##### 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 March 31,
    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



---

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 May 7, 2004 there were 135,695,404 outstanding shares of
the registrants Common Stock.



---






---



DOUBLECLICK INC.

INDEX TO FORM 10-Q






|                                   |  |                                                                                                  |  |  |    | 
|---------------------------------- |  | ------------------------------------------------------------------------------------------------ |  |  | -- | 
|PART I:  FINANCIAL
    INFORMATION
|Item 1:                            |  | Financial Statements
    (unaudited)                                                             |  |  | 2  | 
|                                   |  | Consolidated Balance Sheets
    as of March 31, 2004 and December 31, 2003                       |  |  | 2  | 
|                                   |  | Consolidated Statements of
    Operations for the three months ended March 31, 2004 and
    2003 |  |  | 3  | 
|                                   |  | Consolidated Statements of
    Cash Flows for the three months ended March 31, 2004 and
    2003 |  |  | 4  | 
|                                   |  | Notes to Consolidated
    Financial Statements                                                   |  |  | 5  | 
|Item 2:                            |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations        |  |  | 17 | 
|Item 3:                            |  | Quantitative and Qualitative
    Disclosures about Market Risk                                   |  |  | 27 | 
|Item 4:                            |  | Controls and Procedures                                                                          |  |  | 41 | 
|                                  
|PART II:  OTHER
    INFORMATION   
|Item 1:                            |  | Legal Proceedings                                                                                |  |  | 42 | 
|Item 2:                            |  | Changes in Securities, Use
    of Proceeds and Issuer Purchases of Equity Securities             |  |  | 43 | 
|Item 6:                            |  | Exhibits and Reports on
    Form 8-K                                                             |  |  | 43 | 
|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


|                                                                                                                               |                           |                                            |           |              |         |   |           |        |         | 
|------------------------------------------------------------------------------------------------------------------------------ | ------------------------- | ------------------------------------------ | --------- | ------------ | ------- | - | --------- | ------ | ------- | 
|                                                                                                                               |                           | March 31,                                  |           | December 31,
|                                                                                                                               |                           | 2004                                       |           | 2003        
|                                                                                                                               |                           |                                            |           |             
|                                                                                                                               |                           |                                           
|                                                                                                                               |                           | (Unaudited, in thousands,                 
|                                                                                                                               |                           | except share amounts)                     
|ASSETS                                                                                                                        
|CURRENT ASSETS:                                                                                                                |                           |                                            |           |              |         |   |           |       
|Cash and cash equivalents                                                                                                      |                           | $                                          | 121,255   |              |         | $ | 183,484   |       
|Investments in marketable securities                                                                                           |                           |                                            | 151,616   |              |         |   | 151,898   |       
|Restricted cash                                                                                                                |                           |                                            | 4,228     |              |         |   | 16,328    |       
|Accounts receivable, net of allowances of $6,717
    and $7,519, respectively                                                  |                           |                                            | 55,840    |              |         |   | 51,491    |       
|Prepaid expenses and other current assets                                                                                      |                           |                                            | 20,928    |              |         |   | 17,473    |       
|                                                                                                                               |                           |                                            |           |              |         |   |           |       
|                                                                                                                               |                           | Total current assets                       |           |              | 353,867 |   |           |        | 420,674 | 
|Investment in marketable securities                                                                                            |                           |                                            | 336,635   |              |         |   | 312,434   |       
|Restricted cash                                                                                                                |                           |                                            | 11,668    |              |         |   | 11,668    |       
|Property and equipment, net                                                                                                    |                           |                                            | 75,442    |              |         |   | 75,786    |       
|Goodwill                                                                                                                       |                           |                                            | 33,474    |              |         |   | 18,658    |       
|Intangible assets, net                                                                                                         |                           |                                            | 16,570    |              |         |   | 10,847    |       
|Investment in affiliates                                                                                                       |                           |                                            | 19,406    |              |         |   | 13,422    |       
|Other assets                                                                                                                   |                           |                                            | 13,863    |              |         |   | 14,408    |       
|                                                                                                                               |                           |                                            |           |              |         |   |           |       
|                                                                                                                               |                           | Total assets                               |           | $            | 860,925 |   |           | $      | 877,897 | 
|                                                                                                                               |                           |                                            |           |              |         |   |           |       
|                                                                                                                              
|LIABILITIES AND STOCKHOLDERS
    EQUITY                                                                                      
|CURRENT LIABILITIES:                                                                                                           |                           |                                            |           |              |         |   |           |       
|Accounts payable                                                                                                               |                           | $                                          | 5,375     |              |         | $ | 4,164     |       
|Accrued expenses and other current liabilities                                                                                 |                           |                                            | 43,932    |              |         |   | 62,741    |       
|Capital lease obligations                                                                                                      |                           |                                            | 233       |              |         |   | 411       |       
|Deferred revenue                                                                                                               |                           |                                            | 10,940    |              |         |   | 8,188     |       
|                                                                                                                               |                           |                                            |           |              |         |   |           |       
|                                                                                                                               | Total current liabilities |                                            |           | 60,480       |         |   |           | 75,504 |        
|Convertible subordinated notes  Zero
    Coupon, due 2023                                                                     |                           |                                            | 135,000   |              |         |   | 135,000   |       
|Other long term liabilities                                                                                                    |                           |                                            | 27,150    |              |         |   | 27,046    |       
|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, 140,039,930 and
    139,329,875 shares issued, respectively |                           |                                            | 140       |              |         |   | 139       |       
|Treasury stock, 3,742,425 and
    1,846,170 shares, respectively                                                               |                           |                                            | (30,834   | )            |         |   | (10,396   | )     
|Additional paid-in capital                                                                                                     |                           |                                            | 1,291,114 |              |         |   | 1,287,775 |       
|Accumulated deficit                                                                                                            |                           |                                            | (641,830  | )            |         |   | (649,523  | )     
|Other accumulated comprehensive income                                                                                         |                           |                                            | 19,705    |              |         |   | 12,352    |       
|                                                                                                                               |                           |                                            |           |              |         |   |           |       
|                                                                                                                               |                           | Total stockholders equity                 |           |              | 638,295 |   |           |        | 640,347 | 
|                                                                                                                               |                           |                                            |           |              |         |   |           |       
|                                                                                                                               |                           | Total liabilities and stockholders equity |           | $            | 860,925 |   |           | $      | 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      
|                                                                 |                                     | March 31,               
|                                                                 |                                     |                         
|                                                                 |                                     | 2004                     |         | 2003  
|                                                                 |                                     |                          |         |       
|                                                                 |                                     |                         
|                                                                 |                                     | (Unaudited, in          
|                                                                 |                                     | thousands, except per   
|                                                                 |                                     | share amounts)          
|Revenue                                                          |                                     | $                        | 68,047  |        |        | $ | 60,054  |       
|Cost of revenue                                                  |                                     |                          | 22,565  |        |        |   | 21,947  |       
|                                                                 |                                     |                          |         |        |        |   |         |       
|                                                                 | Gross profit                        |                          |         | 45,482 |        |   |         | 38,107 |       
|Operating expenses:                                              |                                     |                          |         |        |        |   |         |       
|                                                                 | Sales and marketing                 |                          |         | 25,650 |        |   |         | 19,656 |       
|                                                                 | General and administrative          |                          |         | 8,074  |        |   |         | 8,866  |       
|                                                                 | Product development                 |                          |         | 8,491  |        |   |         | 8,045  |       
|                                                                 | Amortization of intangibles         |                          |         | 637    |        |   |         | 2,079  |       
|                                                                 |                                     |                          |         |        |        |   |         |       
|                                                                 |                                     | Total operating expenses |         |        | 42,852 |   |         |        | 38,646 | 
|Income (loss) from operations                                    |                                     |                          | 2,630   |        |        |   | (539    | )     
|Other income (expense)                                           |                                     |                          |         |        |        |   |         |       
|                                                                 | Equity in losses of affiliates      |                          |         | (186   | )      |   |         | (1,265 | )     
|                                                                 | Gain on distribution from affiliate |                          |         | 2,400  |        |   |         |       |       
|                                                                 | Interest and other, net             |                          |         | 3,474  |        |   |         | 3,043  |       
|                                                                 |                                     |                          |         |        |        |   |         |       
|                                                                 |                                     | Total other income       |         |        | 5,688  |   |         |        | 1,778  | 
|Income before income taxes                                       |                                     |                          | 8,318   |        |        |   | 1,239   |       
|Provision for income taxes                                       |                                     |                          | (625    | )      |        |   | (333    | )     
|                                                                 |                                     |                          |         |        |        |   |         |       
|Net income                                                       |                                     | $                        | 7,693   |        |        | $ | 906     |       
|                                                                 |                                     |                          |         |        |        |   |         |       
|Basic net income per share                                       |                                     | $                        | 0.06    |        |        | $ | 0.01    |       
|                                                                 |                                     |                          |         |        |        |   |         |       
|Weighted average shares used in basic net income
    per share   |                                     |                          | 137,099 |        |        |   | 136,437 |       
|                                                                 |                                     |                          |         |        |        |   |         |       
|Diluted net income per share                                     |                                     | $                        | 0.05    |        |        | $ | 0.01    |       
|                                                                 |                                     |                          |         |        |        |   |         |       
|Weighted average shares used in diluted net
    income per share |                                     |                          | 141,084 |        |        |   | 138,760 |       
|                                                                 |                                     |                          |         |        |        |   |         |       

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


|                                                                 |                                                                                                 |                                                                                     |                                                         |         |         |         |         |          |        |         |  
|---------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------------------------------------- | ------- | ------- | ------- | ------- | -------- | ------ | ------- | -
|                                                                 |                                                                                                 |                                                                                    
|                                                                 |                                                                                                 | Three Months Ended                                                                 
|                                                                 |                                                                                                 | March 31,                                                                          
|                                                                 |                                                                                                 |                                                                                    
|                                                                 |                                                                                                 | 2004                                                                                |                                                         | 2003   
|                                                                 |                                                                                                 |                                                                                     |                                                         |        
|                                                                 |                                                                                                 |                                                                                    
|                                                                 |                                                                                                 | (Unaudited, in thousands)                                                          
|CASH FLOWS FROM OPERATING ACTIVITIES                             |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         
|                                                                 | Net income                                                                                      |                                                                                     | $                                                       | 7,693   |         |         | $       | 906      |       
|                                                                 | Adjustments to reconcile net income to net cash
    (used in) provided by operating activities: |                                                                                     |                                                         |         |         |         |         |          |       
|                                                                 |                                                                                                 | Depreciation and leasehold amortization                                             |                                                         |         | 7,445   |         |         |          | 10,189 |        
|                                                                 |                                                                                                 | Amortization of intangible assets                                                   |                                                         |         | 1,512   |         |         |          | 2,949  |        
|                                                                 |                                                                                                 | Equity in losses of affiliates                                                      |                                                         |         | 186     |         |         |          | 1,265  |        
|                                                                 |                                                                                                 | Gain on distribution from affiliate                                                 |                                                         |         | (2,400  | )       |         |          |       |        
|                                                                 |                                                                                                 | Other non-cash items                                                                |                                                         |         | 897     |         |         |          | 849    |        
|                                                                 |                                                                                                 | Provisions for bad debts and advertiser discounts                                   |                                                         |         | 2,574   |         |         |          | 1,879  |        
|                                                                 |                                                                                                 | Changes in operating assets and liabilities, net
    of the effect of acquisitions: |                                                         |         |         |         |         |          |        |        
|                                                                 |                                                                                                 |                                                                                     | Accounts receivable                                     |         |         | (5,434  | )       |          |        | (52     | )
|                                                                 |                                                                                                 |                                                                                     | Prepaid expenses and other assets                       |         |         | (1,884  | )       |          |        | 3,347   |  
|                                                                 |                                                                                                 |                                                                                     | Accounts payable                                        |         |         | 1,210   |         |          |        | 667     |  
|                                                                 |                                                                                                 |                                                                                     | Lease termination and related payments                  |         |         | (7,625  | )       |          |        |        |  
|                                                                 |                                                                                                 |                                                                                     | Accrued expenses and other liabilities                  |         |         | (13,007 | )       |          |        | (20,369 | )
|                                                                 |                                                                                                 |                                                                                     | Deferred revenue                                        |         |         | 1,482   |         |          |        | 3,285   |  
|                                                                 |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         
|                                                                 | Net cash (used in) provided by operating
    activities                                         |                                                                                     |                                                         | (7,351  | )       |         |         | 4,915    |       
|CASH FLOWS FROM INVESTING ACTIVITIES                             |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         
|                                                                 | Purchases of investments in marketable securities                                               |                                                                                     |                                                         | (74,400 | )       |         |         | (130,079 | )     
|                                                                 | Maturities of investments in marketable securities                                              |                                                                                     |                                                         | 51,520  |         |         |         | 177,175  |       
|                                                                 | Restricted cash                                                                                 |                                                                                     |                                                         | 12,100  |         |         |         | (3,950   | )     
|                                                                 | Purchases of property and equipment                                                             |                                                                                     |                                                         | (6,069  | )       |         |         | (8,197   | )     
|                                                                 | Proceeds from distribution from affiliate                                                       |                                                                                     |                                                         | 2,400   |         |         |         |         |       
|                                                                 | Investment in Abacus Deutschland                                                                |                                                                                     |                                                         | (471    | )       |         |         |         |       
|                                                                 | Acquisition of SmartPath, net of cash acquired                                                  |                                                                                     |                                                         | (22,445 | )       |         |         |         |       
|                                                                 | Proceeds from sale of investment in affiliates                                                  |                                                                                     |                                                         |        |         |         |         | 656      |       
|                                                                 |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         
|                                                                 |                                                                                                 |                                                                                     | Net cash (used in) provided by investing
    activities |         |         | (37,365 | )       |          |        | 35,605  |  
|CASH FLOWS FROM FINANCING ACTIVITIES                             |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         
|                                                                 | Proceeds from the issuance of common stock                                                      |                                                                                     |                                                         | 1,974   |         |         |         | 335      |       
|                                                                 | Proceeds from the exercise of stock options                                                     |                                                                                     |                                                         | 469     |         |         |         | 575      |       
|                                                                 | Purchases of treasury stock                                                                     |                                                                                     |                                                         | (20,439 | )       |         |         |         |       
|                                                                 | Payments under capital lease obligations                                                        |                                                                                     |                                                         | (179    | )       |         |         | (1,791   | )     
|                                                                 |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         
|                                                                 |                                                                                                 | Net cash used in financing activities                                               |                                                         |         | (18,175 | )       |         |          | (881   | )      
|Effect of exchange rate changes on cash and cash
    equivalents |                                                                                                 |                                                                                     | 662                                                     |         |         |         | (109    | )       
|                                                                 |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         
|Net (decrease) increase in cash and cash
    equivalents         |                                                                                                 |                                                                                     | (62,229                                                 | )       |         |         | 39,530  |         
|Cash and cash equivalents at beginning of period                 |                                                                                                 | $                                                                                   | 183,484                                                 |         |         | $       | 123,671 |         
|                                                                 |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         
|Cash and cash equivalents at end of period                       |                                                                                                 | $                                                                                   | 121,255                                                 |         |         | $       | 163,201 |         
|                                                                 |                                                                                                 |                                                                                     |                                                         |         |         |         |         |         

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


March 31, 2004


(Unaudited)




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



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

DoubleClick is a leading provider of technology
and data marketing products used by direct marketers, Web
publishers and advertisers. 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 and marketing
automation divisions. DoubleClicks ad management division
includes products which consist primarily of the DART for
Publishers Service, the DART for Advertisers Service, the DART
Enterprise ad serving software product, and DART Motif.
DoubleClicks marketing automation division includes
products such as email products based on DoubleClicks
DARTmail Service as well as campaign management and analytics
products and services. As a result of its acquisition of
SmartPath, Inc. (SmartPath), a marketing
resource management software company in March 2004, DoubleClick
began to offer marketing planning and operational management
solutions as part of its marketing automation suite of products.
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 was formed as a result of
DoubleClicks acquisition of Computer Strategy
Coordinators, Inc., which was completed on June 30,
2003. 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



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(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
March 31, 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 our 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. No indicators of impairment were
identified during the first quarter of 2004.

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)

(Unaudited)


TechSolutions.Revenues include fees earned from the use of DoubleClicks
ad management and marketing automation 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.

For DoubleClicks licensed ad serving and
campaign 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 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.



| |             
| | ------------
| | 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 operating 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

7



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


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 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 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 No. 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 No. 123, Accounting for Stock-Based
Compensation.

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 No. 123, DoubleClicks net
income would have decreased and net loss would have increased to
the pro forma amounts indicated below:

|                                     |                        |                       |   |       |  |  |   |         |  
|------------------------------------ | ---------------------- | --------------------- | - | ----- |  |  | - | ------- | -
|                                     |                        |                      
|                                     |                        | Three Months Ended   
|                                     |                        | March 31,            
|                                     |                        |                      
|                                     |                        | 2004                  |   | 2003 
|                                     |                        |                       |   |      
|                                     |                        |                      
|                                     |                        | (In thousands, except
|                                     |                        | per share amounts)   
|Net income (loss)                    |                        |                       |   |       |  |  |   |        
|                                     | As reported            |                       | $ | 7,693 |  |  | $ | 906     |  
|                                     | Pro forma per SFAS 123 |                       |   | 403   |  |  |   | (23,592 | )
|Basic net income (loss) per share:   |                        |                       |   |       |  |  |   |        
|                                     | As reported            |                       | $ | 0.06  |  |  | $ | 0.01    |  
|                                     | Pro forma per SFAS 123 |                       |   | 0.00  |  |  |   | (0.17   | )
|Diluted net income (loss) per share: |                        |                       |   |       |  |  |   |        
|                                     | as reported            |                       | $ | 0.05  |  |  | $ | 0.01    |  
|                                     | Pro forma per SFAS 123 |                       |   | 0.00  |  |  |   | (0.17   | )

8



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


The per share weighted average fair value of
options granted for the three months ended March 31, 2004
and 2003 was $6.15 and $3.25, respectively, on the grant date
with the following weighted average assumptions:

|                        |  |                    |            |      |  |  |            | 
|----------------------- |  | ------------------ | ---------- | ---- |  |  | ---------- | 
|                        |  |                   
|                        |  | Three Months Ended
|                        |  | March 31,         
|                        |  |                   
|                        |  | 2004               |            | 2003
|                        |  |                    |            |     
|Expected dividend yield |  |                    | 0%         |      |  |  | 0%         | 
|Risk-free interest rate |  |                    | 2.99%      |      |  |  | 2.91%      | 
|Expected life           |  |                    | 4.5  years |      |  |  | 4.5  years | 
|Volatility              |  |                    | 65%        |      |  |  | 60%        | 

The pro forma impact of options on the net income
(loss) for the three months ended March 31, 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 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       
|                                                   |  | March 31,                
|                                                   |  |                          
|                                                   |  | 2004                      |         | 2003
|                                                   |  |                           |         |     
|                                                   |  |                          
|                                                   |  | (In thousands, except per
|                                                   |  | share amounts)           
|Net income                                         |  | $                         | 7,693   |      |  | $ | 906     | 
|                                                   |  |                           |         |      |  |   |         | 
|Weighted average basic common shares outstanding   |  |                           | 137,099 |      |  |   | 136,437 | 
|Effect of dilutive securities: stock options       |  |                           | 3,985   |      |  |   | 2,323   | 
|                                                   |  |                           |         |      |  |   |         | 
|Weighted average diluted common shares outstanding |  |                           | 141,084 |      |  |   | 138,760 | 
|                                                   |  |                           |         |      |  |   |         | 
|Net income per common share  basic                |  | $                         | 0.06    |      |  | $ | 0.01    | 
|                                                   |  |                           |         |      |  |   |         | 
|Net income per common share  diluted              |  | $                         | 0.05    |      |  | $ | 0.01    | 
|                                                   |  |                           |         |      |  |   |         | 

At March 31, 2004 and 2003 outstanding
options of approximately 9.8 million and 13.0 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 March 31, 2004, excludes the effect of
10.3 million shares of common stock issuable upon
conversion of the Zero Coupon Subordinated Notes due 2023. In
addition, at March 31, 2003 the effect of 3.8 million
shares of common stock issuable upon conversion of the
4.75% Convertible Subordinated Notes due 2006 were excluded
since their inclusion would also have had an antidilutive effect.



| |                 
| | ----------------
| | 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

9



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


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.



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

In May 2003, the Financial Accounting Standards
Board (the FASB), issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity
(SFAS No. 150). SFAS No. 150
establishes standards for how a company classifies and measures
certain financial instruments with characteristics of both
liabilities and equity. SFAS No. 150 is effective for
financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003
with the exception of an indefinite deferral relating to
application to limited life entities. The adoption of
SFAS No. 150 did not have a material effect on
DoubleClicks financial position, results of operations or
cash flows.

On April 30, 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities
(SFAS No. 149). SFAS No. 149
amends SFAS No. 133 for derivative instruments,
including certain derivative instruments embedded in other
contracts and for hedging activities. SFAS No. 149
requires contracts with comparable characteristics to be
accounted for similarly. In particular, SFAS No. 149
clarifies when a contract with an initial net investment meets
the characteristic of a derivative and clarifies when a
derivative that contains a financing component will require
special reporting in the statement of cash flows.
SFAS No. 149 is effective for contracts entered into
or modified after June 30, 2003. The adoption of
SFAS No. 149 did not have a material effect on
DoubleClicks financial position, results of operations or
cash flows.

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 applies immediately to variable
interest entities created after January 31, 2003. With
regard to variable interest entities already in existence prior
to February 1, 2003, the implementation of FIN 46 has
been delayed and currently applies to the first fiscal year or
interim period beginning after December 15, 2003.
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. DoubleClick does not have any
entities as of March 31, 2004 that required disclosure or
new consolidation as a result of adopting the provisions of
FIN 46.

Note 2  Business
Transactions



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



| |     
| | ----
| | 2004



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

On March 19, 2004, DoubleClick completed its
acquisition of SmartPath, a privately held marketing resource
management, or MRM, software company for approximately
$24.1 million in cash. The SmartPath MRM solution adds
marketing planning and operational management solutions to
DoubleClicks existing offerings in channel execution and
data and analytics optimization. In addition, SmartPath

10



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


provides DoubleClick with an expanded platform to
enter traditional marketing channels such as print and
television.

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, $1.3 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 intangibles estimated useful life. The covenant
not to compete is being amortized on a straight-line basis over
15 months.

The results of SmartPaths operations will
be included in DoubleClicks Consolidated Statement of
Operations beginning in the second quarter of 2004.



| |     
| | ----
| | 2003



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

On June 30, 2003, DoubleClick completed its
acquisition of Computer Strategy Coordinators, or 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, inclusive of
$0.4 million of direct acquisition costs, 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.

11



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


The following unaudited pro forma results of
operations have been prepared assuming that the acquisitions of
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   
|                                       |  | March 31,            
|                                       |  |                      
|                                       |  | 2004                  |        | 2003
|                                       |  |                       |        |     
|                                       |  |                      
|                                       |  | (In thousands, except
|                                       |  | per share data)      
|Revenue                                |  | $                     | 69,266 |      |  | $ | 66,004 |  
|Net income (loss)                      |  | $                     | 6,555  |      |  | $ | (527   | )
|Net income per basic and diluted share |  | $                     | 0.05   |      |  | $ | 0.00   |  

Note 3  Investment in
Affiliates

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

|                         |  |                |        |      |  |   |        | 
|------------------------ |  | -------------- | ------ | ---- |  | - | ------ | 
|                         |  | 2004           |        | 2003
|                         |  |                |        |     
|                         |  |               
|                         |  | (In thousands)
|AdLINK Internet Media AG |  | $              | 13,276 |      |  | $ | 7,578  | 
|DoubleClick Japan        |  |                | 5,788  |      |  |   | 5,844  | 
|Abacus Deutschland       |  |                | 342    |      |  |   |       | 
|MaxWorldwide, Inc.       |  |                |       |      |  |   |       | 
|                         |  |                |        |      |  |   |        | 
|                         |  | $              | 19,406 |      |  | $ | 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 largest shareholder. This
option is only exercisable if AdLINK has achieved EBITDA
positive results for the fiscal quarters ending
December 31, 2003 and March 31, 2004. DoubleClick is
determining whether AdLINK achieved EBITDA positive results for
the fiscal quarter ended December 31, 2003.

DoubleClicks investment in AdLINK
represents an investment in a publicly traded company, which is
accounted for as available-for-sale marketable securities.
Accordingly this investment is carried at fair value with
changes in fair value being reported as a component of other
comprehensive income. At March 31, 2004 and
December 31, 2003, DoubleClicks cost basis in this
investment was approximately $1.9 million.

As of March 31, 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 March 31, 2004
and December 31, 2003, the fair value of these investments
was as follows:

|                   |  |                |        |      |  |   |        | 
|------------------ |  | -------------- | ------ | ---- |  | - | ------ | 
|                   |  | 2004           |        | 2003
|                   |  |                |        |     
|                   |  |               
|                   |  | (In thousands)
|MaxWorldwide, Inc. |  | $              | 1,968  |      |  | $ | 3,840  | 
|DoubleClick Japan  |  | $              | 21,172 |      |  | $ | 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

12



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


the joint venture which required an initial
investment of approximately $0.5 million and is expected to
require additional investments of $1.0 million during 2004.
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 based on the finalization of its
plan of liquidation and dissolution.

During the first quarter of 2003, DoubleClick
sold its remaining investment in NetRatings and received
proceeds of approximately $0.6 million. The gain recognized
on the sale of this investment was not material.

Note 4  Goodwill

The changes in the carrying amount of goodwill
for the three months ended March 31, 2004 are as follows
(in thousands):

|                                            |  |   |        |  
|------------------------------------------- |  | - | ------ | -
|Balance at December 31, 2003                |  | $ | 18,658 |  
|Recognition of Canadian deferred tax assets |  |   | (903   | )
|Acquisition of SmartPath                    |  |   | 15,719 |  
|                                            |  |   |        |  
|Balance at March 31, 2004                   |  | $ | 33,474 |  
|                                            |  |   |        |  

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

Note 5  Intangible
Assets

Intangible assets consist of the following:

|                   |                                |                |           |                |  |              |        |        |  |     |         |         |   |   |        |       |  |   |        |       | 
|------------------ | ------------------------------ | -------------- | --------- | -------------- |  | ------------ | ------ | ------ |  | --- | ------- | ------- | - | - | ------ | ----- |  | - | ------ | ----- | 
|                   |                                |                |           |                |  |             
|                   |                                |                |           | March 31, 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         |                |           | 28 months      |  |              |        | 28,750 |  |     |         | (21,904 | ) |   |        | 6,846 |  |   |        | 6,105 | 
|                   | Purchased technology and other |                |           | 36 months      |  |              |        | 15,411 |  |     |         | (8,087  | ) |   |        | 7,324 |  |   |        | 4,742 | 
|                   | Covenant not to compete        |                |           | 15 months      |  |              |        | 2,400  |  |     |         |        |   |   |        | 2,400 |  |   |        |      | 
|                   |                                |                |           |                |  |              |        |        |  |     |         |         |   |   |        |       |  |   |        |      
|                   |                                |                | 31 months |                |  | $            | 48,645 |        |  | $   | (32,075 | )       |   | $ | 16,570 |       |  | $ | 10,847 |      
|                   |                                |                |           |                |  |              |        |        |  |     |         |         |   |   |        |       |  |   |        |      

Amortization expense was $1.5 million and
$2.9 million for the three months ended March 31, 2004
and 2003, respectively. For each of the three months ended
March 31, 2004 and 2003, $0.9 million 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
March 31, 2004, the annual amortization expense for each of
the succeeding three fiscal years is estimated to be
$6.8 million, $3.5 million and $0.8 million in
2005, 2006 and 2007, respectively. Amortization expense for the
remaining balance of fiscal 2004 is estimated to be
$5.5 million.

13



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


Note 6  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
March 31, 2004, these thresholds have 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 will be
amortized from the date of issuance through July 15, 2008
and are included as a component of Other assets on
the Consolidated Balance Sheet.

The Zero Coupon Notes contain an embedded
derivative, the value of which as of March 31, 2004 has
been determined by a third party valuation 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.

Note 7   Restructuring

During the first quarter of 2004, no
restructuring charges or credits were recorded. Cash paid during
the quarter with respect to previously accrued restructuring
charges was approximately $8.7 million of which
$7.6 million consisted of the final lease termination
payment relating to DoubleClicks former New York
headquarters. The remaining $1.1 million related to lease
and other exit costs at excess and idle facilities in
New York and for DoubleClicks other facilities,
primarily London, England and Louisville, Colorado.

The restructuring accrual as of March 31,
2004 of approximately $24.6 million consists primarily of
DoubleClicks facilities in Louisville, Colorado and
London, England. The restructuring accrual associated

14



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


with these facilities represents the excess of
future lease commitments over estimated sublease income, if any.
These accruals were based on an analysis performed 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 March 31, 2004, approximately
$3.7 million and $20.9 million remained accrued in
Accrued expenses and other current liabilities and
Other long-term liabilities, 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                      |  |   | (8,711 | )
|Effect of foreign currency translation |  |   | 358    |  
|                                       |  |   |        |  
|Balance at March 31, 2004              |  | $ | 24,624 |  
|                                       |  |   |        |  



|         |              
|-------- | -------------
|Note 8  | 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. 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 June 2003, DoubleClicks Board of
Directors conditionally approved a proposed partial settlement
with the plaintiffs in this matter. 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 Board agreed to approve the settlement subject to a number
of conditions, including the participation of a substantial
number of other issuer defendants in the proposed settlement,
the consent of our insurers to the settlement, and the
completion of acceptable final settlement documentation.
Furthermore, 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 with leave to
amend. DoubleClick believes these claims 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

15



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##### Table of Contents



DOUBLECLICK INC.


NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

(Unaudited)


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 9  | 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. 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):

|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        | 
|------------------------------- |  | --------------------------------- | ------ | ---- |  | --------- | ------ | ----- |  | - | ------ | - |  | - | ------ | 
|                                |  |                                  
|                                |  | Three Months Ended March 31, 2004
|                                |  |                                  
|                                |  | TechSolutions                     |        | Data |  | Corporate |        | Total
|                                |  |                                   |        |      |  |           |        |      
|Revenue from external customers |  | $                                 | 45,297 |      |  | $         | 22,750 |       |  | $ |       |   |  | $ | 68,047 | 
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        | 
|Depreciation and amortization   |  | $                                 | 6,179  |      |  | $         | 2,164  |       |  | $ | 614    |   |  | $ | 8,957  | 
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        | 
|Operating income/(loss)         |  | $                                 | 8,496  |      |  | $         | 2,533  |       |  | $ | (8,399 | ) |  | $ | 2,630  | 
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        | 
|Total other income, net         |  |                                   |        |      |  |           |        |       |  |   |        |   |  | $ | 5,688  | 
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        | 
|Income before income taxes      |  |                                   |        |      |  |           |        |       |  |   |        |   |  | $ | 8,318  | 
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        | 

|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        |  
|------------------------------- |  | --------------------------------- | ------ | ---- |  | --------- | ------ | ----- |  | - | ------ | - |  | - | ------ | -
|                                |  |                                  
|                                |  | Three Months Ended March 31, 2003
|                                |  |                                  
|                                |  | TechSolutions                     |        | Data |  | Corporate |        | Total
|                                |  |                                   |        |      |  |           |        |      
|Revenue from external customers |  | $                                 | 41,528 |      |  | $         | 18,526 |       |  | $ |       |   |  | $ | 60,654 |  
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        |  
|Depreciation and amortization   |  | $                                 | 10,432 |      |  | $         | 1,714  |       |  | $ | 992    |   |  | $ | 13,138 |  
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        |  
|Operating income/(loss)         |  | $                                 | 2,838  |      |  | $         | 4,466  |       |  | $ | (7,843 | ) |  | $ | (539   | )
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        |  
|Total other income, net         |  |                                   |        |      |  |           |        |       |  |   |        |   |  | $ | 1,778  |  
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        |  
|Income before income taxes      |  |                                   |        |      |  |           |        |       |  |   |        |   |  | $ | 1,239  |  
|                                |  |                                   |        |      |  |           |        |       |  |   |        |   |  |   |        |  



|          |                            
|--------- | ---------------------------
|Note 10  | Comprehensive Income (Loss)

Comprehensive income (loss) consists of net
income, unrealized gains and losses on marketable securities and
foreign currency translation adjustments. Comprehensive income
was $15.0 million for the three months ended March 31,
2004. Comprehensive loss was $1.2 million for the three
months ended March 31, 2003.

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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.

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 and our marketing
automation divisions. Our ad management products and services
consist of our DART for Publishers Service, DART Enterprise,
DART for Advertisers Service, Motif and MediaVisor. Our
marketing automation products and services consist of a suite of
email products based on our DARTmail Service, Ensemble, our
campaign management software tool, and SiteAdvance, our Web site
analytics solution. As a result of our acquisition of
SmartPath, Inc., a marketing resource management, or MRM,
software company in March 2004, we began to offer marketing
planning and operational management solutions as part of our
marketing automation suite of products and services. We generate
our TechSolutions revenue primarily from the delivery of
advertising impressions and emails as well as the sale and the
installation of our licensed software products.

DoubleClick Data.Data, which consists of our Abacus and Data Management
divisions, provides products and services to direct marketers.
Abacus maintains the Abacus Alliance database in the United
States, which is the largest proprietary database of consumer
transactions used for target marketing purposes, and maintains
alliances in the United Kingdom, Japan and through a joint
venture, in Germany. In the United States, we also offer a
Business-to-Business Alliance. As a result of our acquisition of
Computer Strategy

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##### Table of Contents



Coordinators, Inc., a data management
company, in June 2003 we began to offer direct marketers
solutions for building and managing customer marketing databases
and other related products and services as part of the new 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.


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 March 31,
2004 were approximately $24.6 million, and consisted
primarily of reserves for our facilities in Louisville, Colorado
and London, England. The restructuring accrual associated with
our facilities represents the excess of future lease commitments
over estimated sublease income, if any. These accruals were
based on an analysis performed 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
$45.0 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 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 Investments and
    Goodwill

We invest in companies, technologies and
intangible assets in areas within our strategic focus, some of
which have highly volatile fair values and uncertain profit
potentials. We evaluate our investments for impairment on a
periodic basis and reduce the carrying values of such assets to
their estimated fair value when we believe an investment has
experienced a decline in value that is other than temporary.
Future adverse changes in market conditions or poor operating
results of strategic investments could indicate an inability to
recover the carrying value of the investments, thereby possibly
requiring impairment charges in the future.

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,

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##### Table of Contents



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

As of March 31, 2004, we held investments in
equity instruments of public companies received as a result of
certain business transactions, including shares held in
DoubleClick Japan, AdLINK Internet Media AG and
MaxWorldwide, Inc. Such investments, which are in the
Internet industry, are subject to significant fluctuations in
fair market value due to the volatility of the stock market. The
following sets forth the cost basis and fair market value of
these investments, which are included in as Investment in
affiliates on the Consolidated Balance Sheets.

|                         |  |                      |       |        |  |   |        | 
|------------------------ |  | -------------------- | ----- | ------ |  | - | ------ | 
|                         |  |                     
|                         |  | As of March 31, 2004
|                         |  |                     
|                         |  |                      |       | Fair  
|                         |  |                      |       | Market
|                         |  | Cost Basis           |       | Value 
|                         |  |                      |       |       
|                         |  |                     
|                         |  | (In thousands)      
|DoubleClick Japan        |  | $                    | 5,788 |        |  | $ | 21,172 | 
|AdLINK Internet Media AG |  | $                    | 1,855 |        |  | $ | 13,276 | 
|MaxWorldwide, Inc.       |  | $                    |      |        |  | $ | 1,968  | 

Some of these investments have suffered a
decrease in value in the past as a result of market volatility.
We will continue to evaluate our investments in affiliates for
impairment due to declines in market value considered to be
other than temporary. This evaluation includes, in addition to
persistent, declining stock prices, general economic and
company-specific assessments. In the event of a determination
that a further decline in market value is other than temporary,
a charge to earnings will be recorded for all or a portion of
the unrealized loss and a new cost basis in the investment will
be established.



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

Pursuant to SFAS 109, we record a valuation
allowance to the extent realization of our deferred tax assets
is not more likely than not. As of March 31, 2004 and
December 31, 2003, we maintained a valuation allowance
against those net 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 net deferred tax asset 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

In May 2003, the Financial Accounting Standards
Board, referred to as FASB, issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity, known as
SFAS No. 150. SFAS No. 150 establishes
standards for how a company classifies and measures certain
financial instruments with characteristics of both liabilities
and equity. SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003,
and otherwise is effective at the beginning of the first

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interim period beginning after June 15, 2003
with the exception of an indefinite deferral relating to
application to limited life entities. The adoption of
SFAS No. 150 did not have a material effect on our
financial position, results of operations or cash flows.


On April 30, 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, known as
SFAS No. 149. SFAS No. 149 amends
SFAS No. 133 for derivative instruments, including
certain derivative instruments embedded in other contracts and
for hedging activities. SFAS No. 149 requires
contracts with comparable characteristics to be accounted for
similarly. In particular, SFAS No. 149 clarifies when
a contract with an initial net investment meets the
characteristic of a derivative and clarifies when a derivative
that contains a financing component will require special
reporting in the statement of cash flows. SFAS No. 149
is effective for contracts entered into or modified after
June 30, 2003. The adoption of SFAS No. 149 did
not have a material effect on our financial position, results of
operations or cash flows.

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 controlling
financial interest. FIN 46 applies immediately to variable
interest entities created after January 31, 2003. With
regard to variable interest entities already in existence prior
to February 1, 2003, the implementation of FIN 46 has
been delayed and currently applies to the first fiscal year or
interim period beginning after December 15, 2003.
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. We do not have any entities
as of March 31, 2004 that required disclosure or new
consolidation as a result of adopting the provisions of
FIN 46.

Business Transactions

Acquisitions



| |     
| | ----
| | 2004



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

On March 19, 2004, we completed our
acquisition of SmartPath, 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, 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, inclusive of $0.4 million of
direct acquisition costs, and the assumption of certain
indebtedness.

Results of Operations

Revenues for the first quarter of 2004 were
$68.0 million, an increase of $8.0 million or 13.3%
compared to the prior year period. This increase was due to
growth in each of our divisions within both our TechSolutions
and Data segments. Gross profits increased $7.4 million
during the quarter to $45.5 million while gross margins
improved by 330 basis points to 66.8%. These increases were
driven primarily by our TechSolutions segment. Operating income
was $2.6 million versus an operating loss of
$0.5 million in the prior year period. Operating income
improved due to the increase in gross profits of
$7.4 million partially offset by

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##### Table of Contents



the increase in operating expenses of
$4.3 million. The increase in operating costs was primarily
due to sales and marketing expenses, which grew by approximately
30%. This increase was net of a $1.5 million reserve
reversal relating to a prior acquisition. Sales and marketing
expenses increased primarily due to the hiring of additional
employees and the assumption of headcount as a result of our
acquisition of CSC. Net income was $7.7 million, or
$0.05 per diluted share, as compared to net income of
$0.9 million, or $0.01 per diluted share, in the prior
year period. Net income for the first quarter of 2004 benefited
from the distribution from MaxWorldwide of approximately
$2.4 million in connection with its plan of liquidation and
dissolution and the reversal of a $1.5 million reserve,
previously discussed. We expect revenue and operating income to
increase throughout 2004 as a result of anticipated growth in
each of our divisions within both our TechSolutions and Data
segments.


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

|              |  |                      |        |               |  |        |        |   |  |   |       |  |  |  |      |  
|------------- |  | -------------------- | ------ | ------------- |  | ------ | ------ | - |  | - | ----- |  |  |  | ---- | -
|              |  |                      |        |               |  |       
|              |  | For the Three Months |        |              
|              |  | Ended March 31,      |        | 2004 vs. 2003
|              |  |                      |        |              
|Revenue:      |  | 2004                 |        | 2003          |  | Change |        | %
|              |  |                      |        |               |  |        |        |  
|TechSolutions |  | $                    | 45,297 |               |  | $      | 41,528 |   |  | $ | 3,769 |  |  |  | 9.1  | %
|Data          |  |                      | 22,750 |               |  |        | 18,526 |   |  |   | 4,224 |  |  |  | 22.8 | %
|              |  |                      |        |               |  |        |        |   |  |   |       |  |  |  |      |  
|Total         |  | $                    | 68,047 |               |  | $      | 60,054 |   |  | $ | 7,993 |  |  |  | 13.3 | %
|              |  |                      |        |               |  |        |        |   |  |   |       |  |  |  |      |  

|              |  |                      |        |               |  |        |        |   |  |   |       |  |  |  |      |  
|------------- |  | -------------------- | ------ | ------------- |  | ------ | ------ | - |  | - | ----- |  |  |  | ---- | -
|              |  |                      |        |               |  |       
|              |  | For the Three Months |        |              
|              |  | Ended March 31,      |        | 2004 vs. 2003
|              |  |                      |        |              
|Gross Profit: |  | 2004                 |        | 2003          |  | Change |        | %
|              |  |                      |        |               |  |        |        |  
|TechSolutions |  | $                    | 31,899 |               |  | $      | 25,443 |   |  | $ | 6,456 |  |  |  | 25.4 | %
|Data          |  |                      | 13,583 |               |  |        | 12,664 |   |  |   | 919   |  |  |  | 7.3  | %
|              |  |                      |        |               |  |        |        |   |  |   |       |  |  |  |      |  
|Total         |  | $                    | 45,482 |               |  | $      | 38,107 |   |  | $ | 7,375 |  |  |  | 19.4 | %
|              |  |                      |        |               |  |        |        |   |  |   |       |  |  |  |      |  

|                         |  |                      |        |               |  |        |        |   |  |   |        |   |  |  |       |   
|------------------------ |  | -------------------- | ------ | ------------- |  | ------ | ------ | - |  | - | ------ | - |  |  | ----- | --
|                         |  |                      |        |               |  |       
|                         |  | For the Three Months |        |              
|                         |  | Ended March 31,      |        | 2004 vs. 2003
|                         |  |                      |        |              
|Operating Income/(Loss): |  | 2004                 |        | 2003          |  | Change |        | %
|                         |  |                      |        |               |  |        |        |  
|TechSolutions            |  | $                    | 8,496  |               |  | $      | 2,838  |   |  | $ | 5,658  |   |  |  | 199.4 | % 
|Data                     |  |                      | 2,533  |               |  |        | 4,466  |   |  |   | (1,933 | ) |  |  | (43.3 | )%
|Corporate(1)             |  |                      | (8,399 | )             |  |        | (7,843 | ) |  |   | (556   | ) |  |  | NMF   |   
|                         |  |                      |        |               |  |        |        |   |  |   |        |   |  |  |       |   
|Total                    |  | $                    | 2,630  |               |  | $      | (539   | ) |  | $ | 3,169  |   |  |  | NMF   |   
|                         |  |                      |        |               |  |        |        |   |  |   |        |   |  |  |       |   



---



|    |                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------
|(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 and marketing automation products and
services. Our ad management products and services consist of the
DART for Publishers Service, the DART Enterprise ad serving
software product, the DART for Advertisers Service, Motif and
MediaVisor. Our marketing automation products and services
consist of a suite of email products based on our DARTmail
Service, Ensemble, our campaign management software tool, and
SiteAdvance, our Web site analytics solution. 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 and marketing automation products.

TechSolutions revenue increased by 9.1% to
$45.3 million for the three months ended March 31,
2004 from $41.5 million for the three months ended
March 31, 2003. The increase in TechSolutions revenue was
attributable to growth in both our ad management and marketing
automation divisions. Ad management revenue increased by
$2.2 million or 7.0% to $33.3 million in the first
quarter of 2004 compared to the same period of 2003. For the
three months ended March 31, 2004, the increase in volumes
outpaced the decline in

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effective price. Volume increases were driven by
our existing customer base and were assisted by the signing of
over 40 new ad management contracts. The decline in effective
price continued to be due to a change in client and product mix
and sustained, pricing pressure. The change in client mix was
driven by the acquisition of higher-volume, lower-priced
customers.


Marketing automation revenue increased 15.0% to
$12.0 million in the first quarter of 2004 compared to
$10.4 million in the prior year period. This increase was
associated with growth in all of our marketing automation
products and services. The addition of over 60 new marketing
automation customers as well as volume increases within email
from existing customers, more than offset price declines.

TechSolutions gross profit was $31.9 million
or 70.4% of revenue for the three months ended March 31,
2004 compared to $25.4 million or 61.3% of revenue for the
three months ended March 31, 2003. Gross profits increased
$6.5 million primarily due to the increase in revenues and
decreases in depreciation, rent and utilities of approximately
$1.7 million in aggregate. The decrease in depreciation,
rent and utilities costs was due to the termination of the lease
for our previous New York headquarters and the relocation
of our data center from New York to Colorado. In addition,
depreciation expense also benefited from the continued efficient
use of our existing hardware.

TechSolutions operating income was
$8.5 million for the three months ended March 31,
2004, an increase of $5.7 million compared to the prior
year period. This improvement was a result of the increase in
gross profit partially offset by an increase in operating
expenses of approximately $0.8 million. Operating expenses
included an increase in personnel-related costs of approximately
$2.0 million resulting from the hiring of additional
employees as well an increase in bad debt expense of
approximately $1.1 million and professional fees of
approximately $0.5 million. The increase in
personnel-related costs was net of a $1.5 million reserve
reversal relating to a prior acquisition. These costs were
offset by a decline in depreciation expense of $1.2 million
relating to our previous New York headquarters and a
reduction in amortization expense of $1.8 million associated
with these assets reaching the end of their amortizable lives.

In 2004, we plan to invest additional resources
in our TechSolutions research, product development and sales
departments to fund future revenue growth. As a part of this
strategy, we anticipate hiring additional employees during 2004.
We anticipate TechSolutions revenue and operating income will
grow in each division as compared to the year ago periods even
with the 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 and
merchants in the Abacus Alliances. As a result of our
acquisition of CSC in June 2003, we began to offer direct
marketers solutions for building and managing customer marketing
databases and other related products and services as part of the
new 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.

Data revenue increased 22.8% to
$22.8 million for the three months ended March 31,
2004 compared to $18.5 million for the three months ended
March 31, 2003. The increase is attributable to the
acquisition of CSC and growth from our Abacus business. Abacus
revenues increased 9.9% to $20.4 million in the first
quarter of 2004 compared to $18.5 million in first quarter
of 2003. The remaining Data revenues during the first quarter of
2004 came from DoubleClicks Data Management division. The
year-over-year increase in Abacus revenues were driven primarily
from continued growth in Abacus
U.S. Business-to-Business Alliance and the U.K.
Business-to-Consumer Alliance. During the quarter, Abacus added
33 Business-to-Consumer Alliance members and 18
Business-to-Business Alliance members.

Gross profits increased $0.9 million to
$13.6 million or 59.6% of revenues in the first quarter of
2004 compared to $12.7 million or 68.4% of revenues in the
prior year period. Gross profits were driven by the

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improvement in sales offset by an increase of
$1.0 million in the amortization of purchased technology
associated with our acquisition of CSC and production costs
associated with this business.


Data operating income decreased to
$2.5 million for the first quarter of 2004 from
$4.5 million in the prior year period. This change was due
to an increase in operating expenses of $2.9 million
partially offset by the improvement in gross profits of
$0.9 million. Operating expenses increased primarily due to
additional headcount assumed as a result of the CSC acquisition.
As a result, average Data headcount increased 53.5% in the first
quarter of 2004 compared to the same period of 2003. In
addition, amortization expense included as a component of
operating expenses increased by approximately $0.5 million.
These expenses are associated with intangible assets acquired in
connection with the CSC acquisition.

In 2004, we anticipate Data revenue and operating
income will grow in each division as compared to the year ago
periods due to growth from our Abacus Alliances in the U.S. and
U.K. and new product offerings within Data Management.



| |                   
| | ------------------
| | Operating Expenses

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

|                           |  |                      |        |               |  |        |        |   |  |   |       |   |  |  |      |   
|-------------------------- |  | -------------------- | ------ | ------------- |  | ------ | ------ | - |  | - | ----- | - |  |  | ---- | --
|                           |  |                      |        |               |  |       
|                           |  | For the Three Months |        |              
|                           |  | Ended March 31,      |        | 2004 vs. 2003
|                           |  |                      |        |              
|Operating Expenses:        |  | 2004                 |        | 2003          |  | Change |        | %
|                           |  |                      |        |               |  |        |        |  
|Sales and marketing        |  | $                    | 25,650 |               |  | $      | 19,656 |   |  | $ | 5,994 |   |  |  | 30.5 | % 
|General and administrative |  | $                    | 8,074  |               |  | $      | 8,866  |   |  | $ | (792  | ) |  |  | (8.9 | %)
|Product development        |  | $                    | 8,491  |               |  | $      | 8,045  |   |  | $ | 446   |   |  |  | 5.5  | % 



| |                    
| | -------------------
| | 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 increased by
$6.0 million in the first quarter of 2004 compared to the
same period of 2003 and increased as a percentage of revenue to
37.7% from 32.7%. The increase was primarily attributable to
increases in personnel-related costs of $4.5 million, bad
debt expense of $0.9 million, and marketing expenses of
$0.5 million. The change in personnel related costs were
net of a $1.5 million reserve reversal relating to a prior
acquisition. Personnel-related costs increased due to the hiring
of additional employees and the assumption of headcount as a
result of our acquisition of CSC. As a result, average sales and
marketing headcount increased 12.2% in the first quarter of 2004
compared to 2003. The increase in bad debt expense was
consistent with our year over year increase in revenues.
Additionally, the rise in marketing expenditures related to our
worldwide Insight conferences, our annual trends and best
practices conference featuring industry thought leaders, case
studies and technical tracks.

For the remainder of 2004, we expect the absolute
dollar amount of sales and marketing expenses to remain
relatively flat as compared to the first quarter of 2004 as we
have completed most of our planned hiring, but to decrease
slightly as a percentage of revenues due to anticipated higher
revenues.



| |                           
| | --------------------------
| | 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
decreased marginally by $0.8 million to 11.9% of revenue in
the first quarter of 2004 compared to 14.8% of revenue in the
same period of 2003. Cost savings initiatives during the year
resulted in reductions of $0.4 million in computer-related
office expenses and $0.8 million in professional and
outside service fees. These decreases were partially offset by
increases in personnel-related costs of $0.7 million due to
the increase in average general and administrative headcount of
9.4% in the first quarter of 2004 compared to the same period of
2003.

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For the remainder of 2004, we expect general and
administrative expenses to remain flat in absolute dollars, but
decrease as a percentage of revenues due to anticipated higher
revenues as compared to the first quarter of 2004.



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

Product development expenses consist primarily of
compensation and related benefits, consulting fees and other
operating expenses associated with the product development
departments. The product development departments perform
research and development, enhance and maintain existing products
and provide quality assurance. Product development expenses
increased marginally in the first quarter of 2004 compared to
the same period of 2003, but decreased as a percentage of
revenue from 13.4% in 2003 to 12.5% in 2004. The increase was
primarily due to approximately $0.4 million in professional
fees relating to new product initiatives.

For the remainder of 2004, we expect product and
development expenses to increase significantly in absolute
dollars and as a percentage of revenue as compared to the first
quarter of 2004 and the year ago periods due to hiring of
additional employees and the assumption of headcount as a result
of our acquisition of SmartPath.



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

Amortization of intangible assets consists
primarily of the amortization of customer relationships.
Amortization expense was $0.6 million and $2.1 million
for the three months ended March 31, 2004 and 2003,
respectively. The decrease of $1.5 million in the first
quarter of 2004 compared to the same period of the prior year
was primarily the result of certain intangible assets becoming
fully amortized during the year.

We expect amortization of intangible assets to
increase during the remainder of 2004 due to the acquisition of
SmartPath in March 2004, offset slightly by other intangible
assets as they become fully amortized.



| |                                            
| | -------------------------------------------
| | Non-Operating Expenses and Income
    Taxes



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

Equity in losses of affiliates was
$0.2 million and $1.3 million for the three months
ended March 31, 2004 and 2003, respectively. In the first
quarter of 2004, we recognized equity losses of approximately
$0.1 million from our equity investment in DoubleClick
Japan and approximately $0.1 million from our investment in
Abacus Deutschland.

In the first quarter of 2003, we recognized
equity losses of $0.3 million relating to our equity
investment in DoubleClick Japan and $1.0 million from our
equity investment in MaxWorldwide.



| |                                        
| | ---------------------------------------
| | 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 based
on the finalization of its plan of liquidation and dissolution.

In the first quarter of 2003, we did not
recognize any gains from affiliate distributions.

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

|                 |  |                |       |      |  |   |        |  
|---------------- |  | -------------- | ----- | ---- |  | - | ------ | -
|                 |  |               
|                 |  | For the Three 
|                 |  | Months Ended  
|                 |  | March 31,     
|                 |  |               
|                 |  | 2004           |       | 2003
|                 |  |                |       |     
|                 |  |               
|                 |  | (In thousands)
|Interest Income  |  | $              | 2,999 |      |  | $ | 5,021  |  
|Interest Expense |  |                | (351  | )    |  |   | (2,107 | )
|Other            |  |                | 826   |      |  |   | 129    |  
|                 |  |                |       |      |  |   |        |  
|                 |  | $              | 3,474 |      |  | $ | 3,043  |  
|                 |  |                |       |      |  |   |        |  

Interest and other, net was $3.5 million and
$3.0 million for the three months ended March 31,
2004, and 2003, respectively. In the first quarter of 2004,
interest income decreased by $2.0 million due to a
combination of a decrease of total cash, which includes cash and
cash equivalents, investments in marketable securities and
restricted cash, of $119.7 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.
Other primarily includes the effect of foreign exchange rate
fluctuations on operations resulting in gains of
$0.7 million and $0.1 million for the three months
ended March 31, 2004 and 2003, respectively.

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



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

The provision for income taxes recorded for the
three months ended March 31, 2004 of $0.6 million
consists principally of income taxes of $0.4 million on the
earnings of our foreign subsidiaries, Federal alternative
minimum taxes of $0.1 million, and state and local taxes of
$0.1 million. The provision for income taxes recorded for
the three months ended March 31, 2003 of $0.3 million
consists principally of income taxes of $0.4 million on the
earnings of some of our foreign subsidiaries and
$0.1 million of Federal alternative minimum tax, reduced by
a benefit of approximately $0.2 million of state and local
refunds received during the first quarter. The provision for
income taxes for the three months ended March 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           
|                                                        |  | Three Months Ended
|                                                        |  | March 31,         
|                                                        |  |                   
|                                                        |  | 2004               |         | 2003
|                                                        |  |                    |         |     
|                                                        |  |                   
|                                                        |  | (In thousands)    
|Net cash (used in) provided by operating
    activities |  | $                  | (7,351  | )    |  | $ | 4,915  |  
|Net cash (used in) provided by investing
    activities |  | $                  | (37,365 | )    |  | $ | 35,605 |  
|Net cash used in financing activities                   |  | $                  | (18,175 | )    |  | $ | (881   | )



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

In the first quarter of 2004, cash used in
operating activities was $7.4 million, a decrease of
$12.3 million compared to the same period in 2003. The
decrease is primarily due to the final lease termination payment
of $7.6 million for our previous New York headquarters
and an increase in accounts receivable of $5.4 million due
to the timing of collections. During the current quarter, cash
used in operating activities included decreases of
$13.1 million in accrued expenses and other liabilities and
$1.9 million in prepaid expenses and other assets,
partially offset by increases in deferred revenue of
$1.5 million and accounts payable of $1.2 million. The
decrease in accrued expenses and other liabilities related to
the payment of certain liabilities while the remaining balance
sheet items were primarily due to timing.

25



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##### Table of Contents



In the first quarter of 2003, cash provided by
operating activities was $4.9 million resulting primarily
from our net income, adjusted for non-cash items. In addition,
accrued expenses and other liabilities decreased
$20.0 million due to the payment of other liabilities
partially offset by an increase in deferred revenue of
$3.3 million and prepaid expenses of $3.3 million.

For the remainder of 2004, we expect to generate
positive cash flow from operating activities on a quarterly
basis due to the completion of restructuring payments for our
previous New York headquarters, the redemption of our
4.75% Convertible Subordinated Notes due 2006 and the
anticipated increase in revenues and net income.



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

In the first quarter of 2004, cash used in
investing activities was $37.4 million, a decrease of
$73.0 million compared to the same period in 2003. The
decline is primarily due to the decrease in the net proceeds
from purchases and maturities of investments in marketable
securities of $70.0 million compared to 2003. In addition,
we used $22.4 million, net of cash acquired, for the
acquisition of SmartPath and $6.1 million for capital
expenditures.

In the first quarter of 2003, cash provided by
investing activities was $35.6 million resulting primarily
from the net proceeds in purchases and maturities of investments
in marketable securities of $47.1 million partially offset
by capital expenditures of $8.2 million.

For the remainder of 2004, cash flow from
investing activities may fluctuate based upon the net proceeds
from purchases and maturities of investments in marketable
securities and possible acquisitions and as compared to the
first quarter of 2004 and the year ago periods.



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

In the first quarter of 2004, cash used in
financing activities was $18.2 million, a decrease of
$17.3 million compared to the same period in 2003. The
decrease was a result of the purchase of 1.9 million shares
our common stock for $20.4 million. These costs were offset
by the net increase in proceeds from the issuance of common
stock and exercise of stock options of approximately
$1.5 million in the quarter.

In the first quarter of 2003, cash used in
financing activities was $0.9 million resulting primarily
from $1.8 million from payments of our capital lease
obligations offset by the net proceeds from the issuance of
common stock and stock options of approximately
$0.9 million.

For the remainder of 2004, cash flow from
financing activities may fluctuate based on possible purchases
of our common stock as compared to the first quarter of 2004 and
the year ago periods.

Related Party Transactions

We maintain a 15% interest in AdLINK. This
interest was acquired in January 2002 as a result of the sale of
our European Media business. We currently maintain one seat on
AdLINKs supervisory board. We recognized revenue of
approximately $0.5 million and $0.7 million during the
three months ended March 31, 2004 and 2003, respectively,
relating to services provided to AdLINK.

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 $0.8 million during the
three months ended March 31, 2003, relating to services
provided to MaxWorldwide.

Additionally, we maintain a minority interest in
DoubleClick Japan. On December 26, 2002, we sold
45,049 shares of common stock in DoubleClick Japan and
reduced our ownership interest to 15.6%. As a result of this
transaction, we account for our remaining 31,271 shares in
DoubleClick Japan under the equity method of accounting. We also
have retained one seat on DoubleClick Japans board of
directors. DoubleClick Japan will continue 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

26



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##### Table of Contents



approximately $0.9 million and
$0.8 million for the three months ended March 31, 2004
and 2003, respectively.







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

Interest Rate Risk

The primary objective of our investment
activities is to preserve principal 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
March 31, 2004, our investments in marketable securities
had a weighted average time to maturity of 399 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
March 31, 2004:

|                                                |  |                  |         |            |  |            |         |            |  |            |         |   |  |   |   |  |  |   |         | 
|----------------------------------------------- |  | ---------------- | ------- | ---------- |  | ---------- | ------- | ---------- |  | ---------- | ------- | - |  | - | - |  |  | - | ------- | 
|                                                |  |                  |         |           
|                                                |  | Time to Maturity |         |           
|                                                |  |                  |         |           
|                                                |  | One Year         |         | One to Two |  | Two to     |         | Five and   |  |           
|                                                |  | or Less          |         | Years      |  | Five Years |         | Thereafter |  | Fair Value
|                                                |  |                  |         |            |  |            |         |            |  |           
|                                                |  |                 
|                                                |  | (In thousands)  
|Assets:                                         |  |                  |         |            |  |            |         |            |  |            |         |   |  |   |   |  |  |   |         | 
|Cash and cash equivalents                       |  | $                | 121,255 |            |  | $          |        |            |  | $          |        |   |  | $ |  |  |  | $ | 121,255 | 
|Average interest rate                           |  |                  | 0.72    | %          |  |            |         |            |  |            |         |   |  |   |   |  |  |   |         | 
|Fixed-rate investments in marketable securities |  | $                | 151,616 |            |  | $          | 313,028 |            |  | $          | 23,607  |   |  | $ |  |  |  | $ | 488,251 | 
|Average interest rate                           |  |                  | 2.36    | %          |  |            | 1.83    | %          |  |            | 1.85    | % |  |   |   |  |  |   |         | 
|Liabilities:                                    |  |                  |         |            |  |            |         |            |  |            |         |   |  |   |   |  |  |   |         | 
|Convertible subordinated notes                  |  | $                |        |            |  | $          |        |            |  | $          | 135,000 |   |  | $ |  |  |  | $ | 152,569 | 
|Average interest rate                           |  |                  |         |            |  |            |         |            |  |            | 0.00    | % |  |   |   |  |  |   |         | 

As of March 31, 2004, the current portion of
restricted cash was $4.2 million and the average interest
rate associated with this cash was 0.13% and the non-current
portion of restricted cash was $11.7 million with an
average interest rate of 0.63%. 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 March 31, 2004 has been determined by a third party
valuation 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 March 31, 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 our subsidiaries. At March 31, 2004, our
international revenues were approximately $14.2 million.
The revenues included beneficial foreign currency

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movements of approximately $1.9 million
primarily due to the strength of the Euro versus the
U.S. dollar. The effect of foreign exchange rate
fluctuations on operations resulted in gains of
$0.7 million and $0.1 million for the three months
ended March 31, 2004 and 2003, respectively. 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 March 31,
2004, we had $58.9 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.

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 anticipated revenue growth 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 for
advertising and as a communications medium, 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 decline or may not grow
in accordance with our business model and may fall short of
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 this past fiscal year, 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,

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respectively. As of March 31, 2004 our
accumulated deficit was $641.8 million. With the exception
of the fiscal year ended December 31, 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. As a result of our expenditures, we
will need to generate significant revenue to maintain
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.


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. The overall market for advertising, including
online advertising, has been characterized in the last few years
by increasing softness of demand, lower prices for
advertisements, the reduction or cancellation of advertising
contracts, an increased risk of uncollectible receivables from
customers and the reduction of marketing and advertising
budgets, especially for online advertising. As a result of these
reductions, advertising spending across traditional media, as
well as the Internet, has decreased over the past few years. We
cannot assure you that further reductions will not occur.

The number of ad impressions delivered by
DoubleClick TechSolutions has, at times in the past, declined
and may in the future decline or fail to grow or the price that
we can charge for our services may decline, which in either case
would 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. However, even if economic conditions
improve, we cannot assure you that marketing budgets and
advertising spending 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. | 

Our ad management, email marketing and data
management 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 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 delivered through our servers. To

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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 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 most
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 expansion 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 expansion 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
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.

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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 significant market share. 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:

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| |   |                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 user 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 revenue, 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 user 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. As a result, we
believe that period-to-period comparisons of our results of
operations may not be indicators of future performance.

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

Our business has expanded rapidly in part as a
result of acquisitions or investments in other companies,
including the acquisitions of Abacus Direct, NetGravity,
FloNetwork, MessageMedia, Protagona, Computer Strategy
Coordinators and SmartPath. We have recorded goodwill in
connection with a number of our acquired businesses, including
MessageMedia, FloNetwork and SmartPath. 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

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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 AdLINK, MaxWorldwide and
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, a
number of business combinations and acquisitions. 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.                                                                                                                                                       

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 and
telecommunications providers, over whom we have no control, to
operate our services.

We depend heavily on several third-party
providers of Internet and related telecommunication services,
including hosting and co-location facilities, in delivering our
products and services. These companies may not continue to
provide services to us without disruptions in service, at the
current cost or at all. The costs associated with any transition
to a new service provider could be substantial and require us to
reengineer our

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computer systems and telecommunications
infrastructure to accommodate a new service provider. This
process could be both expensive and time consuming. 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 key
employee retention and recruiting 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.

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 will depend 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;                                                             
|
| |  | our competitors introduction of new
    products ahead of our new products, or their introduction of
    superior or cheaper products; 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.

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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®,
ABACUSSM, DOUBLECLICK ENSEMBLESM,
SITEADVANCESM, MEDIAVISORSM,
CHANNELVIEW® and MOTIFSM. 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
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 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.

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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 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%. We also operate the DoubleClick Data business
in the United Kingdom and Japan 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;                                      

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| |   |                                                                                    
| | - | -----------------------------------------------------------------------------------
| |  | 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.

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.

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

As of March 31, 2004, we had
136,297,505 shares of common stock outstanding, excluding
18,087,837 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.

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, or Internet browsers set to block the
use of cookies. We cannot assure you that the number 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 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.

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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.

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 have 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.

Among the technologies we use are
cookies, or small pieces of data that are recorded
on the computers of Internet users. 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. 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.

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
online 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. Any
legislation enacted or regulation issued could dampen the growth
and acceptance of our industry in general and of our offerings
in particular. 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

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system failures and computer viruses. 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.

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 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 March 31, 2004. Based on this evaluation,
DoubleClicks chief executive officer and chief financial
officer concluded that, as of March 31, 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

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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 March 31, 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 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. 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. 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. Our Board
of Directors agreed to approve the settlement subject to a
number of conditions, including the participation of a
substantial number of other issuer defendants in the proposed
settlement, the consent of our insurers to the settlement and
the completion of acceptable final settlement documentation.
Furthermore, 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 with leave to amend. We believe these
claims 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

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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 its financial
statements for the periods in question or its current financial
condition.






|        |                                                                                     
|------- | ------------------------------------------------------------------------------------
|Item 2. | Changes in Securities, Use of Proceeds and
    Issuer Purchases of Equity Securities

The following provides information with respect
to our purchases of our common stock during the first 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 |           |               |  | Repurchased as Part of |       | Value that May Yet Be
|                                     |  | Shares          |           | Average Price |  | Publicly Announced     |       | Purchased under the  
|                                     |  | Repurchased     |           | Per Share     |  | Program                |       | Program(1)           
|                                     |  |                 |           |               |  |                        |       |                      
|January 1 through January 31, 2004   |  |                 |          |               |  | $                      |      |                       |  |  | 165,500   |  |  | $ | 98.6 million | 
|February 1 through February 29, 2004 |  |                 | 447,500   |               |  | $                      | 10.77 |                       |  |  | 613,000   |  |  | $ | 93.8 million | 
|March 1 through March 31, 2004       |  |                 | 1,448,755 |               |  | $                      | 10.82 |                       |  |  | 2,061,755 |  |  | $ | 78.1 million | 



---



|    |                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In November 2003, the Board of Directors approved
    a $100 million stock repurchase program (the
    Program). We did not purchase any other shares of
    our common stock outside of the Program during the period ended
    March 31, 2004.






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

(a) 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.




* filed herewith

(b) Reports on Form 8-K



| |                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | On January 28, 2004, we furnished a Current
    Report on Form 8-K under Item 9, containing a copy of
    our earnings release for the quarter and fiscal year ended
    December 31, 2003 (including financial statements) pursuant
    to Item 12.

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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: May 10, 2004

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