BackWeb Reports Q2 Revenue of $1.47 Million; Cash and Cash Equivalents of $18.7 Million

Sees Continued Growth in Awareness, Interest, and Demand for BackWeb Offline Web Offering, Though Sales Cycle Durations Remain Uncertain

SAN JOSE, Calif., – July 23, 2003 – BackWeb Technologies Ltd. (Nasdaq: BWEB), a leading provider of Web infrastructure software enabling offline access to websites and enterprise portals, today announced financial results for its second quarter ended June 30, 2003.

Growth in awareness and demand for BackWeb's industry-leading products led to an increased number of sales of the BackWeb ProactivePortal Server (PPS) in the second quarter of 2003 and net revenue of $1.47 million in the period. This compares to first quarter net revenue of $1.52 million and net revenue of $1.79 million in the second quarter of 2002. New PPS customers in the period included Borsa Italiana S.p.A., ConAgra Foods, Inc., KLA Tencor Corp., Netstal-Maschinen AG, and Pioneer Natural Resources USA, Inc.

BackWeb's operating results continue to benefit from on-going overhead and cost disciplines. BackWeb reported a net loss of $2.6 million, or $0.07 per share, for the second quarter of 2003, compared to a net loss of $5.5 million, or $0.14 per share, in the year-ago period. Given the current environment, BackWeb continues to emphasize cost containment, operating, and cash management disciplines. BackWeb continues to invest prudently in sales and marketing to expand its base of customer prospects, while also investing in a focused set of product enhancements which reflect customer needs. As of June 30, 2003, BackWeb had no long-term debt, and cash and cash equivalents totaling $18.7 million.

Eli Barkat, chairman and CEO of BackWeb Technologies, commented, "We continue to build awareness of, and interest in, our unique offline Web synchronization offering which was substantially augmented with the release of Version 3 in the first quarter. Our lead generation efforts have become more productive, and we are seeing an increasing number of inquiries about BackWeb - either directly to the Company or through industry analysts - as well as a growing appreciation of the importance of the offline functionality we provide. This interest helps validate our strategic decision to focus on the offline opportunity. Unfortunately, the timing of translating this interest and activity into increased revenue remains uncertain in this economic and spending environment.

"Version 3 of the PPS infrastructure further expands our unique value proposition and takes our offering to a new level by providing true two-way offline synchronization of portal, intranet, and enterprise Web content, providing mobile users a more powerful and efficient offline working experience. In the second quarter, we saw a growing percentage of new customer sales represented by PPS, as well as initial migrations of existing customers from our legacy products to our ProactivePortal Server. With enterprises looking for ways to cost effectively leverage their existing IT and personnel resources, we believe Version 3 is a natural solution, offering obvious cost benefits."