##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-Q

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

For the quarterly period ended March 31, 2003

OR

|                                                                                             
|---------------------------------------------------------------------------------------------
|[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|                                                                                             
|For the Transition Period from         to                                                    

Commission File Number 000-30093



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Websense, Inc.

(Exact name of registrant as specified in its charter)


|                                                                        |  |                                                   
|----------------------------------------------------------------------- |  | --------------------------------------------------
|Delaware
(State or other jurisdiction of incorporation or organization) |  | 51-0380839
(I.R.S. Employer Identification Number)

10240 Sorrento Valley Road
San Diego, California 92121
858-320-8000
(Address of principal executive offices, zip code and telephone number)



---

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. (1) Yes [X] No [  ] (2) Yes [X] No
[  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12(b)-2): Yes [X] No [  ]

The number of shares outstanding of the registrants Common Stock, $.01 par
value, as of April 30, 2003 was 21,884,155.





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TABLE OF CONTENTS



|                               |                                                                                               |                                                        |  |  |  |  |  | 
|------------------------------ | --------------------------------------------------------------------------------------------- | ------------------------------------------------------ |  |  |  |  |  | 
|Part I  Financial Information
|                               | Item 1. Consolidated Financial Statements (Unaudited)                                        
|                               |                                                                                               | Consolidated Balance Sheets                           
|                               |                                                                                               | Consolidated Statement of Operations                  
|                               |                                                                                               | Consolidated Statement of Stockholders Equity        
|                               |                                                                                               | Consolidated Statements of Cash Flows                 
|                               |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                               | Item 4. Controls and Procedures                                                              
|Part II - Other Information   
|                               | Item 1. Legal Proceedings                                                                    
|                               | Item 2. Changes in Securities and Use of Proceeds                                            
|                               | Item 3. Defaults upon Senior Securities                                                      
|                               | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                               | Item 5. Other Information                                                                    
|                               | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                    
|CERTIFICATION                 
|EXHIBIT 99.1                  



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##### Table of Contents



Websense, Inc.
Form 10-Q
For the Period Ended March 31, 2003

TABLE OF CONTENTS

|                              |  |         |  |                                                                                          |  |     
|----------------------------- |  | ------- |  | ---------------------------------------------------------------------------------------- |  | ----
|                              |  |         |  |                                                                                          |  | Page
|                              |  |         |  |                                                                                          |  |     
|Part I. Financial Information |  |        
|                              |  | Item 1. |  | Consolidated Financial Statements (Unaudited)                                            |  |     
|                              |  |         |  | Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002.                  |  | 1   
|                              |  |         |  | Consolidated Statements of Operations for the three months ended March 31, 2003 and 2002 |  | 2   
|                              |  |         |  | Consolidated Statement of Stockholders Equity for the three months ended March 31, 2003 |  | 3   
|                              |  |         |  | Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002 |  | 4   
|                              |  |         |  | Notes to Consolidated Financial Statements                                               |  | 5   
|                              |  | Item 2. |  | Managements Discussion and Analysis of Financial Condition and Results of Operations    |  | 9   
|                              |  | Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                               |  | 15  
|                              |  | Item 4. |  | Controls and Procedures                                                                  |  | 15  
|Part II. Other Information    |  |        
|                              |  | Item 1. |  | Legal Proceedings                                                                        |  | 16  
|                              |  | Item 2. |  | Changes in Securities and Use of Proceeds                                                |  | 16  
|                              |  | Item 3. |  | Defaults upon Senior Securities                                                          |  | 16  
|                              |  | Item 4. |  | Submission of Matters to a Vote of Security Holders                                      |  | 16  
|                              |  | Item 5. |  | Other Information                                                                        |  | 16  
|                              |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                         |  | 16  
|Signatures                    |  | 17     
|Certifications                |  | 18     

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Part I  Financial Information




Item 1. Consolidated Financial Statements (Unaudited)




Websense, Inc.
Consolidated Balance Sheets
(In thousands)

|                                       |                                                             |                            |        |             |         |              |        |         |         | 
|-------------------------------------- | ----------------------------------------------------------- | -------------------------- | ------ | ----------- | ------- | ------------ | ------ | ------- | ------- | 
|                                       |                                                             |                            |        | March 31,   |         | December 31,
|                                       |                                                             |                            |        | 2003        |         | 2002        
|                                       |                                                             |                            |        |             |         |             
|                                       |                                                             |                            |        | (Unaudited) |         |              |        |        
|Assets                                 |                                                             |                            |        |             |         |              |        |        
|Current assets:                        |                                                             |                            |        |             |         |              |        |        
|                                       | Cash and cash equivalents                                   |                            | $      | 66,978      |         |              | $      | 61,713  |        
|                                       | Marketable securities                                       |                            |        | 84,245      |         |              |        | 78,753  |        
|                                       | Accounts receivable, net of allowance for doubtful accounts |                            |        | 15,944      |         |              |        | 19,840  |        
|                                       | Deferred income taxes                                       |                            |        | 8,731       |         |              |        | 8,731   |        
|                                       | Other current assets                                        |                            |        | 1,627       |         |              |        | 1,184   |        
|                                       |                                                             |                            |        |             |         |              |        |         |        
|                                       |                                                             | Total current assets       |        |             | 177,525 |              |        |         | 170,221 | 
|                                       | Property and equipment, net                                 |                            |        | 2,985       |         |              |        | 2,967   |        
|                                       | Deferred income taxes, less current portion                 |                            |        | 6,701       |         |              |        | 6,701   |        
|                                       | Deposits and other assets                                   |                            |        | 249         |         |              |        | 299     |        
|                                       |                                                             |                            |        |             |         |              |        |         |        
|                                       | Total assets                                                |                            | $      | 187,460     |         |              | $      | 180,188 |        
|                                       |                                                             |                            |        |             |         |              |        |         |        
|Liabilities and stockholders equity   |                                                             |                            |        |             |         |              |        |        
|Current liabilities:                   |                                                             |                            |        |             |         |              |        |        
|                                       | Accounts payable                                            |                            | $      | 796         |         |              | $      | 761     |        
|                                       | Accrued payroll and related benefits                        |                            |        | 4,124       |         |              |        | 3,627   |        
|                                       | Other accrued expenses                                      |                            |        | 3,342       |         |              |        | 3,440   |        
|                                       | Income taxes payable                                        |                            |        | 3,727       |         |              |        | 970     |        
|                                       | Current portion of deferred revenue                         |                            |        | 47,640      |         |              |        | 46,964  |        
|                                       |                                                             |                            |        |             |         |              |        |         |        
|                                       |                                                             | Total current liabilities  |        |             | 59,629  |              |        |         | 55,762  | 
|Deferred revenue, less current portion |                                                             |                            | 17,223 |             |         |              | 17,715 |        
|Stockholders equity:                  |                                                             |                            |        |             |         |              |        |        
|                                       | Common stock                                                |                            |        | 218         |         |              |        | 217     |        
|                                       | Additional paid-in capital                                  |                            |        | 107,185     |         |              |        | 107,058 |        
|                                       | Deferred compensation                                       |                            |        | (40         | )       |              |        | (83     | )      
|                                       | Retained earnings (deficit)                                 |                            |        | 2,903       |         |              |        | (957    | )      
|                                       | Accumulated other comprehensive income                      |                            |        | 342         |         |              |        | 476     |        
|                                       |                                                             |                            |        |             |         |              |        |         |        
|                                       |                                                             | Total stockholders equity |        |             | 110,608 |              |        |         | 106,711 | 
|                                       |                                                             |                            |        |             |         |              |        |         |        
|                                       | Total liabilities and stockholders equity                  |                            | $      | 187,460     |         |              | $      | 180,188 |        
|                                       |                                                             |                            |        |             |         |              |        |         |        

See accompanying notes.

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Websense, Inc.
Consolidated Statement of Operations
(Unaudited and in thousands, except per share amounts)

|                           |                                          |                          |        |        |                    |   |           |        |        |  | 
|-------------------------- | ---------------------------------------- | ------------------------ | ------ | ------ | ------------------ | - | --------- | ------ | ------ |  | 
|                           |                                          |                          |        |        | Three Months Ended
|                           |                                          |                          |        |        |                   
|                           |                                          |                          |        |        | March 31,          |   | March 31,
|                           |                                          |                          |        |        | 2003               |   | 2002     
|                           |                                          |                          |        |        |                    |   |          
|Revenue                    |                                          | $                        | 18,504 |        |                    | $ | 13,035    |       
|Cost of revenue            |                                          |                          | 1,305  |        |                    |   | 933       |       
|                           |                                          |                          |        |        |                    |   |           |       
|Gross margin               |                                          |                          | 17,199 |        |                    |   | 12,102    |       
|                           |                                          |                          |        |        |                    |   |           |       
|Operating expenses:        |                                          |                          |        |        |                    |   |           |       
|                           | Selling and marketing                    |                          |        | 6,635  |                    |   |           | 5,939  |       
|                           | Research and development                 |                          |        | 3,218  |                    |   |           | 2,307  |       
|                           | General and administrative               |                          |        | 1,544  |                    |   |           | 1,667  |       
|                           | Amortization of stock-based compensation |                          |        | 43     |                    |   |           | 160    |       
|                           |                                          |                          |        |        |                    |   |           |       
|                           |                                          | Total operating expenses |        |        | 11,440             |   |           |        | 10,073 | 
|                           |                                          |                          |        |        |                    |   |           |       
|Income from operations     |                                          |                          | 5,759  |        |                    |   | 2,029     |       
|Other income, net          |                                          |                          | 675    |        |                    |   | 713       |       
|                           |                                          |                          |        |        |                    |   |           |       
|Income before income taxes |                                          |                          | 6,434  |        |                    |   | 2,742     |       
|Provision for income taxes |                                          |                          | 2,574  |        |                    |   | 86        |       
|                           |                                          |                          |        |        |                    |   |           |       
|Net income                 |                                          | $                        | 3,860  |        |                    | $ | 2,656     |       
|                           |                                          |                          |        |        |                    |   |           |       
|Net income per share:      |                                          |                          |        |        |                    |   |           |       
|                           | Basic net income per share               |                          | $      | 0.18   |                    |   | $         | 0.13   |       
|                           |                                          |                          |        |        |                    |   |           |       
|                           | Diluted net income per share             |                          | $      | 0.17   |                    |   | $         | 0.11   |       
|                           |                                          |                          |        |        |                    |   |           |       
|                           | Weighted average shares  basic          |                          |        | 21,795 |                    |   |           | 20,777 |       
|                           |                                          |                          |        |        |                    |   |           |       
|                           | Weighted average shares  diluted        |                          |        | 22,716 |                    |   |           | 23,396 |       
|                           |                                          |                          |        |        |                    |   |           |       

See accompanying notes.

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Websense, Inc.

Consolidated Statement of
Stockholders Equity
(Unaudited and in thousands)

|                             |                                                   |                                                        |        |              |   |            |     |                 |   |              |         |               |   |               |     |        |   |                   |       |       |       |   |     |   |      |   |         |     |       |  
|---------------------------- | ------------------------------------------------- | ------------------------------------------------------ | ------ | ------------ | - | ---------- | --- | --------------- | - | ------------ | ------- | ------------- | - | ------------- | --- | ------ | - | ----------------- | ----- | ----- | ----- | - | --- | - | ---- | - | ------- | --- | ----- | -
|                             |                                                   |                                                        |        | Common stock |   |            |     |                 |   |              |         |               |   |               |     |        |   | Accumulated other |       | Total
|                             |                                                   |                                                        |        |              |   | Additional |     | Deferred        |   | Accumulated  |         | comprehensive |   | stockholders
|                             |                                                   |                                                        |        | Shares       |   | Amount     |     | paid-in capital |   | compensation |         | deficit       |   | income        |     | equity
|                             |                                                   |                                                        |        |              |   |            |     |                 |   |              |         |               |   |               |     |       
|Balance at December 31, 2002 |                                                   |                                                        | 21,734 |              |   | $          | 217 |                 |   | $            | 107,058 |               |   | $             | (83 | )      |   | $                 | (957  | )     |       | $ | 476 |   |      | $ | 106,711 |    
|                             | Issuance of common stock upon exercise of options |                                                        |        | 116          |   |            |     | 1               |   |              |         | 127           |   |               |     |       |   |                   |       |      |       |   |     |  |      |   |         | 128 |      
|                             | Amortization of deferred compensation             |                                                        |        |             |   |            |     |                |   |              |         |              |   |               |     | 43     |   |                   |       |      |       |   |     |  |      |   |         | 43  |      
|                             | Comprehensive income:                             |                                                        |        |              |   |            |     |                 |   |              |         |               |   |               |     |        |   |                   |       |       |       |   |     |   |      |   |         |     |      
|                             |                                                   | Net income                                             |        |              |  |            |     |                 |  |              |         |               |  |               |     |        |  |                   |       |       | 3,860 |   |     |   |     |   |         |     | 3,860 |  
|                             |                                                   | Net change in unrealized gain on marketable
securities |        |              |  |            |     |                 |  |              |         |               |  |               |     |        |  |                   |       |       |      |   |     |   | (134 | ) |         |     | (134  | )
|                             |                                                   |                                                        |        |              |   |            |     |                 |   |              |         |               |   |               |     |        |   |                   |       |       |       |   |     |   |      |   |         |    
|                             |                                                   | Comprehensive income                                   |        |              |   |            |     |                 |   |              |         |               |   |               |     |        |   |                   |       |       |       |   |     |   |      |   |         |     | 3,726 |  
|                             |                                                   |                                                        |        |              |   |            |     |                 |   |              |         |               |   |               |     |        |   |                   |       |       |       |   |     |   |      |   |         |    
|Balance at March 31, 2003    |                                                   |                                                        | 21,850 |              |   | $          | 218 |                 |   | $            | 107,185 |               |   | $             | (40 | )      |   | $                 | 2,903 |       |       | $ | 342 |   |      | $ | 110,608 |    
|                             |                                                   |                                                        |        |              |   |            |     |                 |   |              |         |               |   |               |     |        |   |                   |       |       |       |   |     |   |      |   |         |    

See accompanying notes.

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Websense, Inc.

Consolidated Statements of Cash
Flows
(Unaudited and in thousands)

|                                                                                  |                                       |   |                    |       |           |   |         |       |  
|--------------------------------------------------------------------------------- | ------------------------------------- | - | ------------------ | ----- | --------- | - | ------- | ----- | -
|                                                                                  |                                       |   | Three months ended
|                                                                                  |                                       |   |                   
|                                                                                  |                                       |   | March 31,          |       | March 31,
|                                                                                  |                                       |   | 2003               |       | 2002     
|                                                                                  |                                       |   |                    |       |          
|Operating activities:                                                             |                                       |   |                    |       |           |   |         |      
|Net income                                                                        |                                       | $ | 3,860              |       |           | $ | 2,656   |      
|Adjustments to reconcile net income to net cash
provided by operating activities: |                                       |   |                    |       |           |   |         |      
|                                                                                  | Depreciation                          |   |                    | 489   |           |   |         | 467   |  
|                                                                                  | Amortization of deferred compensation |   |                    | 43    |           |   |         | 160   |  
|                                                                                  | Deferred revenue                      |   |                    | 184   |           |   |         | 2,794 |  
|Changes in operating assets and liabilities:                                      |                                       |   |                    |       |           |   |         |      
|                                                                                  | Accounts receivable                   |   |                    | 3,896 |           |   |         | 1,000 |  
|                                                                                  | Deposits and other assets             |   |                    | (393  | )         |   |         | (224  | )
|                                                                                  | Accounts payable                      |   |                    | 35    |           |   |         | (251  | )
|                                                                                  | Accrued payroll and related benefits  |   |                    | 497   |           |   |         | (41   | )
|                                                                                  | Other accrued expenses                |   |                    | (98   | )         |   |         | 736   |  
|                                                                                  | Income taxes payable                  |   |                    | 2,757 |           |   |         | 27    |  
|                                                                                  |                                       |   |                    |       |           |   |         |      
|Net cash provided by operating activities                                         |                                       |   | 11,270             |       |           |   | 7,324   |      
|                                                                                  |                                       |   |                    |       |           |   |         |      
|Investing activities:                                                             |                                       |   |                    |       |           |   |         |      
|Purchases of property and equipment                                               |                                       |   | (507               | )     |           |   | (329    | )    
|Purchases of marketable securities                                                |                                       |   | (32,423            | )     |           |   | (21,573 | )    
|Maturities of marketable securities                                               |                                       |   | 26,797             |       |           |   | 26,007  |      
|                                                                                  |                                       |   |                    |       |           |   |         |      
|Net cash provided by (used in) investing activities                               |                                       |   | (6,133             | )     |           |   | 4,105   |      
|                                                                                  |                                       |   |                    |       |           |   |         |      
|Financing activities:                                                             |                                       |   |                    |       |           |   |         |      
|Proceeds from exercise of stock options                                           |                                       |   | 128                |       |           |   | 856     |      
|                                                                                  |                                       |   |                    |       |           |   |         |      
|Net cash provided by financing activities                                         |                                       |   | 128                |       |           |   | 856     |      
|                                                                                  |                                       |   |                    |       |           |   |         |      
|Increase in cash and cash equivalents                                             |                                       |   | 5,265              |       |           |   | 12,285  |      
|Cash and cash equivalents at beginning of period                                  |                                       |   | 61,713             |       |           |   | 23,715  |      
|                                                                                  |                                       |   |                    |       |           |   |         |      
|Cash and cash equivalents at end of period                                        |                                       | $ | 66,978             |       |           | $ | 36,000  |      
|                                                                                  |                                       |   |                    |       |           |   |         |      

See accompanying notes.

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WEBSENSE, INC.




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States for interim financial statements and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information or
footnote disclosures normally included in complete financial statements
prepared in accordance with accounting principles generally accepted in the
United States have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion of
management, the statements include all adjustments necessary, which are of a
normal and recurring nature, for the fair presentation of our financial
position and of the results for the interim periods presented.

These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended December
31, 2002, included in Websense, Inc.s Annual Report on Form 10-K filed with
the Securities and Exchange Commission. Operating results for the three months
ended March 31, 2003 are not necessarily indicative of the results that may be
expected for any other interim period or for the year ending December 31, 2003.
The balance sheet at December 31, 2002 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements.

2. Net Income Per Share

Basic net income per common share (Basic EPS) excludes dilution and is
computed by dividing net income by the weighted average number of common shares
outstanding during the period. Diluted net income per common share (Diluted
EPS) reflects the potential dilution that could occur if stock options or
other contracts to issue common stock were exercised or converted into common
stock. The computation of Diluted EPS does not assume exercise or conversion of
securities that would have an anti-dilutive effect on net income per common
share.

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2. Net Income Per Share (continued)

The following is a reconciliation of the numerator and denominator of
Basic EPS to the numerator and denominator of Diluted EPS for all periods
presented:

|                            |                   |   |                                          |   |               |  |           |       |  |   |      |       |  
|--------------------------- | ----------------- | - | ---------------------------------------- | - | ------------- |  | --------- | ----- |  | - | ---- | ----- | -
|                            |                   |   | Net Income                               |   | Shares        |  | Per Share
|                            |                   |   | (Numerator)                              |   | (Denominator) |  | Amount   
|                            |                   |   |                                          |   |               |  |          
|                            |                   |   | (In thousands, except per share amounts)
|For the Three Months Ended: |                   |   |                                          |   |               |  |           |       |  |   |      |      
|March 31, 2003:             |                   |   |                                          |   |               |  |           |       |  |   |      |      
|Basic EPS                   |                   | $ | 3,860                                    |   |               |  | 21,795    |       |  | $ | 0.18 |      
|                            | Effect of options |   |                                          |  |               |  |           | 921   |  |   |      | (0.01 | )
|                            |                   |   |                                          |   |               |  |           |       |  |   |      |      
|Diluted EPS                 |                   | $ | 3,860                                    |   |               |  | 22,716    |       |  | $ | 0.17 |      
|                            |                   |   |                                          |   |               |  |           |       |  |   |      |      
|March 31, 2002:             |                   |   |                                          |   |               |  |           |       |  |   |      |      
|Basic EPS                   |                   | $ | 2,656                                    |   |               |  | 20,777    |       |  | $ | 0.13 |      
|                            | Effect of options |   |                                          |  |               |  |           | 2,619 |  |   |      | (0.02 | )
|                            |                   |   |                                          |   |               |  |           |       |  |   |      |      
|Diluted EPS                 |                   | $ | 2,656                                    |   |               |  | 23,396    |       |  | $ | 0.11 |      
|                            |                   |   |                                          |   |               |  |           |       |  |   |      |      

For the three months ended March 31, 2003 and 2002, there were outstanding
options to purchase 1,546,000 and 884,000 shares, respectively, that had an
exercise price greater than the average market price of the common shares for
the respective quarters. Therefore, these shares would have had an
anti-dilutive effect on EPS.

3. Amortization of Stock-based Compensation

For the three month periods ended March 31, 2003 and 2002, the Company
recorded amortization of stock-based compensation. The allocation of the
expense by operating expense category is as follows (in thousands):

|                                               |  |                    |    |           |  |   |     | 
|---------------------------------------------- |  | ------------------ | -- | --------- |  | - | --- | 
|                                               |  | Three Months Ended
|                                               |  |                   
|                                               |  | March 31,          |    | March 31,
|                                               |  | 2003               |    | 2002     
|                                               |  |                    |    |          
|Selling and marketing                          |  | $                  | 14 |           |  | $ | 41  | 
|Research and development                       |  |                    | 8  |           |  |   | 25  | 
|General and administrative                     |  |                    | 21 |           |  |   | 94  | 
|                                               |  |                    |    |           |  |   |     | 
|Total amortization of stock-based compensation |  | $                  | 43 |           |  | $ | 160 | 
|                                               |  |                    |    |           |  |   |     | 

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4. Comprehensive Income

Components of comprehensive income were as follows (in thousands):

|                                         |  |                    |       |           |  |   |       |  
|---------------------------------------- |  | ------------------ | ----- | --------- |  | - | ----- | -
|                                         |  | Three Months Ended
|                                         |  |                   
|                                         |  | March 31,          |       | March 31,
|                                         |  | 2003               |       | 2002     
|                                         |  |                    |       |          
|Net
income                               |  | $                  | 3,860 |           |  | $ | 2,656 |  
|Change in unrealized gain on
investments |  |                    | (134  | )         |  |   | (339  | )
|                                         |  |                    |       |           |  |   |       |  
|Comprehensive
income                     |  | $                  | 3,726 |           |  | $ | 2,317 |  
|                                         |  |                    |       |           |  |   |       |  

Accumulated other comprehensive income totaled $342,000 and $476,000 at
March 31, 2003 and December 31, 2002, respectively.

5. Stock Based Compensation

The Company accounts for its stock-based compensation plans under
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued
to Employees. The pro forma information below is based on provisions of
Statement of Financial Accounting Standard (FAS) No. 123, Accounting for
Stock-Based Compensation,as amended by FAS 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, issued in December 2002. The pro
forma effects of stock-based compensation on net income and net income per
share have been estimated at the date of grant using the Black-Scholes option
pricing model based on the following weighted average assumptions: risk free
interest rates of 2.71%, dividend yields of 0%, expected volatility of 102%,
and life of 5 years.

The Companys adjusted pro forma information is as follows (in thousands,
except per share amounts):

|                                                                                          |  |                    |        |           |  |   |        |  
|----------------------------------------------------------------------------------------- |  | ------------------ | ------ | --------- |  | - | ------ | -
|                                                                                          |  | Three Months Ended
|                                                                                          |  |                   
|                                                                                          |  | March 31,          |        | March 31,
|                                                                                          |  | 2003               |        | 2002     
|                                                                                          |  |                    |        |          
|Net income as
reported                                                                    |  | $                  | 3,860  |           |  | $ | 2,656  |  
|Stock based employee compensation cost
included in net income as reported, net
of tax
(1) |  | $                  | 43     |           |  | $ | 160    |  
|Compensation expense under FAS
123, net of tax (2)                                        |  | $                  | (1,923 | )         |  | $ | (2,078 | )
|                                                                                          |  |                    |        |           |  |   |        |  
|Pro forma net income                                                                      |  | $                  | 1,980  |           |  | $ | 738    |  
|                                                                                          |  |                    |        |           |  |   |        |  
|Basic net income per share as
reported                                                    |  | $                  | 0.18   |           |  | $ | 0.13   |  
|Pro forma basic net income per
share                                                      |  | $                  | 0.09   |           |  | $ | 0.04   |  
|Diluted net income per share as
reported                                                  |  | $                  | 0.17   |           |  | $ | 0.11   |  
|Pro forma diluted net income per
share                                                    |  | $                  | 0.09   |           |  | $ | 0.03   |  

(1)  The Company is recognizing deferred stock-based compensation expense on the
deemed fair value of options granted prior to our initial public offering in
March 2000. This expense is being amortized on a declining basis over a
four-year period which began in March 2000.

(2)  The Company had an effective
tax rate of 40% and 3% in the first quarters of 2003 and 2002,
respectively.

7



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##### Table of Contents



For purposes of pro forma disclosures, the estimated fair value is
amortized to expense over the options vesting period. The effect of applying
SFAS 123 for purposes of providing pro forma disclosures may not be
representative of the effects on our operating results in future years.

6. New Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
FASB Interpretation No. 46 (FIN 46), Consolidation of Variable Interest
Entities, an Interpretation of Accounting Research Bulletin (ARB) No. 51. FIN
46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first
interim or annual period beginning after June 15, 2003. The Company does not
expect FIN 46 to have a material impact on the Companys consolidated financial
statements.

7. Subsequent Events

On April 3, 2003, the Company announced that its Board of Directors
authorized a stock repurchase program of up to 2 million shares of its common
stock. The repurchases will be made from time to time on the open market at
prevailing market prices or in privately negotiated transactions. Depending on
market conditions and other factors, purchases under this program may be
commenced or suspended at any time, or from time to time, without prior notice.

8. Reclassifications

Certain reclassifications have been made for consistent presentation.

8



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##### Table of Contents






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

The following discussion and analysis should be read in conjunction with
the financial statements and related notes contained elsewhere in this report.
See Risks and Uncertainties regarding certain factors known to us that could
cause reported financial information not to be necessarily indicative of future
results.

Forward Looking Statements

From time to time we have made and may continue to make forward looking
statements within the meaning of the federal securities laws. This report on
Form 10-Q may contain forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These statements, which represent our expectations or beliefs concerning
various future events, may contain words such as expects, anticipates,
intends, plans, believes, estimates, or other words indicating future
results. Such statements include but are not limited to statements concerning
the following:



| |  |  | anticipated trends in revenue;                             
| | - |  | -----------------------------------------------------------
|
| |  |  | growth opportunities in domestic and international markets;
|
| |  |  | customer acceptance and satisfaction with our products;    
|
| |  |  | expected trends in operating expenses; and                 
|
| |  |  | anticipated cash and intentions regarding usage of cash.   

Actual results may differ materially from results anticipated in such
forward-looking statements. We assume no obligation to update any
forward-looking statements to reflect events or circumstances arising after the
date of this report.

Overview

We provide Employee Internet Management, or EIM, solutions that enable
businesses to analyze, report and manage how their employees use computing
resources at work, including the Internet. Our primary product, Websense
Enterprise®, gives organizations the ability to rapidly implement and
configure Internet access policies in support of their efforts to improve
employee productivity, conserve network bandwidth, mitigate potential legal
liability and enhance network security. In 1996, we released our first software
product, Websense Internet Screening System, and since that time, we have
focused our business on developing and selling EIM solutions. In December 1999,
we released Websense Enterprise Version 4, which was sold through March 2003.
We launched the next generation of Websense software - Websense Enterprise
Version 5 - in March 2003, including enhanced EIM capabilities and new network
and application management technology such as Client Application Manager
and Bandwidth Optimizer. We currently derive nearly all of our revenue from
subscriptions to the Websense Enterprise solution and expect this trend to
continue in the future as more offerings are added to the Websense Enterprise
platform.

During the three months ended March 31, 2003, we derived approximately 29%
of revenue from international sales compared with approximately 35% for the
three months ended March 31, 2002. Despite the decline year-over-year as a
percentage of total revenue, international sales increased 18% in the first
quarter of 2003 over the first quarter of 2002, and we believe international
markets represent a significant growth opportunity and are continuing to expand
our international operations, particularly in selected countries in the
European and Asia/Pacific markets.

9



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We currently sell Websense Enterprise, including premium products and
application modules, through both indirect and direct channels; however, sales
through indirect channels currently account for more than 75% of our revenue
and our strategy is to continue to rely on indirect sales channels for a
significant majority of our sales.

As described below, we recognize revenue from subscriptions to Websense
Enterprise, including premium products and application modules, on a monthly
straight-line basis over the term of the subscription. We recognize the
operating expenses related to these sales as they are incurred. These operating
expenses include commissions relating to the sale of new and renewal
subscriptions, which are based on the total amount of the subscription contract
and are fully expensed in the period the product is delivered. Operating
expenses have continued to increase as compared with prior periods due to
expanded selling and marketing efforts, continued product research and
development and investments in administrative infrastructure to support
subscription sales that we will recognize as revenue in subsequent periods.

Critical Accounting Policies

We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

Revenue Recognition.When a purchase decision is made, customers enter
into a subscription agreement, which is generally 12, 24 or 36 months in
duration and for a fixed number of users. We promptly invoice customers for the
full amount of their subscriptions at the time a subscription is activated.
Payment is due for the full term of the subscription generally within 30 days
of the invoice. We recognize revenue on a monthly straight-line basis over the
term of the subscription agreement. We record amounts billed to customers in
excess of recognizable revenue as deferred revenue on our balance sheet. Upon
expiration of the subscription, customers who wish to renew typically must do
so at then current rates to continue using Websense Enterprise. Our revenue is
significantly influenced by subscription renewals, and a decrease in
subscription renewals amounts could negatively impact our future revenue.

Allowance for Doubtful Accounts.We maintain an allowance for doubtful
accounts for estimated losses resulting from the inability or unwillingness of
our customers to make required payments. If the financial condition of our
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.

Deferred Tax Assets.As required by Statement of Financial Accounting
Standards No. 109 (FAS 109), we recognize tax assets on the balance sheet if
it is more likely than not that they will be realized on future tax returns.
During 2002, we reassessed the valuation allowance previously established
against U.S. deferred tax assets. Factors considered by us included: our
earnings history, projected earnings based on current operations, and projected
future taxable income in excess of stock option deductions. Based on this
evidence, we concluded that it was more likely than not that the U.S. deferred
tax assets would be realized. Accordingly, we released the valuation allowance
of $14.3 million, which resulted in an income tax benefit of approximately $9.3
million. The remaining $5.0 million was credited to additional paid-in capital
as it related to the tax benefit of stock option deductions. However, should we
determine that we would not be able to realize all or part of our deferred tax
assets in the future, an adjustment to the deferred tax assets would be charged
against income in the period such determination was made. As of December 31,
2002, we had $15.4 million in deferred tax assets.

10



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##### Table of Contents



Results of Operations

Three months ended March 31, 2003 compared with the three months ended March
31, 2002

The following table summarizes our operating results as a percentage of
total revenue for each of the periods shown.

|                           |                                          |                          |     |                    |    |           |     |    |    | 
|-------------------------- | ---------------------------------------- | ------------------------ | --- | ------------------ | -- | --------- | --- | -- | -- | 
|                           |                                          |                          |     | Three Months Ended
|                           |                                          |                          |     |                   
|                           |                                          |                          |     | March 31,          |    | March 31,
|                           |                                          |                          |     | 2003               |    | 2002     
|                           |                                          |                          |     |                    |    |          
|                           |                                          |                          |     | (Unaudited)       
|Revenue                    |                                          |                          | 100 | %                  |    |           | 100 | % 
|Cost of
revenue            |                                          |                          | 7   |                    |    |           | 7   |   
|                           |                                          |                          |     |                    |    |           |     |   
|Gross
margin               |                                          |                          | 93  |                    |    |           | 93  |   
|Operating expenses:        |                                          |                          |     |                    |    |           |     |   
|                           | Selling and marketing                    |                          |     | 36                 |    |           |     | 45 |   
|                           | Research and development                 |                          |     | 17                 |    |           |     | 18 |   
|                           | General and
administrative               |                          |     | 8                  |    |           |     | 13 |   
|                           | Amortization of stock-based compensation |                          |     | 1                  |    |           |     | 1  |   
|                           |                                          |                          |     |                    |    |           |     |   
|                           |                                          | Total operating
expenses |     |                    | 62 |           |     |    | 77 | 
|                           |                                          |                          |     |                    |    |           |     |   
|Income from
operations     |                                          |                          | 31  |                    |    |           | 16  |   
|Other income,
net          |                                          |                          | 4   |                    |    |           | 5   |   
|                           |                                          |                          |     |                    |    |           |     |   
|Income before income taxes |                                          |                          | 35  |                    |    |           | 21  |   
|Provision for income
taxes |                                          |                          | 14  |                    |    |           | 1   |   
|                           |                                          |                          |     |                    |    |           |     |   
|Net income                 |                                          |                          | 21  | %                  |    |           | 20  | % 
|                           |                                          |                          |     |                    |    |           |     |   

Revenue

Revenue increased to $18.5 million in the first quarter of 2003 from $13.0
million in the first quarter of 2002. This increase was primarily a result of
the addition of new customers. Approximately 45% of subscription revenue
recognized in the first quarter of 2003 was derived from sales to first-time
customers, who initially purchased one-, two-, or three-year subscriptions to
Websense Enterprise in 2003 or prior years. The remaining 55% of subscription
revenue was generated from renewal business with existing customers. We expect
revenue to grow at a slower rate in 2003 than 2002, principally as a result of
the larger revenue base at March 31, 2003 compared with March 31, 2002 and
uncertain global economic factors.

11



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##### Table of Contents



Cost of Revenue

Cost of revenue consists of the costs of content review, technical support
and infrastructure costs associated with maintaining our databases. Cost of
revenue increased to $1.3 million in the first quarter of 2003 from $0.9
million in the first quarter of 2002. The increase was primarily due to the
costs associated with additional personnel in our technical support and
database groups. We expect cost of revenue to increase in the future as we
support the growth and maintenance of our databases as well as the technical
support needs of our customers. As a percentage of revenue, cost of revenue
remained unchanged at 7% during the first quarters of 2003 and 2002. We expect
that cost of revenue, as a percentage of revenue, will remain below 10% of
revenue for the foreseeable future.

Gross Margin

Gross margin increased to $17.2 million in the first quarter of 2003 from
$12.1 million in the first quarter of 2002. The increase was primarily due to
increased revenue. As a percentage of revenue, gross margin remained unchanged
at 93% in the first quarters of 2003 and 2002. We expect that gross margin, as
a percentage of revenue, will remain in excess of 90% of revenue for the
foreseeable future.

Operating Expenses

Selling and marketing. Selling and marketing expenses consist primarily of
salaries, commissions and benefits related to personnel engaged in selling,
marketing and customer support functions, along with costs related to public
relations, investor relations, advertising, promotions and travel as well as
allocated facilities costs and depreciation expenses. Selling and marketing
expenses increased to $6.6 million in the first quarter of 2003 from $5.9
million in the first quarter of 2002. The increase in selling and marketing
expenses of $0.7 million was primarily due to increased headcount costs and
increased advertising and promotional activities in North America, Europe and
Asia. We expect selling and marketing expenses to increase in the future as
more personnel are added to support our expanding selling and marketing efforts
worldwide.

Research and development.Research and development expenses consist
primarily of salaries and benefits for software developers, contract
programmers, and allocated facilities costs and depreciation expenses. Research
and development expenses increased to $3.2 million in the first quarter of 2003
from $2.3 million in the first quarter of 2002. The increase of $0.9 million in
research and development expenses was primarily a result of personnel and
consultants added since the first quarter of 2002 to develop and support our
expanded list of technology partners, enhancements of Websense Enterprise,
including the development of Websense Enterprise Version 5, and additional
products. We expect research and development expenses to increase in the
future, as more personnel are added to support additional technology partners,
product enhancements, and the expansion of our product offerings.

General and administrative.General and administrative expenses consist
primarily of salaries, benefits and related expenses for our executive,
finance, human resources and administrative personnel, third party professional
service fees, allocated facilities costs and depreciation expenses. General and
administrative expenses decreased to $1.5 million in the first quarter of 2003
from $1.7 million in the first quarter of 2002. The $0.2 million decrease in
general and administrative expenses is primarily a result of lower state sales
tax expenses, and lower foreign income tax consulting expenses partially offset
by the addition of personnel to support our growing operations, both
domestically and internationally. Despite the year over year decrease, we
expect general and administrative expenses to increase in future periods,
reflecting growth in operations and increasing expenses associated with being a
public company and expansion of our international operations.

12



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##### Table of Contents



Amortization of stock-based compensation.Amortization of stock-based
compensation decreased to $43,000 in the first quarter of 2003 from $160,000 in
the first quarter of 2002. The decrease in the amortization expense is
primarily due to the accelerated method of amortization used. We expect
amortization of stock-based compensation to decrease in future periods as a
result of using the accelerated method of amortization.

Other Income, Net

Net other income decreased to $675,000 in the first quarter of 2003 from
$713,000 in the first quarter of 2002. The decrease is due primarily to lower
interest income due to lower interest rates earned by our cash, cash
equivalents and marketable securities despite increased balances as of March
31, 2003 as compared with March 31, 2002.

Provision for Income Taxes

In the first quarter of 2002, our provision for income taxes related to
our wholly-owned subsidiaries in the United Kingdom and Japan as well as
domestic state income taxes in a few states. Beyond these domestic state income
taxes, we did not provide for any other income taxes related to our U.S.
operations due to the partial utilization of our deferred tax assets in the
first quarter of 2002. Our provision for income taxes in the first quarter of
2003 relates to our wholly-owned subsidiaries in the United Kingdom, Japan,
Australia, France and Germany as well as U.S. federal and state income taxes.
We expect an effective tax rate of approximately 40% for 2003. Subsequent to 2003, our effective tax rate may decrease over time due to benefits
derived from lower tax rates associated with foreign income.

Liquidity and Capital Resources

From our inception through March 2000, we financed our operations
primarily through the sale of preferred equity securities. In total, we raised
approximately $15.5 million, net of fees and expenses, through the sale of
preferred equity securities. In March 2000, we closed our initial public
offering with proceeds, net of underwriting fees and offering expenses, of
approximately $65.7 million.

As of March 31, 2003, we had cash and cash equivalents of $67.0 million
and investments in marketable securities of $84.2 million and retained earnings
of $2.9 million.

Net cash provided by operating activities was $11.3 million in the first
three months of 2003 compared with $7.3 million in the first three months of
2002. In the first three months of 2003, cash provided by operating activities
was primarily due to increases in net income, our subscriptions (which are
initially recorded as deferred revenue), income taxes payable and collections of accounts receivable. In the first three months of 2002, cash provided by
operating activities was primarily due to net income from operations and an
increase in our subscriptions (which are initially recorded as deferred
revenue). Our operating cash flow and revenue are significantly influenced by
subscription renewals, and a decrease in subscription renewals could negatively
impact our operating cash flow and revenue.

Net cash used in investing activities was $6.1 million in the first three
months of 2003 compared with net cash provided by investing activities of $4.1
million in the first three months of 2002. The relative increase in cash used
in investing activities in the first three months of 2003 is primarily due to
purchases of marketable securities that exceed maturities of marketable
securities.

Net cash provided by financing activities was $128,000 in the first three
months of 2003 compared with $856,000 in the first three months of 2002. Cash
provided by financing activities in the

13



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##### Table of Contents



first three months of 2003 and the first three months of 2002 was due to
proceeds received from the exercise of stock options.

At March 31, 2003, existing or future letters of credit totaled $64,000.
We have operating lease commitments of approximately $800,000 during the
remainder of 2003, $1.2 million in 2004, $1.2 million in 2005, $1.2 million in
2006 and $1.3 million in 2007. A significant majority of our operating lease
commitments are related to our corporate headquarters lease, which was renewed
in April 2002. The lease renewal incentives resulted in no rent payments in the
third and fourth quarters of 2002 and escalating rent payments from 2004 to
2007. The rent expense related to our corporate headquarters lease renewal is
recorded monthly on a straight-line basis in accordance with generally accepted
accounting principles.

On April 3, 2003, we announced that our Board of Directors authorized a
stock repurchase program of up to 2 million shares of our common stock. The
repurchases will be made from time to time on the open market at prevailing
market prices or in privately negotiated transactions. Depending on market
conditions and other factors, purchases under this program may be commenced or
suspended at any time, or from time to time, without prior notice.

We believe that our cash and cash equivalents balances and investments in
marketable securities will be sufficient to satisfy our cash requirements for
at least the next 12 months. We intend to continue to invest our cash in excess
of current operating requirements in interest bearing, investment-grade
securities and may repurchase our common stock from time to time as described
above. If existing cash is insufficient to satisfy our liquidity requirements,
we may seek to sell additional equity or debt securities. The sale of
additional equity or convertible debt securities would result in additional
dilution to our stockholders. Additional debt would result in increased
expenses and could result in covenants that would restrict our operations. We
have not made arrangements to obtain additional financing and there is no
assurance that financing, if required, will be available in amounts or on terms
acceptable to us, if at all.

Risks and Uncertainties

Risks and uncertainties that could impact our business, consolidated
financial position, results of operations and cash flows and cause future
results to differ from our expectations include the following: customer
acceptance of our services, products and fee structures; the success of our
brand development efforts; the volatile and competitive nature of the Internet
industry; changes in domestic and international market conditions and the entry
into and development of international markets for our products; risks relating
to intellectual property ownership; as well as risks and uncertainties
identified in our Annual Report on Form 10-K for the fiscal year ended December
31, 2002 and other filings with the Securities
and Exchange Commission.

14



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##### Table of Contents






Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risk exposures are related to our cash, cash equivalents and
investments. We invest our excess cash in highly liquid short-term investments,
commercial paper, corporate bonds, and mortgage-backed securities. These
investments are not held for trading or other speculative purposes. Changes in
interest rates affect the investment income we earn on our investments and
therefore impact our cash flows and results of operations.

We are exposed to changes in interest rates primarily from our short-term
available-for-sale investments. Under our current policies, we do not use
interest rate derivative instruments to manage exposure to interest rate
changes. A hypothetical 100 basis point adverse move in interest rates along
the entire interest rate yield curve would not materially affect the fair value
of our interest sensitive financial instruments at March 31, 2003. Declines in
interest rates over time will, however, reduce our interest income.

We mitigate our foreign currency risks principally by contracting
primarily in U.S. dollars and maintaining only nominal foreign currency cash
balances. Working funds necessary to facilitate the short term operations of
our subsidiaries are kept in the local currencies in which they do business.
For the quarter ended March 31, 2003, all of our billings, including those
billed by our operations in Ireland, were denominated in our functional
currency, which is the U.S. dollar.




Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that we
are able to collect the information we are required to disclose in the reports
we file with the Securities and Exchange Commission (SEC), and to record,
process, summarize and report this information within the time periods
specified in the rules of the SEC. Based on their evaluation of our disclosure
controls and procedures which took place as of a date within 90 days of the
filing date of this report, our Chief Executive and Chief Financial Officers
have concluded that these controls and procedures are effective.

We also maintain a system of internal controls designed to provide
reasonable assurance that transactions are executed in accordance with
managements general or specific authorization and that transactions are
recorded as necessary (1) to permit preparation of financial statements in
conformity with generally accepted accounting principles, and (2) to maintain
accountability for assets. Access to assets is permitted only in accordance
with managements general or specific authorization, and the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

Since the date of the most recent evaluation of our internal controls by
our Chief Executive and Chief Financial Officers, there have been no
significant changes in our internal controls or in other factors that could
significantly affect our internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.

15



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##### Table of Contents






Part II - Other Information




Item 1. Legal Proceedings

None.




Item 2. Changes in Securities and Use of Proceeds

(a)  Not applicable.

(b)  Not applicable.

(c)  Not applicable.

(d)  On March 28, 2000, we completed our initial public offering for the sale of
4,000,000 shares of common stock at a price to the public of $18 per share,
which resulted in net proceeds of $65.7 million after payment of the
underwriters commissions and deductions of offering expenses. The
registration statement (No. 333-95619) relating to our initial public offering
was declared effective on March 28, 2000. Subsequent to our initial public
offering, a portion of the offering proceeds were used to repay the $1.5
million balance of our fixed term loan agreements with financial institutions.
The remaining proceeds have conformed with our intended use outlined in the
prospectus related to such offering. We currently have approximately $64.2
million remaining from our IPO proceeds.




Item 3. Defaults upon Senior Securities

None.




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

None.




Item 5. Other Information

None.




Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits



| |  | 99.1 Certifications Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
| |  | -----------------------------------------------------------------------------------------------------------------------------

(b)  Reports on Form 8-K



| |  | No reports on Form 8-K were filed by the Company during the quarter ended
March 31, 2003.
| |  | -----------------------------------------------------------------------------------------

16



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SIGNATURES

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.

|                   |  |                |  |                                                                                            
|------------------ |  | -------------- |  | -------------------------------------------------------------------------------------------
|                   |  | WEBSENSE, INC.
|                   |  |                |  |                                                                                            
|Date: May 14, 2003 |  | By:            |  | /s/ JOHN B. CARRINGTON

John B. CarringtonChairman of the Board and
Chief Executive Officer
|                  
|Date: May 14, 2003 |  | By:            |  | /s/ DOUGLAS C. WRIDE

Douglas C. WrideChief Financial Officer                              

17



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CERTIFICATION

I, John B. Carrington, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Websense, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| |  | a)  Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b)  Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| |  | c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                         

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  | a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                   |  |     |  |                                                                   
|------------------ |  | --- |  | ------------------------------------------------------------------
|Date: May 14, 2003 |  |     |  |                                                                   
|                   |  | By: |  | /s/ JOHN B. CARRINGTON

John B. Carrington
Chief Executive Officer

18



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##### Table of Contents



CERTIFICATION

I, Douglas C. Wride, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Websense, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:



| |  | a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the Evaluation Date); and                                                                                                  
|
| |  | c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):



| |  | a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal
controls; and                                                                                                                                        

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

|                   |  |     |  |                                                               
|------------------ |  | --- |  | --------------------------------------------------------------
|Date: May 14, 2003 |  |     |  |                                                               
|                   |  | By: |  | /s/ DOUGLAS C. WRIDE

Douglas C. Wride
Chief Financial Officer

19