<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999.

                                        OR

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE TRANSITION PERIOD FROM       TO       .

                         COMMISSION FILE NUMBER 0-25265

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

                              ALLAIRE CORPORATION

             (Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S>                                                 <C>
                     DELAWARE                                           41-1830792
         (State or Other Jurisdiction of                             (I.R.S. Employer
          Incorporation or Organization)                           Identification No.)

   ONE ALEWIFE CENTER, CAMBRIDGE, MASSACHUSETTS                           02140
     (Address of Principal Executive Offices)                           (Zip Code)
</TABLE>

                                 (617) 761-2000

              (Registrant's Telephone Number, Including Area Code)

                                 NOT APPLICABLE

              (Former Name, Former Address and Former Fiscal Year,
                         If Changed Since Last Report)

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

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

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:

<TABLE>
<CAPTION>
                                                                                                      SHARES OUTSTANDING AT
TITLE OF CLASS                                                                                           AUGUST 6, 1999
-------------------------------------------------------------------------------------------------  ---------------------------
<S>                                                                                                <C>
Common Stock, $.01 par value.....................................................................            11,786,535
</TABLE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                              ALLAIRE CORPORATION

                                   FORM 10-Q
                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                               TABLE OF CONTENTS

<TABLE>
<S>        <C>        <C>                                                                   <C>
PART I.    FINANCIAL INFORMATION

           Item 1.    Financial Statements................................................

                      Condensed Consolidated Balance Sheet as of June 30, 1999 and
                      December 31, 1998...................................................          3

                      Consolidated Statement of Operations for the Three and Six Months
                      Ended June 30, 1999 and 1998........................................          4

                      Consolidated Statement of Cash Flows for the Six Months Ended June
                      30, 1999 and 1998...................................................          5

                      Notes to Unaudited Consolidated Financial Statements................          6

           Item 2.    Management's Discussion and Analysis of Financial Condition and
                      Results of Operations...............................................          7

           Item 3.    Quantitative and Qualitative Disclosures about Market Risk..........         21

PART II.   OTHER INFORMATION

           Item 2.    Changes in Securities and Use of Proceeds...........................         22

           Item 6.    Exhibits and Reports on Form 8-K....................................         22

           Signatures.....................................................................
                                                                                                   23

           Exhibit Index..................................................................
                                                                                                   24
</TABLE>

                                       2
<PAGE>
                         PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                              ALLAIRE CORPORATION

                      CONDENSED CONSOLIDATED BALANCE SHEET

                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           JUNE 30,   DECEMBER 31,
                                                                                             1999         1998
                                                                                           ---------  ------------
<S>                                                                                        <C>        <C>
ASSETS
Current assets:
  Cash and cash equivalents..............................................................  $  19,532   $    3,247
  Short-term investments.................................................................     33,971          496
  Accounts receivable, net of allowance for doubtful accounts and returns of $547 and
    $502 at June 30, 1999 and December 31, 1998, respectively............................      5,055        3,196
  Prepaid expenses and other current assets..............................................        747        1,094
                                                                                           ---------  ------------
    Total current assets.................................................................     59,305        8,033
  Property and equipment, net............................................................      4,717        4,300
  Other assets, net......................................................................        278          375
                                                                                           ---------  ------------
TOTAL ASSETS.............................................................................  $  64,300   $   12,708
                                                                                           ---------  ------------
                                                                                           ---------  ------------
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Current portion of capital lease obligations...........................................  $     311   $      340
  Promissory notes.......................................................................         --        1,500
  Current portion of notes payable.......................................................        452        1,564
  Accounts payable.......................................................................      2,106        3,326
  Accrued expenses.......................................................................      6,277        3,963
  Accrued employee compensation and benefits.............................................      3,275        2,238
  Deferred revenue.......................................................................      8,221        4,793
                                                                                           ---------  ------------
    Total current liabilities............................................................     20,642       17,724
Capital lease obligations................................................................         21          159
Notes payable............................................................................        800        1,034
                                                                                           ---------  ------------
    Total liabilities....................................................................     21,463       18,917
                                                                                           ---------  ------------
Redeemable convertible preferred stock $.01 par value;
  Authorized: none at June 30, 1999 and 3,183,506 shares at December 31, 1998
  Issued and outstanding: none at June 30, 1999 and 3,020,415 shares at December 31,
    1998.................................................................................         --       12,673
                                                                                           ---------  ------------
Stockholders' equity (deficit)
  Preferred stock, $.01 par value; Authorized: 5,000,000 shares at June 30, 1999 and none
    at December 31, 1998.................................................................         --           --
  Series A convertible preferred stock, $.01 par value; Authorized: none at June 30, 1999
    and 200,000 at December 31, 1998
  Issued and outstanding: none at June 30, 1999 and 88,463 shares at December 31, 1998...         --          751
  Common stock, $.01 par value;
    Authorized: 35,000,000 shares at June 30, 1999 and December 31, 1998
  Issued and outstanding: 11,772,411 issued and 11,755,801 outstanding at June 30, 1999
    and 4,859,384 issued and 4,855,967 outstanding at December 31, 1998..................        118           49
  Additional paid-in capital.............................................................     80,239       12,364
  Accumulated deficit....................................................................    (36,699)     (31,170)
  Deferred compensation..................................................................       (811)        (850)
  Stock subscriptions receivable.........................................................        (10)         (26)
                                                                                           ---------  ------------
  Total stockholders' equity (deficit)...................................................     42,837      (18,882)

TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
  (DEFICIT)..............................................................................  $  64,300   $   12,708
                                                                                           ---------  ------------
                                                                                           ---------  ------------
</TABLE>

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

                                       3
<PAGE>
                              ALLAIRE CORPORATION

                      CONSOLIDATED STATEMENT OF OPERATIONS

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          THREE MONTHS ENDED     SIX MONTHS ENDED
                                                                               JUNE 30,              JUNE 30,
                                                                         --------------------  --------------------
<S>                                                                      <C>        <C>        <C>        <C>
                                                                           1999       1998       1999       1998
                                                                         ---------  ---------  ---------  ---------
REVENUE:
  Software license fees................................................  $  10,761  $   4,228  $  17,724  $   7,827
  Services.............................................................      2,314        585      4,048      1,078
                                                                         ---------  ---------  ---------  ---------
    Total revenue......................................................     13,075      4,813     21,772      8,905
                                                                         ---------  ---------  ---------  ---------
COST OF REVENUE:
  Software license fees................................................        647        402      1,103        823
  Services.............................................................      1,794        903      3,300      1,602
                                                                         ---------  ---------  ---------  ---------
    Total cost of revenue..............................................      2,441      1,305      4,403      2,425
                                                                         ---------  ---------  ---------  ---------
GROSS PROFIT...........................................................     10,634      3,508     17,369      6,480
                                                                         ---------  ---------  ---------  ---------
OPERATING EXPENSES:
  Research and development.............................................      2,897      1,806      5,364      3,602
  Sales and marketing..................................................      6,795      4,442     12,461      8,552
  General and administrative...........................................      1,606      1,101      3,043      2,162
  Stock-based compensation.............................................         66         25        133        186
  Merger costs.........................................................      2,700         --      2,700         --
                                                                         ---------  ---------  ---------  ---------
    Total operating expenses...........................................     14,064      7,374     23,701     14,502
                                                                         ---------  ---------  ---------  ---------
    LOSS FROM OPERATIONS...............................................     (3,430)    (3,866)    (6,332)    (8,022)
Interest income, net...................................................        517         45        803        136
                                                                         ---------  ---------  ---------  ---------
    NET LOSS...........................................................  $  (2,913) $  (3,821) $  (5,529) $  (7,886)
                                                                         ---------  ---------  ---------  ---------
                                                                         ---------  ---------  ---------  ---------
NET LOSS PER SHARE:
  Basic and diluted net loss per share.................................  $   (0.26) $   (1.09) $   (0.53) $   (2.38)
                                                                         ---------  ---------  ---------  ---------
                                                                         ---------  ---------  ---------  ---------
  Pro forma basic and diluted net loss per share.......................  $   (0.26) $   (0.49) $   (0.51) $   (1.04)
                                                                         ---------  ---------  ---------  ---------
                                                                         ---------  ---------  ---------  ---------
WEIGHTED AVERAGE SHARES OUTSTANDING:
  Shares used in computing basic and diluted net loss per share........     11,372      3,512     10,449      3,317
                                                                         ---------  ---------  ---------  ---------
                                                                         ---------  ---------  ---------  ---------
  Shares used in computing pro forma basic and diluted net loss per
    share..............................................................     11,372      7,754     10,916      7,602
                                                                         ---------  ---------  ---------  ---------
                                                                         ---------  ---------  ---------  ---------
</TABLE>

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

                                       4
<PAGE>
                              ALLAIRE CORPORATION

                      CONSOLIDATED STATEMENT OF CASH FLOWS

                                 (IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                              SIX MONTHS ENDED JUNE
                                                                                                       30,
                                                                                              ---------------------
<S>                                                                                           <C>         <C>
                                                                                                 1999       1998
                                                                                              ----------  ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash flows from operating activities:
  Net loss..................................................................................  $   (5,529) $  (7,886)
  Adjustments to reconcile net loss to net cash used for operating activities:
    Depreciation and amortization...........................................................       1,122        813
    Compensation expense relating to the issuance of equity instruments.....................         133        186
    Changes in assets and liabilities, net of effects from acquisitions:
      Accounts receivable...................................................................      (1,859)      (411)
      Prepaid expenses and other current assets.............................................         347       (160)
      Other assets..........................................................................          (1)      (261)
      Accounts payable......................................................................      (1,220)        76
      Accrued expenses......................................................................       3,351       1064
      Deferred revenue......................................................................       3,428       1063
                                                                                              ----------  ---------
      Total adjustments.....................................................................       5,301      2,370
                                                                                              ----------  ---------
      Net cash used for operating activities................................................        (228)    (5,516)
                                                                                              ----------  ---------
Cash flows from investing activities:
  Purchases of short-term investments.......................................................     (33,971)    (1,570)
  Sales of short-term investments...........................................................         496      4,699
  Purchases of property and equipment.......................................................      (1,441)    (1,286)
                                                                                              ----------  ---------
      Net cash (used for) provided by investing activities..................................     (34,916)     1,843
                                                                                              ----------  ---------
Cash flows from financing activities:
  Proceeds from the issuance of notes payable...............................................          --      1,406
  Principal payments on capital lease obligations...........................................        (167)      (155)
  Principal payments on promissory notes....................................................      (1,500)        --
  Principal payments on notes payable.......................................................      (1,346)        --
  Proceeds from sale of common stock, net of issuance costs.................................      54,426        538
  Proceeds from sale of convertible preferred stock, net of issuance costs..................          --          5
  Payment received on stock subscription receivable.........................................          16         --
                                                                                              ----------  ---------
      Net cash provided by financing activities.............................................      51,429      1,794
                                                                                              ----------  ---------
Net increase (decrease) in cash and cash equivalents........................................      16,285     (1,879)
Cash and cash equivalents, beginning of period..............................................       3,247      7,190
                                                                                              ----------  ---------
Cash and cash equivalents, end of period....................................................  $   19,532  $   5,311
                                                                                              ----------  ---------
                                                                                              ----------  ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
  Cash paid for interest....................................................................  $      206  $      76

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
  Conversion of Series A convertible preferred stock to common stock........................         751         --
  Conversion of redeemable convertible preferred stock to common stock......................      12,673         --
</TABLE>

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

                                       5
<PAGE>
                              ALLAIRE CORPORATION

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

    The consolidated financial statements include the accounts of Allaire
Corporation and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation. Allaire Corporation and its
subsidiaries are collectively referred to as the "Company" or "Allaire." Certain
1998 amounts have been reclassified to conform to the 1999 method of
presentation.

    The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and rule 10-01 of
Regulation S-X. Accordingly, they do no include all financial information and
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, these financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the results of operations for the interim
periods reported and of the financial condition of the Company as of the date of
the interim balance sheet. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year. These
financial statements should be read in conjunction with the Company's audited
consolidated financial statements and related notes included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1998 and the
Company's Registration Statement on Form S-1/A filed on July 19, 1999
(Registration No. 333-80759).

NET LOSS PER SHARE

    Net loss per share is computed under SFAS No. 128, "Earnings Per Share."
Basic net loss per share is computed using the weighted average number of shares
of common stock outstanding, excluding shares of common stock subject to
repurchase. Diluted net loss per share does not differ from basic net loss per
share since potential common shares from conversion of preferred stock, stock
options and warrants and outstanding shares of common stock subject to
repurchase are anti-dilutive for all periods presented. Pro forma basic and
diluted net loss per share have been calculated assuming the conversion of all
outstanding shares of preferred stock into common stock, as if the shares had
converted immediately upon their issuance.

COMPREHENSIVE INCOME

    Effective January 1, 1998, Allaire adopted SFAS No. 130 "Reporting
Comprehensive Income." This statement requires that a full set of general
purpose financial statements be expanded to include the reporting of
"comprehensive income". Comprehensive income is comprised of two components, net
income and other comprehensive income. During the quarter and six months ended
June 30, 1999 and 1998, Allaire had no items qualifying as other comprehensive
income; accordingly, the adoption of SFAS No. 130 had no impact on Allaire's
financial statements.

2. INITIAL PUBLIC OFFERING

    In January 1999, Allaire sold 2,875,000 shares of its common stock through
an initial public offering. Net proceeds from the offering were approximately
$52.3 million after deducting the underwriting discount and other offering
expenses. At the time of the initial public offering, all of Allaire's
outstanding preferred stock automatically converted into 3,848,941 shares of
common stock.

                                       6
<PAGE>
                              ALLAIRE CORPORATION

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

3. ACQUISITIONS

    On April 12, 1999, Allaire completed its acquisition of Bright Tiger
Technologies, Inc. ("Bright Tiger"). Bright Tiger develops and markets Web site
resource management software. In connection with the transaction, Allaire issued
288,583 shares of its common stock for all of the issued and outstanding shares
of Bright Tiger. On June 25, 1999, Allaire completed its acquisition of Live
Software, Inc. ("Live Software"). Live Software develops, markets and supports
server-side Java development and deployment technology. In connection with the
transaction, Allaire issued 528,376 shares of its common stock for all the
issued and outstanding shares of Live Software. Allaire recorded merger related
costs of $2.7 million in the quarter ended June 30, 1999 primarily related to
professional fees, facility closings, severance packages and related costs
associated with these acquisitions. These mergers were accounted for as poolings
of interests. Accordingly, Allaire's consolidated financial statements have been
restated to include the accounts and operations of Bright Tiger and Live
Software for all periods presented.

    Prior to these mergers, revenues and net income of the combined entities for
the three-month period ended March 31, 1999 and 1998 are presented in the
following table. Prior to these mergers during the quarter ended March 31, 1999,
the companies had intercompany sales of $40,000. The intercompany sales have
been eliminated and certain amounts in the merged companies' financial
statements were reclassified to conform to Allaire's presentations.

<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED MARCH 31,
                                                                                      ----------------------------
PRO FORMA RESULTS                                                                         1999           1998
------------------------------------------------------------------------------------  -------------  -------------
                                                                                              (UNAUDITED)
<S>                                                                                   <C>            <C>
Revenue:
  Allaire...........................................................................  $   7,836,000  $   4,032,000
  Bright Tiger......................................................................        168,000         33,000
  Live Software.....................................................................        693,000         27,000
                                                                                      -------------  -------------
  Combined..........................................................................  $   8,697,000  $   4,092,000

Net Income (Loss):
  Allaire...........................................................................  $  (1,684,000) $  (2,211,000)
  Bright Tiger......................................................................     (1,199,000)    (1,849,000)
  Live Software.....................................................................        267,000         (5,000)
                                                                                      -------------  -------------
  Combined..........................................................................  $  (2,616,000) $  (4,065,000)
</TABLE>

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

    This form 10-Q contains "Forward-Looking Statements" within the meaning of
Section 27a of the securities act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "Believes," "Anticipates," "Plans," "Expects" and
similar expressions are intended to identify forward-looking statements. The
forward-looking statements involve known and unknown risks, uncertainties and
other factors, including the factors set forth below in "Item 2a. Risk Factors,"
that may cause the actual results, performance and achievements of allaire to
differ materially from those indicated by the forward-looking statements.

                                       7
<PAGE>
                              ALLAIRE CORPORATION

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

OVERVIEW

    Allaire develops, markets and supports software for a wide range of Web
development, from building static Web pages to developing high-volume,
interactive Web applications. Allaire derives a majority of its revenue from its
two primary products, ColdFusion and HomeSite. In November 1998, Allaire
released versions 4.0 of its primary products, along with the introduction of a
new application server version, ColdFusion Enterprise Server.

    Allaire's revenue is derived principally from license fees for software
products and, to a lesser extent, fees for a range of services complementing
these products, primarily training and technical support. Software license fees
include sales of licenses for the then-current version of Allaire's products,
product upgrades and subscriptions. Subscriptions entitle the customer to all
new releases for a specific product during the subscription period, generally 12
months.

    Revenue from sales of licenses to use Allaire's software products and
product upgrades is recognized upon delivery to customers, provided no
significant post-delivery obligations or uncertainties remain and collection of
the related receivable is probable. Revenue under arrangements where multiple
products or services are sold together under one contract is allocated to each
element based on their relative fair values, with these fair values being
determined using the price charged when that element is sold separately. For
agreements with specified upgrade rights, the revenue related to such upgrade
rights is deferred until the specified upgrade is delivered. Allaire provides
most of its distributors with rights of return. An allowance for estimated
future returns is recorded at the time revenue is recognized based on Allaire's
historical experience. Revenue from subscription sales is recognized ratably
over the term of the subscription period. Services revenue is recognized as
services are rendered or ratably over the term of the service agreement.

    Allaire generates its revenue through direct sales of licenses to end users
and through its indirect distribution channel. Direct revenue is generated by
Allaire's direct sales force and via Allaire's Web site. The indirect
distribution channel includes distributors, direct and original equipment
manufacturer resellers, system integrators and Allaire Alliance members. Revenue
generated by the indirect distribution channel accounted for 49% of total
revenue for the quarter and six months ended June 30, 1999 and 39% of total
revenue for the quarter and six months ended June 30, 1998. Allaire anticipates
that revenue derived from the indirect distribution channel will continue to
represent a significant percentage of total revenue. Allaire primarily derives
its international revenue through its indirect distribution channel.
International revenue accounted for 11% and 14% of total revenue for the
quarters ended June 30, 1999 and 1998, respectively and 13% and 14% of total
revenue for the six months ended June 30, 1999 and 1998, respectively.

    In April 1999, Allaire completed a merger with Bright Tiger by issuing
approximately 300,000 shares of Allaire common stock for all of the outstanding
equity securities of Bright Tiger. Bright Tiger provides software designed to
enhance the performance, availability and manageability of large-scale Internet
sites and Web applications. Allaire had previously licensed technology from
Bright Tiger that was incorporated in certain Allaire ColdFusion products. In
June 1999, Allaire completed a merger with Live Software by issuing
approximately 550,000 shares of Allaire common stock for all of the outstanding
equity securities of Live Software. Live Software develops, markets and supports
server-side Java development and deployment technology. Live Software's
principal product, JRun, is a leading server-side Java development and
deployment engine. Allaire recorded merger related costs of $2.7 million in the
quarter ended June 30, 1999 primarily related to professional fees, facility
closings, severance packages and related costs associated with these
acquisitions. Allaire accounted for each of these acquisitions as a pooling of
interests.

                                       8
<PAGE>
                              ALLAIRE CORPORATION

        NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

    Allaire has experienced substantial net losses in each fiscal period since
its inception and, as of June 30, 1999, had an accumulated deficit of $36.7
million. Such net losses and accumulated deficit resulted primarily from the
significant costs incurred in the development of Allaire's products and in the
preliminary establishment of Allaire's infrastructure. Allaire expects to
increase its expenditures in all areas in order to execute its business plan,
particularly in research and development and sales and marketing. The planned
increase in sales and marketing expense will primarily result from the hiring of
additional sales force personnel to focus on major account sales, and marketing
programs to increase brand awareness.

    Allaire's limited operating history and the undeveloped nature of the market
for Web development products make predicting future revenue difficult. Allaire's
expense levels are based, in part, on its expectations regarding future revenue
increases, and to a large extent such expenses are fixed, particularly in the
short term. There can be no assurance that Allaire's expectations regarding
future revenue are accurate. Moreover, Allaire may be unable to adjust spending
in a timely manner to compensate for any unexpected revenue shortfall.
Accordingly, any significant shortfall of revenue in relation to Allaire's
expectations would likely cause significant declines in Allaire's quarterly
operating results.

    Allaire is also increasing its sales and marketing efforts focused on larger
purchases by larger customers. Such transactions are generally more complex and
may increase the length of Allaire's average sales cycle. Allaire anticipates
that an increasing portion of its revenue could be derived from large orders, in
which case timing of receipt and fulfillment of any such orders could cause
fluctuations in Allaire's operating results, particularly on a quarterly basis.

    Due to the foregoing factors, Allaire's operating results are difficult to
forecast. Allaire believes that period-to-period comparisons of its historical
operating results are not meaningful and should not be relied upon as an
indication of future performance. Also, Allaire's operating results may fall
below its expectations or the expectations of securities analysts or investors
in some future quarter. In such event, the market price of Allaire's common
stock would likely be materially adversely affected.

                                       9
<PAGE>
RESULTS OF OPERATIONS

    REVENUE

    Total revenue increased 172% from $4.8 million for the quarter June 30, 1998
to $13.1 million for the quarter ended June 30, 1999. Total revenue increased
144% from $8.9 million for the six months ended June 30, 1998 to $21.8 million
for the six months ended June 30, 1999.

    SOFTWARE LICENSE FEES.  Revenue from software license fees increased 155%
from $4.2 million for the quarter ended June 30, 1998 to $10.8 million for the
quarter ended June 30, 1999. Revenue from software license fees increased 126%
from $7.8 million for the six months ended June 30, 1998 to $17.7 million for
the six months ended June 30, 1999. This increase was primarily due to an
increase in the number of licenses sold to use Allaire's ColdFusion and JRun
products. Increases in product prices associated with the release of new
versions of Allaire's products during the fourth quarter of 1998 also
contributed to the growth in revenue.

    SERVICES.  Revenue from services increased 296% from $585,000 for the
quarter ended June 30, 1998 to $2.3 million for the quarter ended June 30, 1999.
Revenue from services increased 276% from $1.1 million for the six months ended
June 30, 1998 to $4.0 million for the six months ended June 30, 1999. The
increase was primarily attributable to growth in training revenue resulting from
an increase in Allaire's installed customer base.

    COST OF REVENUE

    COST OF SOFTWARE LICENSE FEES.  Cost of software license fees includes costs
of product media duplication, manuals, packaging materials, licensed technology
and fees paid to third-party vendors and agents for order fulfillment. Cost of
software license fees increased 61% from $402,000 for the quarter ended June 30,
1998 to $647,000 for the quarter ended June 30, 1999. Cost of software license
fees increased 34% from $823,000 for the six months ended June 30, 1998 to $1.1
million for the six months ended June 30, 1999. The increase in absolute dollars
was due to higher unit sales volume. The improvement in software license fees
gross margins from 90% for the quarter ended June 30, 1998 to 94% for the
quarter ended June 30, 1999 and from 89% for the six months ended June 30, 1998
to 94% for the six months ended June 30, 1999 was primarily attributable to
economies of scale achieved with Allaire's higher sales volume.

    COST OF SERVICES.  Cost of services consists primarily of personnel costs.
Cost of services increased 99% from $903,000 for the quarter ended June 30, 1998
to $1.8 million for the quarter ended June 30, 1999. Cost of services increased
106% from $1.6 million for the six months ended June 30, 1998 to $3.3 million
for the six months ended June 30, 1999. The increase in absolute dollars
resulted primarily from the hiring of additional employees and the use of
contract trainers to support increased customer demand for training classes and
technical support. Services gross margin improved from (54)% for the quarter
ended June 30, 1998 to 22% for the quarter ended June 30, 1999 and from (49)%
for the six months ended June 30, 1998 to 18% for the six months ended June 30,
1999. The improvement in services gross margins was primarily attributable to
the substantial growth in training revenue.

    Overall gross margins are primarily affected by the mix of products
licensed, sales through direct versus indirect distribution channels, software
license fees revenue versus services revenue, and international versus domestic
revenue. Allaire typically realizes higher gross margins on direct sales
relative to indirect distribution channel sales and higher gross margins on
software license fees relative to services revenue. As services revenue or
revenue derived through indirect distribution channels increase as a percentage
of total revenue, Allaire's gross margins may be adversely affected.

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<PAGE>
    OPERATING EXPENSES

    RESEARCH AND DEVELOPMENT.  Research and development expenses consist
primarily of employee salaries, fees for outside consultants and related costs
associated with the development of new products, the enhancement and
localization of existing products, quality assurance and testing. Research and
development expenses increased 60% from $1.8 million for the quarter ended June
30, 1998 to $2.9 million for the quarter ended June 30, 1999. Research and
development expenses increased 49% from $3.6 million for the six months ended
June 30, 1998 to $5.4 million for the six months ended June 30, 1999. The
increase primarily resulted from salaries associated with newly hired
development personnel and product development consulting costs. Allaire
anticipates that research and development expenses will increase primarily due
to increased product development consulting costs.

    SALES AND MARKETING.  Sales and marketing expenses consist primarily of
employee salaries, commissions, and costs associated with marketing programs
such as trade shows, seminars, advertising and new product launch activities.
Sales and marketing expenses increased 53% from $4.4 million for the quarter
ended June 30, 1998 to $6.8 million for the quarter ended June 30, 1999. Sales
and marketing expenses increased 46% from $8.6 million for the six months ended
June 30, 1998 to $12.5 million for the six months ended June 30, 1999. The
increase was primarily attributable to costs associated with additional direct
sales, pre-sales support and marketing personnel, and an increase in marketing
programs, including promotions and advertising. Allaire anticipates that sales
and marketing expenses will continue to increase in absolute dollars as it
continues to expand its marketing programs and sales force to support its brand
awareness, product launches, international expansion and increased focus on
major account sales.

    GENERAL AND ADMINISTRATIVE.  General and administrative expenses consist
primarily of employee salaries and other personnel related costs for executive
and financial personnel, as well as legal, accounting and insurance costs.
General and administrative expenses increased 46% from $1.1 million for the
quarter ended June 30, 1998 to $1.6 million for the quarter ended June 30, 1999.
General and administrative expenses increased 41% from $2.2 million for the six
months ended June 30, 1998 to $3.0 million for the six months ended June 30,
1999. The increase was primarily attributable to salaries associated with newly
hired personnel and related costs required to manage Allaire's growth and
facilities expansion. Allaire expects that its general and administrative
expenses will increase in absolute dollars as it continues to expand its
staffing to support expanded operations and facilities, and incurs expenses
relating to its new responsibilities as a public company.

    STOCK-BASED COMPENSATION.  The amount that the estimated fair market value
of Allaire's common stock exceeds the exercise price of stock options on the
date of grant is recorded as deferred compensation and amortized to stock-based
compensation expense as the options vest. Allaire recognized $25,000 for the
quarter ended June 30, 1998 compared to $66,000 of stock based compensation for
the quarter ended June 30, 1999. Allaire recognized $186,000 for the six months
ended June 30, 1998 compared to $133,000 of stock based compensation for the six
months ended June 30, 1999. The decrease was primarily attributable to the grant
of a fully vested option with an exercise price substantially below fair market
value during the quarter ended March 31, 1998.

    MERGER COSTS.  The merger costs of $2.7 million in the quarter ended June
30, 1999 relate to the mergers with Bright Tiger and Live Software. The costs
include professional fees, facility closings, severance packages and related
costs associated with these acquisitions.

    INTEREST INCOME, NET.  Interest income, net of interest expense, increased
from $45,000 for the quarter ended June 30, 1998 to $517,000 for the quarter
ended June 30, 1999. Interest income, net of interest expense, increased from
$136,000 for the six months ended June 30, 1998 to $803,000 for the six months
ended June 30, 1999. The increase was due to interest income earned from the
investment of the net cash proceeds from Allaire's initial public offering in
January 1999.

                                       11
<PAGE>
    PROVISION FOR INCOME TAXES.  Allaire has incurred significant operating
losses for all periods from inception through June 30, 1999. Allaire has
recorded a valuation allowance for the full amount of its net deferred tax
assets as the future realization of the tax benefit is not sufficiently assured.

    LIQUIDITY AND CAPITAL RESOURCES

    In January 1999, Allaire sold 2,875,000 shares of its common stock through
an initial public offering. Net proceeds from the offering were approximately
$52.3 million after deducting the underwriting discount and offering expenses.
Prior to its initial public offering, Allaire had funded its operations
primarily through net cash proceeds from private placements of preferred stock.
At June 30, 1999, Allaire had cash, cash equivalents and short-term investments
of $53.5 million, up from $3.7 million at December 31, 1998.

    Cash used for operating activities for the six months ended June 30, 1999
was $228,000, primarily relating to a net loss of $5.5 million, offset by
increases in accrued expenses and deferred revenue. Cash used for operating
activities for the six months ended June 30, 1998 was $5.5 million primarily
relating to a net loss of $7.9 million, partially offset by increases in accrued
expenses and deferred revenue.

    Cash used for investing activities for the six months ended June 30, 1999
was $34.9 million, primarily relating to an increase in purchases of short-term
investments. Cash provided by investing activities for the six months ended June
30, 1998 was $1.8 million, primarily relating to a decrease in short-term
investments, partially offset by property and equipment purchases.

    Cash provided by financing activities for the six months ended June 30, 1999
was $51.4 million, primarily due to common stock issuances. Cash provided by
financing activities for the six months ended June 30, 1998 was $1.8 million,
primarily due to the issuance of notes payable.

    As of June 30, 1999, Allaire's primary commitments consisted of obligations
related to operating leases, $1.3 million of notes payable under equipment lines
and $332,000 of capital lease obligations.

    In April 1999, Allaire completed a merger with Bright Tiger by issuing
approximately 300,000 shares of Allaire common stock for all of the outstanding
equity securities of Bright Tiger. In connection with the merger, Allaire
assumed and paid off Bright Tiger debt obligations totaling approximately $2.6
million. In June 1999, Allaire completed a merger with Live Software by issuing
approximately 550,000 shares of Allaire common stock for all of the outstanding
equity securities of Live Software.

    Allaire expects to experience significant growth in its operating expenses
for the foreseeable future in order to execute its business plan, particularly
research and development and sales and marketing expenses. As a result, Allaire
anticipates that such operating expenses, as well as planned capital
expenditures, will constitute a material use of its cash resources. In addition,
Allaire may utilize cash resources to fund acquisitions or investments in
complementary businesses, technologies or product lines. Allaire believes that
its current cash and cash equivalents and short-term investments will be
sufficient to meet its anticipated cash requirements for working capital and
capital expenditures for the foreseeable future.

    YEAR 2000 COMPLIANCE

    Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. The use of software and computer systems that are not Year
2000 compliant could result in system failures or miscalculations causing
disruptions of operations including, among other things, a temporary inability
to process transactions, send invoices or engage in similar normal business
activities. As a result, many companies' software and computer systems may need
to be upgraded or replaced in order to comply with Year 2000 requirements.
Because ColdFusion does not involve data storage, the ability of a Web
application built with ColdFusion to comply with Year 2000 requirements is
largely dependent on whether the database underlying the application is Year
2000

                                       12
<PAGE>
compliant. If ColdFusion is connected to a database that is not Year 2000
compliant, the information received by a ColdFusion application may be
incorrect. Although Allaire believes that the current releases of its products
are Year 2000 compliant, there can be no assurance that Web applications
developed using its products will comply with Year 2000 requirements.

    The purchasing patterns of customers or potential customers may be affected
by Year 2000 issues as companies expend significant resources to correct their
current systems for Year 2000 compliance. These expenditures may result in
reduced funds available for Web development activities, which could have a
material adverse effect on Allaire's business, operating results and financial
condition. Year 2000 complications may disrupt the operation, viability or
commercial acceptance of the Internet, which could have a material adverse
impact on Allaire's business, operating results and financial condition.

    With respect to Allaire's primary internal software systems, Allaire either
has received written confirmations from software vendors that the software it
installed is Year 2000 compliant or is in the process of installing available
software upgrades to achieve Year 2000 compliance. Based on the foregoing,
Allaire currently has no reason to believe that its internal software systems
will not be Year 2000 compliant by September 30, 1999. To date, Allaire has not
incurred significant incremental costs in order to comply with Year 2000
requirements and does not believe it will incur significant incremental costs in
the foreseeable future. However, there can be no assurance that Year 2000 errors
or defects will not be discovered in Allaire's internal software systems and, if
such errors or defects are discovered, there can be no assurance that the costs
of making such systems Year 2000 compliant will not have a material adverse
effect on Allaire's business, operating results and financial condition.

    Allaire relies on third party vendors which may not be Year 2000 compliant
for certain equipment and services. In addition, many of Allaire's distributors
are dependent on commercially available operating systems, which may be impacted
by Year 2000 complications. To date, Allaire has not conducted a Year 2000
review of its vendors or distributors. Failure of systems maintained by
Allaire's vendors or distributors to operate properly with regard to the Year
2000 and thereafter could require Allaire to incur significant unanticipated
expenses to remedy any problems or replace affected vendors, could reduce
Allaire's revenue from its indirect distribution channel and could have a
material adverse effect on Allaire's business, operating results and financial
condition.

ITEM 2A: RISK FACTORS

ALLAIRE HAS A LIMITED OPERATING HISTORY ON WHICH TO EVALUATE ITS PROSPECTS

    Allaire commenced operations in May 1995 and Allaire recorded its first
revenue upon delivery of ColdFusion 1.5 to customers in February 1996.
Accordingly, Allaire has only a limited operating history on which you can base
your evaluation of its business and prospects. In addition, its prospects must
be considered in light of the risks and uncertainties encountered by companies
in an early stage of development in new and rapidly evolving markets.

ALLAIRE MAY NOT BE PROFITABLE IN THE FUTURE

    Since Allaire began operations, it has incurred substantial net losses in
every fiscal period. Allaire cannot be certain when it will become profitable,
if at all. Failure to achieve profitability may adversely affect the market
price of its common stock. At June 30, 1999, Allaire had an accumulated deficit
of $36.7 million. Allaire has generated relatively small amounts of revenue
until recent fiscal quarters, while increasing expenditures in all areas,
particularly in research and development and sales and marketing, in order to
execute its business plan. Although Allaire has experienced revenue growth in
recent periods, the growth has been off of a small base, and it is unlikely that
such growth rates are sustainable.

                                       13
<PAGE>
ALLAIRE'S QUARTERLY RESULTS MAY FLUCTUATE

    Allaire's quarterly revenue and operating results are difficult to predict
and may fluctuate significantly from quarter to quarter. If Allaire's quarterly
revenue or operating results fall below the expectations of investors or public
market analysts, the price of Allaire's common stock could fall substantially.

    Allaire's quarterly revenue may fluctuate for several reasons, including the
following:

    - the market for Web development products is in an early stage of
      development and it is therefore difficult to accurately predict customer
      demand; and

    - the sales cycle for Allaire's products and services varies substantially
      from customer to customer and, if its average sales price increases as
      Allaire expects, Allaire expects the sales cycle to lengthen. As a result,
      Allaire could have difficulty determining whether and when Allaire will
      receive license revenue from a particular customer.

    In addition, because Allaire's revenue from training services is largely
correlated with its license revenue, a decline in license revenue could also
cause a decline in Allaire's services revenue in the same quarter or in
subsequent quarters.

    Most of Allaire's expenses, such as employee compensation and rent, are
relatively fixed. Moreover, Allaire's expense levels are based, in part, on its
expectations regarding future revenue increases. As a result, any shortfall in
revenue in relation to Allaire's expectations could cause significant changes in
its operating results from quarter to quarter and could result in quarterly
losses.

THE DEVELOPMENT OF A MARKET FOR ALLAIRE'S PRODUCTS IS UNCERTAIN

    If the market for Web development products does not grow at a significant
rate, Allaire's business, operating results and financial condition will be
materially adversely affected. Web technology has been used widely for only a
short time, and the market for Web development products is new and rapidly
evolving. As is typical for new and rapidly evolving industries, demand for
recently introduced products is highly uncertain.

ALLAIRE'S PERFORMANCE WILL DEPEND ON THE GROWTH AND COMMERCIAL ACCEPTANCE OF THE
  INTERNET

    Allaire's future success will depend substantially upon the widespread
adoption of the Internet as a primary medium for commerce and business
applications. If the Internet does not become a viable and substantial
commercial medium, Allaire's business, operating results and financial condition
will be materially adversely affected. The Internet has experienced, and is
expected to continue to experience, significant user and traffic growth, which
has, at times, caused user frustration with slow access and download times. The
Internet infrastructure may not be able to support the demands placed on it by
continued growth. Moreover, critical issues concerning the commercial use of the
Internet, such as security, reliability, cost, accessibility and quality of
service, remain unresolved and may negatively affect the growth of Internet use
or the attractiveness of commerce and business communication on the Internet. In
addition, the Internet could lose its viability due to delays in the development
or adoption of new standards and protocols to handle increased activity or due
to increased government regulation and taxation of Internet commerce.

ALLAIRE COMPETES WITH MICROSOFT WHILE SIMULTANEOUSLY SUPPORTING MICROSOFT
  TECHNOLOGIES

    Allaire currently competes with Microsoft in the market for Web development
products while simultaneously maintaining a working relationship with Microsoft.
Microsoft has a longer operating history, a larger installed base of customers
and substantially greater financial, distribution, marketing and technical
resources than Allaire. As a result, Allaire may not be able to compete
effectively with Microsoft

                                       14
<PAGE>
now or in the future, and Allaire's business, operating results and financial
condition may be materially adversely affected.

    Allaire expects that Microsoft's commitment to and presence in the Web
development products market will substantially increase competitive pressure in
the market. Allaire believes that Microsoft will continue to incorporate Web
application server technology into its operating system software and certain of
its server software offerings, possibly at no additional cost to its users.

    Allaire believes that it must maintain a working relationship with Microsoft
to achieve success. Most of Allaire's customers use Microsoft-based operating
platforms, so it is critical to Allaire's success that its products be closely
integrated with Microsoft technologies. Notwithstanding Allaire's historical and
current support of the Microsoft platform, Microsoft may in the future promote
technologies and standards more directly competitive with or not compatible with
Allaire's technology.

ALLAIRE FACES SIGNIFICANT COMPETITION FROM OTHER TECHNOLOGY COMPANIES

    The Web development products market is intensely competitive. Many of
Allaire's current and potential competitors have longer operating histories and
substantially greater financial, technical, marketing, distribution and other
resources than Allaire does and therefore may be able to respond more quickly
than Allaire can to new or changing opportunities, technologies, standards or
customer requirements. In addition to Microsoft, Allaire competes with other
large Web and database platform companies that offer a variety of software
products. Allaire also competes with a number of medium-sized and start-up
companies that have introduced or that are developing Web development products.
In addition, Allaire has strategic relationships with NetObjects, a
majority-owned subsidiary of IBM, and Macromedia. In some cases, these vendors
compete with Allaire, and there can be no assurance that these strategic
relationships will continue.

    Allaire expects that additional competitors will enter the market with
competing products as the size and visibility of the market opportunity
increases. Increased competition could result in pricing pressures, reduced
margins or the failure of Allaire's products to achieve or maintain market
acceptance.

    If, in the future, a competitor chooses to bundle a competing Web
development product with other products, the demand for Allaire's products might
be substantially reduced. In addition, new technologies will likely increase the
competitive pressures that Allaire faces. The development of competing
technologies by market participants or the emergence of new industry standards
may adversely affect Allaire's competitive position. As a result of these and
other factors, Allaire may not be able to compete effectively with current or
future competitors, which would have a material adverse effect on Allaire's
business, operating results and financial condition.

ALLAIRE MAY HAVE DIFFICULTY INTEGRATING THE BUSINESSES OF BRIGHT TIGER AND LIVE
  SOFTWARE

    On April 12, 1999 Allaire acquired Bright Tiger Technologies, Inc., and on
June 25, 1999 Allaire acquired Live Software. There can be no assurance that
Allaire will be able to absorb and effectively manage the foregoing
acquisitions. There can be no assurance that Allaire will be able to develop,
market and sell the Bright Tiger and Live Software products successfully.
Pursuant to the acquisitions, each of Bright Tiger and Live Software became, and
remain, a wholly-owned subsidiary of Allaire. Based in Acton, Massachusetts,
Bright Tiger has 15 employees and designs and markets Web site resource
management products to allow its customers to build and manage fast, reliable
Web sites. Live Software's eight employees moved from California to Allaire's
headquarters in Cambridge, Massachusetts. Live Software develops, markets and
supports server-side Java development and deployment technology. The difficulty
and management distraction inherent in integrating the acquired businesses, the
substantial charges expected to be incurred in connection with such
acquisitions, including costs of integrating the businesses and transaction
expenses arising from the acquisitions, the risks of entering markets in which
Allaire has no or limited direct prior experience, the potential loss of key
employees of the acquired companies and

                                       15
<PAGE>
the risk that the benefits sought in the acquisitions will not be fully
achieved, could have a material adverse effect on Allaire's business, operating
results and financial condition.

ALLAIRE'S SUCCESS DEPENDS ON ITS ABILITY TO EXPAND ITS SALES FORCE AND
  DISTRIBUTION CHANNELS

    To increase its revenue, Allaire must increase the size of its sales force
and the number of its indirect channel partners, including original equipment
manufacturers, value-added resellers and systems integrators. A failure to do so
could have a material adverse effect on its business, operating results and
financial condition. There is intense competition for sales personnel in
Allaire's business, and there can be no assurance that it will be successful in
attracting, integrating, motivating and retaining new sales personnel. Allaire's
existing or future channel partners may choose to devote greater resources to
marketing and supporting the products of other companies. In addition, Allaire
will need to resolve potential conflicts among its sales force and channel
partners.

ALLAIRE'S SUCCESS DEPENDS ON ONGOING SALES THROUGH A LIMITED NUMBER OF
  DISTRIBUTORS

    Allaire derives a substantial portion of its revenue from a limited number
of distributors. For the six months ended June 30, 1999, revenue from Allaire's
indirect distribution channel accounted for approximately 49% of its total
revenue, and one distributor, Ingram Micro, accounted for approximately 37% of
its total revenue. For the six months ended June 30, 1998 revenue from Allaire's
indirect distribution channel accounted for approximately 39%, and Ingram Micro
accounted for approximately 22% of its total revenue. The loss of, or a
reduction in orders from, Ingram Micro or any other significant distributor
could have a material adverse effect on Allaire's business, operating results
and financial condition. Because Allaire does not deal directly with end users
when selling through distributors, it is dependent upon the ability of
distributors to accurately forecast demand and maintain appropriate levels of
inventory. If a distributor purchases excess product, Allaire may be obligated
to accept the return of some products.

ALLAIRE MAY EXPERIENCE LOST OR DELAYED SALES AS ITS SALES CYCLE LENGTHENS

    A longer sales cycle reduces Allaire's ability to forecast revenue levels.
Any delay or loss in sales of Allaire's products could have a material adverse
effect on its business, operating results and financial condition, and could
cause Allaire's operating results to vary significantly from quarter to quarter.
As Allaire increases its marketing focus on larger purchases by larger
customers, it expects that increased executive-level involvement of information
technology officers and other senior managers of its customers will occur.
Potential large sales may be delayed, or lost altogether, because Allaire will
have to provide a more comprehensive education to prospective customers
regarding the use and benefits of its products. Allaire's customers' purchase
decisions may be subject to delays over which Allaire may have little or no
control, including budgeting constraints, internal purchase approval review
procedures and the inclusion or exclusion of Allaire's products on customers'
approved standards list.

ALLAIRE'S PERFORMANCE WILL DEPEND ON CONTINUED MARKET ACCEPTANCE OF ITS PRODUCTS

    If Allaire's products do not continue to satisfy the Web developer community
or otherwise fail to sustain sufficient market acceptance, Allaire's business,
operating results and financial condition would be materially adversely
affected. Allaire believes that a significant contributing factor to its initial
growth has been its ability to create and maintain strong relationships with the
community of Web developers that initially adopted its products. This community
of early adopters demands rapid improvements in the performance, features and
reliability of its products, as well as a high level of customer service. Due in
part to the emerging nature of the Web development products market and the
substantial resources available to many market participants, Allaire believes
there is a time-limited opportunity to achieve and maintain market share in the
Web development products market.

                                       16
<PAGE>
ALLAIRE'S EFFORTS TO DEVELOP BRAND AWARENESS MAY BE UNSUCCESSFUL

    Allaire believes that developing and maintaining awareness of the "Allaire,"
"ColdFusion", "HomeSite" and "JRun" brand names is critical to achieving
widespread acceptance of its products. If Allaire fails to promote and maintain
its brands or incur significant related expenses, Allaire's business, operating
results and financial condition could be materially adversely affected. To
promote its brands, Allaire may find it necessary to increase its marketing
budget or otherwise increase its financial commitment to creating and
maintaining brand awareness among potential customers. Although Allaire has
obtained a United States registration of the trademark "Cold Fusion," Allaire is
aware of other companies, including competitors, that use the word "Fusion" in
their marks alone or in combination with other words, and Allaire does not
expect to be able to prevent third party uses of the word "Fusion" for competing
goods and services. For example, NetObjects markets its principal products for
designing, building and updating Web sites under the names "NetObjects Fusion"
and "NetObjects Team Fusion." Competitors that use marks that are similar to
Allaire's brand names may cause confusion among actual and potential customers,
which could prevent Allaire from achieving significant brand recognition.

ALLAIRE'S PERFORMANCE DEPENDS ON THE SUCCESS OF COLDFUSION, HOMESITE AND JRUN

    Allaire derives almost all of its revenue from licenses of its ColdFusion,
HomeSite and JRun software products and related services. Any competitive
pressures or other factors that adversely affect market acceptance of
ColdFusion, HomeSite, or JRun software would have a material adverse effect on
Allaire's business, operating results and financial condition.

ALLAIRE'S FUTURE SUCCESS WILL DEPEND ON ITS ABILITY TO ENHANCE EXISTING PRODUCTS
  AND DEVELOP NEW PRODUCTS

    To be competitive, Allaire must develop and introduce product enhancements
and new products which increase its customers' ability to build and deploy Web
applications. In the past, Allaire has been forced to delay introduction of
several new products. If Allaire fails to develop and introduce new products and
enhancements successfully and on a timely basis, it could have a material
adverse effect on Allaire's business, operating results and financial condition.
The emerging nature of the Web development products market requires that Allaire
continually improve the performance, features and reliability of its products,
particularly in response to competitive offerings and evolving customer needs.
Allaire must also introduce enhancements to existing products as quickly as
possible and prior to the introduction of competing products.

ALLAIRE DEPENDS ON THIRD PARTIES FOR TECHNOLOGY IN ITS PRODUCTS

    Allaire licenses technology that is incorporated into its products from
third parties. The loss of access to such technology could result in delays in
Allaire's development and introduction of new products or enhancements until
equivalent or replacement technology could be accessed, if available, or
developed internally, if feasible. These delays could have a material adverse
effect on Allaire's business, operating results and financial condition. In
light of the rapidly evolving nature of Web technology and its strategy to
pursue industry partnerships, Allaire believes that it will increasingly need to
rely on technology from third party vendors, such as Microsoft, which may also
be competitors. There can be no assurance that technology from others will
continue to be available to Allaire on commercially reasonable terms, if at all.

    Moreover, although Allaire is generally indemnified against claims that such
third party technology infringes the proprietary rights of others, such
indemnification is not always available for all types of intellectual property
rights (for example, patents may be excluded) and in some cases the scope of
such indemnification is limited. Even if Allaire receives broad indemnification,
third party indemnitors are not always well capitalized and may not be able to
indemnify us in the event of infringement, resulting in substantial exposure to
us. There can be no assurance that infringement or invalidity claims arising
from

                                       17
<PAGE>
the incorporation of third party technology, and claims for indemnification from
Allaire's customers resulting from such claims, will not be asserted or
prosecuted against it. Such claims, even if not meritorious, could result in the
expenditure of significant financial and managerial resources in addition to
potential product redevelopment costs and delays, all of which could materially
adversely affect Allaire's business, operating results and financial condition.

ALLAIRE MAY HAVE DIFFICULTY MANAGING ITS GROWTH

    Allaire has been experiencing a period of rapid growth that has been placing
a significant strain on all of its resources. The number of Allaire's employees
increased from 138 at December 31, 1997 to 222 at June 30, 1999. To manage
future growth effectively Allaire must maintain and enhance its financial and
accounting systems and controls, integrate new personnel and manage expanded
operations. Any failure to do so could have a material adverse effect on the
quality of Allaire's products, its ability to retain key personnel and its
business, operating results and financial condition.

ALLAIRE IS DEPENDENT ON JOSEPH ALLAIRE AND DAVID ORFAO

    Allaire's future success depends to a significant degree on the skills,
experience and efforts of Joseph J. Allaire, its founder, Chairman of the Board,
Chief Technology Officer and Executive Vice President, and David J. Orfao, its
President and Chief Executive Officer. The loss of the services of Mr. Allaire
or Mr. Orfao could have a material adverse effect on Allaire's business,
operating results and financial condition. Allaire also depends on the ability
of its executive officers and other members of senior management to work
effectively as a team. Allaire does not have employment agreements with any of
its executive officers, and Allaire does not have any key person life insurance
other than for Mr. Allaire and Mr. Orfao.

ALLAIRE MUST HIRE AND RETAIN SKILLED PERSONNEL IN A TIGHT LABOR MARKET

    Qualified personnel are in great demand throughout the software industry.
Allaire's success depends in large part upon its ability to attract, train,
motivate and retain highly skilled employees, particularly sales and marketing
personnel, software engineers and other senior personnel. Allaire's failure to
attract and retain the highly trained technical personnel that are integral to
its direct sales, product development, service and support teams may limit the
rate at which Allaire can generate sales and develop new products or product
enhancements. This could have a material adverse effect on Allaire's business,
operating results and financial condition.

ALLAIRE'S SUCCESS DEPENDS ON ITS ABILITY TO PROTECT ITS PROPRIETARY TECHNOLOGY

    Allaire's success depends to a significant degree upon the protection of its
software and other proprietary technology. The unauthorized reproduction or
other misappropriation of Allaire's proprietary technology could enable third
parties to benefit from Allaire's technology without paying Allaire for it. This
could have a material adverse effect on Allaire's business, operating results
and financial condition.

    Although Allaire has taken steps to protect its proprietary technology, they
may be inadequate. Existing trade secret, copyright and trademark laws offer
only limited protection. In addition, Allaire relies in part on "shrinkwrap" and
"clickwrap" licenses that are not signed by the end user and, therefore, may be
unenforceable under the laws of certain jurisdictions. Moreover, the laws of
other countries in which Allaire markets its products may afford little or no
effective protection of its intellectual property.

    If Allaire resorts to legal proceedings to enforce its intellectual property
rights, the proceedings could be burdensome and expensive and could involve a
high degree of risk.

                                       18
<PAGE>
OTHER COMPANIES MAY CLAIM THAT ALLAIRE INFRINGES THEIR PROPRIETARY TECHNOLOGY

    Although Allaire attempts to avoid infringing known proprietary rights of
third parties, Allaire is subject to the risk of claims alleging infringement of
third party proprietary rights. If Allaire were to discover that any of its
products violated third party proprietary rights, there can be no assurance that
Allaire would be able to obtain licenses on commercially reasonable terms to
continue offering the product without substantial reengineering or that any
effort to undertake such reengineering would be successful. Allaire does not
conduct comprehensive patent searches to determine whether the technology used
in its products infringes patents held by third parties. In addition, product
development is inherently uncertain in a rapidly evolving technological
environment in which there may be numerous patent applications pending, many of
which are confidential when filed, with regard to similar technologies.

    Any claim of infringement could cause Allaire to incur substantial costs
defending against the claim, even if the claim is invalid, and could distract
its management from its business. Furthermore, a party making such a claim could
secure a judgment that requires Allaire to pay substantial damages. A judgment
could also include an injunction or other court order that could prevent Allaire
from selling its products. Any of these events could have a material adverse
effect on Allaire's business, operating results and financial condition.

ALLAIRE'S BUSINESS COULD BE ADVERSELY AFFECTED IF ITS PRODUCTS CONTAIN ERRORS

    Software products as complex as Allaire's may contain undetected errors or
"bugs," which result in product failures or security breaches. Errors in certain
of Allaire's products have been detected after the release of the product. The
occurrence of errors could result in loss of or delay in revenue, loss of market
share, failure to achieve market acceptance, diversion of development resources,
injury to Allaire's reputation, or damage to its efforts to build brand
awareness, any of which could have a material adverse effect on Allaire's
business, operating results and financial condition.

ALLAIRE COULD BE SUBJECT TO PRODUCT LIABILITY CLAIMS RELATING TO ITS CUSTOMERS'
  CRITICAL BUSINESS OPERATIONS

    Many of the Web applications developed and deployed with Allaire's products
are critical to the operations of its customers' businesses. Any failure in a
customer's Web application could result in a claim for substantial damages
against Allaire, regardless of its responsibility for such failure. Although
Allaire maintains general liability insurance, including coverage for errors and
omissions, there can be no assurance that such coverage will continue to be
available on reasonable terms or will be available in amounts sufficient to
cover one or more large claims, or that the insurer will not disclaim coverage
as to any future claim.

ALLAIRE MAY BE SUBJECT TO RISKS ASSOCIATED WITH FUTURE ACQUISITIONS

    From time to time, Allaire may pursue acquisitions to obtain complementary
products, services and technologies. An acquisition may not produce the revenue,
earnings or business synergies that Allaire anticipated, and an acquired
product, service or technology might not perform as Allaire expected. In
pursuing any acquisition, Allaire's management could spend a significant amount
of time and effort in identifying and completing the acquisition. If Allaire
completes an acquisition, Allaire would probably have to devote a significant
amount of management resources to integrating the acquired business with its
existing business.

    To pay for an acquisition, Allaire might use capital stock or cash.
Alternatively, Allaire might borrow money from a bank or other lender. If
Allaire uses capital stock, its stockholders would experience dilution of their
ownership interests. If Allaire uses cash or debt financing, its financial
liquidity will be reduced.

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<PAGE>
ALLAIRE MAY BE AFFECTED BY UNEXPECTED YEAR 2000 PROBLEMS

    Many existing computer systems and software products do not properly
recognize dates after December 31, 1999. This "Year 2000" problem could result
in miscalculations, data corruption, system failures or disruptions of
operations. Allaire is subject to potential Year 2000 problems affecting its
products, its internal systems and the systems of its vendors and distributors,
any of which could have a material adverse effect on Allaire's business,
operating results and financial condition.

    Because ColdFusion does not involve data storage, the ability of a Web
application built with ColdFusion to comply with Year 2000 requirements is
largely dependent on whether the database underlying the application is Year
2000 compliant. Although Allaire believes that the current releases of its
products are Year 2000 compliant, there can be no assurance that Web
applications developed using Allaire's products will comply with Year 2000
requirements. For example, if ColdFusion is connected to a database that is not
Year 2000 compliant, the information received by a ColdFusion application may be
incorrect.

    Changing purchasing patterns of customers impacted by Year 2000 issues may
result in reduced funds available for Web development activities.

    In addition, there can be no assurance that Year 2000 errors or defects will
not be discovered in Allaire's internal software systems and, if such errors or
defects are discovered, there can be no assurance that the costs of making such
systems Year 2000 compliant will not be material.

    Year 2000 errors or defects in the internal systems maintained by Allaire's
vendors or distributors could require us to incur significant unanticipated
expenses to remedy any problems or replace affected vendors and could reduce
Allaire's revenue from its indirect distribution channel.

ALLAIRE'S EXISTING STOCKHOLDERS WILL EXERCISE SIGNIFICANT CONTROL OVER ALLAIRE

    Allaire's officers, directors and greater than ten percent stockholders
together control approximately 44% of the outstanding common stock as of July
31, 1999. As a result, these stockholders, if they act together, will be able to
influence Allaire's management and affairs and all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions. This concentration of ownership may have the effect of
delaying or preventing a change in control of Allaire and might affect the
market price of the common stock.

CERTAIN PROVISIONS OF ALLAIRE'S CHARTER AND OF DELAWARE LAW MAKE A TAKEOVER OF
  ALLAIRE MORE DIFFICULT

    Allaire's corporate documents and Delaware law contain provisions that might
enable Allaire's management to resist a takeover of Allaire. These provisions
might discourage, delay or prevent a change in the control of Allaire or a
change in Allaire's management. These provisions could also discourage proxy
contests and make it more difficult for you and other stockholders to elect
directors and take other corporate actions. The existence of these provisions
could limit the price that investors might be willing to pay in the future for
shares of common stock.

INVESTORS WILL BE SUBJECT TO MARKET RISKS

    The stock market in general has recently experienced extreme price and
volume fluctuations. The market prices of securities of technology companies,
particularly Internet-related companies, have been extremely volatile, and have
experienced fluctuations that have often been unrelated or disproportionate to
the operating performance of such companies. These broad market fluctuations
could adversely affect the market price of the common stock.

    Recently, when the market price of a stock has been volatile, holders of
that stock have often instituted securities class action litigation against the
company that issued the stock. If any of Allaire's

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<PAGE>
stockholders brought such a lawsuit against Allaire, it could incur substantial
costs defending the lawsuit. The lawsuit could also divert the time and
attention of Allaire's management.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

    As of June 30, 1999, Allaire is exposed to market risks which primarily
include changes in U.S. interest rates. Allaire maintains a significant portion
of its cash, cash equivalents and short-term investments in financial
instruments with purchased maturities of twelve months or less. Allaire does not
hold derivative financial instruments or equity securities in its investment
portfolio. Allaire's cash equivalents and short-term investments consist of
high-quality corporate and government debt. These financial instruments are
subject to interest rate risk and will decline in value if interest rates
increase. Due to the short duration of these financial instruments, an immediate
increase in interest rates would not have a material effect on Allaire's
financial condition or results of operations.

                                       21
<PAGE>
                           PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

    (d) Use of Proceeds

    The Company sold 2,875,000 shares of its common stock on January 22, 1999,
pursuant to a Registration Statement on Form S-1 (Registration No. 333-68639),
which was declared effective by the Securities and Exchange Commission on
January 22, 1999 (the "Effective Date"). The managing underwriters of the
offering were Credit Suisse First Boston, Dain Rausher Wessels and Banc of
America Securities LLC. The aggregate gross proceeds of the offering were $57.5
million. The Company's total expenses in connection with the offering were
approximately $5.2 million, of which approximately $4.0 million was for
underwriting discounts and commissions and approximately $1.2 million was for
other expenses paid to persons other than directors or officers of the Company
or persons owning more than 10 percent of any class of equity securities of
Allaire. The Company's net proceeds from the offering were approximately $52.3
million. From the Effective Date through June 30, 1999, the Company used
approximately $1.9 million of the net proceeds primarily to fund operating
losses and working capital requirements. As of June 30, 1999, the Company had
approximately $50.4 million of net proceeds remaining, and pending use of the
proceeds, the Company intends to invest such proceeds primarily in high-quality
corporate and government debt.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

    (a) Exhibits:

Exhibit 11   Statement re: Computation of Unaudited Net Loss Per Share and Pro
             Forma Net Loss Per Share (filed herewith)

Exhibit 27.1  Financial Data Schedule (filed herewith)

Exhibit 27.2  Financial Data Schedule (filed herewith)

Exhibit 27.3  Financial Data Schedule (filed herewith)

Exhibit 27.4  Financial Data Schedule (filed herewith)

    (b) A report on Form 8-K was filed on April 27, 1999, regarding Allaire's
acquisition of Bright Tiger. A report on Form 8-K/A was filed on June 5, 1999 to
report financial statements of Bright Tiger and pro forma financial statements
assuming a business combination between Allaire and Bright Tiger accounted for
on a "pooling of interests" basis.

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<PAGE>
                                   SIGNATURES

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

Dated: August 16, 1999

<TABLE>
<S>                             <C>  <C>
                                ALLAIRE CORPORATION

                                By:              /s/ David A. Gerth
                                     -----------------------------------------
                                                   David A. Gerth
                                      VICE PRESIDENT, FINANCE AND OPERATIONS,
                                       TREASURER AND CHIEF FINANCIAL OFFICER
                                        (PRINCIPAL FINANCIAL AND ACCOUNTING
                                                      OFFICER)
</TABLE>

                                       23
<PAGE>
                                 EXHIBIT INDEX

Exhibit 11   Statement re: Computation of Unaudited Net Loss Per Share and Pro
             Forma Net Loss Per Share (filed herewith)

Exhibit 27.1  Financial Data Schedule (filed herewith)

Exhibit 27.2  Financial Data Schedule (filed herewith)

Exhibit 27.3  Financial Data Schedule (filed herewith)

Exhibit 27.4  Financial Data Schedule (filed herewith)

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