BackWeb Reports Q2 Results and Recent Developments

Roll-out of Realignment of Sales and Marketing Strategy Expected to Be Complete in Current Quarter

SAN JOSE, CA – July 28, 2004 – BackWeb Technologies Ltd. (Nasdaq: BWEB), a leading provider of offline Web software, today reported financial results for the second quarter and six months ended June 30, 2004.

Reflecting continued budgetary challenges in the information technology market, coupled with the impact of the Company's restructuring of its sales and marketing strategy to focus on line-of-business selling, BackWeb reported Q2 2004 revenue of $1.14 million compared to $1.47 million in the second quarter of 2003.

As a result of BackWeb's company-wide cost management initiatives, the Company reported an improved net loss of $1.3 million, or $0.03 per share, for Q2 2004, compared to a net loss of $2.6 million, or $0.07 per share, in Q2 2003. BackWeb continues to emphasize cost containment, operating, and cash management disciplines and as a result has seen a 30% decline in spending in the six months ended June 30, 2004 as compared to the prior year period. As of June 30, 2004, BackWeb had cash and investments totaling $11.9 million and no long-term debt.

Erez Lorber, CEO of BackWeb, commented, "Our Q2 revenue performance reflects the ongoing challenges and lengthy sales cycles we have been experiencing with our previously IT-oriented sales strategy. As anticipated, our sales execution in the quarter was also impacted by personnel and other changes being implemented as part of our transition to our new value-based selling model focused on line of business management. Led by Pat Williams, our new Vice President of Worldwide Sales, the rollout of this new approach is expected later in the third quarter. While embarking on a new sales strategy is a highly management intensive and disruptive process, our experience over the past quarter underscores the market dynamics that make our move to value-based selling both a sound and necessary strategy to best leverage the opportunity we see for our solutions."

Recent BackWeb Developments:

• Grant Thornton LLP was engaged as BackWeb's new independent auditor, replacing Ernst & Young LLP, who resigned due to a potential conflict of interest as they pursue an ongoing review of BackWeb's products for potential future deployment.
  
• BackWeb and BEA Design Joint Solution: As announced at BEA's eWorld Conference in May, BackWeb designed a solution to help BEA customers more easily and cost-effectively mobilize, or offline enable, any BEA Web application for mobile laptop users with intermittent network connectivity. The joint solution aims to help sales and field service organizations realize maximum productivity, cost savings and process acceleration gains from employees using BEA Web applications while disconnected from the network.
  
• Gartner Selects BackWeb: In June report reviewing the portal "ecosystem," Gartner recognized BackWeb as a premier vendor of offline solutions in the portal market. In its segment on offline portals, the report discusses the importance of allowing portals to work in a disconnected mode while delivering the same personalization and user experience as when connected.