##### Table of Contents









U.S. SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549




---

Form 10-Q

|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|  
|   |  | For the quarterly period ended
    September 30, 2004                                       
|  
|or
|  
|o  |  | 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: 000-23709



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DoubleClick Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS
CHARTER)


|                                                                   |  |                                            
|------------------------------------------------------------------ |  | -------------------------------------------
|Delaware                                                           |  | 13-3870996                                 
|(STATE OR OTHER JURISDICTION OF
    INCORPORATION OR ORGANIZATION) |  | (I.R.S. EMPLOYER
    IDENTIFICATION NUMBER)

111 Eighth Avenue, 10th Floor

New York, New York 10011


(212) 683-0001


(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE
NUMBER,


INCLUDING AREA CODE OF REGISTRANTS
PRINCIPAL EXECUTIVE OFFICES)


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 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 þ          No o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Exchange
Act).     Yes þ          No o

As of November 8, 2004 there were
125,600,277 outstanding shares of the registrants Common
Stock.



---






---










DOUBLECLICK INC.

INDEX TO FORM 10-Q

|                                   |  |                                                                                                               |  |   
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------- |  | --
|PART I:  FINANCIAL
    INFORMATION
|Item 1:                            |  | Financial Statements
    (unaudited)                                                                          |  |   
|                                   |  | Consolidated Balance Sheets
    as of September 30, 2004 and December 31, 2003                                |  | 2 
|                                   |  | Consolidated Statements of
    Operations for the three and nine months ended
    September 30, 2004 and 2003 |  | 3 
|                                   |  | Consolidated Statements of
    Cash Flows for the nine months ended September 30, 2004 and
    2003           |  | 4 
|                                   |  | Notes to Consolidated
    Financial Statements                                                                |  | 5 
|Item 2:                            |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations                     |  | 20
|Item 3:                            |  | Quantitative and Qualitative
    Disclosures about Market Risk                                                |  | 34
|Item 4:                            |  | Controls and Procedures                                                                                       |  | 49
|                                  
|PART II:  OTHER
    INFORMATION   
|Item 1:                            |  | Legal Proceedings                                                                                             |  | 49
|Item 2:                            |  | Unregistered Sales of Equity
    Securities and Use of Proceeds                                               |  | 51
|Item 6:                            |  | Exhibits                                                                                                      |  | 51
|CERTIFICATION                     
|CERTIFICATION                     
|CERTIFICATION                     
|CERTIFICATION                     



1



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##### Table of Contents






PART 1:     FINANCIAL
INFORMATION






|        |                                     
|------- | ------------------------------------
|Item 1: | Financial Statements
    (Unaudited)

DOUBLECLICK INC.



CONSOLIDATED BALANCE SHEETS


|                                                                                                                               |                                            |                           |           |              |  |   |           |         | 
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------------------------- | --------- | ------------ |  | - | --------- | ------- | 
|                                                                                                                               |                                            | September 30,             |           | December 31,
|                                                                                                                               |                                            | 2004                      |           | 2003        
|                                                                                                                               |                                            |                           |           |             
|                                                                                                                               |                                            |                          
|                                                                                                                               |                                            | (Unaudited, in thousands,
|                                                                                                                               |                                            | except share amounts)    
|ASSETS                                                                                                                        
|CURRENT ASSETS:                                                                                                                |                                            |                           |           |              |  |   |           |        
|Cash and cash equivalents                                                                                                      |                                            | $                         | 95,582    |              |  | $ | 183,484   |        
|Investments in marketable securities                                                                                           |                                            |                           | 230,699   |              |  |   | 151,898   |        
|Restricted cash                                                                                                                |                                            |                           | 3,659     |              |  |   | 16,328    |        
|Accounts receivable, net of allowances of $9,108
    and $7,519, respectively                                                  |                                            |                           | 76,429    |              |  |   | 51,491    |        
|Prepaid expenses and other current assets                                                                                      |                                            |                           | 13,271    |              |  |   | 17,473    |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total current assets                       |                           |           | 419,640      |  |   |           | 420,674 | 
|Investment in marketable securities                                                                                            |                                            |                           | 182,339   |              |  |   | 312,434   |        
|Restricted cash                                                                                                                |                                            |                           | 11,668    |              |  |   | 11,668    |        
|Property and equipment, net                                                                                                    |                                            |                           | 76,330    |              |  |   | 75,786    |        
|Goodwill                                                                                                                       |                                            |                           | 66,551    |              |  |   | 18,658    |        
|Intangible assets, net                                                                                                         |                                            |                           | 25,472    |              |  |   | 10,847    |        
|Investment in affiliates                                                                                                       |                                            |                           | 5,759     |              |  |   | 13,422    |        
|Other assets                                                                                                                   |                                            |                           | 13,228    |              |  |   | 14,408    |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total assets                               |                           | $         | 800,987      |  |   | $         | 877,897 | 
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                              
|LIABILITIES AND STOCKHOLDERS
    EQUITY                                                                                      
|CURRENT LIABILITIES:                                                                                                           |                                            |                           |           |              |  |   |           |        
|Accounts payable                                                                                                               |                                            | $                         | 21,969    |              |  | $ | 4,164     |        
|Accrued expenses and other current liabilities                                                                                 |                                            |                           | 46,854    |              |  |   | 63,152    |        
|Deferred revenue                                                                                                               |                                            |                           | 10,594    |              |  |   | 8,188     |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total current liabilities                  |                           |           | 79,417       |  |   |           | 75,504  | 
|Convertible subordinated notes  Zero
    Coupon, due 2023                                                                     |                                            |                           | 135,000   |              |  |   | 135,000   |        
|Other long term liabilities                                                                                                    |                                            |                           | 21,267    |              |  |   | 27,046    |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total Liabilities                          |                           |           | 235,684      |  |   |           | 237,550 | 
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|STOCKHOLDERS EQUITY:                                                                                                          |                                            |                           |           |              |  |   |           |        
|Preferred stock, par value $0.001;
    5,000,000 shares authorized, none outstanding                                           |                                            |                           |          |              |  |   |          |        
|Common stock, par value $0.001;
    400,000,000 shares authorized, 140,428,420 and
    139,329,875 shares issued, respectively |                                            |                           | 140       |              |  |   | 139       |        
|Treasury stock, 14,864,925 and
    1,846,170 shares, respectively                                                              |                                            |                           | (109,223  | )            |  |   | (10,396   | )      
|Additional paid-in capital                                                                                                     |                                            |                           | 1,293,573 |              |  |   | 1,287,775 |        
|Accumulated deficit                                                                                                            |                                            |                           | (622,585  | )            |  |   | (649,523  | )      
|Other accumulated comprehensive income                                                                                         |                                            |                           | 3,398     |              |  |   | 12,352    |        
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total stockholders equity                 |                           |           | 565,303      |  |   |           | 640,347 | 
|                                                                                                                               |                                            |                           |           |              |  |   |           |        
|                                                                                                                               | Total liabilities and stockholders equity |                           | $         | 800,987      |  |   | $         | 877,897 | 
|                                                                                                                               |                                            |                           |           |              |  |   |           |        

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

2



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##### Table of Contents



DOUBLECLICK INC.



CONSOLIDATED STATEMENTS OF
OPERATIONS


|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |         |         | 
|---------------------------------------------------------------- | -------------------------------------------- | --------------------------------------------------- | ------- | ----------------- | ------ | ---- | ------- | ------ | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                 |                                              |                                                     |         |                  
|                                                                 |                                              | Three Months Ended                                  |         | Nine Months Ended
|                                                                 |                                              | September 30,                                       |         | September 30,    
|                                                                 |                                              |                                                     |         |                  
|                                                                 |                                              | 2004                                                |         | 2003              |        | 2004 |         | 2003  
|                                                                 |                                              |                                                     |         |                   |        |      |         |       
|                                                                 |                                              |                                                    
|                                                                 |                                              | (Unaudited, in thousands, except per share amounts)
|Revenue                                                          |                                              | $                                                   | 80,954  |                   |        | $    | 74,790  |        |        | $ | 218,154 |         |         | $ | 198,400 |        
|Cost of revenue                                                  |                                              |                                                     | 21,519  |                   |        |      | 25,383  |        |        |   | 65,913  |         |         |   | 69,778  |        
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|                                                                 | Gross profit                                 |                                                     |         | 59,435            |        |      |         | 49,407 |        |   |         | 152,241 |         |   |         | 128,622 |        
|Operating expenses:                                              |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|                                                                 | Sales and marketing                          |                                                     |         | 26,320            |        |      |         | 27,175 |        |   |         | 75,475  |         |   |         | 67,683  |        
|                                                                 | General and administrative                   |                                                     |         | 9,040             |        |      |         | 8,459  |        |   |         | 25,974  |         |   |         | 25,685  |        
|                                                                 | Product development                          |                                                     |         | 13,802            |        |      |         | 10,685 |        |   |         | 33,286  |         |   |         | 27,258  |        
|                                                                 | Amortization of intangibles                  |                                                     |         | 1,764             |        |      |         | 1,561  |        |   |         | 3,589   |         |   |         | 4,880   |        
|                                                                 | Impairment of goodwill and intangible assets |                                                     |         | 5,592             |        |      |         |       |        |   |         | 5,592   |         |   |         |        |        
|                                                                 | Restructuring credits, net                   |                                                     |         | (4,514            | )      |      |         | (2,221 | )      |   |         | (4,514  | )       |   |         | (9,092  | )      
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|                                                                 |                                              | Total operating expenses                            |         |                   | 52,004 |      |         |        | 45,659 |   |         |         | 139,402 |   |         |         | 116,414 | 
|Income from operations                                           |                                              |                                                     | 7,431   |                   |        |      | 3,748   |        |        |   | 12,839  |         |         |   | 12,208  |        
|Other income (expense)                                           |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|                                                                 | Equity in losses of affiliates               |                                                     |         | (314              | )      |      |         | (126   | )      |   |         | (884    | )       |   |         | (2,439  | )      
|                                                                 | Loss on early extinguishment of debt         |                                                     |         |                  |        |      |         |       |        |   |         |        |         |   |         | (4,406  | )      
|                                                                 | Gain on distribution from affiliate          |                                                     |         |                  |        |      |         |       |        |   |         | 2,400   |         |   |         |        |        
|                                                                 | Gain on sale of investment in affiliate      |                                                     |         | 7,125             |        |      |         |       |        |   |         | 7,125   |         |   |         |        |        
|                                                                 | Interest and other, net                      |                                                     |         | 2,661             |        |      |         | 3,491  |        |   |         | 8,452   |         |   |         | 9,123   |        
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|                                                                 |                                              | Total other income                                  |         |                   | 9,472  |      |         |        | 3,365  |   |         |         | 17,093  |   |         |         | 2,278   | 
|Income before income taxes                                       |                                              |                                                     | 16,903  |                   |        |      | 7,113   |        |        |   | 29,932  |         |         |   | 14,486  |        
|Provision for income taxes                                       |                                              |                                                     | (1,539  | )                 |        |      | (773    | )      |        |   | (2,994  | )       |         |   | (1,409  | )      
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|Net income                                                       |                                              | $                                                   | 15,364  |                   |        | $    | 6,340   |        |        | $ | 26,938  |         |         | $ | 13,077  |        
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|Basic net income per share                                       |                                              | $                                                   | 0.12    |                   |        | $    | 0.05    |        |        | $ | 0.20    |         |         | $ | 0.10    |        
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|Weighted average shares used in basic net income
    per share   |                                              |                                                     | 127,080 |                   |        |      | 137,366 |        |        |   | 133,001 |         |         |   | 136,908 |        
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|Diluted net income per share                                     |                                              | $                                                   | 0.12    |                   |        | $    | 0.04    |        |        | $ | 0.20    |         |         | $ | 0.09    |        
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        
|Weighted average shares used in diluted net
    income per share |                                              |                                                     | 128,589 |                   |        |      | 142,351 |        |        |   | 135,770 |         |         |   | 140,515 |        
|                                                                 |                                              |                                                     |         |                   |        |      |         |        |        |   |         |         |         |   |         |        

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

3



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##### Table of Contents



DOUBLECLICK INC.



CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                                                         |                                                                                                 |                                                                                     |                                        |         |         |         |         |          |         |         |  
|-------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------------------- | ------- | ------- | ------- | ------- | -------- | ------- | ------- | -
|                                                         |                                                                                                 |                                                                                    
|                                                         |                                                                                                 | Nine Months Ended                                                                  
|                                                         |                                                                                                 | September 30,                                                                      
|                                                         |                                                                                                 |                                                                                    
|                                                         |                                                                                                 | 2004                                                                                |                                        | 2003   
|                                                         |                                                                                                 |                                                                                     |                                        |        
|                                                         |                                                                                                 |                                                                                    
|                                                         |                                                                                                 | (Unaudited, in thousands)                                                          
|OPERATING ACTIVITIES                                     |                                                                                                 |                                                                                     |                                        |         |         |         |         |         
|                                                         | Net income                                                                                      |                                                                                     | $                                      | 26,938  |         |         | $       | 13,077   |        
|                                                         | Adjustments to reconcile net income to net cash
    provided by (used in) operating activities: |                                                                                     |                                        |         |         |         |         |          |        
|                                                         |                                                                                                 | Depreciation and leasehold amortization                                             |                                        |         | 19,505  |         |         |          | 37,465  |        
|                                                         |                                                                                                 | Amortization of intangible assets                                                   |                                        |         | 7,119   |         |         |          | 7,483   |        
|                                                         |                                                                                                 | Equity in losses of affiliates                                                      |                                        |         | 884     |         |         |          | 2,439   |        
|                                                         |                                                                                                 | Gain on distribution from affiliate                                                 |                                        |         | (2,400  | )       |         |          |        |        
|                                                         |                                                                                                 | Gain on sale of investment in affiliate                                             |                                        |         | (7,125  | )       |         |          |         |        
|                                                         |                                                                                                 | Loss on early extinguishment of debt                                                |                                        |         |        |         |         |          | 4,406   |        
|                                                         |                                                                                                 | Restructuring credit                                                                |                                        |         | (4,514  | )       |         |          | (9,092  | )      
|                                                         |                                                                                                 | Goodwill and other impairments                                                      |                                        |         | 5,592   |         |         |          |        |        
|                                                         |                                                                                                 | Other non-cash items                                                                |                                        |         | 1,914   |         |         |          | 1,307   |        
|                                                         |                                                                                                 | Provisions for bad debts and advertiser discounts                                   |                                        |         | 10,471  |         |         |          | 6,367   |        
|                                                         |                                                                                                 | Changes in operating assets and liabilities, net
    of the effect of acquisitions: |                                        |         |         |         |         |          |         |        
|                                                         |                                                                                                 |                                                                                     | Accounts receivable                    |         |         | (17,968 | )       |          |         | (9,022  | )
|                                                         |                                                                                                 |                                                                                     | Prepaid expenses and other assets      |         |         | 6,416   |         |          |         | 2,714   |  
|                                                         |                                                                                                 |                                                                                     | Accounts payable                       |         |         | 1,324   |         |          |         | (2,096  | )
|                                                         |                                                                                                 |                                                                                     | Lease termination and related payments |         |         | (7,625  | )       |          |         | (70,874 | )
|                                                         |                                                                                                 |                                                                                     | Accrued expenses and other liabilities |         |         | (10,689 | )       |          |         | (24,656 | )
|                                                         |                                                                                                 |                                                                                     | Deferred revenue                       |         |         | (97     | )       |          |         | 1,449   |  
|                                                         |                                                                                                 |                                                                                     |                                        |         |         |         |         |         
|                                                         |                                                                                                 | Net cash provided by (used in) operating
    activities                             |                                        |         | 29,745  |         |         |          | (39,033 | )      
|INVESTING ACTIVITIES                                     |                                                                                                 |                                                                                     |                                        |         |         |         |         |         
|                                                         | Purchases of investments in marketable securities                                               |                                                                                     |                                        | (95,084 | )       |         |         | (334,195 | )      
|                                                         | Maturities of investments in marketable securities                                              |                                                                                     |                                        | 143,277 |         |         |         | 424,486  |        
|                                                         | Restricted cash                                                                                 |                                                                                     |                                        | 12,669  |         |         |         | (2,650   | )      
|                                                         | Purchases of property and equipment                                                             |                                                                                     |                                        | (18,541 | )       |         |         | (17,234  | )      
|                                                         | Proceeds from distribution from affiliate                                                       |                                                                                     |                                        | 2,400   |         |         |         |         |        
|                                                         | Proceeds from sale of investment in affiliates                                                  |                                                                                     |                                        | 9,519   |         |         |         | 656      |        
|                                                         | Proceeds from sale of intangible asset, net                                                     |                                                                                     |                                        |        |         |         |         | 900      |        
|                                                         | Investment in Abacus Germany                                                                    |                                                                                     |                                        | (805    | )       |         |         |         |        
|                                                         | Acquisition of businesses, net of cash assumed                                                  |                                                                                     |                                        | (72,002 | )       |         |         | (2,757   | )      
|                                                         |                                                                                                 |                                                                                     |                                        |         |         |         |         |         
|                                                         |                                                                                                 | Net cash (used in) provided by investing
    activities                             |                                        |         | (18,567 | )       |         |          | 69,206  |        
|FINANCING ACTIVITIES                                     |                                                                                                 |                                                                                     |                                        |         |         |         |         |         
|                                                         | Proceeds from the issuance of common stock                                                      |                                                                                     |                                        | 3,885   |         |         |         | 4,450    |        
|                                                         | Proceeds from issuance of convertible
    subordinated notes, net                               |                                                                                     |                                        |        |         |         |         | 131,963  |        
|                                                         | Proceeds used in repurchase of convertible bonds                                                |                                                                                     |                                        |         |         |         |         | (157,952 | )      
|                                                         | Purchases of treasury stock                                                                     |                                                                                     |                                        | (98,827 | )       |         |         |         |        
|                                                         | Payments under capital lease obligations and
    notes payable                                  |                                                                                     |                                        | (3,675  | )       |         |         | (8,308   | )      
|                                                         |                                                                                                 |                                                                                     |                                        |         |         |         |         |         
|                                                         |                                                                                                 | Net cash used in financing activities                                               |                                        |         | (98,617 | )       |         |          | (29,847 | )      
|Effect of exchange rate changes on cash                  |                                                                                                 |                                                                                     | (463                                   | )       |         |         | 2,695   |         
|                                                         |                                                                                                 |                                                                                     |                                        |         |         |         |         |         
|Net (decrease) increase in cash and cash
    equivalents |                                                                                                 |                                                                                     | (87,902                                | )       |         |         | 3,021   |         
|Cash and cash equivalents at beginning of period         |                                                                                                 | $                                                                                   | 183,484                                |         |         | $       | 123,671 |         
|                                                         |                                                                                                 |                                                                                     |                                        |         |         |         |         |         
|Cash and cash equivalents at end of period               |                                                                                                 | $                                                                                   | 95,582                                 |         |         | $       | 126,692 |         
|                                                         |                                                                                                 |                                                                                     |                                        |         |         |         |         |         

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

4



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##### Table of Contents



DOUBLECLICK INC.



NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS


September 30, 2004


(Unaudited)




|         |                                                                
|-------- | ---------------------------------------------------------------
|Note 1  | Description of Business and Significant
    Accounting Policies



| |                        
| | -----------------------
| | Description of Business

DoubleClick is a leading provider of technology
and data products used by direct marketers, Web publishers and
advertisers to plan, execute and analyze their marketing
programs. Combining technology and data expertise,
DoubleClicks solutions help its customers to optimize
their advertising and marketing campaigns online and through
direct mail. DoubleClick offers a broad array of technology and
data products and services to its customers to allow them to
address a full range of the marketing processes, from
pre-campaign planning and testing, to execution, measurement and
campaign refinements.

DoubleClick derives its revenues from two
business segments: TechSolutions and Data. DoubleClick
TechSolutions includes its Ad Management, Marketing Automation
and Performics divisions. DoubleClicks Ad Management
division primarily consists of the DART for Publishers Service,
the DART for Advertisers Service and the DART Enterprise ad
serving software product. DoubleClicks Marketing
Automation division primarily consists of email products based
on DoubleClicks DARTmail Service and its Enterprise
Marketing Solutions, or EMS, which consists of its campaign
management and marketing resource management, or MRM, products.
As a result of the acquisition of Performics Inc. in June 2004,
DoubleClick created a third division within TechSolutions which
offers search engine marketing and affiliate marketing solutions.

DoubleClick Data includes its Abacus and Data
Management divisions. Abacus utilizes the information
contributed to the proprietary Abacus database by Abacus
Alliance members to make direct marketing more effective for
Abacus Alliance members and other clients. Data Management
offers direct marketers solutions for building and managing
customer marketing databases, tools to plan, execute and measure
multi-channel marketing campaigns, as well as list processing
and data hygiene products and services.



| |                      
| | ---------------------
| | Basis of Presentation

The accompanying consolidated financial
statements include the accounts of DoubleClick, its wholly owned
subsidiaries, and subsidiaries over which it exercises a
controlling financial interest. All significant intercompany
transactions and balances have been eliminated. Investments in
entities in which DoubleClick does not have a controlling
financial interest, but over which it has significant influence
are accounted for using the equity method. Investments in which
DoubleClick does not have the ability to exercise significant
influence are accounted for using the cost method.

The accompanying interim consolidated financial
statements have been prepared in accordance with the rules and
regulations of Securities and Exchange Commission. The
accompanying interim consolidated financial statements are
unaudited, but in the opinion of management, contain all the
normal, recurring adjustments considered necessary to present
fairly the financial position, the results of operations and
cash flows for the periods presented in conformity with
generally accepted accounting principles applicable to interim
periods. Results of operations are not necessarily indicative of
the results expected for the full fiscal year or for any future
period.

The Consolidated Balance Sheet at
December 31, 2003 has been derived from, but does not
include all the disclosures contained in, the audited
Consolidated Financial Statements for the year ended
December 31, 2003. The accompanying Consolidated Financial
Statements should be read in conjunction with the audited
Consolidated Financial Statements of DoubleClick for the year
ended December 31, 2003.

5



---



##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)




| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | Cash and Cash Equivalents, Investments in
    Marketable Securities and Restricted Cash

Cash and cash equivalents represent cash and
highly liquid investments with a remaining contractual maturity
at the date of purchase of three months or less.

Marketable securities consist of government and
corporate debt securities and are classified as current or
non-current assets depending on their dates of maturity. As of
September 30, 2004, all marketable securities included in
non-current assets have maturities greater than one year.

DoubleClick classifies its investments in
marketable securities as available-for-sale. Accordingly, these
investments are carried at fair value, with unrealized gains and
losses reported as a separate component of stockholders
equity. DoubleClick recognizes gains and losses when these
securities are sold using the specific identification method.
DoubleClick has not recognized any material gains or losses from
the sale of its investments in marketable securities.

Restricted cash primarily represents amounts
placed in escrow relating to funds used to cover office lease
security deposits and DoubleClicks automated clearinghouse
payment function.



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment is recorded at cost and
depreciated using the straight-line method over the shorter of
the estimated life of the asset or the lease term. As required
by SOP 98-1, Accounting for Costs of Computer
Software Developed or Obtained for Internal Use,
DoubleClick capitalizes certain computer software developed or
obtained for internal use. Capitalized software is depreciated
using the straight-line method over the estimated life of the
software, generally three to five years.



| |                                   
| | ----------------------------------
| | Goodwill and Intangible
    Assets

DoubleClick records as goodwill the excess of
purchase price over the fair value of the identifiable net
assets acquired. SFAS No. 142, Goodwill and
Other Intangible Assets, prescribes a two-step process for
impairment testing of goodwill, which is performed annually, as
well as when an event triggering impairment may have occurred.
The first step tests for impairment, while the second step, if
necessary, measures the impairment. DoubleClick has elected to
perform its annual analysis during the fourth quarter of each
fiscal year as of October 1st. See Note 6 
Impairment of goodwill and intangible assets.

Intangible assets include patents, trademarks,
customer relationships, purchased technology and a covenant not
to compete. Such intangible assets are amortized on a
straight-line basis over their estimated useful lives, which are
generally two to five years.



| |                                    
| | -----------------------------------
| | Impairment of Long-Lived
    Assets

DoubleClick assesses the recoverability of
long-lived assets, including intangible assets, held and used
whenever events or changes in circumstances indicate that future
cash flows, undiscounted and without interest charges, expected
to be generated by an assets disposition or use may not be
sufficient to support its carrying amount. If such undiscounted
cash flows are not sufficient to support the recorded value of
assets, an impairment loss is recognized to reduce the carrying
value of long-lived assets to their estimated fair value.



| |                    
| | -------------------
| | Revenue Recognition

DoubleClicks revenues are presented net of
a provision for advertiser credits, which is estimated and
established in the period in which services are provided. These
credits are generally issued in the event that solutions do not
meet contractual specifications. Actual results could differ
from these estimates.

6



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


TechSolutions.Revenues include fees earned from the use of DoubleClicks
Ad Management, Marketing Automation and Performics products and
services. Revenues derived from DoubleClicks hosted, or
Web-based, applications, including the DART for Publishers
Service, the DART for Advertisers Service, and DARTmail, are
recognized in the period the advertising impressions or emails
are delivered, provided collection of the resulting receivable
is reasonably assured. DART Service activation fees are deferred
and recognized ratably over the expected term of the customer
relationship.

Performics search and affiliate marketing
revenues are recognized when a contract has been signed,
services have been rendered, the related fee is fixed and
determinable, and collection of the fee is reasonably assured.
Performics revenues are recorded on a net basis, exclusive of
pass through charges when acting as an agent on
behalf of its clients with respect to such costs.

For DoubleClicks licensed ad serving,
campaign management and marketing resource management software
solutions, revenues are recognized when product installation is
complete, which generally occurs when customers begin utilizing
the product, there is pervasive evidence of an arrangement,
collection is reasonably assured, the fee is fixed or
determinable and vendor-specific objective evidence exists to
allocate the total fees to all elements of the arrangement. A
portion of the initial ad serving software license fee is
attributed to the customers right to receive, at no
additional charge, software upgrades released during the
subsequent twelve months. Revenues attributable to software
upgrades are deferred and recognized ratably over the period
covered by the software license agreement, which is generally
one year.

Revenues from consulting services are recognized
as the services are performed and customer-support revenues are
deferred and recognized ratably over the period covered by the
customer support agreement, which is generally one year.

Data.Abacus
provides services to its clients that result in a deliverable
product in the form of consumer and business prospect lists.
Revenues are recognized when the product is shipped to the
client, provided collection of the resulting receivable is
reasonably assured. Data Management provides list processing,
database development and database management services. List
processing and database development revenues are recognized in
the period that the product is completed and delivered, provided
that collection is reasonably assured. Database development fees
are deferred and recognized ratably over the expected term of
the customer relationship. Database management revenues are
recognized as the services are provided.



| |                    
| | -------------------
| | Product Development

Product development expenses consist primarily of
compensation and related benefits, consulting fees and other
operating expenses associated with product development
departments. The product development departments perform
research and development, enhance and maintain existing products
and provide quality assurance. Software development costs are
required to be capitalized when a products technological
feasibility has been established by completion of a working
model of the product and ending when a product is available for
general release to customers. To date, completion of a working
model of DoubleClicks products and general release have
substantially coincided. As a result, DoubleClick has not
capitalized any software development costs.



| |                                    
| | -----------------------------------
| | Issuance of Stock by
    Affiliates

Changes in DoubleClicks interest in its
affiliates arising as the result of their issuance of common
stock are recorded as gains and losses in the Consolidated
Statement of Operations, except for any transactions that must
be recorded directly to equity in accordance with the provisions
of SAB No. 51, Accounting for Sales of Stock of a
Subsidiary.

7



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)




| |             
| | ------------
| | Income Taxes

DoubleClick uses the asset and liability method
of accounting for income taxes. Under this method, deferred tax
assets and liabilities are recognized for the future tax
consequences attributable to the differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and to tax loss and
tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is
recognized in results of operations in the period that includes
the enactment date. A valuation allowance is provided to reduce
the deferred tax assets reported if, based on the weight of the
available evidence, it is not more likely than not that some
portion or all of the deferred tax assets will be realized.



| |                 
| | ----------------
| | Foreign Currency

The functional currencies of DoubleClicks
foreign subsidiaries are their respective local currencies. The
financial statements maintained in local currencies are
translated to United States dollars using period-end rates of
exchange for assets and liabilities and average rates during the
period for revenues, cost of revenues and expenses. Translation
gains and losses are accumulated as a separate component of
stockholders equity. Net gains and losses from foreign
currency transactions are included in the Consolidated
Statements of Operations and were not significant during the
periods presented.



| |                          
| | -------------------------
| | Equity-based Compensation

DoubleClick accounts for its employee stock
option plans under the intrinsic value method, in accordance
with the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for
Stock Issued to Employees and related interpretations.
Under APB No. 25, generally no compensation expense is
recorded when the terms of the award are fixed and the exercise
price of the employee stock option equals or exceeds the fair
value of the underlying stock on the date of the grant.
DoubleClick has adopted the disclosure-only requirements of
SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS 123), which allows
entities to continue to apply the provisions of APB No. 25
for transactions with employees and provide pro forma net income
and pro forma earnings per share disclosures for employee stock
grants made as if the fair value based method of accounting in
SFAS 123 had been applied to these transactions.

In December 2002, the Financial Accounting
Standards Board (the FASB) issued
SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure which
amends SFAS 123, Accounting for Stock-Based
Compensation. This amendment requires prominent disclosure
in both annual and interim financial statements about the method
of accounting for stock-based employee compensation and the
effect of the method used on reported results.

8



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


Had DoubleClick determined compensation expense
of employee stock options based on the estimated fair value of
the stock options at the grant date, consistent with the
guidelines of SFAS 123, DoubleClicks net income would
have decreased to the pro forma amounts indicated below:

|                                    |                        |                                          |   |                   |  |      |   |         |   |  |   |        |  |  |   |         |  
|----------------------------------- | ---------------------- | ---------------------------------------- | - | ----------------- |  | ---- | - | ------- | - |  | - | ------ |  |  | - | ------- | -
|                                    |                        |                                          |   |                  
|                                    |                        | Three Months Ended                       |   | Nine Months Ended
|                                    |                        | September 30,                            |   | September 30,    
|                                    |                        |                                          |   |                  
|                                    |                        | 2004                                     |   | 2003              |  | 2004 |   | 2003   
|                                    |                        |                                          |   |                   |  |      |   |        
|                                    |                        |                                         
|                                    |                        | (In thousands, except per share amounts)
|Net income (loss)                   |                        |                                          |   |                   |  |      |   |         |   |  |   |        |  |  |   |        
|                                    | As reported            |                                          | $ | 15,364            |  |      | $ | 6,340   |   |  | $ | 26,938 |  |  | $ | 13,077  |  
|                                    | Pro forma per SFAS 123 |                                          | $ | 8,359             |  |      | $ | (22,527 | ) |  | $ | 5,984  |  |  | $ | (73,962 | )
|Basic net income (loss) per share   |                        |                                          |   |                   |  |      |   |         |   |  |   |        |  |  |   |        
|                                    | As reported            |                                          | $ | 0.12              |  |      | $ | 0.05    |   |  | $ | 0.20   |  |  | $ | 0.10    |  
|                                    | Pro forma per SFAS 123 |                                          | $ | 0.07              |  |      | $ | (0.16   | ) |  | $ | 0.04   |  |  | $ | (0.54   | )
|Diluted net income (loss) per share |                        |                                          |   |                   |  |      |   |         |   |  |   |        |  |  |   |        
|                                    | As reported            |                                          | $ | 0.12              |  |      | $ | 0.04    |   |  | $ | 0.20   |  |  | $ | 0.09    |  
|                                    | Pro forma per SFAS 123 |                                          | $ | 0.07              |  |      | $ | (0.16   | ) |  | $ | 0.04   |  |  | $ | (0.54   | )

The per share weighted average fair value of
options granted for the three and nine months ended
September 30, 2004 was $3.33 and $3.91, respectively, and
the per share weighted average fair value of options granted for
the three and nine months ended September 30, 2003 was
$5.08 and $4.06, respectively, on the grant date with the
following weighted average assumptions:

|                        |  |                    |            |                   |  |      |            |      |  |  |            |  |  |  |            | 
|----------------------- |  | ------------------ | ---------- | ----------------- |  | ---- | ---------- | ---- |  |  | ---------- |  |  |  | ---------- | 
|                        |  |                    |            |                  
|                        |  | Three Months Ended |            | Nine Months Ended
|                        |  | September 30,      |            | September 30,    
|                        |  |                    |            |                  
|                        |  | 2004               |            | 2003              |  | 2004 |            | 2003
|                        |  |                    |            |                   |  |      |            |     
|Expected dividend yield |  |                    | 0%         |                   |  |      | 0%         |      |  |  | 0%         |  |  |  | 0%         | 
|Risk-free interest rate |  |                    | 3.37%      |                   |  |      | 3.14%      |      |  |  | 3.34%      |  |  |  | 2.87%      | 
|Expected life           |  |                    | 5.0  years |                   |  |      | 4.5  years |      |  |  | 4.7  years |  |  |  | 4.5  years | 
|Volatility              |  |                    | 65%        |                   |  |      | 60%        |      |  |  | 65%        |  |  |  | 60%        | 

The pro forma impact of options on net income
(loss) for the three and nine months ended
September 30, 2004 and 2003 is not representative of the
effects on net income (loss) for future years, as future years
will include the effects of additional years of stock option
grants.



| |                                           
| | ------------------------------------------
| | Basic and Diluted Net Income Per
    Share

Basic net income per share excludes the effect of
potentially dilutive securities and is computed by dividing the
net income available to common shareholders by the
weighted-average number of common shares outstanding for the
reporting period. Diluted net income per share adjusts this
calculation to reflect the impact

9



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


of outstanding convertible securities and stock
options to the extent that their inclusion would have a dilutive
effect on net income per share for the reporting period.

|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|-------------------------------------------------- |  | ---------------------------------------- | ------- | ----------------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                                   |  |                                          |         |                  
|                                                   |  | Three Months Ended                       |         | Nine Months Ended
|                                                   |  | September 30,                            |         | September 30,    
|                                                   |  |                                          |         |                  
|                                                   |  | 2004                                     |         | 2003              |  | 2004 |         | 2003
|                                                   |  |                                          |         |                   |  |      |         |     
|                                                   |  |                                         
|                                                   |  | (In thousands, except per share amounts)
|Net income                                         |  | $                                        | 15,364  |                   |  | $    | 6,340   |      |  | $ | 26,938  |  |  | $ | 13,077  | 
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Weighted average basic common shares outstanding   |  |                                          | 127,080 |                   |  |      | 137,366 |      |  |   | 133,001 |  |  |   | 136,908 | 
|Effect of dilutive securities: stock options       |  |                                          | 1,509   |                   |  |      | 4,985   |      |  |   | 2,769   |  |  |   | 3,607   | 
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Weighted average diluted common shares outstanding |  |                                          | 128,589 |                   |  |      | 142,351 |      |  |   | 135,770 |  |  |   | 140,515 | 
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Net income per common share  basic                |  | $                                        | 0.12    |                   |  | $    | 0.05    |      |  | $ | 0.20    |  |  | $ | 0.10    | 
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         | 
|Net income per common share  diluted              |  | $                                        | 0.12    |                   |  | $    | 0.04    |      |  | $ | 0.20    |  |  | $ | 0.09    | 
|                                                   |  |                                          |         |                   |  |      |         |      |  |   |         |  |  |   |         | 

At September 30, 2004 and 2003, outstanding
options of approximately 16.3 million and
13.2 million, respectively, to purchase shares of common
stock were not included in the computation of diluted net income
per share because to do so would have had an antidilutive effect
for the periods presented. Similarly, the computation of diluted
net income per share at September 30, 2004 and 2003
excludes the effect of 10.3 million shares of common stock
issuable upon conversion of the Zero Coupon Convertible
Subordinated Notes due 2023.



| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could
differ from those estimates.



| |                  
| | -----------------
| | Reclassifications

Certain reclassifications have been made to prior
years financial statements to conform to current year
presentation.



| |                              
| | -----------------------------
| | Change in Accounting Estimate

Effective June 15, 2003, DoubleClick changed
its estimate of the useful lives of its furniture and fixtures
and leasehold improvements located at its New York headquarters.
The average remaining useful life for these assets was reduced
from approximately two and twelve years for furniture and
fixtures and leasehold improvements, respectively, to six and
one half months for both asset types in order to recognize
depreciation expense over the remaining time that the assets
were expected to remain in service. The change was due to the
planned relocation of DoubleClicks New York headquarters
in the fourth quarter of 2003. On August 19, 2003,
DoubleClick entered into a Lease Termination Agreement to
terminate the lease for its facility located in
San Francisco. As a result of this lease termination,
DoubleClick accelerated the amortization of its leasehold
improvements at this facility due to the change in useful life
of these assets. The average remaining useful life of these
assets was reduced from approximately nine years to
one month as DoubleClick vacated this facility on
September 19, 2003. As a result of these changes for the
New York and San Francisco

10



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


facilities, net income was reduced by
approximately $8.3 million, or $0.06 per diluted
share, and $9.2 million, or $0.07 per diluted share,
for the three and nine months ended September 30,
2003, respectively. The amortization of these assets is
allocated over headcount and therefore impacts cost of revenue,
sales and marketing, general and administrative and product
development expenses.



| |                              
| | -----------------------------
| | New Accounting Pronouncements

On September 30, 2004, the Emerging Issues
Task Force (EITF) confirmed their tentative
conclusion on EITF Issue No. 04-8, The Effect of
Contingently Convertible Debt on Diluted Earnings per
Share. EITF 04-8 requires contingently convertible
debt instruments to be included in diluted earnings per share,
if dilutive, regardless of whether a market price contingency
for the conversion of the debt into common shares or any other
contingent factor has been met. Prior to this consensus, such
instruments were excluded from the calculation until one or more
of the contingencies were met. EITF 04-8 is effective for
reporting periods ending after December 15, 2004, and
requires restatement of prior period earnings per share amounts.
Under the provisions of EITF 04-8, DoubleClicks Zero
Coupon Convertible Subordinated Notes due 2023, which represent
10.3 million potential shares of common stock, will be
included in the calculation of diluted earnings per share using
the if-converted method regardless if the contingent
requirements have been met for conversion to common stock.
DoubleClick plans to adopt EITF 04-8 during the fourth
quarter of 2004. The effect of these adjustments would reduce
diluted earnings per share for the three and nine months ended
September 30, 2004 by approximately $0.01 and $0.02,
respectively. Diluted earnings per share for both the three and
nine months ended September 30, 2003 would be unchanged.

In January 2003, FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities (FIN 46). This interpretation of
Accounting Research Bulletin No. 51, Consolidated
Financial Statements, addresses consolidation by business
enterprises of variable interest entities that either
(1) do not have sufficient equity investment at risk to
permit the entity to finance its activities without additional
subordinated financial support, or (2) are owned by equity
investors who lack an essential characteristic of a controlling
financial interest. FIN 46 requires disclosure of variable
interest entities in financial statements issued after
January 31, 2003, if it is reasonably possible that as of
the transition date (1) an entity will be the primary
beneficiary of an existing variable interest entity that will
require consolidation, or (2) an entity will hold a
significant variable interest in, or have significant
involvement with, an existing variable interest entity. In
December 2003, the FASB issued Interpretation No. 46R
(FIN 46R), a revision to FIN 46.
FIN 46R clarifies some of the provisions of FIN 46 and
exempts certain entities from its requirements. FIN 46R is
effective at the end of the first interim period ending after
December 15, 2003. DoubleClick does not have any entities
as of September 30, 2004 that required disclosure or new
consolidation as a result of adopting the provisions of
FIN 46 and FIN 46R.



|         |                      
|-------- | ---------------------
|Note 2  | Business Transactions



| |             
| | ------------
| | Acquisitions



| |     
| | ----
| | 2004



| |                
| | ---------------
| | Performics Inc.

On June 22, 2004, DoubleClick completed its
acquisition of Performics, a privately-held search engine
marketing and affiliate marketing company based in Chicago,
Illinois for approximately $58.2 million in cash. Pursuant
to the acquisition agreements, the former shareholders of
Performics have the right to receive up to an additional
$7.0 million based on the attainment of certain 2004
revenue objectives. Performics search engine marketing
solutions are designed to help clients automate their paid
placement, paid inclusion, and

11



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


comparison shopping listings across multiple
search providers and publishers. Performics also provides the
infrastructure for affiliate marketing, through which marketers
manage, track, and report on their offers across multiple
affiliate sites. This acquisition enabled DoubleClick to offer
performance based marketing products and services.

The purchase price has been allocated to the
assets acquired and the liabilities assumed according to their
fair value at the date of acquisition as follows (in millions):

|                          |  |   |       |  
|------------------------- |  | - | ----- | -
|Current assets            |  | $ | 24.9  |  
|Property and equipment    |  |   | 1.4   |  
|Other intangible assets   |  |   | 18.7  |  
|Goodwill                  |  |   | 35.0  |  
|                          |  |   |       |  
|Total assets acquired     |  |   | 80.0  |  
|Total liabilities assumed |  |   | (21.8 | )
|                          |  |   |       |  
|Net assets acquired       |  | $ | 58.2  |  
|                          |  |   |       |  

On the basis of estimated fair values,
approximately $11.8 million of the purchase price has been
allocated to purchased technology and $6.9 million to
customer relationships. The purchased technology and the
customer relationships are being amortized on a straight-line
basis over three years based on each intangibles estimated
useful life.

The results of Performics operations were
included in DoubleClicks Consolidated Statement of
Operations beginning in the third quarter of 2004.



| |                
| | ---------------
| | SmartPath, Inc.

On March 19, 2004, DoubleClick completed its
acquisition of SmartPath, a privately-held marketing resource
management, or MRM, software company based in Raleigh, North
Carolina for approximately $24.1 million in cash. The
SmartPath solution added marketing planning and operational
management solutions to DoubleClicks existing offerings

The purchase price has been allocated to the
assets acquired and the liabilities assumed according to their
fair value at the date of acquisition as follows (in millions):

|                          |  |   |      |  
|------------------------- |  | - | ---- | -
|Current assets            |  | $ | 3.2  |  
|Property and equipment    |  |   | 0.1  |  
|Other intangible assets   |  |   | 7.1  |  
|Goodwill                  |  |   | 15.7 |  
|                          |  |   |      |  
|Total assets acquired     |  |   | 26.1 |  
|Total liabilities assumed |  |   | (2.0 | )
|                          |  |   |      |  
|Net assets acquired       |  | $ | 24.1 |  
|                          |  |   |      |  

On the basis of estimated fair values,
approximately $3.3 million of the purchase price has been
allocated to purchased technology, $1.4 million to customer
relationships and $2.4 million to a covenant not to
compete. The purchased technology and the customer relationships
are being amortized on a straight-line basis over three years
based on each intangibles estimated useful life. The
covenant not to compete is being amortized on a straight-line
basis over 15 months.

12



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


The results of SmartPaths operations were
included in DoubleClicks Consolidated Statement of
Operations beginning in the second quarter of 2004. In the third
quarter of 2004, Smartpath was included as a component of
DoubleClicks Enterprise Marketing Solutions business.



| |     
| | ----
| | 2003



| |                                         
| | ----------------------------------------
| | Computer Strategy Coordinators,
    Inc.

On June 30, 2003, DoubleClick completed its
acquisition of CSC, a data management company based in
Schaumburg, Illinois. This acquisition enabled DoubleClick to
strengthen the link between its email, campaign management and
Web site analytics technology businesses with its data
businesses, to create a comprehensive and bundled solution. In
the transaction, DoubleClick acquired all of the outstanding
shares of CSC in exchange for approximately $2.8 million in
cash and the assumption of certain indebtedness.

The purchase price has been allocated to the
assets acquired and the liabilities assumed according to their
fair value at the date of acquisition as follows (in millions):

|                          |  |   |      |  
|------------------------- |  | - | ---- | -
|Current assets            |  | $ | 2.2  |  
|Property and equipment    |  |   | 0.5  |  
|Other intangible assets   |  |   | 6.8  |  
|                          |  |   |      |  
|Total assets acquired     |  |   | 9.5  |  
|Total liabilities assumed |  |   | (6.7 | )
|                          |  |   |      |  
|Net assets acquired       |  | $ | 2.8  |  
|                          |  |   |      |  

On the basis of estimated fair values,
approximately $5.6 million of the purchase price has been
allocated to customer relationships and $1.2 million to
purchased technology. These intangibles are being amortized on a
straight-line basis over three years based on each
intangibles estimated useful life.

The results of operations of CSC were included in
DoubleClicks Consolidated Statement of Operations
beginning in the third quarter of 2003.

The following unaudited pro forma results of
operations have been prepared assuming that the acquisitions of
Performics, SmartPath and CSC, consummated during 2004 and 2003,
occurred at the beginning of the respective periods presented.
This pro forma financial information should not be considered
indicative of the actual results that would have been achieved
had the acquisitions been completed on the dates indicated and
does not purport to indicate results of operations as of any
future date or any future period.

|                             |  |                       |        |                           |  |      |        |      |  |   |         |  |  |   |         | 
|---------------------------- |  | --------------------- | ------ | ------------------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------- | 
|                             |  |                       |        |                          
|                             |  | Three Months Ended    |        | Nine Months Ended        
|                             |  | September 30,         |        | September 30,            
|                             |  |                       |        |                          
|                             |  | 2004                  |        | 2003                      |  | 2004 |        | 2003
|                             |  |                       |        |                           |  |      |        |     
|                             |  |                       |        |                          
|                             |  | (In thousands, except |        | (In thousands, except per
|                             |  | per share data)       |        | share data)              
|Revenues                     |  | $                     | 80,954 |                           |  | $    | 78,331 |      |  | $ | 228,311 |  |  | $ | 217,429 | 
|Net income                   |  | $                     | 15,364 |                           |  | $    | 3,978  |      |  | $ | 22,958  |  |  | $ | 4,192   | 
|Net income per basic share   |  | $                     | 0.12   |                           |  | $    | 0.03   |      |  | $ | 0.17    |  |  | $ | 0.03    | 
|Net income per diluted share |  | $                     | 0.12   |                           |  | $    | 0.03   |      |  | $ | 0.17    |  |  | $ | 0.03    | 

13



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)




|         |                         
|-------- | ------------------------
|Note 3  | Investment in Affiliates

DoubleClicks investments in affiliates at
September 30, 2004 and December 31, 2003 consisted of
the following:

|                         |  |                |       |              |  |   |        | 
|------------------------ |  | -------------- | ----- | ------------ |  | - | ------ | 
|                         |  | September 30,  |       | December 31,
|                         |  | 2004           |       | 2003        
|                         |  |                |       |             
|                         |  |               
|                         |  | (In thousands)
|AdLINK Internet Media AG |  | $              |      |              |  | $ | 7,578  | 
|DoubleClick Japan        |  |                | 5,581 |              |  |   | 5,844  | 
|Abacus Deutschland       |  |                | 178   |              |  |   |       | 
|MaxWorldwide, Inc.       |  |                |      |              |  |   |       | 
|                         |  |                |       |              |  |   |        | 
|                         |  | $              | 5,759 |              |  | $ | 13,422 | 
|                         |  |                |       |              |  |   |        | 

In connection with DoubleClicks sale of its
European Media business to AdLINK Internet Media AG
(AdLINK) in January 2002, DoubleClick acquired an
option to acquire an additional 21% of AdLINK common shares from
United Internet AG, AdLINKs majority shareholder. This
option was only exercisable if AdLINK had achieved EBITDA
positive results for two out of three consecutive fiscal
quarters before December 31, 2003. AdLINK did not achieve
EBITDA positive results during these periods, therefore the
option expired unexercised. On September 22, 2004,
DoubleClick sold its 15% interest in AdLINK Internet Media AG
for $9.5 million to United Internet AG. As a result of the
sale, DoubleClick recorded a gain of approximately
$7.1 million and no longer holds an equity interest in
AdLINK.

As of September 30, 2004 and
December 31, 2003, DoubleClicks investments in
MaxWorldwide, Inc. (MaxWorldwide) and DoubleClick
Japan represent investments in publicly traded companies which
are accounted under the equity method of accounting. At
September 30, 2004 and December 31, 2003, the fair
value of these investments was as follows:

|                   |  |                |        |              |  |   |        | 
|------------------ |  | -------------- | ------ | ------------ |  | - | ------ | 
|                   |  | September 30,  |        | December 31,
|                   |  | 2004           |        | 2003        
|                   |  |                |        |             
|                   |  |               
|                   |  | (In thousands)
|MaxWorldwide, Inc. |  | $              | 2,064  |              |  | $ | 3,840  | 
|DoubleClick Japan  |  | $              | 14,664 |              |  | $ | 12,981 | 

In January 2004, DoubleClick commenced operations
of Abacus Deutschland, a joint venture with AZ Direct GmbH,
a subsidiary of Bertelsmann AG, a global media company.
DoubleClick has a 50% interest in the joint venture which has
required investments to date of approximately $0.8 million.
As of September 30, 2004, DoubleClick recognized losses of
approximately $0.6 million. Abacus Deutschland is based in
Düsseldorf, Germany and offers German catalog companies
modeling tools designed to improve their direct marketing
initiatives.

In the first quarter of 2004, DoubleClick
recognized a gain of $2.4 million relating to a
distribution from MaxWorldwide in connection with its plan of
liquidation and dissolution. DoubleClick still maintains a 19.8%
interest in MaxWorldwide and may receive additional
distributions in future periods as a result of the finalization
of its plan of liquidation and dissolution.

14



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)




|         |         
|-------- | --------
|Note 4  | Goodwill

The changes in the carrying amount of goodwill
for the nine months ended September 30, 2004 are as follows
(in thousands):

|                                                              |  |   |        |  
|------------------------------------------------------------- |  | - | ------ | -
|Balance at December 31, 2003                                  |  | $ | 18,658 |  
|Recognition of Canadian deferred tax assets                   |  |   | (1,139 | )
|Acquisition of SmartPath                                      |  |   | 15,719 |  
|Acquisition of Performics                                     |  |   | 35,053 |  
|Impairment charge (see Note 6)                                |  |   | (1,506 | )
|Tax adjustment related to the acquisition of
    MessageMedia |  |   | (234   | )
|                                                              |  |   |        |  
|Balance at September 30, 2004                                 |  | $ | 66,551 |  
|                                                              |  |   |        |  

Goodwill at September 30, 2004 and
December 31, 2003 relates solely to DoubleClicks
TechSolutions segment.



|         |                  
|-------- | -----------------
|Note 5  | Intangible Assets

Intangible assets consist of the following:

|                   |                                |                |           |                    |  |              |        |        |  |     |         |         |   |   |        |        |  |   |        |       | 
|------------------ | ------------------------------ | -------------- | --------- | ------------------ |  | ------------ | ------ | ------ |  | --- | ------- | ------- | - | - | ------ | ------ |  | - | ------ | ----- | 
|                   |                                |                |           |                    |  |             
|                   |                                |                |           | September 30, 2004 |  |             
|                   |                                | Weighted       |           |                    |  | December 31,
|                   |                                | Average        |           | Gross              |  |              |        | 2003  
|                   |                                | Amortization   |           | Carrying           |  | Accumulated  |        |        |  |    
|                   |                                | Period         |           | Amount             |  | Amortization |        | Net    |  | Net
|                   |                                |                |           |                    |  |              |        |        |  |    
|                   |                                |               
|                   |                                | (In thousands)
|Intangible assets: |                                |                |           |                    |  |              |        |        |  |     |         |         |   |   |        |        |  |   |        |      
|                   | Patents and trademarks         |                |           | 33 months          |  |              | $      | 2,084  |  |     | $       | (2,084  | ) |   | $      |       |  |   | $      |      | 
|                   | Customer relationships         |                |           | 33 months          |  |              |        | 34,675 |  |     |         | (23,867 | ) |   |        | 10,808 |  |   |        | 6,105 | 
|                   | Purchased technology and other |                |           | 39 months          |  |              |        | 23,889 |  |     |         | (10,665 | ) |   |        | 13,224 |  |   |        | 4,742 | 
|                   | Covenant not to compete        |                |           | 15 months          |  |              |        | 2,400  |  |     |         | (960    | ) |   |        | 1,440  |  |   |        |      | 
|                   |                                |                |           |                    |  |              |        |        |  |     |         |         |   |   |        |        |  |   |        |      
|                   |                                |                | 36 months |                    |  | $            | 63,048 |        |  | $   | (37,576 | )       |   | $ | 25,472 |        |  | $ | 10,847 |      
|                   |                                |                |           |                    |  |              |        |        |  |     |         |         |   |   |        |        |  |   |        |      

Amortization expense was $3.5 million and
$7.1 million for the three and nine months ended
September 30, 2004, respectively, and $2.5 million and
$7.5 million for the three and nine months ended
September 30, 2003, respectively. For the three and nine
months ended September 30, 2004, $1.7 million and
$3.5 million of amortization expense, respectively,
relating to purchased technology has been included as a
component of cost of revenue in the Consolidated Statements of
Operations. For the three and nine months ended
September 30, 2003, $0.9 million and
$2.6 million, respectively, of amortization expense
relating to purchased technology has been included as a
component of cost of revenue in the Consolidated Statements of
Operations.

Based on the balance of intangible assets at
September 30, 2004, the annual amortization expense for
each of the succeeding three fiscal years is estimated to be
$10.6 million, $8.5 million and $3.6 million in
2005, 2006 and 2007, respectively. Amortization expense for the
fourth quarter of 2004 is estimated to be $2.8 million.

In the third quarter of 2004, DoubleClick
recorded an impairment charge of $1.4 million relating to
intangible assets of its Enterprise Marketing Solutions, or EMS,
business. (See Note 6)

15



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)




|         |                                                 
|-------- | ------------------------------------------------
|Note 6  | Impairment of Goodwill and Intangible
    Assets

In the third quarter of 2004, DoubleClick
initiated a valuation for its Enterprise Marketing Solutions, or
EMS, business, which consists of its campaign management and
marketing resource management products. This valuation was
performed with the assistance of a third party to determine if
the recorded balances of goodwill and other intangible assets
relating to this reporting unit were recoverable. The
recoverability of these assets was brought into question as a
result of the lower than expected revenues generated to date and
the reduced estimates of future performance primarily from
DoubleClicks campaign management products. The fair market
value of the EMS reporting unit was determined based on
projected discounted cash flows and price/revenue multiples of
competitors in the EMS marketplace. The outcome of this
valuation resulted in an impairment charge of $5.6 million
being recorded during the quarter based on the difference
between the carrying value and the fair market value of this
business. The impairment charge consisted of a write-down in
goodwill of $1.5 million and intangible assets of
$4.1 million. The conclusion regarding the recognition of
this charge was made in connection with the preparation of the
financial statements included in this report.



|         |                                                
|-------- | -----------------------------------------------
|Note 7  | Convertible Subordinated Debt  Zero
    Coupon

On June 23, 2003, DoubleClick issued
$135.0 million aggregate principal amount of Zero Coupon
Convertible Subordinated Notes due 2023 (the Zero Coupon
Notes) in a private offering. The Zero Coupon Notes do not
bear interest and have a zero yield to maturity. The Zero Coupon
Notes are convertible under certain circumstances into
DoubleClick common stock at a conversion price of approximately
$13.12 per share, which would result in an aggregate of
approximately 10.3 million shares, subject to adjustment
upon the occurrence of specified events. Each $1,000 principal
amount of the Zero Coupon Notes will initially be convertible
into 76.2311 shares of DoubleClick common stock prior to
July 15, 2023 if the sale price of DoubleClicks
common stock issuable upon conversion of the Zero Coupon Notes
reaches a specified threshold for a defined period of time, if
specified corporate transactions have occurred or if DoubleClick
calls the Zero Coupon Notes for redemption. The specified
thresholds for conversion prior to the maturity date are
(a) during any calendar quarter, the last reported sale
price of DoubleClicks common stock for at least 20 trading
days in the 30 consecutive trading days ending on the last
trading day of the previous calendar quarter is greater than or
equal to 120% of the applicable conversion price on that 30th
trading day and (b) subject to certain exceptions, during
the five business day period following any five consecutive
trading day period, the trading price per $1,000 principal
amount of Zero Coupon Notes for each of the five consecutive
trading days is less than 98% of the product of the last
reported sale price of DoubleClicks common stock and the
conversion rate (initially 76.2311) on each such day. As of
September 30, 2004, these thresholds had not been met.

The Zero Coupon Notes are DoubleClicks
general unsecured obligations and are subordinated in right of
payment to all of its existing and future senior debt.
DoubleClick may not redeem the Zero Coupon Notes prior to
July 15, 2008. DoubleClick may be required to repurchase
any or all of the Zero Coupon Notes upon a change of control or
a termination of trading. DoubleClick may redeem for cash some
or all of the Zero Coupon Notes at any time on or after
July 15, 2008. Holders of the Zero Coupon Notes also have
the right to require DoubleClick to purchase some or all of
their notes for cash on July 15, 2008, July 15, 2013
and July 15, 2018, at a price equal to 100% of the
principal amount of the Zero Coupon Notes being redeemed plus
accrued and unpaid liquidated damages, if any.

DoubleClick received net proceeds of
approximately $131.5 million and incurred issuance costs of
approximately $3.5 million. The issuance costs are
amortized from the date of issuance through July 15, 2008
and are included as a component of other assets on the
Consolidated Balance Sheet.

16



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


The Zero Coupon Notes contain an embedded
derivative, the fair value of which as of September 30,
2004 has been determined to be immaterial to our consolidated
financial position. For financial accounting purposes, the
ability of the holder to convert upon the satisfaction of a
trading price condition constitutes an embedded derivative. Any
significant changes in its value will be reflected in our future
income statements, in accordance with Statement of Financial
Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities.



|         |              
|-------- | -------------
|Note 8  | Restructuring

During the third quarter of 2004, DoubleClick
recorded a restructuring credit of $4.5 million. This
credit was due to the reversal of a portion of
DoubleClicks real estate reserve for its facility in
Louisville, Colorado. The reversal of the reserve was due to the
sublease of this property at rates in excess of
DoubleClicks previous estimate of sublease income. Cash
paid during the nine months ended September 30, 2004 with
respect to previously accrued restructuring charges was
approximately $10.3 million. In the first quarter of 2004,
$7.6 million was paid for the final lease termination
payment relating to DoubleClicks former New York
headquarters. The remaining $2.7 million of cash paid in
the first nine months of 2004 related to payments for lease and
other exit costs at excess and idle facilities in New York and
Louisville, Colorado.

The restructuring accrual as of
September 30, 2004 of approximately $18.4 million
consists primarily of DoubleClicks facilities in London,
England and Louisville, Colorado. The restructuring accrual
associated with DoubleClicks facilities represents the
excess of future lease commitments over estimated sublease
income in locations where DoubleClick has excess or idle space.
In most cases, subleases have been signed for the entire term of
these leases and DoubleClicks estimate of sublease income
is based on the agreed upon sublease rates. In facilities for
which DoubleClick does not have a sublease signed for the entire
term of the lease, sublease assumptions are made with the
assistance of a real estate firm and are based on the current
real estate market conditions in the local markets where these
facilities are located. Should market conditions or other
circumstances change, this information may be updated and
restructuring charges or credits may be required.

As of September 30, 2004, approximately
$4.0 million and $14.4 million remained accrued as a
component in accrued expenses and other current liabilities and
other long-term liabilities on the Consolidated Balance Sheet,
respectively, and relates wholly to future lease costs.

The following table sets forth a summary of the
costs and related charges for DoubleClicks restructuring
charges and the balance of the restructuring reserves
established (in thousands):

|                              |                                        |   |        |         |  
|----------------------------- | -------------------------------------- | - | ------ | ------- | -
|Balance at December 31, 2003  |                                        | $ | 32,977 |        
|                              | Cash expenditures                      |   |        | (10,295 | )
|                              | Restructuring credit                   |   |        | (4,514  | )
|                              | Effect of foreign currency translation |   |        | 259     |  
|                              |                                        |   |        |        
|Balance at September 30, 2004 |                                        | $ | 18,427 |        
|                              |                                        |   |        |        



|         |              
|-------- | -------------
|Note 9  | Contingencies

In April 2002, a consolidated amended class
action complaint alleging violation of the federal securities
laws in connection with DoubleClicks follow-on offerings
was filed in the United States District Court for the Southern
District of New York naming as defendants DoubleClick, some of
its officers and directors and certain underwriters of
DoubleClicks follow-on offerings. Approximately 300 other
issuers and their underwriters have had similar suits filed
against them, all of which are included in a single coordinated

17



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


proceeding in the Southern District of New York.
In October 2002, the action was dismissed against the named
officers and directors without prejudice. However, claims
against DoubleClick remain. In July 2002, DoubleClick and the
other issuers in the consolidated cases filed motions to dismiss
the amended complaint for failure to state a claim, which was
denied as to DoubleClick in February 2003.

In September 2003, DoubleClicks Board of
Directors conditionally approved a proposed partial settlement
with the plaintiffs in this matter. In September 2004, an
agreement of settlement was submitted to the court for
preliminary approval, and the underwriter defendants have
opposed that motion. The settlement would provide, among other
things, a release of DoubleClick and of the individual
defendants for the conduct alleged in the action to be wrongful
in the amended complaint. DoubleClick would agree to undertake
other responsibilities under the partial settlement, including
agreeing to assign away, not assert, or release certain
potential claims it may have against its underwriters. The
settlement is subject to a hearing on fairness and approval by
the court overseeing the IPO litigations. If this settlement is
not finalized, DoubleClick intends to dispute these allegations
and defend this lawsuit vigorously.

DoubleClick is defending two class action
lawsuits, one filed in Allegheny County, Pennsylvania and the
other in San Joaquin County, California, alleging, among
other things, deceptive business practices, fraud,
misrepresentation, invasion of privacy and right of association
relating to allegedly deceptive content of online advertisement
that plaintiffs assert we delivered to consumers. The actions
seek, among other things, injunctive relief, compensatory and
punitive damages and attorneys fees and costs. In April
2004, the court in the California action entered an order
dismissing several claims against DoubleClick. DoubleClick
believes the claims in these cases are without merit and intends
to defend these actions vigorously.

As previously reported, in October 2003,
DoubleClick received a grand jury subpoena from the United
States Attorneys Office for the Southern District of New
York (U.S. Attorneys Office) seeking
documents regarding certain vendors that provided services to
DoubleClick, including interior construction and facilities
management, during the period from 1999 through 2001. The
services provided by these vendors are unrelated to the products
and services provided by DoubleClick to its customers. In March
2004, the U.S. Attorneys Office issued a press
release announcing an Indictment against nineteen individuals,
including a former DoubleClick employee, for racketeering and
other federal crimes. The Indictment alleges a scheme to defraud
DoubleClick through extortion of one of its vendors and through
kickbacks to the DoubleClick former employee named in the
Indictment. The press release states that these kickback
payments were made without knowledge of [the former
employees] superiors at DoubleClick and were in direct
violation of the written policies and procedures of
DoubleClick.

DoubleClick is continuing to fully cooperate with
the U.S. Attorneys Office. In addition, following
receipt of the grand jury subpoena, DoubleClick conducted an
internal investigation and has implemented remedial measures to
improve its selection, use and oversight of its vendors.
DoubleClick does not believe that any overpayments by
DoubleClick relating to the vendor named in the Indictment or
the other vendors listed in the grand jury subpoena are material
with respect to its financial statements for the periods in
question or its current financial condition.

Note 10  Segment
Reporting

DoubleClick is organized into two segments:
TechSolutions and Data. In December 2003, DoubleClick changed
its measure of segment profit or loss from gross profit to
operating income (loss). As a result, DoubleClick has adjusted
its prior period segment disclosures to conform to this new
measurement. Adjustments to reconcile segment reporting to
consolidated results are included in corporate.
Corporate represents the results of operations of
DoubleClicks unallocated corporate overhead and
restructuring credits

18



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

September 30, 2004


(Unaudited)


that are non-segment specific. The accounting
policies of DoubleClicks segments are the same as those
described in the summary of significant accounting policies.

Revenue and operating income (loss) by
segment are as follows (in thousands):

|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |       |  |   |        |   |  |   |        |  |  |   |        |   |  |   |        |  
|------------------------------- |  | -------------------------- | ------ | -------------------------- |  | --------- | ------ | ----- |  | ------------- | ------ | ---- |  | --------- | ------ | ----- |  | - | ------ | - |  | - | ------ |  |  | - | ------ | - |  | - | ------ | -
|                                |  |                            |        |                           
|                                |  | For the Three Months Ended |        | For the Three Months Ended
|                                |  | September 30, 2004         |        | September 30, 2003        
|                                |  |                            |        |                           
|                                |  | TechSolutions              |        | Data                       |  | Corporate |        | Total |  | TechSolutions |        | Data |  | Corporate |        | Total
|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |      
|Revenue from external customers |  | $                          | 47,823 |                            |  | $         | 33,131 |       |  | $             |       |      |  | $         | 80,954 |       |  | $ | 43,514 |   |  | $ | 31,276 |  |  | $ |       |   |  | $ | 74,790 |  
|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |       |  |   |        |   |  |   |        |  |  |   |        |   |  |   |        |  
|Depreciation and amortization   |  | $                          | 6,493  |                            |  | $         | 2,196  |       |  | $             | 530    |      |  | $         | 9,219  |       |  | $ | 14,688 |   |  | $ | 2,753  |  |  | $ | 2,173  |   |  | $ | 19,614 |  
|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |       |  |   |        |   |  |   |        |  |  |   |        |   |  |   |        |  
|Restructuring credits, net      |  | $                          |       |                            |  | $         |       |       |  | $             | (4,514 | )    |  | $         | (4,514 | )     |  | $ |       |   |  | $ |       |  |  | $ | (2,220 | ) |  | $ | (2,220 | )
|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |       |  |   |        |   |  |   |        |  |  |   |        |   |  |   |        |  
|Goodwill and other impairments  |  | $                          | 5,592  |                            |  | $         |       |       |  | $             |       |      |  | $         |       |       |  | $ |       |   |  | $ |       |  |  | $ |       |   |  | $ |       |  
|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |       |  |   |        |   |  |   |        |  |  |   |        |   |  |   |        |  
|Operating income/(loss)         |  | $                          | (961   | )                          |  | $         | 12,945 |       |  | $             | (4,553 | )    |  | $         | 7,431  |       |  | $ | (1,790 | ) |  | $ | 11,063 |  |  | $ | (5,525 | ) |  | $ | 3,748  |  
|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |       |  |   |        |   |  |   |        |  |  |   |        |   |  |   |        |  
|Total other income              |  |                            |        |                            |  |           |        |       |  |               |        |      |  | $         | 9,472  |       |  |   |        |   |  |   |        |  |  |   |        |   |  | $ | 3,365  |  
|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |       |  |   |        |   |  |   |        |  |  |   |        |   |  |   |        |  
|Income before income taxes      |  |                            |        |                            |  |           |        |       |  |               |        |      |  | $         | 16,903 |       |  |   |        |   |  |   |        |  |  |   |        |   |  | $ | 7,113  |  
|                                |  |                            |        |                            |  |           |        |       |  |               |        |      |  |           |        |       |  |   |        |   |  |   |        |  |  |   |        |   |  |   |        |  

|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |       |  |   |         |  |  |   |        |  |  |   |         |   |  |   |         |  
|------------------------------- |  | ------------------------- | ------- | ------------------------- |  | --------- | ------ | ----- |  | ------------- | ------- | ---- |  | --------- | ------- | ----- |  | - | ------- |  |  | - | ------ |  |  | - | ------- | - |  | - | ------- | -
|                                |  |                           |         |                          
|                                |  | For the Nine Months Ended |         | For the Nine Months Ended
|                                |  | September 30, 2004        |         | September 30, 2003       
|                                |  |                           |         |                          
|                                |  | TechSolutions             |         | Data                      |  | Corporate |        | Total |  | TechSolutions |         | Data |  | Corporate |         | Total
|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |      
|Revenue from external customers |  | $                         | 139,485 |                           |  | $         | 78,669 |       |  | $             |        |      |  | $         | 218,154 |       |  | $ | 128,511 |  |  | $ | 69,889 |  |  | $ |        |   |  | $ | 198,400 |  
|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |       |  |   |         |  |  |   |        |  |  |   |         |   |  |   |         |  
|Depreciation and amortization   |  | $                         | 18,300  |                           |  | $         | 6,568  |       |  | $             | 1,756   |      |  | $         | 26,624  |       |  | $ | 34,571  |  |  | $ | 6,107  |  |  | $ | 4,270   |   |  | $ | 44,948  |  
|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |       |  |   |         |  |  |   |        |  |  |   |         |   |  |   |         |  
|Restructuring credits, net      |  | $                         |        |                           |  | $         |       |       |  | $             | (4,514  | )    |  | $         | (4,514  | )     |  | $ |        |  |  | $ |       |  |  | $ | (9,092  | ) |  | $ | (9,092  | )
|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |       |  |   |         |  |  |   |        |  |  |   |         |   |  |   |         |  
|Goodwill and other impairments  |  | $                         | 5,592   |                           |  | $         |       |       |  | $             |        |      |  | $         | 5,592   |       |  | $ |        |  |  | $ |       |  |  | $ |        |   |  | $ |        |  
|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |       |  |   |         |  |  |   |        |  |  |   |         |   |  |   |         |  
|Operating Income/(loss)         |  | $                         | 17,078  |                           |  | $         | 17,844 |       |  | $             | (22,083 | )    |  | $         | 12,839  |       |  | $ | 5,089   |  |  | $ | 21,387 |  |  | $ | (14,268 | ) |  | $ | 12,208  |  
|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |       |  |   |         |  |  |   |        |  |  |   |         |   |  |   |         |  
|Total other income              |  |                           |         |                           |  |           |        |       |  |               |         |      |  | $         | 17,093  |       |  |   |         |  |  |   |        |  |  |   |         |   |  | $ | 2,278   |  
|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |       |  |   |         |  |  |   |        |  |  |   |         |   |  |   |         |  
|Income before income taxes      |  |                           |         |                           |  |           |        |       |  |               |         |      |  | $         | 29,932  |       |  |   |         |  |  |   |        |  |  |   |         |   |  | $ | 14,486  |  
|                                |  |                           |         |                           |  |           |        |       |  |               |         |      |  |           |         |       |  |   |         |  |  |   |        |  |  |   |         |   |  |   |         |  

Note 11  Comprehensive
Income

Comprehensive income consists of net income,
unrealized gains and losses on marketable securities and foreign
currency translation adjustments. Comprehensive income was
$9.0 million and $18.0 million for the three and nine
months ended September 30, 2004, respectively.
Comprehensive income was $7.5 million and $16.7 million for
the three and nine months ended September 30, 2003,
respectively.

Note 12  Subsequent
Event

On October 31, 2004, DoubleClick announced
that it retained Lazard Freres & Co. to explore
strategic options for the business to achieve greater
shareholder value. These options may include a sale of part or
all of its businesses, recapitalization, extraordinary dividend,
share repurchase or a spin-off.

19



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

Cautionary Note Regarding Forward-Looking
Statements

This report contains forward-looking
statements relating to future events and our future performance
within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Stockholders are cautioned
that such statements involve risks and uncertainties. These
forward-looking statements are based on current expectations,
estimates, forecasts and projections about the industry and
markets in which we operate and managements beliefs and
assumptions. Any statements contained herein, including without
limitation, statements to the effect that we or our management
believes, expects,
anticipates, plans or similar
expressions that are not statements of historical fact should be
considered forward-looking statements. These statements are not
guarantees of future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict. Our
actual results and timing of certain events could differ
materially from those anticipated in these forward-looking
statements as a result of certain factors, including, but not
limited to, those set forth under Risk Factors and
elsewhere in this report and in our other public filings with
the Securities and Exchange Commission. It is routine for
internal projections and expectations to change as the year or
each quarter in the year progresses, and therefore it should be
clearly understood that the internal projections and beliefs
upon which we base our expectations are made as of the date of
this Quarterly Report on Form 10-Q and may change prior to
the end of each quarter or the year. While we may elect to
update forward-looking statements at some point in the future,
we may not update publicly any forward-looking statements
whether as a result of new information, future events or
otherwise. The forward looking statements and risk factors
discussed herein do not reflect the potential impact of any
mergers, acquisitions or dispositions.

Overview

We provide technology and data products and
services that direct marketers, Web publishers and advertisers
use to optimize their marketing programs and efficiently reach
their customers. We derive revenues from two business segments:
DoubleClick TechSolutions, which we refer to as our
TechSolutions segment, and DoubleClick Data, which we refer to
as our Data segment.

DoubleClick TechSolutions.TechSolutions includes products and
services from our Ad Management, Marketing Automation and
Performics divisions. Our Ad Management products and services
primarily consist of our DART for Publishers Service, DART
Enterprise ad serving product and DART for Advertisers Service.
Our Marketing Automation products and services primarily consist
of our email products based on our DARTmail Service and our
Enterprise Marketing Solutions, or EMS, which consists of our
campaign management and marketing resource management, or MRM,
products. As a result of the acquisition of Performics Inc. in
June 2004, we created a third division within TechSolutions
which offers search engine marketing and affiliate marketing
solutions. We generate our TechSolutions revenue primarily from
the delivery of advertising impressions and emails, the sale and
the installation of our licensed software products as well as
when transactions are generated through the use of our
Performics products.

DoubleClick Data.Data, which consists of our Abacus and
Data Management divisions, provides products and services
primarily to direct marketers. Abacus maintains the Abacus
Alliance database in the United States, which is a proprietary
database of consumer transactions used for target marketing
purposes, and maintains alliances in the United Kingdom,
Australia, Japan, France and through a joint venture, in
Germany. In the United States, we also offer a
Business-to-Business Alliance. In addition, we offer direct
marketers solutions for building and managing customer marketing
databases and other related products and services as part of our
Data Management division. We generate our Data revenue primarily
from the sale of consumer and business prospect lists, list
processing, database development and database management
services.

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Recent Developments

On October 31, 2004, we announced that we
retained Lazard Freres & Co. to explore strategic
options for the business to achieve greater shareholder value.
These options may include a sale of part or all of our
businesses, recapitalization, extraordinary dividend, share
repurchase or a spin-off.



| |                             
| | ----------------------------
| | Critical Accounting Policies

Our discussion and analysis of our financial
condition and results of operations is based upon our
consolidated financial statements, which have been prepared in
accordance with generally accepted accounting principles. The
preparation of these consolidated financial statements requires
us to make estimates, judgments and assumptions, which
management believes to be reasonable, based on the information
available. These estimates and assumptions affect the reported
amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent liabilities. Variances in the
estimates or assumptions used could yield materially different
accounting results. Described below are the areas where we
believe that the estimates, judgments or assumptions that we
have made, if different, would have yielded the most significant
differences in our financial statements.



| |                        
| | -----------------------
| | Restructuring Estimates

Our restructuring reserves as of
September 30, 2004 were approximately $18.4 million,
and consisted primarily of reserves for our facilities in
London, England and Louisville, Colorado. The restructuring
accrual associated with our facilities represents the excess of
future lease commitments over estimated sublease income in
locations where we have excess or idle space. In most cases,
subleases have been signed for the entire term of these leases
and our estimate of sublease income is based on the agreed upon
sublease rates. In facilities for which we do not have a
sublease signed for the entire term of the lease, sublease
assumptions are made with the assistance of a real estate firm
and are based on the current real estate market conditions in
the local markets where these facilities are located. The most
material estimate is associated with our facility in London
where the office space is currently sublet for only a portion of
the remaining lease term. The total remaining obligation for
this facility is approximately $42.8 million. Our London
reserve is based on our estimate of future sublease income
relative to the total remaining obligation and was determined
based on the weighted probability of various future sublease
scenarios. These scenarios resulted in a weighted average
sublease rate where for each $1.00 change in this assumption,
additional restructuring charges or credits of approximately
$0.2 million would be required. If market conditions or
other circumstances change, this information may be updated and
additional charges or credits may be required.



| |                                    
| | -----------------------------------
| | Advertiser Credits and Bad
    Debt

We record reductions to revenue for the estimated
future credits issuable to our customers in the event that
solutions do not meet contractual specifications. We follow this
method because we believe reasonably dependable estimates of
such credits can be made based on historical experience. If the
actual amounts of customer credits differ from our estimates,
revisions to the associated allowance may be required. We
maintain an allowance for doubtful accounts for estimated losses
resulting from the inability 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 in subsequent
periods.



| |                      
| | ---------------------
| | Valuation of Goodwill

We evaluate our goodwill for impairment annually,
as well as when an event triggering impairment may have
occurred. We have elected to perform our annual impairment
analysis during the fourth quarter of each fiscal year as of
October 1st. In accordance with Statements of Financial
Accounting Standards No. 142, Goodwill and Other
Intangible Assets, we utilize a two-step process for
impairment testing of goodwill. The first step tests for
impairment, while the second step, if necessary, measures the
impairment.

When it is determined that the carrying value of
goodwill may be impaired or investments may not be recoverable,
management measures impairment based on projected discounted
cash flows, recent transactions

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involving similar businesses and price/revenue
multiples at which they were bought and sold and price/revenue
multiples of competitors and the closing market price for
investments that are publicly traded.


In the third quarter of 2004, we initiated a
valuation for our Enterprise Marketing Solutions, or EMS,
business which consists of our campaign management and marketing
resource management products. This valuation was performed with
the assistance of a third party to determine if the recorded
balance of goodwill and other intangible assets relating to this
reporting unit was recoverable. The recoverability of these
assets was brought into question as a result of the lower than
expected revenues generated to date and the reduced estimates of
future performance primarily associated with our campaign
management products. The outcome of this valuation resulted in
an impairment charge of $5.6 million being recorded during
the quarter based on the difference between the carrying value
and the fair value of this business. The impairment charge
consisted of a write-down in intangible assets of $4.1 million
and goodwill of $1.5 million.



| |                    
| | -------------------
| | Deferred Tax Assets

Pursuant to SFAS 109, we record a valuation
allowance to the extent realization of our net deferred tax
asset is not more likely than not. As of September 30, 2004
and December 31, 2003, we maintained a valuation allowance
against certain deferred tax assets that we believe, after
considering all the available objective evidence, both positive
and negative, historical and prospective, with greater weight
given to historical evidence, are not more likely than not
expected to be realized. If we determine that we would be able
to realize additional or all of our deferred tax assets, an
adjustment to the valuation allowance would increase income
and/or adjust additional paid-in capital and/or goodwill in the
period such determination was made.



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment is stated at cost and
depreciated using the straight-line method over the shorter of
the estimated life of the asset or the lease term. We
periodically review the useful lives of our assets to confirm
that such useful life determination is appropriate. If we
determine that the estimated useful life of our assets needs to
be adjusted to reflect depreciation expense over the remaining
time that the assets are expected to remain in service, future
income or losses will be impacted in the subsequent periods
after such a determination is made.



| |                                     
| | ------------------------------------
| | Recent Accounting
    Pronouncements

On September 30, 2004, the Emerging Issues
Task Force (EITF) confirmed their tentative
conclusion on EITF Issue No. 04-8, The Effect of
Contingently Convertible Debt on Diluted Earnings per
Share. EITF 04-8 requires contingently convertible debt
instruments to be included in diluted earnings per share, if
dilutive, regardless of whether a market price contingency for
the conversion of the debt into common shares or any other
contingent factor has been met. Prior to this consensus, such
instruments were excluded from the calculation until one or more
of the contingencies were met. EITF 04-8 is effective for
reporting periods ending after December 15, 2004, and
requires restatement of prior period earnings per share amounts.
Under the provisions of EITF 04-8, DoubleClicks Zero
Coupon Convertible Subordinated Notes due 2023, which represent
10.3 million potential shares of common stock, will be
included in the calculation of diluted earnings per share using
the if-converted method regardless if the contingent
requirements have been met for conversion to common stock. We
plan to adopt EITF 04-8 during the fourth quarter of 2004.
The effect of these adjustments would reduce diluted earnings
per share for the three and nine months ended September 30,
2004 by approximately $0.01 and $0.02, respectively. Diluted
earnings per share for both the three and nine months ended
September 30, 2003 would be unchanged.

In January 2003, FASB issued Interpretation
No. 46, Consolidation of Variable Interest
Entities, known as FIN 46. This interpretation of
Accounting Research Bulletin No. 51, Consolidated
Financial Statements, addresses consolidation by business
enterprises of variable interest entities that either
(1) do not have sufficient equity investment at risk to
permit the entity to finance its activities without additional
subordinated financial support, or (2) are owned by equity
investors who lack an essential characteristic of a

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controlling financial interest. FIN 46 requires
disclosure of variable interest entities in financial statements
issued after January 31, 2003, if it is reasonably possible
that as of the transition date (1) an entity will be the
primary beneficiary of an existing variable interest entity that
will require consolidation, or (2) an entity will hold a
significant variable interest in, or have significant
involvement with, an existing variable interest entity. In
December 2003, the FASB issued Interpretation No. 46R,
known as FIN 46R, a revision to FIN 46. FIN 46R
clarifies some of the provisions of FIN 46 and exempts
certain entities from its requirements. FIN 46R is
effective at the end of the first interim period ending after
December 15, 2003. We do not have any entities as of
September 30, 2004 that required disclosure or new
consolidation as a result of adopting the provisions of
FIN 46 and FIN 46R.


Business Transactions



| |             
| | ------------
| | Acquisitions



| |     
| | ----
| | 2004



| |                
| | ---------------
| | Performics Inc.

On June 22, 2004, we completed our
acquisition of Performics Inc., a privately-held search engine
marketing and affiliate marketing company based in Chicago,
Illinois for approximately $58.2 million in cash. Pursuant
to the acquisition agreements, the former shareholders of
Performics have the right to receive up to an additional
$7.0 million based on the attainment of certain 2004
revenue objectives. Performics search engine marketing
solutions are designed to help clients automate their paid
placement, paid inclusion, and comparison shopping listings
across multiple search providers and publishers. Performics also
provides the infrastructure for affiliate marketing, through
which marketers manage, track, and report on their offers across
multiple affiliate sites.



| |                
| | ---------------
| | SmartPath, Inc.

On March 19, 2004, we completed our
acquisition of SmartPath, Inc, a privately held marketing
resource management, or MRM, software company, for approximately
$24.1 million in cash.



| |     
| | ----
| | 2003



| |                                         
| | ----------------------------------------
| | Computer Strategy Coordinators,
    Inc.

On June 30, 2003, we completed our
acquisition of Computer Strategy Coordinators, Inc., or CSC, a
data management company. In the transaction, we acquired all of
the outstanding shares of CSC in exchange for approximately
$2.8 million in cash and the assumption of certain
indebtedness.

Results of Operations



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Three months ended September 30, 2004
    compared to three months ended September 30,
    2003

Revenue for the three months ended
September 30, 2004 was $81.0 million, an increase of
$6.2 million, or 8.2%, compared to the prior year period.
This increase was due to the acquisitions of Performics in June
2004 and SmartPath in March 2004 as well as organic growth
within our Data segment. Revenues associated with these
acquisitions were $6.0 million in aggregate for the third
quarter of 2004. These increases were partially offset by a
year-over year decline in revenues from our campaign management
products and our Ad Management division. Gross profit increased
$10.0 million during the third quarter of 2004 to $59.4
million over the prior year period while gross margins improved
by 730 basis points to 73.4%. These increases were driven by our
TechSolutions segment. Operating income was $7.4 million
compared to $3.7 million in the prior year period.
Operating income improved due to an increase in gross profit of
$10.0 million partially offset by an increase in operating
expenses of $6.3 million. The increase in operating
expenses was the result of the assumption of headcount
associated with the Performics and SmartPath acquisitions and
the hiring of additional employees in our TechSolutions and Data
segments. These personnel-related increases primarily occurred
in our sales and marketing and product development departments.
The increase in operating

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expenses was partially offset by a decrease in
depreciation expense due to accelerated depreciation charges
associated with the relocation of our New York headquarters and
the termination of the lease for our facility in San Francisco
in 2003. In addition, third quarter of 2004 operating expenses
included a $5.6 million impairment charge associated with our
Enterprise Marketing Solutions, or EMS, business and a
restructuring credit of $4.5 million relating to our
Louisville, Colorado facility while the prior year period
included a restructuring credit of $2.2 million. Net income
was $15.4 million, or $0.12 per diluted share, for the
third quarter of 2004 compared to $6.3 million, or $0.04
per diluted share, in the prior year period. Net income for the
third quarter of 2004 included a $7.1 million gain in
connection with the sale of our investment in AdLINK.




| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Nine months ended September 30, 2004
    compared to nine months ended September 30,
    2003

Revenue for the nine months ended
September 30, 2004 was $218.2 million, an increase of
$19.8 million, or 10.0% compared to the prior year period.
This increase was primarily due to the acquisitions of
Performics in June 2004, SmartPath in March 2004, CSC in June
2003 and organic growth from within our Data segment and our
email products and services. Revenues associated with our
Performics and SmartPath acquisitions were $7.4 million in
aggregate for the nine months ended September 30, 2004.
Revenues associated with CSC were $8.3 million versus
$2.5 million in the year ago period as we began recognizing
revenue for this business in the third quarter of 2003. Gross
profit increased $23.6 million during the nine months ended
September 30, 2004 to $152.2 million over the prior
year period while gross margins improved by almost 500 basis
points to 69.8%. These increases were driven by our
TechSolutions segment. Operating income was $12.8 million
compared to $12.2 million in the prior year period.
Operating income improved due to an increase in gross profits of
$23.6 million offset by an increase in operating expenses
of $23.0 million. The increase in operating expenses was
primarily the result of the assumption of headcount associated
with our acquisitions of Performics, SmartPath and CSC and the
hiring of additional employees in our TechSolutions and Data
segments. These personnel-related increases primarily occurred
in our sales and marketing and product development departments.
The increases in operating expenses were partially offset by
reductions in depreciation expense due to accelerated
depreciation charges associated with the relocation of our New
York headquarters and the termination of the lease for our
facility in San Francisco in 2003. In addition, year to date
operating expenses included a $5.6 million impairment
charge associated with our Enterprise Marketing Solutions, or
EMS, business and a restructuring credit of $4.5 million
relating to our Louisville, Colorado facility while the prior
year period included a net restructuring credit of
$9.1 million. Net income was $26.9 million, or $0.20
per diluted share, for the nine months ended September 30,
2004 as compared to net income of $13.1 million, or $0.09
per diluted share, in the prior year period. Net income for the
nine months ended September 30, 2004 benefited from a $7.1
million gain in connection with the sale of our investment in
AdLINK and a distribution from MaxWorldwide of approximately
$2.4 million in connection with its plan of liquidation and
dissolution. Net income for the nine months ended
September 30, 2003 included a $4.4 million loss in
connection with the redemption of our 4.75% Convertible
Subordinated Notes.

We expect revenue to increase in the fourth
quarter 2004 as compared to the prior year period primarily as a
result of our acquisitions of Performics and SmartPath.
Operating income is expected to increase as well due to
continued efficiency gains within our core businesses partially
offset by integration costs and the amortization of intangible
assets associated with our acquisitions of SmartPath and
Performics.

Revenues, gross profit and operating income
(loss) by segment are as follows (in thousands):

|              |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |     |   |  |   |         |  |  |   |         |  |  |   |        |  |  |  |      |  
|------------- |  | -------------------- | ------ | ------------- |  | ------------------- | ------ | ------------- |  | ---- | ----- | ---- |  | ------ | --- | - |  | - | ------- |  |  | - | ------- |  |  | - | ------ |  |  |  | ---- | -
|              |  |                      |        |               |  |                     |        |               |  |      |       |     
|              |  | For the Three Months |        |               |  | For the Nine Months |        |              
|              |  | Ended September 30,  |        | 2004 vs. 2003 |  | Ended September 30, |        | 2004 vs. 2003
|              |  |                      |        |               |  |                     |        |              
|Revenue:      |  | 2004                 |        | 2003          |  | Change              |        | %             |  | 2004 |       | 2003 |  | Change |     | %
|              |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |     |  
|TechSolutions |  | $                    | 47,823 |               |  | $                   | 43,514 |               |  | $    | 4,309 |      |  |        | 9.9 | % |  | $ | 139,485 |  |  | $ | 128,511 |  |  | $ | 10,974 |  |  |  | 8.5  | %
|Data          |  |                      | 33,131 |               |  |                     | 31,276 |               |  |      | 1,855 |      |  |        | 5.9 | % |  |   | 78,669  |  |  |   | 69,889  |  |  |   | 8,780  |  |  |  | 12.6 | %
|              |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |     |   |  |   |         |  |  |   |         |  |  |   |        |  |  |  |      |  
|Total         |  | $                    | 80,954 |               |  | $                   | 74,790 |               |  | $    | 6,164 |      |  |        | 8.2 | % |  | $ | 218,154 |  |  | $ | 198,400 |  |  | $ | 19,754 |  |  |  | 10.0 | %
|              |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |     |   |  |   |         |  |  |   |         |  |  |   |        |  |  |  |      |  

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|              |  |                      |        |               |  |                     |        |               |  |      |        |      |  |        |      |   |  |   |         |  |  |   |         |  |  |   |        |  |  |  |      |  
|------------- |  | -------------------- | ------ | ------------- |  | ------------------- | ------ | ------------- |  | ---- | ------ | ---- |  | ------ | ---- | - |  | - | ------- |  |  | - | ------- |  |  | - | ------ |  |  |  | ---- | -
|              |  |                      |        |               |  |                     |        |               |  |      |        |     
|              |  | For the Three Months |        |               |  | For the Nine Months |        |              
|              |  | Ended September 30,  |        | 2004 vs. 2003 |  | Ended September 30, |        | 2004 vs. 2003
|              |  |                      |        |               |  |                     |        |              
|Gross Profit: |  | 2004                 |        | 2003          |  | Change              |        | %             |  | 2004 |        | 2003 |  | Change |      | %
|              |  |                      |        |               |  |                     |        |               |  |      |        |      |  |        |      |  
|TechSolutions |  | $                    | 35,233 |               |  | $                   | 26,980 |               |  | $    | 8,253  |      |  |        | 30.6 | % |  | $ | 100,963 |  |  | $ | 79,329  |  |  | $ | 21,634 |  |  |  | 27.3 | %
|Data          |  |                      | 24,202 |               |  |                     | 22,427 |               |  |      | 1,775  |      |  |        | 7.9  | % |  |   | 51,277  |  |  |   | 49,293  |  |  |   | 1,984  |  |  |  | 4.0  | %
|              |  |                      |        |               |  |                     |        |               |  |      |        |      |  |        |      |   |  |   |         |  |  |   |         |  |  |   |        |  |  |  |      |  
|Total         |  | $                    | 59,435 |               |  | $                   | 49,407 |               |  | $    | 10,028 |      |  |        | 20.3 | % |  | $ | 152,240 |  |  | $ | 128,622 |  |  | $ | 23,618 |  |  |  | 18.4 | %
|              |  |                      |        |               |  |                     |        |               |  |      |        |      |  |        |      |   |  |   |         |  |  |   |         |  |  |   |        |  |  |  |      |  

|                         |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |      |   |  |   |         |   |  |   |         |   |  |   |        |   |  |  |       |   
|------------------------ |  | -------------------- | ------ | ------------- |  | ------------------- | ------ | ------------- |  | ---- | ----- | ---- |  | ------ | ---- | - |  | - | ------- | - |  | - | ------- | - |  | - | ------ | - |  |  | ----- | --
|                         |  |                      |        |               |  |                     |        |               |  |      |       |     
|                         |  | For the Three Months |        |               |  | For the Nine Months |        |              
|                         |  | Ended September 30,  |        | 2004 vs. 2003 |  | Ended September 30, |        | 2004 vs. 2003
|                         |  |                      |        |               |  |                     |        |              
|Operating Income/(Loss): |  | 2004                 |        | 2003          |  | Change              |        | %             |  | 2004 |       | 2003 |  | Change |      | %
|                         |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |      |  
|TechSolutions            |  | $                    | (961   | )             |  | $                   | (1,790 | )             |  | $    | 829   |      |  |        | 46.3 | % |  | $ | 17,078  |   |  | $ | 5,089   |   |  | $ | 11,989 |   |  |  | 235.6 | % 
|Data                     |  |                      | 12,945 |               |  |                     | 11,063 |               |  |      | 1,882 |      |  |        | 17.0 | % |  |   | 17,844  |   |  |   | 21,387  |   |  |   | (3,543 | ) |  |  | (16.6 | )%
|Corporate(1)             |  |                      | (4,553 | )             |  |                     | (5,525 | )             |  |      | 972   |      |  |        | NMF  |   |  |   | (22,083 | ) |  |   | (14,268 | ) |  |   | (7,815 | ) |  |  | NMF   |   
|                         |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |      |   |  |   |         |   |  |   |         |   |  |   |        |   |  |  |       |   
|Total                    |  | $                    | 7,431  |               |  | $                   | 3,748  |               |  | $    | 3,683 |      |  |        | 98.3 | % |  | $ | 12,839  |   |  | $ | 12,208  |   |  | $ | 631    |   |  |  | (5.2  | )%
|                         |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |      |   |  |   |         |   |  |   |         |   |  |   |        |   |  |  |       |   



---



|    |                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------
|(1) | Adjustments to reconcile segment reporting to
    consolidated results are included in Corporate.



| |                          
| | -------------------------
| | DoubleClick TechSolutions

TechSolutions revenue is derived from the sales
of our Ad Management, Marketing Automation and Performics
products and services. Our Ad Management products and services
primarily consist of the DART for Publishers Service, the DART
Enterprise ad serving software product and the DART for
Advertisers Service. Our Marketing Automation products and
services primarily consist of our email products based on our
DARTmail Service and our Enterprise Marketing Solutions, or EMS,
which consists of our campaign management and marketing resource
management, or MRM, products. As a result of the acquisition of
Performics Inc. in June 2004, we created a third division within
TechSolutions which offers search engine marketing and affiliate
marketing solutions. TechSolutions cost of revenue includes
costs associated with the delivery of advertisements and emails,
including Internet access costs, depreciation of the ad and
email delivery systems, the amortization of purchased technology
and facility- and personnel-related costs incurred to operate
and support our Ad Management, Marketing Automation and
Performics products and services.

Three
months ended September 30, 2004 compared to three months
ended September 30, 2003

TechSolutions revenue increased by 9.9% to
$47.8 million for the three months ended September 30,
2004 from $43.5 million for the three months ended
September 30, 2003. The increase in TechSolutions revenue
was primarily attributable to our acquisitions of Performics and
SmartPath, partially offset by a decline in Ad Management. Ad
Management revenue decreased by approximately $1.2 million
or 3.9% to $29.8 million in the third quarter of 2004
compared to the same period of 2003. For the three months ended
September 30, 2004, the increase in volumes for our DART
for Advertisers Service outpaced the decline in effective price
for this product. However, the increase in revenue from our DART
for Advertisers Service was outweighed by the declines in
revenue from our DART for Publishers Service where volume
increases did not compensate for pricing declines. The effective
price of both products continued to decline as the result of
sustained competitive pressure. Marketing Automation revenue
increased 4.0% to $13.0 million in the third quarter of
2004 compared to $12.5 million in the prior year period. This
increase was primarily attributable to our acquisition of
SmartPath and organic growth in our email products, offset by a
decline in campaign management revenue. Performics revenue was
$5.1 million for the third quarter of 2004 as we began
recognizing revenue for this division in July 2004.

TechSolutions gross profit was $35.2 million
or 73.7% of revenue for the three months ended
September 30, 2004 compared to $27.0 million or 62.0%
of revenue for the three months ended September 30, 2003.
Gross profits increased $8.2 million largely due to the
increase in revenue associated with our acquisition of
Performics and improved performance in our Ad Management
division and email products due to lower depreciation expense.
Depreciation expense fell by approximately $3.8 million due
primarily to accelerated

25



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depreciation charges associated with the
relocation of our New York headquarters and the termination of
the lease for our facility in San Francisco in 2003. These
gains were partially offset by increases in intangible
amortization associated with our acquisitions of Performics and
SmartPath.


TechSolutions operating loss was
$1.0 million for the three months ended September 30,
2004, a decrease of $0.8 million from the prior year
period. This improvement was the result of the increase in gross
profit partially offset by an increase in operating expenses of
approximately $7.4 million. Operating expenses for the
third quarter included an impairment charge for
$5.6 million relating to goodwill and other intangible
assets of our EMS business. Personnel-related costs increased
approximately $5.3 million due to the assumption of
headcount associated with our acquisitions of Performics and
SmartPath as well as the hiring of additional employees in our
sales and marketing and product development departments. In
addition, professional fees increased by approximately
$1.2 million and marketing expenses increased by
approximately $0.8 million. These costs were offset by a
decline in depreciation expense of $5.5 million related to
the relocation of our New York headquarters and the termination
of the lease for our facility in San Francisco in 2003.



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Nine months ended September 30, 2004
    compared to nine months ended September 30,
    2003

TechSolutions revenue increased by 8.5% to
$139.5 million for the nine months ended September 30,
2004 from $128.5 million for the nine months ended
September 30, 2003. The increase in TechSolutions revenue
was primarily attributable to the acquisitions of Performics and
SmartPath, as well as organic growth from our suite of email
products and services. Ad Management revenue was flat at
approximately $94.9 million for the first nine months of
2004 compared to the same period of 2003. For the nine months
ended September 30, 2004, the increase in volumes for our
DART for Advertisers Service outpaced the decline in effective
price for this product. However, the increase in revenue from
our DART for Advertisers Service was outweighed by the declines
in revenue from our DART for Publishers Service where volume
increases did not compensate for pricing declines. The effective
price of both products continued to decline as the result of
sustained competitive pressure. Marketing Automation revenue
increased 16.9% to $39.5 million in the first nine months
of 2004 compared to $33.8 million in the prior year period.
This increase was primarily due to the acquisition of SmartPath
and robust volume-driven growth in our email products and
services. Performics revenues were $5.1 million for the
nine months ended September 30, 2004 as we began
recognizing revenue for this division in July 2004.

TechSolutions gross profit was
$101.0 million or 72.4% of revenue for the nine months
ended September 30, 2004 compared to $79.3 million or
61.7% of revenue for the nine months ended September 30,
2003. Gross profits increased $21.7 million due to the
increase in revenue associated with our acquisitions of
Performics and SmartPath and a decrease in depreciation, rent
and utility costs. Depreciation expense fell by approximately
$7.3 million due to accelerated depreciation charges
associated with the relocation of our New York headquarters and
the termination of the lease for our facility in
San Francisco in 2003. Rent and utility costs declined due
to the move of our data center from New York to Colorado in June
2003. These gains were partially offset by increases in
intangible amortization associated with our acquisitions of
Performics and SmartPath.

TechSolutions operating income was
$17.1 million for the nine months ended September 30,
2004, an increase of $12.0 million from the prior year
period. This improvement was primarily the result of the
increase in gross profit partially offset by an increase in
operating expenses of approximately $9.6 million.
Personnel-related costs increased approximately
$9.8 million related to the assumption of headcount
associated with our acquisitions of Performics and SmartPath as
well as the hiring of additional employees in our sales and
marketing and product development departments. This change in
personnel-related costs was net of a $1.5 million reserve
reversal recorded in the first quarter of 2004 relating to a
prior acquisition. Operating expenses in 2004 included an
impairment charge for $5.6 million relating to goodwill and
other intangible assets of our EMS business. In addition,
professional fees increased by approximately $2.9 million
and marketing expenses increased by approximately
$0.8 million. These costs were offset by a decline in
depreciation expense of $7.9 million related to the
relocation of our New York headquarters and the termination of
the lease for our facility in San Francisco in 2003. In
addition, amortization expense decreased

26



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##### Table of Contents



$2.1 million driven by certain of our other
intangible assets reaching the end of their amortizable lives
partially offset by the addition of acquired intangibles
associated with our acquisitions of Performics and SmartPath.


In fourth quarter of 2004, we plan to continue to
invest additional resources in our TechSolutions sales and
marketing and product development departments to help achieve
future revenue growth. We anticipate TechSolutions revenue and
operating income will increase as compared to the year ago
periods even with these additional investments described above.



| |                 
| | ----------------
| | DoubleClick Data

DoubleClick Data revenue has historically been
derived primarily from our Abacus division, which provides
products and services, such as acquisition solutions, retention
solutions and list optimization, to direct marketers in the
Abacus Alliances. As a result of our acquisition of CSC in June
2003, we offer direct marketers solutions for building and
managing customer marketing databases and other related products
and services as part of the our Data Management division. Data
cost of revenue includes expenses associated with maintaining
and updating the Abacus databases, facility- and
personnel-related expenses to operate and support our production
equipment, the amortization of purchased intangible assets and
subscriptions to third party providers of lifestyle and
demographic data that is used to supplement our transactions
based databases.



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | Three months ended September 30, 2004
    compared to three months ended September 30,
    2003

Data revenue increased 5.9% to $33.1 million
for the three months ended September 30, 2004 compared to
$31.3 million for the three months ended September 30,
2003. The increase in revenue is attributable to organic growth
in both Abacus and Data Management. Abacus revenues increased
5.3% to $30.3 million in the third quarter of 2004 compared
to $28.8 million in third quarter of 2003. Data management
revenues were $2.8 million, a 10.2% increase over the prior
year period. The year-over-year increase in Abacus revenues were
driven primarily from growth in its
U.S. Business-to-Consumer, U.S. Business-to-Business
and International Alliances.

Gross profit increased $1.8 million to
$24.2 million, or 73.0% of revenues, in the third quarter
of 2004 compared to $22.4 million, or 71.7% of revenues, in
the prior year period. The increase in gross profit was
primarily associated with the increase in revenues associated
with our Abacus division while gross margins gains were
primarily due to improvement in our Data Management business.

Data operating income increased to
$12.9 million for the third quarter of 2004 from
$11.1 million in the prior year period. This change was due
to an increase in gross profit of $1.8 million while
operating expenses were unchanged. Operating expenses included
an increase in personnel-related costs of approximately
$1.0 million resulting from the hiring of additional
employees in our sales and marketing departments. These costs
were offset by a reduction in depreciation and professional fees.



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Nine months ended September 30, 2004
    compared to nine months ended September 30,
    2003

Data revenue increased 12.6% to
$78.7 million for the nine months ended September 30,
2004 from $69.9 million for the nine months ended
September 30, 2003. The increase in revenue was
attributable to the acquisition of CSC and organic growth from
our Abacus business. Abacus revenues increased 4.4% to
$70.3 million for the nine months ended September 30,
2004 compared to $67.4 million in same period of 2003. Data
Management revenues were $8.3 million compared to
$2.5 million in the year ago period as we began recognizing
revenue for this business in the third quarter of 2003. The
year-over-year increase in Abacus revenues was driven from
continued growth in our U.S. Business-to-Business and
International Alliances while revenues associated with our
U.S. Business-to-Consumer Alliance were flat.

Data gross profit increased by $2.0 million
to $51.3 million or 65.2% of revenues for the nine months
ended September 30, 2004 compared to $49.3 million or
70.5% of revenues in the prior year period. The increase in
gross profit was primarily due to revenue growth in our
International Alliances. Gross margins also were impacted by the
inclusion of CSC, a lower margin business.

27



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Data operating income decreased to
$17.8 million for the nine months ended September 30,
2004 from $21.4 million in the prior year period. This
change was due to an increase in operating expenses of
$5.6 million partially offset by the increase in gross
profit of $2.0 million. Operating expenses included an
increase in personnel-related costs of approximately
$4.8 million primarily resulting from the assumption of
headcount as the result of our acquisition of CSC and the hiring
of additional employees. In addition, amortization expense
included as a component of operating expenses increased by
approximately $0.9 million. These expenses are associated
with intangible assets acquired in connection with the CSC
acquisition.

For the fourth quarter of 2004, we anticipate
that Data revenue will increase compared to the prior year
period due to anticipated growth from Data Management and our
U.S. Business-to-Business and International Alliances.
Operating income is expected to be comparable to prior year
periods as we plan to continue to invest in new Data Management
products and our International Alliances.

Operating Expenses

Operating costs and expenses were as follows (in
thousands):

|                           |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |      |    |  |   |        |  |  |   |        |  |  |   |       |  |  |  |      |  
|-------------------------- |  | -------------------- | ------ | ------------- |  | ------------------- | ------ | ------------- |  | ---- | ----- | ---- |  | ------ | ---- | -- |  | - | ------ |  |  | - | ------ |  |  | - | ----- |  |  |  | ---- | -
|                           |  |                      |        |               |  |                     |        |               |  |      |       |     
|                           |  | For the Three Months |        |               |  | For the Nine Months |        |              
|                           |  | Ended September 30,  |        | 2004 vs. 2003 |  | Ended September 30, |        | 2004 vs. 2003
|                           |  |                      |        |               |  |                     |        |              
|Operating Expenses:        |  | 2004                 |        | 2003          |  | Change              |        | %             |  | 2004 |       | 2003 |  | Change |      | % 
|                           |  |                      |        |               |  |                     |        |               |  |      |       |      |  |        |      |   
|Sales and marketing        |  | $                    | 26,320 |               |  | $                   | 27,175 |               |  | $    | (855  | )    |  |        | (3.1 | )% |  | $ | 75,475 |  |  | $ | 67,683 |  |  | $ | 7,792 |  |  |  | 11.5 | %
|General and administrative |  | $                    | 9,040  |               |  | $                   | 8,459  |               |  | $    | 581   |      |  |        | 6.9  | %  |  | $ | 25,974 |  |  | $ | 25,685 |  |  | $ | 289   |  |  |  | 1.1  | %
|Product development        |  | $                    | 13,802 |               |  | $                   | 10,685 |               |  | $    | 3,117 |      |  |        | 29.2 | %  |  | $ | 33,286 |  |  | $ | 27,258 |  |  | $ | 6,028 |  |  |  | 22.1 | %



| |                    
| | -------------------
| | Sales and Marketing

Sales and marketing expenses consist primarily of
compensation and related benefits, sales commissions, general
marketing costs, advertising, bad debt expense and other
operating expenses associated with our sales and marketing
departments. Sales and marketing expenses decreased by
$0.9 million in the third quarter of 2004 compared to the
same period of 2003 and decreased as a percentage of revenue to
32.5% from 36.3%. The decrease was primarily attributable to
decreases in depreciation expense of approximately
$4.0 million partially offset by increases in
personnel-related costs of $3.1 million and marketing
expenses of $1.5 million. The decrease in depreciation
expense was due to accelerated depreciation charges associated
with the relocation of our New York headquarters and the
termination of the lease for our facility in San Francisco
in 2003. Personnel-related costs increased due to the assumption
of headcount as a result of our acquisitions of Performics and
SmartPath and the hiring of additional employees in our Data
segment. Marketing expenses increased due to additional
investment in our core products as well as costs associated with
our new product offerings from our recent acquisitions.

Sales and marketing expenses increased by
$7.8 million for the nine months ended September 30,
2004 compared to the same period of 2003 and increased as a
percentage of revenue to 34.6% from 34.1%. The dollar increase
was primarily attributable to increases in personnel-related
costs of $9.9 million, marketing expenses of
$2.2 million and bad debt expense of $0.9 million,
partially offset by decreases in depreciation expense of
approximately $5.1 million. Personnel-related costs
increased due to the assumption of headcount as a result of our
acquisitions of CSC, SmartPath and Performics and the hiring of
additional employees in our Data segment. The change in
personnel-related costs was net of a $1.5 million reserve
reversal recorded in the first quarter of 2004 relating to a
prior acquisition. Marketing expenses increased due to our costs
associated with our worldwide Insight conferences held in the
first quarter of 2004 and additional investment in our core
products. The increase in bad debt expense was consistent with
our year-over-year increase in revenues. The decrease in
depreciation expense was due to accelerated depreciation charges
associated with the relocation of our New York headquarters and
the termination of the lease for our facility in
San Francisco in 2003.

For the fourth quarter of 2004, we expect the
absolute dollar amount of sales and marketing expenses to
increase as compared to the prior year period due to additional
personnel-related expenses primarily as a result of our
acquisition of Performics and additional investments expected to
be made in our Ad Management business.

28



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| |                           
| | --------------------------
| | General and Administrative

General and administrative expenses consist
primarily of compensation and related benefits, professional
services and other operating expenses associated with our
executive, finance, human resources, legal, facilities and
administrative departments. General and administrative expenses
increased slightly by $0.6 million to $8.5 million or
11.2% of revenue in the third quarter of 2004 compared to 11.3%
of revenue in the same period of 2003. The increases were
primarily a result of increases in professional and outside
service fees of $2.4 million partially offset by a decrease
in depreciation expense of $1.8 million. The increase in
professional and outside service fees related to strategic
initiatives and the requirements of the Sarbanes-Oxley Act. In
addition, this increase was inclusive of a $1.4 million
insurance claim settlement received during the third quarter of
2003. The decrease in depreciation expense was due to
accelerated depreciation charges associated with the relocation
of our New York headquarters in 2003.

General and administrative expenses increased
slightly by $0.3 million to $26.0 million or 11.9% of
revenue for the nine months ended September 30, 2004
compared to 12.9% of revenue in the same period of 2003. The
increase was primarily attributable to increases in professional
and outside service fees of $2.9 million and
personnel-related costs of $1.9 million, partially offset
by a decrease in depreciation and utility costs of
$4.0 million. The increase in professional and outside
service fees related to strategic initiatives and the
requirements of the Sarbanes-Oxley Act. This increase was
inclusive of a $1.4 million insurance claim settlement
received during the third quarter of 2003. Personnel-related
costs increased due to the assumption of headcount as a result
of our acquisitions of CSC, SmartPath and Performics. The
decrease in depreciation expense was due to accelerated
depreciation charges associated with the relocation of our New
York headquarters in 2003. In addition, we achieved utility cost
savings this year as a result of the reconfiguration of our
disaster recovery operations.

For the fourth quarter of 2004, we expect general
and administrative expenses to decline in absolute dollars as
compared to the prior year period due to the decline in
depreciation expense associated with our lease terminations in
2003 partially offset by an increase in personnel-related costs
due to the assumption of headcount as a result of our SmartPath
and Performics acquisitions.



| |                    
| | -------------------
| | Product Development

Product development expenses consist primarily of
compensation and related benefits, consulting fees and other
operating expenses associated with our product development
departments. Our product development departments perform
research and development, enhance and maintain existing products
and provide quality assurance. Product development expenses
increased by $3.1 million to $13.8 million or 17.0% of
revenue in the third quarter of 2004 compared to 14.3% of
revenue in the same period of 2003. The increase was primarily
due to increases in personnel-related costs of
$3.8 million, which was attributable to additional
headcount assumed from our acquisitions of SmartPath and
Performics and the impact of hiring additional employees in our
TechSolutions segment. In addition, professional fees increased
by approximately $1.1 million relating to consulting fees
for new product initiatives. These increases were partially
offset by decreases of $1.9 million in depreciation expense
due to accelerated depreciation charges associated with the
relocation of our New York headquarters in 2003.

Product development expenses increased by
$6.0 million to 15.3% of revenue for the nine months ended
September 30, 2004 compared to 13.7% of revenue in the same
period of 2003. The increase was primarily due to increases in
personnel-related costs of $2.2 million that was
attributable to additional headcount assumed from our
acquisitions of CSC, SmartPath and Performics and the impact of
hiring additional employees in our TechSolutions segment. In
addition, professional fees increased by approximately
$2.2 million relating to consulting fees for new product
initiatives. These increases were partially offset by decreases
of $2.9 million in depreciation expense due to accelerated
depreciation charges associated with the relocation of our New
York headquarters in 2003.

In the fourth quarter of 2004, we expect product
and development expenses to continue to increase in absolute
dollars as compared to the prior year period primarily due to
the assumption of headcount as a result

29



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##### Table of Contents



of our acquisition of Performics and additional
investments expected to be made in our Ad Management business.




| |                            
| | ---------------------------
| | Amortization of Intangibles

Amortization of intangible assets consists
primarily of the amortization of customer relationships.
Amortization expense was $1.8 million and $1.6 million
for the three months ended September 30, 2004 and 2003,
respectively. Amortization expense increased in the third
quarter of 2004 compared to the third quarter of 2003 primarily
due to acquired intangibles assets with respect to Performics
and SmartPath offset by certain intangible assets becoming fully
amortized during the year.

Amortization expense was $3.6 million and
$4.9 millions for the nine months ended September 30,
2004 and 2003, respectively. The decrease of $1.3 million
in the nine months ended September 30, 2004 compared to the
same period of 2003 was primarily the result of certain
intangible assets becoming fully amortized during the year
partially offset by acquired intangibles assets with respect to
Performics and SmartPath.

We expect amortization of intangible assets to
increase in the fourth quarter of 2004 as compared to the prior
year period due to our acquisitions of SmartPath and Performics
partially offset by certain of our other intangible assets
reaching the end of their amortizable lives.



| |                                                 
| | ------------------------------------------------
| | Impairment of Goodwill and Intangible
    Assets

In the third quarter of 2004, we initiated a
valuation for our Enterprise Marketing Solutions, or EMS,
business which consists of our campaign management and marketing
resource management products. This valuation was performed with
the assistance of a third party to determine if the recorded
balance of goodwill and other intangible assets relating to this
reporting unit was recoverable. The recoverability of these
assets was brought into question as a result of the lower than
expected revenues generated to date and the reduced estimates of
future performance primarily associated with our campaign
management products. The fair market value of the EMS reporting
unit was determined based on projected discounted cash flows and
price/revenue multiples of competitors in the EMS marketplace.
The outcome of this valuation resulted in an impairment charge
of $5.6 million being recorded during the third quarter of
2004 based on the difference between the carrying value and the
fair value of this business. The impairment charge consisted of
a write-down in intangible assets of $4.1 million and
goodwill of $1.5 million.



| |                           
| | --------------------------
| | Restructuring Credits, Net

During the third quarter of 2004, we recorded a
restructuring credit of $4.5 million. This credit was due
to the reversal of a portion of our real estate reserve relating
to our facility in Louisville, Colorado. The reversal of the
reserve was due to the sublease of this property at rates in
excess of our previous estimate of sublease income. Of the
remaining $18.4 million in cash outlays relating to our
restructuring activities, we estimate we will pay approximately
$1.0 million in the fourth quarter of 2004 and
approximately $17.4 million in 2005 and thereafter. We
continue to review our estimates and assumptions relating to
excess real estate and if market conditions or other
circumstances change, this information may be updated and
additional charges or credits may be required.

During the third quarter of 2003, we recorded a
net restructuring credit of $2.2 million. This resulted
from a net credit from our New York headquarters of
approximately $1.5 million and the termination of the
remainder of our lease in San Francisco, which resulted in
a credit of approximately $0.7 million. The net credit
associated with our New York headquarters consisted of exit
costs of $2.5 million offset by the reversal of a deferred
rent liability of approximately $1.5 million, all of which
were required to be recorded in the third quarter in accordance
with SFAS No. 146. In addition, approximately
$2.5 million of reserves were reversed as the result of
favorable settlements of other real estate related items
relating to our New York headquarters which occurred during the
third quarter of 2003. The net credit associated with our
San Francisco facility resulted from our estimated
restructuring reserve for this facility being in excess of our
actual payments made in connection with the lease termination.

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##### Table of Contents



During the nine months ended September 30,
2003, we recorded restructuring credits of approximately
$16.5 million offset by restructuring charges of
approximately $7.4 million. This resulted in a net
restructuring credit of $9.1 million. This credit was due
to the reversal of a portion of our real estate reserve relating
to our New York headquarters and our San Francisco
facility. The reversal of the reserve was a result of final
lease terminations with respect to our New York headquarters and
San Francisco facility for which our reserve was in excess
of our then expected payments. Total costs to terminate the
lease associated with these facilities were approximately
$44.5 million and $26.4 million, respectively,
inclusive of broker commissions and related costs.

Non-Operating Expenses and Income
Taxes



| |                                   
| | ----------------------------------
| | Equity in Losses of
    Affiliates

Equity in losses of affiliates was
$0.3 million and $0.1 million for the three months
ended September 30, 2004 and 2003, respectively. In the
third quarter of 2004, we recognized equity losses of
approximately $0.2 million from our equity investment in
Abacus Deutschland and approximately $0.1 million from our
equity investment in DoubleClick Japan. In the third quarter of
2003, we recognized equity losses of $0.1 million relating
to our equity investments in DoubleClick Japan and MaxWorldwide.

Equity in losses of affiliates was
$0.9 million and $2.4 million for the nine months
ended September 30, 2004 and 2003, respectively. In the
nine months ended September 30, 2004, we recognized equity
losses of approximately $0.6 million from our equity
investment in Abacus Deutschland and approximately
$0.3 million from our investment in DoubleClick Japan. In
the nine months ended September 30, 2003, we recognized
equity losses of $2.0 million relating to our equity
investment in MaxWorldwide and $0.4 million from our equity
investment in DoubleClick Japan.



| |                                             
| | --------------------------------------------
| | Gain on Sale of Investments in
    Affiliate

In the third quarter of 2004, we sold our
3,862,500 shares of AdLINK for an aggregate purchase price
of $9.5 million to United Internet AG, the majority
shareholder of AdLINK. As a result of the transaction, we
recorded a gain of $7.1 million and no longer hold an
equity interest in AdLINK.

We did not recognize any gains from the sale of
investments in affiliates in the nine months ended
September 30, 2003.



| |                                        
| | ---------------------------------------
| | Gain on Distribution from
    Affiliate

In the first quarter of 2004, we recognized a
gain of $2.4 million relating to a distribution from
MaxWorldwide in connection with its plan of liquidation and
dissolution. We still maintain a 19.8% interest in MaxWorldwide
and may receive additional distributions in future periods as a
result of the finalization of its plan of liquidation and
dissolution.

We did not recognize any gains from affiliate
distributions in the nine months ended September 30, 2003.



| |                        
| | -----------------------
| | Interest and Other, Net

|                 |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |        |  
|---------------- |  | -------------------- | ----- | ------------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                 |  |                      |       |                    
|                 |  | For the Three Months |       | For the Nine Months
|                 |  | Ended September 30,  |       | Ended September 30,
|                 |  |                      |       |                    
|                 |  | 2004                 |       | 2003                |  | 2004 |       | 2003
|                 |  |                      |       |                     |  |      |       |     
|Interest Income  |  | $                    | 2,570 |                     |  | $    | 3,709 |      |  | $ | 8,326  |   |  | $ | 12,815 |  
|Interest Expense |  |                      | (302  | )                   |  |      | (806  | )    |  |   | (1,033 | ) |  |   | (5,079 | )
|Other            |  |                      | 393   |                     |  |      | 588   |      |  |   | 1,159  |   |  |   | 1,387  |  
|                 |  |                      |       |                     |  |      |       |      |  |   |        |   |  |   |        |  
|                 |  | $                    | 2,661 |                     |  | $    | 3,491 |      |  | $ | 8,452  |   |  | $ | 9,123  |  

Interest and other, net was $2.7 million and
$3.5 million for the three months ended September 30,
2004, and 2003, respectively. In the third quarter of 2004,
interest income decreased by $1.1 million due to a decrease
of average total cash, which includes cash and cash equivalents,
investments in marketable securities

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and restricted cash, of $234.8 million
compared to the prior year period. Interest expense decreased
due to the redemption of our 4.75% Convertible Subordinated
Notes due 2006 in July 2003.


Interest and other, net was $8.5 million and
$9.1 million for the nine months ended September 30,
2004, and 2003, respectively. For the nine months ended
September 30, 2004, interest income decreased by
$4.5 million due to a decrease of average total cash, which
includes cash and cash equivalents, investments in marketable
securities and restricted cash, of $165.9 million compared
to the prior year period and a decrease in the average interest
rates. Interest expense decreased due to the redemption of our
4.75% Convertible Subordinated Notes due 2006 in July 2003.

Interest and other, net may fluctuate in future
periods in correlation with the cash, investment and debt
balances we maintain and as a result of changes in the market
interest rates.



| |                           
| | --------------------------
| | Provision for Income Taxes

The provision for income taxes recorded for the
three months ended September 30, 2004 of $1.5 million
consists principally of income taxes of $1.2 million on the
earnings of certain of our foreign subsidiaries, federal
alternative minimum taxes of $0.2 million and state and
local taxes of $0.1 million. The provision for income taxes
recorded for the three months ended September 30, 2003 of
$0.8 million consists principally of income taxes of
$0.7 million on the earnings of some of our foreign
subsidiaries and state and local taxes of $0.1 million.
Except for certain foreign jurisdictions, the provision for
income taxes for the three months ended September 30, 2004
and 2003 does not reflect tax benefits attributable to our net
operating loss and other tax carryforwards due to limitations
and uncertainty surrounding our prospective realization of such
benefits.

The provision for income taxes recorded for the
nine months ended September 30, 2004 of $3.0 million
consists principally of income taxes of $2.3 million on the
earnings of certain of our foreign subsidiaries, federal
alternative minimum taxes of $0.5 million and state and
local taxes of $0.2 million. The provision for income taxes
recorded for the nine months ended September 30, 2003 of
$1.4 million consists principally of income taxes of
$1.8 million on the earnings of some of our foreign
subsidiaries reduced by a benefit of approximately
$0.4 million related to certain state and local tax refunds
and settlements. Except for certain foreign jurisdictions, the
provision for income taxes for the nine months ended
September 30, 2004 and 2003 does not reflect tax benefits
attributable to our net operating loss and other tax
carryforwards due to limitations and uncertainty surrounding our
prospective realization of such benefits.

Liquidity and Capital Resources

|                                                        |  |                     |         |      |  |   |         |  
|------------------------------------------------------- |  | ------------------- | ------- | ---- |  | - | ------- | -
|                                                        |  |                    
|                                                        |  | For the Nine Months
|                                                        |  | Ended September 30,
|                                                        |  |                    
|                                                        |  | 2004                |         | 2003
|                                                        |  |                     |         |     
|                                                        |  |                    
|                                                        |  | (In thousands)     
|Net cash provided by (used in) operating
    activities |  | $                   | 29,745  |      |  | $ | (39,033 | )
|Net cash (used in) provided by investing
    activities |  | $                   | (18,567 | )    |  | $ | 69,206  |  
|Net cash used in financing activities                   |  | $                   | (98,617 | )    |  | $ | (29,847 | )



| |                     
| | --------------------
| | Operating Activities

For the nine months ended September 30,
2004, cash provided by operating activities was
$29.7 million, an increase of $68.8 million compared
to the same period of 2003. The increase was primarily a result
of the decrease in accrued expenses and the timing of lease
termination payments. Accrued expenses decreased to
$10.7 million in the nine months ended September 30,
2004 compared to $24.7 million in the same period of the
prior year. The decreases in payments associated with accrued
expenses were primarily a result of additional restructuring
activities in 2003 compared to same period in 2004. Lease
termination payments were $7.6 million for the nine months
ended September 30, 2004 compared to $70.9 million in
the prior year period. These payments were slightly offset by a
decrease in net income adjusted for non-cash items and an
increase in accounts receivable.

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For the fourth quarter of 2004, we expect to
generate positive cash flow from operating activities based on
our revenue and net income projections.



| |                     
| | --------------------
| | Investing Activities

For the nine months ended September 30,
2004, cash used in investing activities was $18.6 million,
a change of $87.8 million compared to the same period of
2003. The change was primarily due to the net cash used in the
acquisitions of Performics and SmartPath of $72.0 million
and the decrease in the net proceeds from purchases and
maturities of investments in marketable securities of
$48.2 million. These cash flows were partially offset by
proceeds from the sale of our investment in AdLINK of
$9.5 million, a distribution from MaxWorldwide of
$2.4 million along with positive movements in restricted
cash totaling $10.0 million.

For the fourth quarter of 2004, cash flow from
investing activities may fluctuate based upon the net proceeds
from purchases and maturities of investments in marketable
securities and purchases of equipment compared to the prior year
period.



| |                     
| | --------------------
| | Financing Activities

For the nine months ended September 30,
2004, cash used in financing activities was $98.6 million,
an increase of $68.8 million compared to the same period of
2003. The change was due to the $98.8 million in cash used
for the purchase of 13.0 million shares of our common stock
in 2004. The prior year period included cash used of
$158.0 million in the repurchase of our
4.75% Convertible Bonds due 2006 partially offset by
proceeds of $132.0 million from the issuance of the Zero
Coupon Convertible Subordinated Notes due 2023

For the fourth quarter of 2004, we expect cash
flow from financing activities to be comparable to the prior
year period.



| |                           
| | --------------------------
| | Related Party Transactions

We maintain a 15.5% interest in DoubleClick
Japan. On December 26, 2002, we sold 45,049 shares of
common stock in DoubleClick Japan. As a result of this
transaction, we account for our remaining 31,271 shares in
DoubleClick Japan under the equity method of accounting.
DoubleClick Japan continues to sell our suite of DART technology
products as part of a long-term technology reseller agreement.
Revenue recognized through services provided to DoubleClick
Japan was approximately $2.3 million and $2.4 million
for the nine months ended September 30, 2004 and 2003,
respectively.

In addition, we hold a 19.8% interest in
MaxWorldwide. This interest was acquired in July 2002 as a
result of the sale of our North American Media business. We
recognized revenue of approximately $1.7 million during the
nine months ended September 30, 2003, relating to services
provided to MaxWorldwide. In 2004, we did not provide any
services to MaxWorldwide as a result of the sale of its
MaxOnline division and its plan of liquidation and dissolution.

In the third quarter of 2004, we sold our 15%
interest in AdLINK to United Internet AG, the majority
shareholder of AdLINK. Prior to the sale, we recognized revenue
of approximately $1.4 million and $2.0 million during
the nine months ended September 30, 2004 and 2003,
respectively, relating to services provided to AdLINK.

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|        |                                                               
|------- | --------------------------------------------------------------
|Item 3. | Quantitative and Qualitative Disclosures
    About Market Risk

Interest Rate Risk

The primary objective of our investment
activities is to preserve principal and maintain liquidity,
while at the same time maximizing yields without significantly
increasing risk. To achieve this objective, we maintain our
portfolio of cash equivalents and marketable securities in a
variety of government and corporate debt obligations and money
market funds. As of September 30, 2004, our investments in
marketable securities had a weighted average time to maturity of
329 days.

The following table presents the amounts of our
financial instruments that are subject to interest rate risk by
expected maturity and average interest rates as of
September 30, 2004:

|                                                |  |                  |         |            |  |             |         |            |  |            |         |   |  |   |   |  |  |   |         | 
|----------------------------------------------- |  | ---------------- | ------- | ---------- |  | ----------- | ------- | ---------- |  | ---------- | ------- | - |  | - | - |  |  | - | ------- | 
|                                                |  |                  |         |           
|                                                |  | Time to Maturity |         |           
|                                                |  |                  |         |           
|                                                |  | One Year         |         | One to Two |  | Two to Five |         | Five and   |  |           
|                                                |  | or Less          |         | Years      |  | Years       |         | Thereafter |  | Fair Value
|                                                |  |                  |         |            |  |             |         |            |  |           
|                                                |  |                 
|                                                |  | (In thousands)  
|Assets:                                         |  |                  |         |            |  |             |         |            |  |            |         |   |  |   |   |  |  |   |         | 
|Cash and cash equivalents                       |  | $                | 95,582  |            |  | $           |        |            |  | $          |        |   |  | $ |  |  |  | $ | 95,582  | 
|Average interest rate                           |  |                  | 1.93    | %          |  |             |         |            |  |            |         |   |  |   |   |  |  |   |         | 
|Fixed-rate investments in marketable securities |  | $                | 230,699 |            |  | $           | 182,339 |            |  | $          |        |   |  | $ |  |  |  | $ | 413,038 | 
|Average interest rate                           |  |                  | 1.73    | %          |  |             | 2.01    | %          |  |            |         |   |  |   |   |  |  |   |         | 
|                                               
|Liabilities:                                    |  |                  |         |            |  |             |         |            |  |            |         |   |  |   |   |  |  |   |         | 
|Convertible subordinated notes                  |  | $                |        |            |  | $           |        |            |  | $          | 135,000 |   |  | $ |  |  |  | $ | 112,787 | 
|Average interest rate                           |  |                  |         |            |  |             |         |            |  |            | 0.00    | % |  |   |   |  |  |   |         | 

As of September 30, 2004, the current
portion of restricted cash was $3.7 million and the average
interest rate associated with this cash was 0.22% and the
non-current portion of restricted cash was $11.7 million
with an average interest rate of 0.67%. Restricted cash
primarily represents amounts placed in escrow relating to funds
to cover office lease security deposits and our automated
clearinghouse payment function.

We may redeem for cash some or all of the Zero
Coupon Convertible Subordinated Notes due 2023 at any time on or
after July 15, 2008. Holders of the Zero Coupon Convertible
Subordinated Notes due 2023 also have the right to require us to
purchase some or all of their notes for cash on July 15,
2008, July 15, 2013 and July 15, 2018, at a price
equal to 100% of the principal amount of the Zero Coupon
Convertible Subordinated Notes due 2023 being redeemed plus
accrued and unpaid liquidated damages, if any.

The Zero Coupon Convertible Subordinated Notes
due 2023 contain an embedded derivative, the value of which as
of September 30, 2004 has been determined to be immaterial
to our consolidated financial position. For financial accounting
purposes, the ability of the holder to convert upon the
satisfaction of a trading price condition constitutes an
embedded derivative. Any changes in its value will be reflected
in our future income statements, in accordance with Statement of
Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities. As of
September 30, 2004, we did not hold any other derivative
financial instruments.

Foreign Currency Risk

We transact business in various foreign countries
and are thus subject to exposure from adverse movements in
foreign currency exchange rates. This exposure is primarily
related to revenue and operating expenses denominated in
European and Asian currencies, as well as cash balances held in
currencies other than our functional currency and the functional
currency of our subsidiaries. For the three and nine months
ended September 30, 2004, our international revenues were
approximately $13.4 million and $41.5 million,
respectively. The revenues included beneficial foreign currency
movements of approximately $2.0 million and
$6.2 million for the three and nine months ended
September 30, 2004, respectively, primarily due to the
strength of the Euro compared to the U.S. dollar. The
effect of foreign exchange rate fluctuations on

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operations resulted in gains of $0.5 million
for the nine months ended September 30, 2004. This was
principally as a result of the weakening of the U.S. dollar
and its impact upon our U.S. dollar denominated deposits
held by our international subsidiaries.


To date we have not used financial instruments to
hedge operating activities denominated in foreign currencies. We
assess the need to utilize financial instruments to hedge
currency exposures on an ongoing basis. As of September 30,
2004, we had $59.9 million in cash and cash equivalents
denominated in foreign currencies.

Our international business is subject to risks
typical of an international business, including, but not limited
to, differing economic conditions, changes in political climate,
differing tax structures, other regulations and restrictions and
foreign exchange rate volatility. Accordingly, our future
results could be materially and adversely affected by changes in
these or other factors.

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RISK FACTORS

The following important factors, among others,
could cause our actual operating results to differ materially
from those indicated or suggested by forward-looking statements
made in this Form 10-Q or presented elsewhere by management
from time to time.

RISKS RELATING TO OUR COMPANY AND OUR
BUSINESS

We have a limited operating history and our
future financial results may fluctuate, which may cause our
stock price to decline.

We have a limited operating history. An investor
in our common stock must consider the risks and difficulties
frequently encountered by companies in new and rapidly evolving
industries, including companies that provide marketing
technology and data products and services. Our risks include the
ability to:



| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | achieve expected revenue rates;                                                                                                              
|
| |  | manage our operations;                                                                                                                       
|
| |  | compete effectively in the marketplace;                                                                                                      
|
| |  | develop and introduce new products and services;                                                                                             
|
| |  | continue to develop, upgrade and integrate our
    products and services;                                                                    
|
| |  | attract, retain and motivate qualified personnel;                                                                                            
|
| |  | maintain our current, and develop new,
    relationships with direct marketers, Web publishers, advertisers
    and advertising agencies; and
|
| |  | anticipate and adapt to changing industry
    conditions.                                                                                    

We also depend on the use of the Internet and
direct mail for advertising and marketing and as communications
media, the demand for advertising and marketing services in
general, and on general economic and industry conditions. We
cannot assure you that our business strategy will be successful
or that we will successfully address these risks. If we are
unsuccessful in addressing these risks, our revenues may fall
short of our own expectations or of the expectations of market
analysts and investors, which could negatively affect the price
of our stock.

We have a history of losses and may have
losses at times in the future.

With the exception of 2003, we have incurred net
losses each year since inception, including net losses of
$117.9 million and $265.8 million for the years ended
December 31, 2002 and 2001, respectively. As of
September 30, 2004 our accumulated deficit was
$622.6 million. With the exception of 2003, we have not
achieved profitability on an annual basis and may incur
operating losses at times in the future. We expect to continue
to incur significant operating and capital expenditures, which
may include obligations for facilities that currently constitute
excess or idle facilities. Periodically, we evaluate the
expenses likely to be incurred for these facilities, and where
appropriate, have taken restructuring charges with respect to
these expenses. We cannot assure you that there will not be
additional restructuring charges recognized with respect to our
excess or idle facilities, in particular with respect to our
facility in London, England where the office space is currently
sublet for only a portion of the remaining lease term. As a
result of our expenditures, we will need to generate significant
revenue to achieve profitability. Even if we do continue to
achieve profitability, we cannot assure you that we can sustain
or increase profitability on a quarterly or annual basis in the
future. If revenue does not meet our expectations, or if
operating expenses exceed what we anticipate or cannot be
reduced accordingly, our business, results of operations and
financial condition will be materially and adversely affected.

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Our review of strategic options may not be
successful and the outcome of this process is
uncertain.

We recently retained Lazard
Frères & Co. to explore strategic options for
the business in order to achieve greater shareholder value,
including a sale of part or all of our businesses,
recapitalization, extraordinary dividend, share repurchase or a
spin-off. We are uncertain as to what impact any particular
strategic option may have on our operating results or stock
price if accomplished or whether any transaction will even occur
as a result of this review. Other uncertainties and risks
relating to our review of strategic options include:



| |   |                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the review of strategic options may disrupt our
    operations and divert managements attention, which could
    have a material adverse effect on our business, financial
    condition or results of operations;
|
| |  | the perceived uncertainties as to our future
    direction may result in the loss of, or failure to attract,
    customers, employees or business partners;                                                        
|
| |  | the process of reviewing strategic options may be
    more time consuming and expensive than we currently
    anticipate; and                                                                                      
|
| |  | we may not be able to identify strategic options
    that are worth pursuing.                                                                                                                                      

A decrease in expenditures by direct marketers
and advertisers or a downturn in the economy could cause our
revenues to decline significantly in any given period.

We derive, and expect to continue to derive for
the foreseeable future, a large portion of our revenue from
products and services we provide to direct marketers, Web
publishers, advertisers and advertising agencies. Expenditures
by direct marketers and advertisers tend to be cyclical,
reflecting overall economic conditions as well as budgeting and
buying patterns. Specifically, the market for online advertising
has been characterized in the last few years by lower prices for
advertisements and the reduction, renegotiation or cancellation
of advertising contracts. As a result, advertising spending
across traditional media, as well as the Internet, decreased
over the past few years. In addition, at times in the past, we
have experienced an increased risk of uncollectible receivables
from customers and the reduction of marketing and advertising
budgets, especially for online advertising. We cannot assure you
that expenditures by direct marketers and advertisers will not
decline in any given period.

The number of ad impressions and emails delivered
by DoubleClick TechSolutions has, at times in the past, declined
and may in the future decline or fail to grow, which would
adversely affect our revenues. In addition, the prices that
DoubleClick TechSolutions can charge for its products and
services has declined in recent years, and if these declines
continue, it may adversely affect our revenues. A decline in the
economic prospects of direct marketers or the economy in general
would also adversely impact the revenue outlook for our
marketing automation business. DoubleClick Data, which provides
products and services to direct marketers, may face similar
pressures. Some direct marketers may respond to economic
downturns by reducing the number of catalogs mailed, thereby
possibly reducing the demand for DoubleClick Datas
services. If direct marketing activities fail to grow or
decline, our revenues could be adversely affected.

We cannot assure you that reductions in marketing
spending will not occur or that marketing spending will not be
diverted to more traditional media or other online marketing
products and services. Even if economic conditions improve, we
cannot assure you that marketing budgets and advertising
spending in general or with respect to our offerings in
particular will increase, or not decrease, from current levels.
A decline in the economic prospects of marketers or the economy
in general could alter current or prospective marketers
spending priorities or increase the time it takes to close a
sale with a customer. As a result, our revenues from marketing
and advertising services may not increase or may decline
significantly in any given period.

Disruption of our services due to
unanticipated problems or failures could harm our
business.

Some of our TechSolutions and Data technologies
reside in our data centers in multiple locations in the United
States and abroad. Continued and uninterrupted performance of
our technology is critical to our success. Customers may become
dissatisfied by any system failure that interrupts our ability
to provide our

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services to them, including failures affecting
our ability to deliver advertisements without significant delay
to the viewer or our ability to deliver a customers online
marketing campaign. Sustained or repeated system failures would
reduce the attractiveness of our products and services to our
customers and could result in contract terminations, fee rebates
or credits, or damages resulting from claims or litigation,
thereby reducing revenue. Slower response time or system
failures may also result from straining the capacity of our
technology due to an increase in the volume of advertising or
emails delivered through our servers. To the extent that we do
not effectively address any capacity constraints or system
failures, our business, results of operations and financial
condition could be materially and adversely affected.


Our operations are dependent on our ability to
protect our computer systems against damage from natural
disasters, fire, power loss, water damage, telecommunications
failures, vandalism, unauthorized access to, or attacks on, our
systems, and other malicious acts, and similar unexpected
adverse events. In addition, interruptions in our products or
services could result from the failure of our telecommunications
providers to provide the necessary data communications capacity
in the time frame we require. Unanticipated problems affecting
our systems have from time to time in the past caused, and in
the future could cause, interruptions in the delivery of our
products and services. Our business, results of operations and
financial condition could be materially and adversely affected
by any damage or failure that interrupts, delays or destroys our
operations. Some of our data centers are located at facilities
provided by third parties and if these parties are unable to
adequately protect our data centers, our business, results of
operations and financial conditions could be materially and
adversely affected.

We do not have multi-year agreements with many
of our customers and may be unable to retain customers, attract
new customers or replace departing customers with customers that
can provide comparable revenues.

Many of our contracts with our customers are
short-term. We cannot assure you that our customers will
continue to use our products and services or that we will be
able to replace, in a timely or effective manner, departing
customers with new customers that generate comparable revenues.
Further, we cannot assure you that our customers will continue
to generate consistent amounts of revenues over time. Our
failure to develop and sustain long-term relationships with our
customers would materially and adversely affect our results of
operations.

Industry shifts, continuing evolution of our
products and services and other changes may strain our
managerial, operational, financial and information system
resources.

In recent years, we have had to respond to
significant changes in our industry. As a result, we have
experienced industry shifts, continuing evolution of product and
service offerings and other changes that have increased the
complexity of our business and placed considerable demands on
our managerial, operational and financial resources. We continue
to increase and change the scope of our product and service
offerings both domestically and internationally and to deploy
our resources in accordance with changing business conditions
and opportunities. We have also grown through geographic
expansion and as a result have dispersed offices and operation
centers that make it more challenging to manage, operate and
monitor our business and operations. To continue to successfully
implement our business plan in our changing industry requires
effective planning and management processes. We expect that we
will need to continue to improve our financial and managerial
controls and information and reporting systems and procedures
and will need to continue to train and manage our workforce. Our
inability to effectively respond to these challenges could
materially and adversely affect our business, financial
condition and results of operations.

We may not be able to generate profits from
many of our products and services.

A significant part of our business model involves
generating revenue by providing marketing technology and data
products and services to direct marketers, Web publishers,
advertisers and advertising agencies. The long term profit
potential for our business model has not yet been proven. The
profitability of our business model is subject to external and
internal factors. Any single factor or combination of factors
could limit the profit potential, long-term and short-term, of
our business model. Like other businesses in the marketing and

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advertising sectors, our revenue outlook is
sensitive to downturns in the economy, including declines in
advertising and marketing budgets. The profit potential of our
business model is also subject to the acceptance of our products
and services by direct marketers, Web publishers, advertisers
and advertising agencies. Intensive marketing and sales efforts
may be necessary to educate prospective customers regarding the
uses and benefits of, and to generate demand for, our products
and services. Enterprises may be reluctant or slow to adopt a
new approach that may replace existing techniques, or may feel
that our offerings fall short of their needs. If these outcomes
occur, it could have an adverse effect on the profit potential
of our business model.


Misappropriation of confidential information
could cause us to lose customers or incur liability.

We currently retain highly confidential
information on behalf of our customers in secure database
servers. Although we observe security measures throughout our
operations, we cannot assure you that we will be able to prevent
unauthorized individuals from gaining access to these database
servers. Any unauthorized access to our servers, or abuse by our
employees, could result in the theft of confidential customer
information. If confidential information is compromised, we
could lose customers or become subject to liability or
litigation and our reputation could be harmed, any of which
could materially and adversely affect our business and results
of operations.

Direct marketing, online advertising and
related products and services are competitive markets and we may
not be able to compete successfully.

The market for marketing technology and data
products and services is very competitive. We expect this
competition to continue because there are low barriers to entry
for several of our businesses. Also, industry consolidation may
lead to stronger, better capitalized entities against which we
must compete. We expect that we will encounter additional
competition from new sources as we expand our product and
service offerings.

We believe that our ability to compete depends on
many factors both within and beyond our control, including the
following:



| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the features, performance, price and reliability
    of products and services offered either by us or our competitors;                                           
|
| |  | the launch timing and market success of products
    and services developed either by us or our competitors;                                                     
|
| |  | our ability to adapt, integrate and scale our
    products and services, and to develop and introduce new products
    and services that respond to market needs;
|
| |  | our ability to adapt to evolving technology and
    industry standards;                                                                                          
|
| |  | our customer service and support efforts;                                                                                                                        
|
| |  | our sales and marketing efforts; and                                                                                                                             
|
| |  | the relative impact of general economic and
    industry conditions on either us or our competitors.                                                             

Some of our existing and potential competitors
have longer operating histories, greater name recognition,
larger customer bases and significantly greater financial,
technical and marketing resources than do we. These factors
could allow them to compete more effectively than we can,
including devoting greater resources to the development,
promotion and sale of their products and services, engaging in
more extensive research and development, undertaking more
far-reaching marketing campaigns, adopting more aggressive
pricing policies and making more attractive offers to existing
and potential employees, strategic partners, direct marketers,
Web publishers and advertisers. We cannot assure you that our
competitors will not develop products or services that are equal
or superior to our products and services or that achieve greater
acceptance than our products and services. In addition, current
and potential competitors have or may merge or have established
or may establish cooperative relationships among themselves or
with third parties to increase the ability of their products or
services to address the needs of our prospective direct
marketer, Web publisher, advertising and advertising agency
customers. As a result, it is possible that new competitors may
emerge and rapidly acquire

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significant market share. We also face
competition from point solution providers that may offer
expertise in a particular segment or solutions within a
specialized market, including providers of online advertising
and email products and services. Increased competition may
result in price reductions, reduced gross profits and loss of
market share. We cannot assure you that we will be able to
compete successfully or that competitive pressures will not
materially and adversely affect our business, results of
operations or financial condition.


Our quarterly operating results are subject to
significant fluctuations and you should not rely on them as an
indication of future operating performance.

Our revenue and results of operations may
fluctuate significantly in the future as a result of a variety
of factors, many of which are beyond our control. These factors
include:



| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | direct marketer, Web publisher and advertiser
    demand for our products and services;                                                                                                                                                 
|
| |  | downward pricing pressures from current and
    potential customers for our products and services;                                                                                                                                      
|
| |  | Internet traffic levels;                                                                                                                                                                                                                
|
| |  | number and size of ad units per page on our
    customers Web sites;                                                                                                                                                                   
|
| |  | the introduction of new products or services by
    us or our competitors;                                                                                                                                                              
|
| |  | variations in the levels of capital, operating
    expenditures and other costs relating to our operations;                                                                                                                             
|
| |  | the size and timing of significant pre-tax
    charges, including for goodwill impairment and the write-down of
    assets and restructuring charges and credits, such as those
    relating to idle or excess facilities and severance;
|
| |  | costs related to any acquisitions or dispositions
    of technologies or businesses;                                                                                                                                                    
|
| |  | general seasonal and cyclical
    fluctuations; and                                                                                                                                                                                     
|
| |  | general economic and industry conditions.                                                                                                                                                                                               

We may not be able to manage our operational
spending properly which could adversely impact our business,
results of operations and financial condition.

We may not be able to adjust spending quickly
enough to offset any unexpected revenue shortfall. Our expenses
include upgrading and enhancing our ad management and email
delivery technology, expanding our product and service
offerings, marketing and supporting our products and services
and supporting our sales and marketing operations. If we have a
shortfall in revenue in relation to our expenses, or if our
expenses exceed our expectations, then our business, results of
operations and financial condition could be materially and
adversely affected.

Seasonal trends may cause our operating
results to fluctuate.

Our business is subject to seasonal fluctuations.
Advertisers generally place fewer advertisements during the
first and third calendar quarters of each year, which directly
affects our DoubleClick TechSolutions business. Further,
Internet traffic typically drops during the summer months, which
reduces the amount of online advertising. The direct marketing
industry generally uses our data services more in the third
calendar quarter based on plans for holiday season mailings,
which directly affects our DoubleClick Data business. The email
technology business may experience seasonal patterns similar to
the traditional direct marketing industry, which typically
generates lower revenues earlier in the calendar year and higher
revenues later in the year. In addition, the demand for
performance based marketing services has, in the past, peaked
during the fourth quarter holiday season. As a result, we
believe that period-to-period comparisons of our results of
operations may not be indicators of future performance.

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We may not be able to continue to grow through
acquisitions of or investments in other companies.

Our business has expanded in part as a result of
acquisitions or investments in other companies, including our
recent acquisitions of SmartPath and Performics. We have
recorded goodwill in connection with a number of our acquired
businesses, including MessageMedia, FloNetwork, SmartPath and
Performics. We have in the past recognized impairment charges
with respect to the goodwill of some acquired businesses as a
result of significantly lower-than-expected revenues generated
with respect to acquired businesses and considerably reduced
estimates of future performance. If market conditions require,
we may in the future record additional impairments in the value
of our acquired businesses.

We may continue to acquire or make investments in
other complementary businesses, products, services or
technologies as a means to grow our business. From time to time
we have had discussions with other companies regarding our
acquiring, or investing in, their businesses, products, services
or technologies. We cannot assure you that we will be able to
identify other suitable acquisition or investment candidates.
Even if we do identify suitable candidates, we cannot assure you
that we will be able to make other acquisitions or investments
on commercially acceptable terms, if at all. Even if we agree to
buy a company, technology or other assets, we cannot assure you
that we will be successful in consummating the purchase. If we
are unable to continue to expand through acquisitions, our
revenue may decline or fail to grow.

We are also minority investors in a few
technology companies, including DoubleClick Japan. Our
investments have decreased in value in the past, and may
decrease in the future, as a result of market volatility, and
periodically, we have recorded charges to earnings for all or a
portion of the unrealized loss due to declines in market value
considered to be other than temporary. The market value of these
investments may decline in future periods due to the continued
volatility in the stock market in general or the market prices
of securities of technology companies in particular and we may
be required to record further charges to earnings as a result.
Further, we cannot assure you that we will be able to sell these
securities at or above our cost basis.

We may not manage the integration of acquired
companies successfully or achieve desired results.

As a part of our business strategy, we have in
the past entered into, and could in the future enter into,
business combinations and acquisitions. Business combinations
and acquisitions are accompanied by a number of risks, including:



| |   |                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the difficulty of assimilating the operations and
    personnel of the acquired companies;                                                                                                                                       
|
| |  | the potential disruption of the ongoing
    businesses and distraction of our management and the management
    of acquired companies;                                                                                           
|
| |  | the difficulty of incorporating acquired
    technology and rights into our products and services;                                                                                                                               
|
| |  | unanticipated expenses related to technology and
    other integration;                                                                                                                                                          
|
| |  | difficulties in disposing of the excess or idle
    facilities of an acquired company or business;                                                                                                                               
|
| |  | difficulties in maintaining uniform standards,
    controls, procedures and policies;                                                                                                                                            
|
| |  | the impairment of relationships with employees
    and customers as a result of the integration of new management
    personnel;                                                                                                 
|
| |  | the inability to develop new products and
    services that combine our knowledge and resources and our
    acquired businesses or the failure for a demand to develop for
    the combined companies new products and services;
|
| |  | potential failure to achieve additional sales and
    enhance our customer base through cross-marketing of the
    combined companys products to new and existing customers;                                                    
|
| |  | potential litigation resulting from our business
    combinations or acquisition activities; and                                                                                                                                 
|
| |  | potential unknown liabilities associated with the
    acquired businesses.                                                                                                                                                       

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We may not succeed in addressing these risks or
other problems encountered in connection with these business
combinations and acquisitions. If so, these risks and problems
could disrupt our ongoing business, distract our management and
employees, increase our expenses and adversely affect our
results of operations. Furthermore, we may incur debt or issue
equity securities to pay for any future acquisitions. The
issuance of equity securities could be dilutive to our existing
stockholders.

We depend on third-party Internet,
telecommunications and technology providers, over whom we have
no control, to provide our products and services.

We depend heavily on several third-party
providers of Internet and related telecommunication services,
including hosting and co-location facilities, as well as
providers of technology solutions, including software developed
by third party vendors, in delivering our products and services.
These companies may not continue to provide services or software
to us without disruptions in service, at the current cost or at
all. Our Abacus division depends on data modeling software
licensed from SAS Institute Inc. We do not maintain a long term
agreement with this vendor and rely, in large measure, upon our
relationship with them.

If the products and services provided by these
third-party vendors are disrupted or not properly supported, our
ability to provide our products and services would be adversely
impacted. While we believe our business relationships with our
key vendors are good, a material adverse impact on our business
would occur if a supply or license agreement with a key vendor
is materially revised, is not renewed or is terminated, or the
supply of products or services were insufficient or interrupted.
The costs associated with any transition to a new service
provider could be substantial, require us to reengineer our
computer systems and telecommunications infrastructure to
accommodate a new service provider and disrupt the services we
provide to our customers. This process could be both expensive
and time consuming and could damage our relationships with
customers.

In addition, failure of our Internet and related
telecommunications providers to provide the data communications
capacity in the time frame we require could cause interruptions
in the services we provide. Unanticipated problems affecting our
computer and telecommunications systems in the future could
cause interruptions in the delivery of our services, causing a
loss of revenue and potential loss of customers.

We are dependent on key personnel and on the
retention and recruiting of key personnel for our future
success.

Our future success depends to a significant
extent on the continued service of our key technical, sales and
senior management personnel. We do not have employment
agreements with these executives and do not maintain key person
life insurance on any of these executives. The loss of the
services of one or more of our key employees could significantly
delay or prevent the achievement of our product development and
other business objectives and could harm our business. Our
future success also depends on our continuing ability to
attract, retain and motivate highly skilled employees for key
positions. There is competition for qualified employees in our
industry. We may not be able to retain our key employees or
attract, assimilate or retain other highly qualified employees
in the future, including as a result of our review of strategic
options.

We have from time to time in the past
experienced, and we expect to continue to experience from time
to time in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications for certain
positions.

We may be unable to introduce new or enhanced
products and services that meet our customers
requirements.

Our future success depends in part upon our
ability to enhance and integrate our existing products and to
introduce new, competitively priced products and solutions with
features that meet evolving customer requirements, all in a
timely and cost-effective manner. A number of factors, including
the following, could have a negative impact on the success of
our products and services:



| |   |                                                                               
| | - | ------------------------------------------------------------------------------
| |  | delays or difficulties in product acquisition,
    integration or development;

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| |   |                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------
| |  | our competitors introduction of new
    products ahead of our new products, or their introduction of
    superior or cheaper products;
|
| |  | our customers development of in-house
    solutions that could eliminate the need for our products and
    services; and              
|
| |  | our failure to anticipate changes in
    customers requirements.                                                                      

If we are unable to introduce new and enhanced
products and services effectively, our revenues may decline or
may not grow in accordance with our business model.

If we fail to adequately protect our
intellectual property, we could lose our intellectual property
rights or be liable for damages to third parties.

Our success and ability to effectively compete
are substantially dependent on the protection of our proprietary
technologies, patents, trademarks, service marks, copyrights and
trade secrets, which we protect through a combination of patent,
trademark, copyright, trade secret, unfair competition and
contract law. We cannot assure you that any of our intellectual
property rights will be viable or of value in the future.

In September 1999, the U.S. Patent and
Trademark Office issued to us a patent that covers our DART ad
serving and ad management technology. We are currently seeking
reissue of this patent, which would limit the scope of the
existing patent, and this reissue proceeding is pending before
the U.S. Patent and Trademark Office. The patent examiner
has raised some objections to our reissue application. Although
we are contesting these objections, we cannot assure you that
this patent will be reissued. We own other patents, and have
patent applications pending for some of our other technology. We
cannot assure you that the patent applications that we have
filed in the United States and internationally will be issued or
that patents issued or acquired by us now or in the future will
be valid and enforceable or provide us with any meaningful
protection.

We also have rights in the trademarks and service
marks that we use to market our products and services. These
marks include DOUBLECLICK®, DART®, DARTMAIL® and
ABACUSSM. We have applied to register some of our
trademarks and service marks in the United States and
internationally. We cannot assure you that any of these current
or future applications will be approved. Even if these marks are
registered, these marks may be invalidated or successfully
challenged by others. If our trademarks or service marks are not
registered because third parties own these marks, our use of
these marks will be restricted unless we are able to enter into
arrangements with these parties, which may not be available on
commercially reasonable terms, if at all.

We also enter into confidentiality, assignments
of proprietary rights and license agreements, as appropriate,
with our employees, consultants and business and technology
partners, and generally control access to and distribution of
our technologies, documentation and other proprietary
information. Despite these efforts, we cannot be certain that
the steps we take to prevent unauthorized use of our
intellectual property rights are sufficient to prevent
misappropriation of our products and services or technologies,
particularly in foreign countries where laws or law enforcement
practices may not protect our intellectual property rights as
fully as in the United States. In addition, we cannot assure you
that we will be able to adequately enforce the contractual
arrangements that we have entered into to protect our
proprietary technologies and intellectual property. If we lose
our intellectual property rights, this could have a material and
adverse impact on our business, financial condition and results
of operations.

If we face a claim of intellectual property
infringement, we may be liable for damages and be required to
make changes to our technology or business.

Infringement claims may be asserted against us,
which could adversely affect our reputation and the value of our
intellectual property rights. From time to time we have been,
and we expect to continue to be, subject to claims or notices in
the ordinary course of our business, including assertions of
alleged infringement of the patents, trademarks and other
intellectual property rights of third parties by us or our
customers. We do not conduct exhaustive patent searches to
determine whether our technology infringes patents held by
others. In addition, the protection of proprietary rights in
Internet-related industries is inherently uncertain due to the

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rapidly evolving technological environment. As
such, there may be numerous patent applications pending, many of
which are confidential during a large part of their prosecution,
that provide for technologies similar to ours.


Third party infringement claims and any resultant
litigation against us or our technology partners or providers,
should it occur, could subject us to significant liability for
damages, restrict us from using our or their technology or
operating our business generally, or require changes to be made
to our technology. Even if we prevail, litigation is time
consuming and expensive to defend and would result in the
diversion of managements time and attention. Claims from
third parties may also result in limitations on our ability to
use the intellectual property subject to these claims unless we
are able to enter into royalty, licensing or other similar
agreements with the third parties asserting these claims.

Such agreements, if required, may not be
available on terms acceptable to us, or at all. If we are unable
to enter into these types of agreements, we would be required to
either cease using the subject product or change the technology
underlying the applicable product. If a successful claim of
infringement is brought against us and we fail to develop
non-infringing technology as an alternative or to license the
infringed or similar technology on a timely and cost effective
basis, it could materially adversely affect our business,
financial condition and results of operations.

Our business may be materially adversely
affected by lawsuits related to privacy, data protection and our
business practices.

We have been a defendant in several lawsuits and
governmental inquiries by the Federal Trade Commission and the
attorneys general of several states alleging, among other
things, that we unlawfully obtain and use Internet users
personal information and that our use of ad serving
cookies violates various laws. Cookies are small
pieces of data that are recorded on the computers of Internet
users. Although the last of these particular matters was
resolved in 2002, we may in the future be subject to additional
claims or regulatory inquiries with respect to our business
practices. Class action litigation and regulatory inquiries of
these types are often expensive and time consuming and their
outcome may be uncertain.

Any additional claims or regulatory inquiries,
whether successful or not, could require us to devote
significant amounts of monetary or human resources to defend
ourselves and could harm our reputation. We may need to spend
significant amounts on our legal defense, senior management may
be required to divert their attention from other portions of our
business, new product launches may be deferred or canceled as a
result of any proceedings, and we may be required to make
changes to our present and planned products or services, any of
which could materially and adversely affect our business,
financial condition and results of operations. If, as a result
of any proceedings, a judgment is rendered or a decree is
entered against us, it may materially and adversely affect our
business, financial condition and results of operations and harm
our reputation.

Activities of our clients could damage our
reputation or give rise to legal claims against us.

Our clients promotion of their products and
services may not comply with federal, state and local laws,
including but not limited to laws and regulations relating to
the Internet. Failure of our customers to comply with federal,
state or local laws or our policies could damage our reputation
and adversely affect our business, results of operations or
financial condition. We cannot predict whether our role in
facilitating our customers marketing activities would
expose us to liability under these laws. Any claims made against
us could be costly and time-consuming to defend. If we are
exposed to this kind of liability, we could be required to pay
substantial fines or penalties, redesign our business methods,
discontinue some of our services or otherwise expend resources
to avoid liability.

We also may be held liable to third parties for
the content in the advertising and emails we deliver on behalf
of our customers. We may be held liable to third parties for
content in the advertising we serve if the music, artwork, text
or other content involved violates the copyright, trademark or
other intellectual property rights of such third parties or if
the content is defamatory, deceptive or otherwise violates
applicable laws or

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regulations. Any claims or counterclaims could be
time consuming, result in costly litigation or divert
managements attention.


Our business may suffer if we are unable to
effectively manage our international operations.

We have operations in a number of countries and
have limited experience in developing localized versions of our
products and services and in marketing, selling and distributing
our products and services internationally. We sell our
technology products and services through our directly and
indirectly owned subsidiaries primarily located in Australia,
Canada, China, France, Germany, Spain, Ireland, the United
Kingdom and Hong Kong. In Japan, we sell our technology products
and services through DoubleClick Japan, of which we own
approximately 15%. In addition, we develop and provide support
for some of our technology products and services in Canada,
Europe and Asia. We also operate the DoubleClick Data business
in the United Kingdom, Australia, Japan, France and, through a
joint venture, in Germany.

Our international operations are subject to other
inherent risks, including:



| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | the high cost of maintaining international
    operations;                         
|
| |  | uncertain demand for our products and services;                                    
|
| |  | the impact of recessions in economies outside the
    United States;               
|
| |  | changes in regulatory requirements;                                                
|
| |  | more restrictive data protection regulation,
    which may vary by country;        
|
| |  | reduced protection for intellectual property
    rights in some countries;         
|
| |  | potentially adverse tax consequences;                                              
|
| |  | difficulties and costs of staffing and managing
    foreign operations;            
|
| |  | cultural differences in the conduct of business;                                   
|
| |  | political and economic instability;                                                
|
| |  | fluctuations in currency exchange rates; and                                       
|
| |  | seasonal fluctuations in Internet usage and
    marketing and advertising spending.

These risks may have a material and adverse
impact on the business, results of operations and financial
condition of our operations in a particular country and could
result in a decision by us to reduce or discontinue operations
in that country. The combined impact of these risks in each
country may also materially and adversely affect our business,
results of operations and financial condition as a whole.

Many of our customers continue to experience
business conditions that could adversely affect our
business.

Some of our customers have experienced, and may
continue to experience, difficulty raising capital and
supporting their current operations and implementing their
business plans, or may be anticipating such difficulties and,
therefore, may elect to scale back the resources they devote to
marketing in general and our offerings in particular. These
customers may not be able to discharge their payment and other
obligations to us. The non-payment or late payment of amounts
due to us from our customers could negatively impact our
financial condition. If the current business environment for our
customers worsens, our business, results of operations and
financial condition could be materially adversely affected.

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Anti-takeover provisions in our charter,
by-laws and Delaware law may make it difficult for a third party
to acquire us.

Some of the provisions of our amended and
restated certificate of incorporation, our amended and restated
by-laws and Delaware law could, together or separately:



| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | discourage potential acquisition proposals;                                                                    
|
| |  | delay or prevent a change in control; or                                                                       
|
| |  | impede the ability of our stockholders to change
    the composition of our board of directors in any one year.

As a result, it could be more difficult for third
parties to acquire us, even if doing so might be beneficial to
our stockholders. Difficulty in acquiring us could, in turn,
limit the price that investors might be willing to pay for
shares of our common stock.

Our stock price may experience price and
volume fluctuations, and this volatility could result in us
becoming subject to securities or other litigation, which is
expensive and could result in a diversion of
resources.

The market price of our common stock has
fluctuated in the past and is likely to continue to be highly
volatile and subject to wide fluctuations. In addition, the
stock market has experienced significant price and volume
fluctuations. Investors may be unable to resell their shares of
our common stock at or above their purchase price.

Additionally, in the past, following periods of
volatility in the market price of a particular companys
securities, securities class action litigation has often been
brought against that company. Many companies in our industry
have been subject to this type of litigation in the past. We may
also become involved in this type of litigation. Litigation is
often expensive and diverts managements attention and
resources, which could materially and adversely affect our
business, financial condition and results of operations.

Future sales of our common stock may affect
the market price of our common stock.

As of September 30, 2004, we had
125,563,495 shares of common stock outstanding, excluding
20,708,246 shares subject to options outstanding as of such
date under our stock option plans that are exercisable at prices
ranging from $0.01 to $1,134.80 per share. We cannot
predict the effect, if any, that future sales of common stock or
the availability of shares of common stock for future sale will
have on the market price of our common stock prevailing from
time to time. Sales of substantial amounts of common stock,
including shares issued upon the exercise of stock options, or
the perception that such sales could occur, may materially
reduce the market value for our common stock.

Risks Related to Our Industry

Direct marketers and advertisers may be
reluctant to devote a portion of their budgets to marketing
technology and data products and services or online
advertising.

Companies doing business on the Internet,
including us, must compete with traditional advertising media,
including television, radio, cable and print, for a share of
advertisers total marketing budgets. Potential customers
may be reluctant to devote a significant portion of their
marketing budget to online advertising or marketing technology
and data products and services if they perceive the Internet or
direct marketing to be a limited or ineffective marketing
medium. Any shift in marketing budgets away from marketing
technology and data products or services or online advertising
spending, or our offerings in particular, could materially and
adversely affect our business, results of operations or
financial condition. In addition, online advertising could lose
its appeal to those direct marketers and advertisers using the
Internet as a result of its ad performance relative to other
media.

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If the delivery of Internet advertising on the
Web, or the delivery of our email messages, is limited or
blocked, demand for our products and services may
decline.

Our business may be adversely affected by the
adoption by computer users of technologies that harm the
performance of our products and services. For example, computer
users may use software designed to filter or prevent the
delivery of emails or Internet advertising, including pop-up and
pop-under advertisements; block, disable or remove cookies used
by our ad serving technologies; prevent or impair the operation
of other online tracking technologies; or misrepresent
measurements of ad penetration and effectiveness. We cannot
assure you that the proportion of computer users who employ
these or other similar technologies will not increase, thereby
diminishing the efficacy of our products and services. In the
event that one or more of these technologies became more widely
adopted by computer users, demand for our products and services
would decline.

We also depend on our ability to deliver emails
over the Internet through Internet service providers and private
networks. Internet service providers are able to block messages
from reaching their users and we do not have agreements with any
Internet service providers to deliver emails to their customers.
As a result, we could experience temporary or permanent
blockages of our delivery of emails to their customers, which
would limit the effectiveness of email marketing. Some Internet
service providers also use proprietary technologies to handle
and deliver email. If Internet service providers or private
networks materially limit or block the delivery of our emails,
or if our technology fails to be compatible with their email
technologies, then our business, results of operations or
financial condition could be materially and adversely affected.
In addition, the effectiveness of email marketing may decrease
as a result of increased consumer resistance to email marketing
in general.

New laws and regulations or changing
interpretations of existing laws and regulations could harm our
business.

Governments in the U.S. and other countries have
adopted laws and regulations affecting important aspects of our
business, Internet commerce, such as Internet communications,
electronic contracting, privacy and data protection, taxation,
advertising and direct marketing.

Many countries, including the countries of the
European Union, have implemented more stringent data protection
regulations than those in the U.S. Our current policies and
procedures may not meet these more restrictive standards. The
cost of such compliance could be material, and we may not be
able to comply with the applicable regulations in a timely or
cost-effective manner.

Some countries, including the countries of the
European Union, require that Internet users be allowed to refuse
to accept cookies or other online tracking technologies. In
addition, new technologies may make it easier or less
inconvenient for Internet users to reject cookies or other
online tracking technologies. If a high percentage of Internet
users refuse to accept cookies or other online tracking
technologies, or if future laws require express consent for the
use of cookies or otherwise restrict our use of related Internet
technologies, Internet advertising and direct marketing may
become more costly and less effective, and the demand for our
services may decrease.

In addition, the U.S. and many foreign countries
have adopted laws that restrict the transmission of unsolicited
commercial email. U.S. law requires senders of commercial
electronic mail messages to, among other things, identify their
messages as advertisements or solicitations and provide
recipients a mechanism to decline (opt out) future commercial
email from the sender. The Federal Trade Commission is
authorized to regulate commercial email and may impose
additional measures such as labeling requirements or a national
Do Not E-Mail registry. Other countries, including
the countries of the European Union, either require, or may in
the future require, senders to obtain recipients direct
affirmative consent before sending commercial email messages.
Although our email delivery is consent-based, we may be
subjected to increased liabilities and may be required to change
our current email practices in ways that make email
communications less effective or more costly.

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Meanwhile, many areas of the law affecting the
Internet remain unsettled, and it can be difficult to determine
whether and how existing laws, such as those governing data
protection, privacy, intellectual property, financial services,
content standards, libel, data security and taxation, may be
applied to Internet-based businesses. Our business could be
negatively impacted by new applications or interpretations of
existing laws and regulations to direct marketing, the Internet
or our other lines of business.

Future laws and regulations could also have a
material adverse effect on our business. In particular, new
consumer protection requirements could impose significant,
unanticipated compliance costs and could make it inefficient or
infeasible to operate certain parts of our business. Governments
in the U.S. and other countries are considering new limitations
on the collection, use and disclosure of personal information
for marketing purposes. The U.S. Congress and several
U.S. states are presently considering legislation that, if
enacted into law, could impose substantial restrictions,
including consumer notice and consent requirements, on our use
of ad serving cookies and other online tracking technologies.
Any legislation enacted or regulation issued could dampen the
growth and acceptance of our industry in general and of our
offerings in particular and could have a material adverse effect
on our business, financial condition and results of operations.
We are unable to predict whether any particular proposal will
pass, or the nature of the limitations that may be imposed.

Any changes in applicable legal requirements may
cause us to change or discontinue an existing offering, business
or business model; cancel a proposed offering or new business;
or incur significant expenses or liability that materially and
adversely affect our business, financial condition and results
of operations.

We are a member of the Network Advertising
Initiative, including its Email Service Provider Coalition, the
Privacy Alliance, and the Direct Marketing Association, all
industry self-regulatory organizations. These organizations or
similar organizations might adopt additional, more burdensome
guidelines, compliance with which could materially and adversely
affect our business, financial condition and results of
operations.

Our business may suffer if the Web experiences
unexpected interruptions or delays that may be caused by system
failures.

Our success depends, in large part, upon the
maintenance of the Web infrastructure, such as a reliable
network backbone with the necessary speed, data capacity and
security and timely development of enabling products. We cannot
assure you that the Web infrastructure will effectively support
the demands placed on it as the Web continues to experience
increased numbers of users, frequency of use or increased
bandwidth requirements of users. Furthermore, the Web has
experienced unexpected interruptions and delays caused by system
failures and computer viruses and attacks. These interruptions
and delays could impact user traffic and the direct marketers,
Web publishers and advertisers using our products and services.
In addition, a lack of security over the Internet may cause
Internet usage to decline and could adversely impact our
business, financial condition and results of operations.

The lack of appropriate advertising
measurement standards or tools may cause us to lose customers or
prevent us from charging a sufficient amount for our products
and services.

Because online marketing technology and data
products and services remain relatively new disciplines, there
are currently no generally accepted methods or tools for
measuring the efficacy of online marketing and advertising as
there are for advertising in television, radio, cable and print.
Many traditional advertisers may be reluctant to spend sizable
portions of their budget on online marketing and advertising
until there exist widely accepted methods and tools that measure
the efficacy of their campaigns.

We could lose customers or fail to gain customers
if our products and services do not utilize the measuring
methods and tools that may become generally accepted. Further,
new measurement standards and tools could require us to change
our business and the means used to charge our customers, which
could result in a loss of customer revenues and adversely impact
our business, financial condition and results of operation.

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Our Data business segment is dependent on the
success of the direct marketing industry for our future
success.

The future success of DoubleClick Data is
dependent in large part on the continued demand for our services
from the direct marketing industry, including the catalog
industry, as well as the continued willingness of catalog
operators to contribute their data to us. Most of our Abacus
customers are large consumer merchandise catalog operators in
the United States, with a number of operators in the United
Kingdom. A significant downturn in the direct marketing industry
generally, including the catalog industry, or withdrawal or
diminished use of our services by a substantial number of
catalog operators from the Abacus Alliances, would have a
material adverse effect on our business, financial condition and
results of operations. If email marketing or electronic
commerce, including the purchase of merchandise and the exchange
of information via the Internet or other media, increases
significantly in the future, companies that now rely on catalogs
or other direct marketing avenues to market their products may
reallocate resources toward these new direct marketing channels
and away from catalog-related marketing or other direct
marketing avenues, which could adversely affect demand for some
DoubleClick Data services. In addition, the effectiveness of
direct mail as a marketing tool may decrease as a result of
consumer saturation and increased consumer resistance to direct
mail in general.

Increases in postal rates and paper prices
could harm our Data business segment.

The direct marketing activities of our Abacus
Alliance customers are adversely affected by postal rate
increases, especially increases that are imposed without
sufficient advance notice to allow adjustments to be made to
marketing budgets. Higher postal rates may result in fewer
mailings of direct marketing materials, with a corresponding
decline in the need for some of the direct marketing services
offered by us. Increased postal rates can also lead to pressure
from our customers to reduce our prices for our services in
order to offset any postal rate increase. Higher paper prices
may also cause catalog companies to conduct fewer or smaller
mailings which could cause a corresponding decline in the need
for our products and services. Our customers may aggressively
seek price reductions for our products and services to offset
any increased materials cost.






|        |                         
|------- | ------------------------
|Item 4. | Controls and Procedures.

DoubleClicks management, with the
participation of DoubleClicks chief executive officer and
chief financial officer, evaluated the effectiveness of
DoubleClicks disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange
Act) as of September 30, 2004. Based on this evaluation,
DoubleClicks chief executive officer and chief financial
officer concluded that, as of September 30, 2004,
DoubleClicks disclosure controls and procedures were
(1) designed to ensure that material information relating
to DoubleClick, including its consolidated subsidiaries, is made
known to DoubleClicks chief executive officer and chief
financial officer by others within those entities, particularly
during the period in which this report was being prepared and
(2) effective, in that they provide reasonable assurance
that information required to be disclosed by DoubleClick in the
reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms.

No change in DoubleClicks internal control
over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) occurred during the fiscal
quarter ended September 30, 2004 that has materially
affected, or is reasonably likely to materially affect,
DoubleClicks internal control over financial reporting.




PART II: OTHER INFORMATION






|        |                  
|------- | -----------------
|Item 1. | Legal Proceedings

In April 2002, a consolidated amended class
action complaint alleging violations of the federal securities
laws in connection with our follow-on offerings was filed in the
United States District Court for the Southern District of New
York naming us, some of our officers and directors and certain
underwriters of our follow-on

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offerings as defendants. We and some of our
officers and directors are named in the suit pursuant to
Section 11 of the Securities Act of 1933 and
Section 10(b) of the Securities Exchange Act of 1934 on the
basis of the alleged failure to disclose the underwriters
alleged compensation and manipulative practices. This action
seeks, among other things, unspecified damages and costs,
including attorneys fees. Approximately 300 other issuers
and their underwriters have had similar suits filed against
them, all of which are included in a single coordinated
proceeding in the Southern District of New York. In October
2002, the action was dismissed against our officers and
directors without prejudice. However, claims against us remain.
In July 2002, we and the other issuers in the consolidated cases
filed motions to dismiss the amended complaint for failure to
state a claim, which was denied as to us in February 2003.


In June 2003, our Board of Directors
conditionally approved a proposed partial settlement with the
plaintiffs in this matter. In June 2004, an agreement of
settlement was submitted to the court for preliminary approval,
and the underwriter defendants have opposed. The settlement
would provide, among other things, a release of us and of the
individual defendants for the conduct alleged in the action to
be wrongful in the amended complaint. We would agree to
undertake other responsibilities under the partial settlement,
including agreeing to assign away, not assert, or release
certain potential claims we may have against our underwriters.
The settlement is subject to a hearing on fairness and approval
by the court overseeing the IPO litigations. We believe these
claims are without merit and, if the settlement is not
finalized, we intend to defend these actions vigorously.
However, due to the inherent uncertainties of litigation, we
cannot accurately predict the ultimate outcome of the
litigation. An unfavorable outcome in litigation could
materially and adversely affect our business, financial
condition and results of operations.

We are defending two class action lawsuits, one
filed in Allegheny County, Pennsylvania and the other in
San Joaquin County, California, alleging, among other
things, deceptive business practices, fraud, misrepresentation,
invasion of privacy and right of association relating to
allegedly deceptive content of online advertisements that
plaintiffs assert we delivered to consumers. The actions seek,
among other things, injunctive relief, compensatory and punitive
damages and attorneys fees and costs. In April 2004, the
court in the California action entered an order dismissing
several claims against us. We believe the claims in these cases
are without merit and intend to defend these actions vigorously.
However, due to the inherent uncertainties of litigation, we
cannot accurately predict the ultimate outcome of these
litigations. An unfavorable outcome in litigation could
materially and adversely affect our business, financial
condition and results of operations.

As previously reported, in October 2003, we
received a grand jury subpoena from the United States
Attorneys Office for the Southern District of New York
(U.S. Attorneys Office) seeking documents
regarding certain vendors that provided services to us,
including interior construction and facilities management,
during the period from 1999 through 2001. The services provided
by these vendors are unrelated to the products and services
provided by us to our customers. In March 2004, the
U.S. Attorneys Office issued a press release
announcing an Indictment against nineteen individuals, including
one of our former employees, for racketeering and other federal
crimes. The Indictment alleges a scheme to defraud us through
extortion of one of our vendors and through kickbacks to our
former employee named in the Indictment. The press release
states that these kickback payments were made without
knowledge of [the former employees] superiors at
DoubleClick and were in direct violation of the written policies
and procedures of DoubleClick.

We are continuing to fully cooperate with the
U.S. Attorneys Office. In addition, following receipt
of the grand jury subpoena, we conducted an internal
investigation and have implemented remedial measures to improve
our selection, use and oversight of our vendors. We do not
believe that any overpayments made by us relating to the vendor
named in the Indictment or the other vendors listed in the grand
jury subpoena are material with respect to our financial
statements for the periods in question or our current financial
condition.

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|        |                                                                
|------- | ---------------------------------------------------------------
|Item 2. | Unregistered Sales of Equity Securities and
    Use of Proceeds

The following provides information with respect
to our purchases of our common stock during the third quarter of
2004 of equity securities that are registered by us pursuant to
Section 12 of the Exchange Act:

|                                       |  |                 |           |               |  |                        |      |                       |  |  |            |  |  |  |               | 
|-------------------------------------- |  | --------------- | --------- | ------------- |  | ---------------------- | ---- | --------------------- |  |  | ---------- |  |  |  | ------------- | 
|                                       |  |                 |           |               |  | Total Number of Shares |      | Approximate Dollar   
|                                       |  | Total Number of |           |               |  | Purchased as Part of   |      | Value that May Yet Be
|                                       |  | Shares          |           | Average Price |  | Publicly Announced     |      | Purchased under the  
|                                       |  | Purchased       |           | Per Share     |  | Program                |      | Program(1)           
|                                       |  |                 |           |               |  |                        |      |                      
|July 1 through July 31, 2004           |  |                 | 4,192,800 |               |  | $                      | 6.62 |                       |  |  | 10,954,455 |  |  |  | $11.1 million | 
|August 1 through August 31, 2004       |  |                 | 2,229,800 |               |  | $                      | 4.97 |                       |  |  | 13,184,255 |  |  |  | $0            | 
|September 1 through September 30, 2004 |  |                 |          |               |  |                        |     |                       |  |  |           |  |  |  | $0            | 
|Total                                  |  |                 | 6,422,600 |               |  | $                      | 6.05 |                       |  |  | 13,184,255 |  |  |  | $0            | 



---



|    |                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In November 2003, the Board of Directors approved
    a $100 million stock repurchase program (the
    Program). All of our purchases of common stock
    during the third quarter were under the Program and during this
    period we completed the Program.






|        |         
|------- | --------
|Item 6. | Exhibits

|       |    |             |  |                                                                                                        
|------ | -- | ----------- |  | -------------------------------------------------------------------------------------------------------
|Number |    | Description
|       |    |            
|       | 31 | .1*         |  | Certification of Chief Executive Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.
|       | 31 | .2*         |  | Certification of Chief Financial Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.
|       | 32 | .1*         |  | Certification of Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.
|       | 32 | .2*         |  | Certification of Chief Financial Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.



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* filed herewith

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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.



| |                 
| | ----------------
| | DOUBLECLICK INC.



| |     |                    
| | --- | -------------------
| | By: | /s/ CORY A. DOUGLAS

| |                                                     
| | ----------------------------------------------------
| |                                                     
| | Cory A. Douglas                                     
| | Vice President, Finance and Corporate
    Controller
| | (Chief Accounting Officer and                       
| | Duly Authorized Officer)                            

Date: November 9, 2004

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EXHIBIT INDEX

|       |    |             |  |                                                                                                        
|------ | -- | ----------- |  | -------------------------------------------------------------------------------------------------------
|Number |    | Description
|       |    |            
|       | 31 | .1*         |  | Certification of Chief Executive Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.
|       | 31 | .2*         |  | Certification of Chief Financial Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.
|       | 32 | .1*         |  | Certification of Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.
|       | 32 | .2*         |  | Certification of Chief Financial Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002.



---

* filed herewith.