ended September 30, 1998. Net cash used in investing activities in the nine
months ended September 30, 1999 was primarily related to the purchase of
marketable securities ($198.5 million), partially offset by the maturity of
investments ($18.5 million). The net cash used in investing activities in each
period was also related to purchases of fixed assets and net cash paid for
business acquisitions. From time to time, we expect to evaluate the acquisition
of products, businesses and technologies that complement our business. These
acquisitions may involve cash investments.

    Net cash provided by financing activities in the nine months ended
September 30, 1999 was $222.8 million and it was $5.6 million in the same period
ended September 30, 1998. Net cash provided by financing activities in the nine
months ended September 30, 1999 was primarily related to proceeds from our
secondary public offering ($167.0 million) and proceeds from the issuance of
common stock to National Broadcasting Company ($55.0 million), partially offset
by the repayment of notes payable ($608,000). Net cash provided by financing
activities in the nine months ended September 30, 1998 was primarily
attributable to net proceeds from the issuance of common stock ($5.5 million).

    We believe that we have the financial resources needed to meet our presently
anticipated business requirements, including capital expenditure and strategic
operating programs, for at least the next 12 months. Thereafter, if cash
generated by operations is insufficient to satisfy our liquidity requirements,
we may need to sell additional equity or debt securities or obtain additional
credit facilities. The sale of additional equity or convertible debt securities
may result in additional dilution to our stockholders. We may not be able to
raise any such capital on terms acceptable to us or at all.

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<PAGE>
YEAR 2000 COMPLIANCE

    Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. As a result, software that
records only the last two digits of the calendar year may not be able to
distinguish whether "00" means 1900 or 2000. This may result in software
failures or the creation of erroneous results.

    We have conducted an internal review of software systems which we use for
site management, network monitoring, quality assurance, transactions processing
and fulfillment services. Because we developed these software systems
internally, beginning at inception in 1996 when the Year 2000 problem already
had some visibility, we were largely able to anticipate four digit requirements.
In conjunction with ongoing reviews of its own products and services, we are
also reviewing our computer infrastructure, including network equipment and
servers. We do not anticipate material problems with network equipment, as our
current configuration was installed within the last three years. Similarly, we
purchased most of our servers in 1997 and 1998. With this relatively current
equipment, we do not anticipate material Year 2000 compliance problems, and we
will replace any servers that cannot be updated either in the normal replacement
cycle or on an accelerated basis. We have also internally standardized our
personal computers on Windows NT 4.0, using reasonably current service packs,
which our vendor has advised us are Year 2000 compliant. We use multiple
software systems for internal business purposes, including accounting, e-mail,
development, human resources, customer service and support and sales tracking
systems. All of these applications have been purchased within the last three
years.

    We have made inquiries of vendors of systems we believe to be mission
critical to our business regarding their Year 2000 readiness. Although we have
received various assurances, we have not received affirmative documentation of
Year 2000 compliance from any of these vendors and we have not performed any
operational tests on our internal systems. We generally do not have contractual
rights with third party providers should their equipment or software fail due to
Year 2000 issues. If this third party equipment or software does not operate
properly with regard to Year 2000, we may incur unexpected expenses to remedy
any problems. These expenses could potentially include purchasing replacement
hardware and software. We have not determined the state of compliance of some of
our third-party suppliers of services such as warehousing and fulfillment
services, phone companies, long distance carriers, financial institutions and
electric companies, the failure of any one of which could severely disrupt its
ability to carry on our business.

    We anticipate that our review of Year 2000 issues and any remediation
efforts will continue throughout calendar 1999. The costs incurred to date to
remediate our Year 2000 issues have not been material. If any Year 2000 issues
are uncovered with respect to these systems or our other internal systems, we
believe that we will be able to resolve these problems without material
difficulty, as replacement systems are available on commercially reasonable
terms. We presently estimate that the total remaining cost of addressing Year
2000 issues will not exceed $150,000. We derived these estimates using a number
of assumptions, including the assumption that we have already identified our
most significant Year 2000 issues. However, these assumptions may not be
accurate, and actual results could differ materially from those anticipated. In
view of our Year 2000 review and remediation efforts to date, the recent
development of our products and services, the recent installation of our
networking equipment and servers, and the limited activities that remain to be
completed, we do not consider contingency planning to be necessary at this time.

    Our applications operate in complex network environments and directly and
indirectly interact with a number of other hardware and software systems. We are
unable to predict to what extent our business may be affected if our systems or
the systems that operate in conjunction with it experience a material Year 2000
failure. Known or unknown errors or defects that affect the operation of our
software and systems could result in delay or loss of revenue, interruption of
services, cancellation of contracts and memberships, diversion of development
resources, damage to our reputation, increased service and warranty costs,

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<PAGE>
and litigation costs, any of which could adversely affect our business,
financial condition and results of operations. The most likely worst case
scenario is that the Internet fails and we are unable to offer any services on
our community site or make any of our direct e-commerce offerings, which would
materially adversly affect our results of operations, financial position and
cash flows in fiscal 2000.

CERTAIN RISK FACTORS WHICH MAY IMPACT FUTURE OPERATING RESULTS

    This report on Form 10-Q contains forward looking statements which involve
risks and uncertainties. Our actual results could differ materially from those
anticipated by such forward looking statements as a result of certain factors,
including those set forth below.

WE CANNOT ASSURE YOU THAT WE WILL BE PROFITABLE BECAUSE WE HAVE OPERATED OUR
BUSINESS ONLY FOR A SHORT PERIOD OF TIME

    Xoom.com was founded in April 1996 and has a limited operating history. An
investor in our common stock must consider the risks and difficulties frequently
encountered by early stage companies in new and rapidly evolving markets,
particularly those involved in e-commerce and the Internet. These risks include:

    - the level of use of the Internet and online services and consumer
      acceptance of the Internet and   other online services, particularly
      direct e-mail marketing, for the purchase of consumer products such as
      those we offer;

    - the lack of broad acceptance of the community model on the Internet;

    - our inability to generate significant e-commerce revenue or premium
      service revenue from our members;

    - our inability to maintain and increase levels of traffic on the Xoom.com
      Web site;

    - our failure to continue to develop and extend the Xoom.com brand;

    - our inability to attract or retain members;

    - our inability to meet minimum guaranteed impressions under advertising
      agreements;

    - our failure to anticipate and adapt to a developing market;

    - our inability to upgrade and develop our systems and infrastructure and
      attract new personnel in a timely and effective manner;

    - the failure of our server and networking systems to efficiently handle our
      Web traffic; and

    - our inability to effectively manage rapidly expanding operations.

WE CANNOT BE CERTAIN THAT OUR BUSINESS STRATEGY WILL BE SUCCESSFUL OR THAT WE
WILL SUCCESSFULLY ADDRESS THESE RISKS.

    As of September 30, 1999, we had an accumulated deficit of $33.0 million.
Although we have experienced growth in our net revenue, members, customers and
reach in recent periods, these growth rates are not sustainable and will
decrease in the future. To date, we have not been profitable on either a
quarterly or an annual basis, and we expect to incur net losses for the
foreseeable future. We expect our operating expenses to increase significantly,
especially in the areas of sales and marketing and brand promotion, and, as a
result, we will need to increase our revenue to become profitable. If our
revenue does not grow as expected or increases in our expenses are not in line
with forecasts, there could be a material adverse effect on our business,
results of operations and financial condition.

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<PAGE>
THE UNPREDICTABILITY OF OUR QUARTER-TO-QUARTER RESULTS COULD CAUSE OUR STOCK
PRICE TO BE VOLATILE OR DECLINE

    Our operating results have fluctuated in the past and will likely continue
to do so in the future. Some of the factors that could cause our operating
results to fluctuate are:

    - the level of demand for the services and products offered in our direct
      e-mail marketing and our ability to meet the demand in a timely manner;

    - consumers' receptiveness to e-commerce and to direct e-mail marketing in
      particular;

    - developments relating to advertising on the Web;

    - timely deployment and expansion of our network and network architectures;

    - new services offered by our competitors that affect the level of traffic
      on our Web site and the continuing expansion of our membership base;

    - our ability to predict demand for products and services we offer and to
      optimize inventory levels accordingly;

    - marketing costs that we will need to incur in order to maintain and
      enhance the Xoom.com brand name;

    - the loss of key business relationships;

    - the mix of domestic and international sales;

    - the costs of acquiring technology or businesses and our ability to
      integrate them into our operations; and

    - economic conditions generally, as well as those specific to the Internet
      and related industries.

    To respond to these and other factors, we may need to make business
decisions that could have a material adverse effect on our quarterly operating
results.

    Our business fluctuates on a seasonal basis. Traffic on our site has
historically been lower during the summer and year-end vacation and holiday
periods when people tend to spend less time on the Internet. Advertising revenue
also varies with the seasons. Typically, advertisers spend less during the first
and third calendar quarters. Web-based commerce and advertising are relatively
new, which means that new trends may develop that could affect the results of
our operations.

    As a relatively new company, it is difficult for us to plan or anticipate
our operating expenses based on our limited historical financial data. If our
actual revenue is lower than predicted, we may be unable to adjust our operating
expenses accordingly.

    A substantial portion of our net revenue is from short-term advertising
contracts, usually one to two months in length. That means our quarterly net
revenue is a function of the contracts we enter into within the quarter and our
ability to adjust spending in light of any net revenue shortfalls. To date, our
advertising revenue comes from a small to medium group of customers whose
composition periodically changes. For example, during the nine months ended
September 30, 1999, our five largest advertisers accounted for approximately 25%
of our total advertising revenue. As a result, the cancellation of even a small
number of these advertising contracts could affect our operating results.
Advertising revenue is also linked to the level of traffic on our Web site, so
if traffic is less than the level expected by our advertising customers, our
revenue from this source could be affected. We have guaranteed our advertisers a
minimum number of impressions on our Web site. Reduced traffic on our Web site
would cause us to fall short in meeting this minimum requirement and as a result
we may give credits to our advertisers and reduce advertising rates, which would
lead to a reduction in our revenue from advertising.

    The Internet has not been available for a sufficient period of time to gauge
its effectiveness as an

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<PAGE>
advertising medium when compared with traditional media. Notwithstanding, there
is intense competition among sellers of advertising space on the Web. This makes
it difficult to project pricing models or to anticipate whether we will be
successful in selling advertising space and relying on advertising as a
substantial source of revenue.

    Due to the foregoing factors, we believe that period-to-period comparisons
of our operating results are not necessarily meaningful, you should not view
them as indicators of our future performance. If our operating results in any
period fall below the expectations of securities analysts and investors, the
market price of our shares would likely decline.

BECAUSE OUR BUSINESS MODEL IS UNPROVEN AND DEPENDS ON MAINTAINING AND EXPANDING
OUR MEMBERSHIP BASE, WE DO NOT KNOW WHETHER OUR BUSINESS MODEL WILL ULTIMATELY
BE VIABLE AND PROFITABLE

    Our business model relies on using our community platform and membership
base to generate revenues from different sources. To be profitable, we will need
to provide goods and services that are attractive to our members, advertisers
and vendors. We have relied on member-generated content and the "grassroots"
voluntary promotional efforts of our members to develop and maintain our profile
as a community site. A decline in voluntary promotional activities by our
members or member-generated content could make our Web site less attractive. We
cannot be sure that Internet users will continue to be interested in communities
on the Web, or that direct e-mail marketing will prove to be a profitable or
effective method of selling goods and services.

    Our future success also depends on the continued growth in the use of the
Internet and the Web. Use of the Internet for retail transactions is a recent
development and the continued demand and growth of a market for services and
products via the Internet is uncertain. For the nine months ended September 30,
1999, e-commerce was the source of approximately 51.5% of our total net revenue.
The Internet may ultimately prove not to be a viable commercial marketplace for
a number of reasons, including:

    - unwillingness of consumers to shift their purchasing from traditional
      retailers to online purchases;

    - lack of acceptable security for data and concern for privacy of personal
      information;

    - limitations on access and ease of use;

    - congestion leading to delayed or extended response times;

    - inadequate development of Web infrastructure to keep pace with increased
      levels of use;

    - increased or excessive government regulation; and

    - problems regarding intellectual property ownership.

    Because of these factors, we do not know whether our business model will
ultimately be viable and profitable.

OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO RISKS THAT COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS

    We market and sell our products in the United States and internationally.
Approximately 14% of our net revenue during the first three quarters of 1999
came from sales outside the United States. We plan to establish additional
operations or form business partnerships in other parts of the world. The
expansion of

                                       29
<PAGE>
our existing international operations and entry into additional international
markets will require substantial management attention and financial resources.
We cannot be certain that our investment in establishing operations in other
countries will produce the desired levels of revenue. In addition, international
operations are subject to other inherent risks and problems, including:

    - the impact of recessions in economies outside the United States;

    - greater difficulty in accounts receivable collections;

    - unexpected changes in regulatory requirements;

    - difficulties and costs of staffing and managing foreign operations;

    - reduced protection for intellectual property rights in some countries;

    - political and economic instability;

    - the introduction of the euro;

    - fluctuations in currency exchange rates; and

    - difficulty in maintaining effective communications due to distance,
      language and cultural barriers.

    - Some or all of the above factors could have a material adverse effect on
      the results of our operations.

ANY FAILURE OF OUR NETWORK INFRASTRUCTURE COULD HAVE A MATERIAL ADVERSE EFFECT
ON OUR RESULTS OF OPERATIONS

    Our success depends upon the capacity, reliability and security of our
networking hardware and software infrastructure. We have developed an open
standard hardware and software system that is designed for reliability. System
architecture is based on a distributed model that is highly scalable, flexible
and modular, emphasizing extensive automation and a high degree of redundancy
that is designed to minimize single points of failure. The system integrates
site management, network monitoring, quality assurance, transaction processing
and fulfillment services. Currently, the system has 2.5 terabytes of unformatted
disk space, supports over 14 million hits per day, has a peak bandwidth of over
90 megabits per second and transfers about 1 terabyte of data each day.

    We must continue to expand and adapt our system infrastructure to keep pace
with the increase in the number of our members who use the free services we
provide. Demands on our infrastructure that exceed our current forecasts could
result in technical difficulties with our Web site. Any system failure that
interferes with the access to our Web site and the use of the free services we
provide could diminish the level of traffic on our Web site. Continuing or
repeated system failures could impair our reputation and brand name and reduce
our commerce and advertising revenue. At present, we do not know if we will be
able to scale our systems to handle a larger amount of traffic at higher
transmission speeds. Expanding our network infrastructure will require
substantial financial, operational and management resources in the remainder of
1999 and future periods, all of which could affect the results of our
operations.

    We developed our systems for maintaining our Web site, processing
transactions and managing orders internally. If, in the future, we cannot modify
these systems to accommodate increased traffic and an increased volume of
transactions and orders, we could suffer slower response time, problems with
customer service and delays in reporting accurate financial information. Any of
these factors could significantly and adversely impact the results of our
operations.

    We use network servers that are housed separately by application at Exodus
Communications, Inc. in Santa Clara, California and Frontier Global Center in
Sunnyvale, California. Our site is connected to the Internet via multiple DS-3
and OC-3 links on a 24 hour-a-day, seven days per week basis by Exodus and
Frontier Global Center. Exodus and Frontier Global Center also provide and
manage power and

                                       30
<PAGE>
environmentals for our networking and server equipment. We manage and monitor
our servers and network remotely from our headquarters in San Francisco,
California. We strive to rapidly develop and deploy high-quality tools and
features into our system without interruption or degradation in service.

    Although the agreements we have with our hosting companies give us remedies
for service interruptions, we cannot guarantee that:

    - we will have uninterrupted access to the Internet;

    - our members will be able to reach our Web site; or

    - communications via our Web site will be secure.

    Any disruption in the Internet access provided by Exodus or Frontier Global
Center, or any interruption in the service that Exodus or Frontier Global Center
receives from other providers, or any failure of Exodus or Frontier Global
Center to handle higher volumes of Internet users to the Xoom.com site could
have a material adverse effect on our business, results of operations and
financial condition.

    Despite precautions taken by us and by the companies that host our Web site,
our system is susceptible to natural and man-made disasters such as earthquakes,
fires, floods, power loss and sabotage. Our system is also vulnerable to
disruptions from computer viruses and attempts by hackers to penetrate our
network security. Hackers have succeeded in penetrating our network security in
the past, and we expect such attempts to continue from time to time.

    We are covered for loss of income from some of the events listed above by a
$1.0 million insurance policy, but this insurance may not be adequate to cover
all instances of system failure. We have insurance coverage of $1.25 million
against loss of income due to earthquakes, but this amount may be insufficient,
especially given the frequency of earthquakes in Northern California.

    Any of the events listed above could cause us interference, delays, or
service interruptions and adversely affect our business and results of
operations.

BREACHES OF OUR NETWORK SECURITY COULD ALSO DISRUPT THE OPERATION OF OUR WEB
SITE AND JEOPARDIZE THE SECURITY OF CONFIDENTIAL INFORMATION STORED IN OUR
SERVERS

    Our system is also vulnerable to disruptions from computer viruses and
attempts by hackers to penetrate our network security. Hackers have succeeded in
penetrating our network security in the past, and we expect such attempts to
continue from time to time. We may need to devote substantial capital and
resources to protect against the threat of unauthorized penetration of our
network security. Breaches of our network security could also disrupt the
operation of our Web site and jeopardize the security of confidential
information stored in our servers. The occurrence of any of the events listed
above could cause us to lose members and also expose us to liability and result
in litigation, all of which could have an adverse effect on our operations.

WE DEPEND ON OUR VENDORS AND SUPPLIERS

    We rely on other companies for critical aspects of our business. Banta
Corporation is primarily responsible for fulfilling orders for products and
services sold via our Web site and in response to direct e-mail marketing.
Substantially all of our revenue from e-commerce comes from these sales. We do
not have a written agreement with Banta. If our relationship with Banta were to
terminate without sufficient advance notice, our operations would be negatively
affected, even if we were able to establish a relationship with a comparable
vendor to fulfill orders. An unanticipated termination of our relationship with
Banta would be particularly damaging during the fourth calendar quarter, in
which a high percentage of our annual sales are made. We would also be affected
by problems experienced by Banta, such as insufficient capacity and damage from
human error, sabotage, fire, flood, power loss and other similar man-made or
natural disasters. The success of our specific e-mail direct e-commerce
campaigns depends

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<PAGE>
on the timely supply of inventory by the manufacturers and suppliers of the
products we offer for sale to our members. In particular, we rely on Logic
General, Inc. for all of our CD-ROM products, DVDs and DVD-ROMs that contain
software, clip art and classic movies. The failure of Logic General or other
suppliers on whom we depend would adversely affect the results of our
operations.

IMPOSITION OF NEW TAXES OR FEES BY THE FEDERAL GOVERNMENT OF THE UNITED STATES
OR BY FOREIGN GOVERNMENTS ON INTERNET TRANSACTIONS OR ON THE USE OF THE INTERNET
AS A MEANS OF COMMUNICATION COULD ALSO ADVERSELY AFFECT US

    We do not currently collect sales or similar taxes for goods that we ship
into states other than California and New York. Imposition of sales or other
similar taxes on our sales of merchandise by states or countries where we ship
goods could have a material adverse effect on our results of operations.
Imposition of new taxes or fees by the Federal government of the United States
or by foreign governments on Internet transactions or on the use of the Internet
as a means of communication could also adversely affect us.

DIFFICULTIES WE MAY ENCOUNTER DEALING WITH OUR GROWTH AND EXPANSION COULD
ADVERSELY AFFECT THE RESULTS OF OUR OPERATIONS

    Our rapid rate of growth places a significant strain on our resources due
to:

    - the need to manage relationships with various strategic partners,
      technology licensors, members, advertisers, and other third parties;

    - difficulties in hiring and retaining skilled personnel necessary to
      support our business;

    - the need to train and manage our growing employee base; and

    - pressures for the continued development of our financial and information
      management systems.

    - Difficulties we may encounter dealing successfully with the above risks
      relating to our rapid growth could adversely affect the results of our
      operations.

THE LOSS OF KEY PERSONNEL, OR THE INABILITY TO ATTRACT AND RETAIN ADDITIONAL,
QUALIFIED PERSONNEL, COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF
OPERATIONS

    Our success depends to a significant degree upon the continued contributions
of our executive management team, most of whom have worked together only for a
short time. We do not carry key man life insurance on the lives of any of our
employees, including senior management. Our success will also depend upon the
continued service of our senior management team as well as technical, marketing
and sales personnel. Competition for qualified employees is intense. Our
employees may voluntarily terminate their employment with us at any time. Our
success also depends upon our ability to attract and retain additional highly
qualified management, technical, sales and marketing and customer support
personnel. Locating personnel with the combination of skills and attributes
required to carry out our strategy is often a lengthy process. The loss of key
personnel, or the inability to attract and retain additional, qualified
personnel, could have a material adverse effect on our results of operations.

THE RESULTS OF OUR OPERATIONS COULD BE ADVERSELY AFFECTED IF OUR INVESTMENT OF
FINANCIAL AND OTHER RESOURCES IN PROMOTING OUR BRAND DOES NOT GENERATE A
CORRESPONDING INCREASE IN NET REVENUE, OR IF THE EXPENSE OF PROMOTING OUR BRAND
NAME BECOMES EXCESSIVE

    As the number of Internet sites grow, brand recognition will play an
increasingly important role. Establishing and promoting the Xoom.com brand in
the face of pressures from our competitors will be critical to developing our
member base and strategic and commercial relationships. We will be required to

                                       32
<PAGE>
continue to devote substantial financial and other resources to maintaining the
distinctiveness of our brand to our members, advertisers and commerce partners
through:

    - Web advertising and marketing;

    - traditional media advertising campaigns in print, radio, billboards and
      television; and

    - providing a high quality community experience.

    The results of our operations could be adversely affected if our investment
of financial and other resources in promoting our brand does not generate a
corresponding increase in net revenue, or if the expense of promoting our brand
name becomes excessive. Changes in the quality and type of services we offer and
the character of our company as perceived by our members could make our Web site
less attractive to our members, advertisers, and strategic partners, all of
which would have a material adverse effect on the results of our operations.

IF WE ARE UNABLE TO INTEGRATE NEW TECHNOLOGIES AND STANDARDS EFFECTIVELY, THE
RESULTS OF OUR OPERATIONS COULD BE ADVERSELY AFFECTED

    - Our ability to remain competitive in our area of business will depend, in
      part, on our ability to:

    - enhance and improve the responsiveness, functionality and features of our
      Web site;

    - continue to develop our technical expertise;

    - develop and introduce new services and technology to meet changing
      customer needs and preferences;

    - influence and respond to emerging industry standards and other
      technological changes in a timely and cost effective manner; and

    - license leading technologies useful in our business.

    We cannot assure you that we will be successful in responding to the above
technological and industry challenges in a timely and cost-effective way. If we
are unable to integrate new technologies and standards effectively, there could
be an adverse effect on our results of our operations.

PRIVACY CONCERNS, GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD HAVE AN
ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF OPERATIONS

    Laws and regulations that apply directly to communications or commerce over
the Internet are becoming more prevalent. The most recent session of the United
States Congress resulted in Internet laws regarding children's privacy,
copyrights, taxation and the transmission of sexually explicit material. The
European Union recently enacted its own privacy regulations. The law of the
Internet, however, remains largely unsettled, even in areas where there has been
some legislative action. It may take years to determine whether and how existing
laws that govern intellectual property, privacy, libel and taxation apply to the
Internet. The development of laws governing these areas may decrease the growth
in the use of the Internet, which could adversely impact our business. In
addition, the growth and development of the e-commerce market may prompt calls
for more stringent consumer protection laws, both in the United States and
abroad, that may impose additional burdens on companies conducting business
online. The adoption or modification of laws or regulations relating to the
Internet could adversely affect our business.

    The Federal Communications Commission ("FCC") is currently reviewing its
regulatory positions on data transmissions over telecommunications networks and
could seek to impose some form of telecommunications carrier regulation on
telecommunications functions of information services. State public utility
commissions generally have declined to regulate information services, although
the public service commissions of some states continue to review potential
regulation of such services. Future regulation or regulatory changes could have
an adverse effect on our business and results of operations.

                                       33
<PAGE>
OUR FAILURE TO ATTRACT ADVERTISING REVENUE IN QUANTITIES AND AT RATES THAT ARE
SATISFACTORY TO US COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, RESULTS
OF OPERATIONS AND FINANCIAL CONDITION

    We have derived a material portion of our net revenue to date from the sale
of advertisements, including banner advertising revenue. For the nine months
ended September 30, 1999, advertising revenue represented approximately 47.9% of
our total net revenue. During the same period, our five largest advertising
customers accounted for approximately 25% of advertising revenue (approximately
12% of total net revenue). We intend to continue to rely on advertising as a
significant source of revenue.

    It is uncertain whether Web advertising will continue to grow at a rate that
will support expansion in our net revenue. The Internet as a marketing and
advertising medium has not been available for a sufficient period of time to
gauge its effectiveness as compared with traditional media. Many of our
suppliers and advertisers have only limited experience with the Web as a sales
and advertising medium. Advertisers have not yet devoted a significant portion
of their advertising budgets 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.

    It is also possible that in the future certain Internet access providers
will act to block or limit the use of e-mail direct e-commerce solicitations,
whether at their own behest or at the request of users. Members may also choose
not to receive our e-mail offerings or may fail to respond to such offerings.
Moreover, "filter" software programs that limit or remove advertising from a Web
user's desktop are available. If these programs become popular, there could be a
material adverse effect upon the viability of advertising on the Web and on our
business, results of operations and financial condition.

ANY INCREASE IN COMPETITION COULD ADVERSELY AFFECT OUR ABILITY TO MAINTAIN OR
IMPROVE OUR POSITION IN THE MARKET RELATIVE TO THAT OF OUR COMPETITORS, WHICH
COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF OPERATIONS

    The market for community-based direct selling channels on the Internet is
new and rapidly evolving. Competition for members, consumers, visitors and
advertisers is intense and is expected to increase over time. Barriers to entry
are relatively low. Other companies that are primarily focused on creating
Web-based communities on the Internet and with whom we compete are Tripod and
WhoWhere, subsidiaries of Lycos, GeoCities, recently acquired by Yahoo!, and
theglobe.com. We also face competition and compete for visitors and traffic with
Web directories, search engines, shareware archives, content sites, online
service providers, and traditional media companies such as ABC, America Online,
CBS, CNET, Excite, Infoseek, Lycos, NBC, Netscape, Microsoft, Time Warner and
Yahoo!.

    We also expect intense competition in the e-commerce market from an ever
increasing number of companies selling goods and services over the Internet,
particularly goods and services that relate to the use of computers. These
competitors include:

    - traditional computer retailers including CompUSA and Micro Electronics's
      MicroCenter; various mail-order retailers including CDW Computer Centers,
      Micro Warehouse, Insight Enterprises, Inc., PC Connection, Inc. and
      Creative Computers;

    - internet-focused retailers including Amazon.com, Egghead's Egghead.com,
      software.net, and New England Circuit Sales' NECX Direct;

    - manufacturers that sell directly over the Internet including Dell
      Computer, Gateway 2000, Apple Computer and many software companies;

    - a number of online service providers including America Online and the
      Microsoft Network that offer computer products directly or in partnership
      with other retailers;

                                       34
<PAGE>
    - some non-computer retailers such as Wal-Mart Stores that sell a limited
      selection of computer products in their stores; and

    - computer products distributors that may develop direct sales channels to
      the consumer market.

    Increased competition from these and other sources could require us to
respond to competitive pressures by establishing pricing, marketing and other
programs or seeking out additional strategic alliances or acquisitions that may
be less favorable to us than we could otherwise establish or obtain, and thus
could have a material adverse effect on our business, prospects, financial
condition and results of operations.

    Many of our competitors have longer operating histories in the Web market,
greater name recognition, larger customer bases and significantly greater
financial, technical and marketing resources. In addition, substantially all of
our current advertising customers and strategic partners also have established
collaborative relationships with some of our competitors or other high-traffic
Web sites. Our advertising customers might also conclude that other Internet
businesses, such as search engines, commercial online services and sites that
offer professional editorial content, are more effective sites for advertising.
Moreover, we may be unable to maintain the high level of traffic on our Web site
or our member base, which would make our site less attractive than those of our
competitors. Any of these factors could adversely affect our ability to maintain
or improve our position in the market relative to that of our competitors.

OUR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS COULD HAVE A MATERIAL
ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION

    We view our technology as proprietary and try to protect it under existing
United States and international laws relating to protection of intellectual
property. We have also developed internal procedures to control access and
dissemination of our proprietary information. Despite our precautions, third
parties may succeed in misappropriating our intellectual property or
independently developing similar intellectual property. Protecting our
intellectual property against infringement could result in substantial legal and
other costs and could divert our limited management resources and attention.
This could adversely impact our business and the results of our operations.

    Some of the technology incorporated in our Web site is based on technology
licensed from third parties. As we continue to introduce new services, we may
need to license additional technology. If we are unable to timely license needed
technology on commercially reasonable terms, we could experience delays and
reductions in the quality of our services, all of which could adversely affect
our business and results of operations. Our reputation and the value of our
proprietary information could also be adversely affected by actions of third
parties to whom we license our proprietary information and intellectual
property. If someone asserts a claim relating to proprietary technology or
information against us, we may seek licenses to such intellectual property. We
cannot assure you, however, that we could obtain licenses on commercially
reasonable terms, if at all. The failure to obtain the necessary licenses or
other rights could have a material adverse effect on our business and results of
operations.

    Although we do not believe we infringe the proprietary rights of any third
parties, we cannot assure you that third parties will not assert claims against
us in the future. From time to time, we have been subject to claims of alleged
infringement of intellectual property rights of others on the basis of our
actions and the content generated by our members. These categories of claims,
whether or not meritorious, could result in litigation and become a drain on our
management and financial resources. If successful, claims of this nature could
subject us to liability, injunctive relief restricting our use of intellectual
property important to our operations, and could ultimately cause us to lose
rights to some of our intellectual property. Any of these events could have a
material adverse effect on our business and results of operations.

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<PAGE>
WE COULD BE SUBJECT TO LIABILITY FOR ONLINE CONTENT THAT MAY NOT BE COVERED BY
OUR INSURANCE

    The nature and breadth of information disseminated on our Web site and
through the sites of our members could expose us to liability in various areas,
including claims relating to:

    - product information and reviews we offer;

    - the content and publication of various materials based on defamation,
      libel, negligence, personal injury and other legal theories;

    - copyright or trademark infringement and wrongful action due to the actions
      of third parties;

    - use of third party content made available through our Web site or through
      content and material posted by members on their home pages or in chat
      rooms and bulletin boards; and

    - damages arising from the use or misuse of the free e-mail services we
      offer.

    Claims of these kinds against us would result in our incurring substantial
costs and would also be a drain on our financial and other resources. If there
were a sufficient number or severity of claims of this nature, we would need to
implement measures to reduce our exposure and potential liability. In addition
to being a drain on our resources, this may also require taking measure that
could make our services less attractive to our members and visitors. This in
turn could reduce traffic on our Web site, negatively impact our member base,
and reduce our revenue from e-commerce and advertising. We carry general
liability insurance in the aggregate amount of $2.0 million and umbrella
coverage in an aggregate amount of $5.0 million. This coverage may be
insufficient to cover expenses and losses arising in connection with any claims
against us. To the extent our insurance coverage does not cover liability or
expenses we incur, our business and results of operations would be adversely
affected.

WE COULD FACE LIABILITY FROM LEGAL PROCEEDINGS THAT COULD ADVERSELY AFFECT OUR
BUSINESS AND RESULTS OF OPERATIONS

    We are litigating a dispute with Imageline, Inc., which claims to own the
copyright in some of the clip art images licensed to us by Sprint Software
Pty Ltd, an unrelated third party. Some of the disputed images were included in
versions of our Web Clip Empire CD-ROM product licensed by us to third parties,
including other software clip publishers. The images licensed from Sprint
Software generated less than 1.0% of our total net revenue in 1998, and since
September 30, 1998, we have not received any net revenue for images licensed
from Sprint Software.

    To resolve this matter, we filed a lawsuit against Imageline in August 1998
in the United States District Court for the Eastern District of Virginia. We
asked for a declaration with respect to Imageline's allegations of copyright
infringement regarding the clip art images. In September 1998 Imageline filed a
counterclaim, which they amended in January 1999, seeking up to $60 million in
damages. In March 1999, the parties completed the discovery process and filed
separate motions for partial summary judgment. On April 5, 1999, the court
granted one of our motions for partial summary judgment and stayed the case to
allow Imageline to file all necessary copyright registration applications to
cover the clip art images.

    We believe that the claims asserted in Imageline's counterclaim are without
merit and continue to defend against them vigorously. As part of the lawsuit, we
are seeking to enforce our right to indemnification under our license agreement
with Sprint Software for any damages that may be imposed on us. We do not know
whether Sprint Software will be able to fulfill its indemnity obligations.
Depending on the outcome of the litigation, we may also need to indemnify third
parties for damages in connection with the use of the Imageline images. An
unfavorable outcome to this litigation could adversely affect our business and
results of operations.

    Zoom Telephonics, Inc. filed a lawsuit against us in September 1998 in the
United States District Court for the District of Massachusetts alleging
trademark infringement and related statutory violations.

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<PAGE>
We were not served with Zoom Telephonics' complaint until January 1999. Zoom
Telephonics has demanded that we stop using the Xoom.com trademark and has asked
for an unspecified amount of money damages. We responded to the complaint in
February 1999. In April 1999, Zoom Telephonics filed a motion for preliminary
injunction to stop us from using any mark containing "Xoom". We have filed a
motion to oppose Zoom Telephonic's motion for preliminary injunction. A hearing
on the motion was held on September 30, 1999. On October 7, 1999 the court
denied Zoom Telephonics' motion for a preliminary injunction but allowed Zoom
Telephonics to request the court to reconsider the motion if the Xoom.com merger
does not close by October 31, 1999. On November 3, 1999 Zoom Telephonics filed a
motion to renew their previous motion for preliminary injunction. We intend to
respond to Zoom Telephonics' most recent motion. We believe that the claims
asserted by Zoom Telephonics are without merit and we intend to defend against
them vigorously. We cannot assure you, however, that the results of this
litigation will be favorable to us. An adverse result of the litigation could
have a material adverse effect on our business and results of operations,
particularly if the litigation forces us to make substantial changes to our name
and trademark usage. Any name change could result in confusion to consumers and
investors, which could adversely affect the results of our operations and the
market price of its common stock.

    John G. Balletto filed a lawsuit against us in September 1999 in the San
Francisco Superior Court alleging breach of contract and specific performance.
Mr. Balletto has alleged that in connection with a loan which we obtained from
Sand Hill Capital LLC in 1998 and pursuant to an oral contract with Xoom.com, he
is entitled to a finder's fee. Mr. Balletto has sought specific performance of
the alleged oral contract by having the court direct us to issue 33,784 shares
of our common stock to Mr. Balletto and such other relief that the court may
deem just and proper. We believe that this lawsuit is without merit and intend
to defend the suit vigorously.

IF WE ARE UNABLE TO SUCCESSFULLY INTEGRATE FUTURE ACQUISITIONS INTO OUR
OPERATION, THERE COULD BE AN ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF
OPERATIONS

    Acquiring complementary businesses, products and technologies is an integral
part of our business strategy. Some of the risks attendant to this acquisition
strategy are:

    - difficulties and expenses of integrating the operations and personnel of
      acquired companies into our operations while preserving the goodwill of
      the acquired entity;

    - the additional financial resources that may be needed to fund the
      operations of acquired companies;

    - the potential disruption of our business;

    - our management's ability to maximize our financial and strategic position
      by incorporating acquired technology or businesses;

    - the difficulty of maintaining uniform standards, controls, procedures and
      policies;

    - the potential loss of key employees of acquired companies;

    - the impairment of relationships with employees and customers as a result
      of changes in management; and

    - increasing competition with other entities for desirable acquisition
      targets.

    Any of the above risks could prevent us from realizing significant benefits
from our acquisitions. In addition, the issuance of our common stock in
acquisitions will dilute our stockholder interests in our company, while the use
of cash will deplete our cash reserves. Finally, if we are unable to account for
our acquisitions under the "pooling of interests" method of accounting, we may
incur significant, one-time write-offs and amortization charges. These
write-offs and charges could decrease our future earnings or

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<PAGE>
increase our future losses. Due to all of the foregoing, implementing our
acquisition strategy may have a material adverse effect on our business and
results of operations.

IF OUR CAPITAL IS INSUFFICIENT TO PROMOTE OUR BUSINESS, AND IF WE CANNOT OBTAIN
NEEDED FINANCING, WE WILL BE UNABLE TO PROMOTE OUR BRAND NAME, EXPLOIT
ACQUISITION OPPORTUNITIES AND OTHERWISE MAINTAIN OUR POSITION RELATIVE TO THAT
OF OUR COMPETITORS

    We believe that the proceeds from our initial public offering and our
secondary offering in April 1999, will be sufficient to support our operations
for the next 12 months. Notwithstanding, we may need to raise additional funds
to maintain and develop our position in the marketplace. It may be difficult or
impossible for us to obtain financing on favorable terms. Raising funds by
issuing equity securities or convertible debt securities will dilute the
percentage ownership of our current stockholders. Also, new securities we may
issue may have rights senior to the rights of our common stock. If we cannot
obtain needed financing, we will be unable to promote our brand name, exploit
acquisition opportunities and otherwise maintain our position relative to that
of our competitors.

IF IMPORTANT STRATEGIC RELATIONSHIPS ARE DISCONTINUED FOR ANY REASON, THERE
WOULD BE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION

    Although our strategic relationships are a key factor in our overall
business strategy, our strategic partners may not view their relationships with
us as significant to their own business. There is a risk that parties with whom
we have strategic alliance agreements may not perform their obligations as
agreed. Our arrangements with strategic partners generally do not establish
minimum performance requirements but instead rely on the voluntary efforts of
our partners. In addition, most of our agreements with strategic partners may be
terminated by either party with little notice. If important strategic
relationships are discontinued for any reason, our business and results of
operations may be adversely affected.

YEAR 2000 ISSUES COULD NEGATIVELY AFFECT OUR BUSINESS

    Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. As a result, software that
records only the last two digits of the calendar year may not be able to
distinguish whether "00" means 1900 or 2000. This may result in software
failures or the creation of erroneous results.

    We have conducted an internal review of software systems which we use for
site management, network monitoring, quality assurance, transaction processing
and fulfillment services. Because we developed these software systems
internally, beginning at inception in 1996 when the Year 2000 problem already
had some visibility, we were largely able to anticipate four digit requirements.
In conjunction with ongoing reviews of our own products and services, we are
also reviewing our computer infrastructure, including network equipment and
servers. We do not anticipate material problems with network equipment, as our
current configuration was installed within the last three years. Similarly, we
purchased most of our servers in 1997 and 1998. With this relatively current
equipment, we do not anticipate material Year 2000 compliance problems, and we
will replace any servers that we cannot update either in the normal replacement
cycle or on an accelerated basis. We have also internally standardized our
personal computers on Windows NT 4.0, using reasonably current service packs,
which we are advised by our vendor are Year 2000 compliant. We use multiple
software systems for internal business purposes, including accounting, e-mail,
development, human resources, customer service and support and sales tracking
systems. All of these applications have been purchased within the last three
years.

    We have made inquiries of vendors of systems we believe to be mission
critical to our business regarding their Year 2000 readiness. Although we have
received various assurances, we have not received affirmative documentation of
Year 2000 compliance from any of these vendors and we have not performed any
operational tests on our internal systems. We generally do not have contractual
rights with third party

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<PAGE>
providers should their equipment or software fail due to Year 2000 issues. If
this third party equipment or software does not operate properly with regard to
Year 2000, we may incur unexpected expenses to remedy any problems. These
expenses could potentially include purchasing replacement hardware and software.
We have not determined the state of compliance of certain third-party suppliers
of services such as warehousing and fulfillment services, phone companies, long
distance carriers, financial institutions and electric companies, the failure of
any one of which could severely disrupt our ability to carry on our business.

    We anticipate that our review of Year 2000 issues and any remediation
efforts will continue throughout calendar 1999. The costs incurred to date to
remediate our Year 2000 issues have not been material. If any Year 2000 issues
are uncovered with respect to these systems or our other internal systems, we
believe that we will be able to resolve these problems without material
difficulty, as replacement systems are available on commercially reasonable
terms. We presently estimate that the total remaining cost of addressing Year
2000 issues will not exceed $150,000. We derived these estimates using a number
of assumptions, including the assumption that we have already identified our
most significant Year 2000 issues. However, these assumptions may not be
accurate, and actual results could differ materially from those anticipated. In
view of our Year 2000 review and remediation efforts to date, the recent
development of our products and services, the recent installation of our
networking equipment and servers, and the limited activities that remain to be
completed, we do not consider contingency planning to be necessary at this time.

    Our applications operate in complex network environments and directly and
indirectly interact with a number of other hardware and software systems. We are
unable to predict to what extent our business may be affected if our systems or
the systems that operate in conjunction with it experience a material Year 2000
failure. Known or unknown errors or defects that affect the operation of our
software and systems could result in delay or loss of revenue, interruption of
services, cancellation of contracts and memberships, diversion of development
resources, damage to our reputation, increased service and warranty costs, and
litigation costs, any of which could adversely affect our business, financial
condition and results of operations. The most likely worst case scenario is that
the Internet fails and we are unable to offer any services on our community site
or make any of our direct e-commerce offerings.

OUR STOCK PRICE HAS BEEN AND MAY CONTINUE TO BE VOLATILE

    The trading price of our common stock has been and is likely to be highly
volatile. Our stock price could be subject to wide fluctuations in response to a
variety of factors, including:

    - actual or anticipated variations in quarterly operating results;

    - announcements of technological innovations;

    - new products or services offered by us or our competitors;

    - changes in financial estimates by securities analysts;

    - conditions or trends in the e-commerce market;

    - our announcement of significant acquisitions, strategic partnerships,
      joint ventures or capital commitments;

    - additions or departures of key personnel;

    - sales of common stock; and

    - other events or factors that may be beyond our control.

    In addition, the Nasdaq National Market, where most publicly held Internet
companies are traded, has recently experienced extreme price and volume
fluctuations. These fluctuations often have been

                                       39
<PAGE>
unrelated or disproportionate to the operating performance of these companies.
Many Internet companies' stocks are trading at multiples which are substantially
above historical levels.

    These trading prices and multiples may not be sustainable. These broad
market and industry factors may materially adversely affect the market price of
our common stock, regardless of our actual operating performance. In the past,
following periods of volatility in the market price of a company's securities,
securities class action litigation often has been instituted against that
company. Litigation like this, if instituted, could result in substantial costs
and a diversion of management's attention and resources.

                                       40
<PAGE>
                          PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

    Zoom Telephonics, Inc. filed a lawsuit against us in September 1998 in the
United States District Court for the District of Massachusetts alleging
trademark infringement and related statutory violations. We were not served with
Zoom Telephonics' complaint until January 1999. Zoom Telephonics has demanded
that we stop using the Xoom.com trademark and has asked for an unspecified
amount of money damages. We responded to the complaint in February 1999. In
April 1999, Zoom Telephonics filed a motion for preliminary injunction to stop
us from using any mark containing "Xoom". We have filed a motion to oppose Zoom
Telephonic's motion for preliminary injunction. A hearing on the motion was held
on September 30, 1999. On October 7, 1999 the court denied Zoom Telephonics'
motion for a preliminary injunction but allowed Zoom Telephonics to request the
court to reconsider the motion if the Xoom.com merger does not close by
October 31, 1999. On November 3, 1999 Zoom Telephonics filed a motion to renew
their previous motion for preliminary injunction. We intend to respond to Zoom
Telephonics' most recent motion. We believe that the claims asserted by Zoom
Telephonics are without merit and we intend to defend against them vigorously.
We cannot assure you, however, that the results of this litigation will be
favorable to us. An adverse result of the litigation could have a material
adverse effect on our business and results of operations, particularly if the
litigation forces us to make substantial changes to our name and trademark
usage. Any name change could result in confusion to consumers and investors,
which could adversely affect the results of our operations and the market price
of its common stock.

    John G. Balletto filed a lawsuit against us in September 1999 in the
San Francisco Superior Court alleging breach of contract and specific
performance. Mr. Balletto has alleged that in connection with a loan which we
obtained from Sand Hill Capital LLC in 1998 and pursuant to an oral contract
with Xoom.com, he is entitled to a finder's fee. Mr. Balletto has sought
specific performance of the alleged oral contract by having the court direct us
to issue 33,784 shares of our common stock to Mr. Balletto and such other relief
that the court may deem just and proper. We believe that this lawsuit is without
merit and intend to defend the suit vigorously.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

    USE OF PROCEEDS FROM SALES OF REGISTERED SECURITIES.  In our initial public
offering, we sold an aggregate of 4,600,000 shares of our common stock
(including 600,000 shares sold pursuant to the exercise of the Underwriters'
over-allotment option) at an initial price of $14 per share pursuant to a
Registration Statement on Form S-1 (File No. 333-62395) effective on
December 8, 1998. The sale of these 4,600,000 shares of Common Stock generated
aggregate gross proceeds of $64,400,000. We received net proceeds from the
offering of approximately $57,342,000, after deducting underwriting discounts
and commissions of $4,508,000 and our expenses of the offering of approximately
$2,550,000.

    Through September 30, 1999 we used a portion of the proceeds from our
initial public offering as follows: (i) $21.1 million of net cash used for
general corporate purposes, including working capital and capital expenditures;
(ii) $2.7 million of cash used for the repayment of notes payable issued in
connection with the execution of a loan agreement, the acquisition of
Pagecount, Inc., the acquisition of Global Bridges Technologies, Inc., the
purchase of certain assets of Revolutionary Software, Inc., and the license of
certain technology from ArcaMax, Inc.; (iii) $1.3 million of net cash used in
connection with the acquisitions of Focused Presence, Inc., MightyMail
Networks, Inc., Net Floppy, Inc., Paralogic Software Corporation, Private One,
Inc., and LiquidMarket, Inc.; and (iv) $639,000 of cash used for the repayment
of capital lease obligations and other notes payable. The remaining
$31.2 million of the net proceeds shall be used for general corporate purposes,
including working capital, capital expenditures, expanding operations
internationally, potential acquisitions and promotional campaigns. The amounts
actually expended by us for such purposes may vary significantly and will depend
on a number of factors, including our future revenue and cash generated by
operations and the other factors described under "Certain Risk

                                       41
<PAGE>
Factors Which May Impact Future Operating Results." Accordingly, our management
retains broad discretion in the allocation of the net proceeds of the offerings.
A portion of the net proceeds may also be used to acquire or invest in
complementary businesses, technologies or product offerings. In the ordinary
course of business, we evaluate potential acquisitions of such businesses,
technologies and product offerings.

    SECURITIES SOLD.  On July 29, 1999, we issued 960,028 shares of common stock
to National Broadcasting Company, Inc. for $57.29 in cash per share in
connection with a Stock Purchase Agreement dated June 11, 1999. We received
proceeds of $55.0 million from this sale. This issuance of stock was deemed to
be exempt from registration under the Securities Act in reliance on
Section 4(2) of the Securities Act because the issuance was a transaction by an
issuer not involving any public offering.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    MARKETABLE SECURITIES.  We had marketable securities of $198.9 million as of
September 30, 1999. These marketable securities consist of highly liquid
investments with original maturities at the date of purchase of between three
and twelve months. We had long-term investments of $63.4 million as of
September 30, 1999. These long-term investments consist of investments with
original maturities as of the date of purchase of more than twelve months. These
investments are subject to interest rate risk and will fall in value if market
interest rates increase. A hypothetical increase in market interest rates by
10 percent from levels as of September 30, 1999 would cause the fair value of
these investments to decline by an immaterial amount. Because we are not
required to sell these investments before maturity, we have the ability to avoid
realizing losses on these investments due to a sudden change in market interest
rates. However, we could choose to sell these investments before maturity at a
loss. Declines in interest rates over time will, however, reduce our interest
income.

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<PAGE>
ITEM 6.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

    (a) EXHIBITS

<TABLE>
    <C>    <S>
    10.1   Agreement and Plan of Merger, dated as of July 26, 1999, by
             and among Xoom.com, Inc., XOOM Acquisition Sub, Inc. and
             LiquidMarket, Inc.*

    10.2   Form of Severance Agreement by and between Xoom.com, Inc.
             and Laurent Massa

    10.3   Stock Purchase Agreement by and between Xoom.com, Inc. and
             National Broadcasting Company, Inc., dated June 11, 1999

    10.4   First Amendment to Agreement and Plan of Contribution and
             Merger dated as of October 20, 1999 by and among the
             Registrant, Xoom.com, Inc. CNET, Inc., SNAP! LLC and
             Xenon 3, Inc.

    10.5   Second Amended and Restated Agreement and Plan of
             Contribution, Investment and Merger dated July 8, 1999 by
             and among the Registrant, National Broadcasting Company,
             Inc., GE Investments Subsidiary, Inc., Neon Media
             Corporation and Xoom.com, Inc. (filed as Appendix A-2 to
             the Proxy Statement/Prospectus forming a part of this
             Registration Statement)

    10.6   First Amendment to Second Amended and Restated Agreement and
             Plan of Contribution, Investment and Merger dated
             October 20, 1999 by and among the Registrant, National
             Broadcasting Company, Inc., GE Investments Subsidiary,
             Inc., Neon Media Corporation and Xoom.com, Inc.

    10.7   Office lease for 225 Bush Street, San Francisco, California
             between OAIC Bush Street, LLC and Xoom.com, Inc. dated
             August 13, 1999.

    27.1   Financial Data Schedule
</TABLE>

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

*   Incorporated by reference to Xoom.com report on form 8-K filed on August 5,
    1999.

    (b) REPORTS ON FORM 8-K

    We filed the following reports on Form 8-K and 8-K/A during the three months
ended September 30, 1999:

        1.  On July 1, 1999, the Company filed a report on Form 8-K announcing
    that it had completed the acquisition of Paralogic Software Corporation
    pursuant to an Agreement and Plan of Merger, dated as of June 10, 1999, as
    amended.

        2.  On July 2, 1999, the Company filed a report on Form 8-K/A related to
    the acquisition of MightyMail Networks, Inc. This amendment was filed for
    the purpose of including financial statements and pro forma financial
    information and should be read in conjunction with the Form 8-K dated as of
    May 5, 1999.

        3.  On July 19, 1999 the Company filed a report on Form 8-K/A related to
    the acquisition of Paralogic Software Corporation. This amendment was filed
    for the purpose of including financial statements and pro forma financial
    information and should be read in conjunction with the Form 8-K dated as of
    July 1, 1999.

        4.  On August 5, 1999, the Company filed a report on Form 8-K announcing
    that it had completed the acquisition of LiquidMarket, Inc. pursuant to an
    Agreement and Plan of Merger, dated as of July 26, 1999.

        5.  On August 31, 1999, the Company filed a report on Form 8-K/A related
    to the acquisition of LiquidMarket, Inc. This amendment was filed for the
    purpose of including financial statements and pro forma financial
    information and should be read in conjunction with the Form 8-K dated as of
    August 5, 1999.

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<PAGE>
                                   SIGNATURE

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

<TABLE>
<S>                                                    <C>  <C>
Date: November 12, 1999                                XOOM.COM, INC.

                                                       By:              /s/ JOHN HARBOTTLE
                                                            -----------------------------------------
                                                                          John Harbottle
                                                                  VICE PRESIDENT OF FINANCE AND
                                                                     CHIEF FINANCIAL OFFICER
                                                                   (duly authorized officer and
                                                                   principal financial officer)
</TABLE>

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