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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Commission file number: 000-23709

DoubleClick Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

111 Eighth Avenue, 10th Floor

New York, New York 10011

(212) 683-0001

(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,

INCLUDING AREA CODE OF REGISTRANT’S PRINCIPAL EXECUTIVE OFFICES)

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

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

      As of May 9, 2005 there were 126,131,699 outstanding shares of the registrant’s Common Stock.

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DOUBLECLICK INC.

INDEX TO FORM 10-Q

PART 1:     FINANCIAL INFORMATION

Item 1:     Financial Statements (unaudited)

DOUBLECLICK INC.

CONSOLIDATED BALANCE SHEETS

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

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

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

DOUBLECLICK INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2005

(unaudited)

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

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

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

      On October 31, 2004, DoubleClick announced that it retained Lazard Freres & Co. to explore strategic options for the business to achieve greater shareholder value. On April 23, 2005, DoubleClick signed a definitive agreement to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity (See Note 12).

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

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

      The Consolidated Balance Sheet at December 31, 2004 has been derived from, but does not include all the disclosures contained in, the audited Consolidated Financial Statements for the year ended December 31, 2004. The accompanying Consolidated Financial Statements should be read in conjunction with the audited

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

Consolidated Financial Statements of DoubleClick included in DoubleClick’s Annual Report on Form 10-K for the year ended December 31, 2004.

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

      Marketable securities consist of investment grade government and corporate debt securities and are classified as current or non-current assets depending on their dates of maturity. As of March 31, 2005, all marketable securities included in non-current assets have maturities greater than one year.

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

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

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

      DoubleClick records as goodwill the excess of purchase price over the fair value of the identifiable net assets acquired. SFAS No. 142, “Goodwill and Other Intangible Assets,” prescribes a two-step process for impairment testing of goodwill, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. DoubleClick has elected to perform its annual analysis during the fourth quarter of each fiscal year as of October 1st. No indicators of impairment were identified during the first quarter of 2005.

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

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

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

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

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

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

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

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

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

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

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

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

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

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

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

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

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

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

      The weighted average per share fair value of options granted during the first quarter of 2005 and 2004 were $4.01 and $6.15, respectively, on the grant date with the following weighted average assumptions:

      The pro forma impact of options on the net income (loss) for the first quarter of 2005 and 2004 is not representative of the effects on net income (loss) for future years, as future years will include the effects of additional years of stock option grants.

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      Basic net income (loss) per share excludes the effect of potentially dilutive securities and is computed by dividing the net income (loss) available to shareholders by the weighted-average number of shares outstanding for the reporting period. Diluted net income (loss) per share adjusts this calculation to reflect the impact of outstanding convertible securities and stock options to the extent that their inclusion would have a dilutive effect on net income (loss) per share for the reporting period.

      At March 31, 2005 and 2004 outstanding options of approximately 20.0 million and 9.8 million, respectively, to purchase shares of common stock were not included in the computation of diluted net income (loss) per share because to do so would have had an antidilutive effect for the periods presented. Similarly, the computation of diluted earnings per share at March 31, 2005, excludes the effect of 10.3 million shares issuable upon conversion of the Zero Coupon Convertible Subordinated Notes due 2023.

      Financial instruments that potentially subject DoubleClick to concentrations of credit risk consist primarily of cash and cash equivalents, investments in marketable securities and accounts receivable.

      Credit is extended to customers based on an evaluation of their financial condition and collateral is not required. DoubleClick performs ongoing credit assessments of its customers and maintains an allowance for doubtful accounts.

      DoubleClick’s financial instruments consist of cash and cash equivalents, investments in marketable securities, restricted cash, accounts receivable, accounts payable, accrued expenses and convertible subordinated notes. At March 31, 2005 and December 31, 2004, the fair value of these instruments approximated their financial statement-carrying amount with the exception of the convertible subordinated notes. The Zero Coupon Convertible Subordinated Notes due 2023 had an estimated fair value of $123.4 million and $126.3 million at March 31, 2005 and December 31, 2004, respectively.

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

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

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

      In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123 (“SFAS 123”) and supercedes APB Opinion No. 25. SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. SFAS 123R is effective for fiscal years beginning after June 15, 2005. Early application of SFAS 123R is encouraged, but not required. SFAS 123R permits companies to adopt its requirements using either a “modified prospective” method, or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on proforma disclosures made in accordance with SFAS 123. DoubleClick will adopt SFAS 123R as of January 1, 2006; however, DoubleClick has not yet determined which of the adoption methods it will use.

      In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29” (“SFAS No. 153”). SFAS No. 153 requires that exchanges of productive assets be accounted for at fair value unless fair value cannot be reasonably determined or the transaction lacks commercial substance. SFAS No. 153 is effective for nonmonetary assets exchanges occurring in the fiscal year beginning January 1, 2006 and is not expected to have a material effect on DoubleClick’s Consolidated Financial Statements.

      In November 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 03-13 (“EITF 03-13”), “Applying the Conditions in Paragraph 42 of SFAS 144 in Determining Whether to Report Discontinued Operations”. EITF 03-13 provides guidance for evaluating whether the criteria in paragraph 42 of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, have been met for classifying as a discontinued operation a component of an entity that either has been disposed of or is classified as held for sale. To qualify as a discontinued operation, paragraph 42 of SFAS No. 144 requires that cash flows of the disposed component be eliminated from the operations of the ongoing entity and that the ongoing entity not have any significant continuing involvement in the operations of the disposed component after the disposal transaction. EITF 03-13 defines which cash flows are relevant for assessing whether cash flows have been eliminated and it provides a framework for evaluating what types of ongoing involvement constitute significant continuing involvement. The guidance contained in EITF 03-13 is effective for components of an enterprise that are either disposed of or classified as held for sale in fiscal periods beginning after December 15, 2004. EITF 03-13 may have a material impact on DoubleClick’s financial position or results of operations in 2005 depending on the outcome of our ongoing review of strategic options and the definitive agreement for DoubleClick to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity, which was signed on April 23, 2005 .

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      In October 2004, the FASB ratified the consensus reached by the EITF with respect to EITF Issue No. 04-10 (EITF 04-10), “Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds”. EITF 04-10 clarifies the guidance in paragraph 19 of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. According to EITF 04-10, operating segments that do not meet the quantitative thresholds can be aggregated under paragraph 19 only if aggregation is consistent with the objective and basic principle of SFAS No. 131, the segments have similar economic characteristics, and the segments share a majority of the aggregation criteria listed in items (a)-(e) in paragraph 17 of SFAS No. 131. The FASB staff is currently working on a FASB Staff Position (“FSP”) to provide guidance in determining whether two or more operating segments have similar economic characteristics. The effective date of EITF 04-10 has been delayed in order to coincide with the effective date of the anticipated FSP. DoubleClick does not foresee any significant changes in the reporting practices used to report its segment information.

      In September 2004, the EITF confirmed their tentative conclusion on EITF Issue No. 04-8 (“EITF 04-8”), “The Effect of Contingently Convertible Debt on Diluted Earnings per Share.” EITF 04-8 requires contingently convertible debt instruments to be included in diluted earnings per share, if dilutive, regardless of whether a market price contingency for the conversion of the debt into common shares or any other contingent factor has been met. Prior to this consensus, such instruments were excluded from the calculation until one or more of the contingencies were met. EITF 04-8 is effective for reporting periods ending after December 15, 2004, and requires restatement of prior period earnings per share amounts. DoubleClick adopted EITF 04-8 during the fourth quarter of 2004 and has restated prior period earnings per share amounts and presented 2005 earnings per share amounts based upon the requirements of EITF 04-8. In the first quarter of 2004, diluted earnings per share amounts reflect DoubleClick’s Zero Coupon Convertible Subordinated Notes due 2023, which represent 10.3 million potential shares of common stock. In the first quarter of 2005, diluted earnings per share amounts excluded DoubleClick Zero Coupon Convertible Subordinated Notes due 2023 because to do so would have an anti-dilutive effect for the period. Due to the adoption of this pronouncement, diluted earnings per share for the first quarter of 2004 were unchanged.

      On June 22, 2004, DoubleClick completed its acquisition of Performics Inc., a privately held search engine marketing and affiliate marketing company based in Chicago, Illinois, for approximately $58.2 million in cash. In addition, DoubleClick paid the former shareholders of Performics an additional $6.6 million during the first quarter of 2005 based on their attainment of certain 2004 revenue objectives. This payment was accounted for as an adjustment to purchase price. Performics’ search engine marketing solutions are designed to help clients automate their paid placement, paid inclusion and comparison shopping listings across multiple search providers and publishers. Performics also provides the infrastructure for affiliate marketing, through which marketers manage, track, and report on their offers across multiple affiliate sites. This acquisition enabled DoubleClick to offer performance based marketing products and services.

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

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

      On the basis of estimated fair values, approximately $11.8 million of the purchase price has been allocated to purchased technology and $6.9 million to customer relationships. The purchased technology and the customer relationships are being amortized on a straight-line basis over three years based on each intangible’s estimated useful life. DoubleClick recorded approximately $41.6 million in goodwill, which represents the remainder of the excess of the purchase price over the fair value of net assets acquired. This goodwill is not tax deductible and, in accordance with SFAS No. 142, will be and has been periodically tested for impairment.

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

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

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

      On the basis of estimated fair values, approximately $3.3 million of the purchase price has been allocated to purchased technology, $1.4 million to customer relationships and $2.4 million to a covenant not to compete. The purchased technology and the customer relationships are being amortized on a straight-line basis over three years based on each intangible’s estimated useful life. The covenant not to compete is being amortized on a straight-line basis over 15 months. DoubleClick recorded approximately $15.7 million in goodwill, which represents the remainder of the excess of the purchase price over the fair value of net assets acquired. This

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

goodwill is not tax deductible and, in accordance with SFAS No. 142, will be and has been periodically tested for impairment.

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

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

      DoubleClick’s investments in affiliates at March 31, 2005 and December 31, 2004 consisted of the following:

      As of March 31, 2005 and December 31, 2004, DoubleClick’s investments in MaxWorldwide and DoubleClick Japan represent investments in publicly traded companies which are accounted under the equity method of accounting. At March 31, 2005 and December 31, 2004, the fair value of these investments was as follows:

      Equity in losses of affiliates was $0.1 million and $0.2 million for the first quarter of 2005 and 2004, respectively. In the first quarter of 2005, DoubleClick recognized an equity loss of approximately $0.2 million from the equity investment in its Abacus Deutschland joint venture partially offset by an equity gain of approximately $0.1 million from its equity investment in DoubleClick Japan. In the first quarter of 2004, DoubleClick recognized equity losses of $0.1 million from the equity investment in its Abacus Deutschland joint venture and $0.1 million from its equity investment in DoubleClick Japan.

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      In January 2004, DoubleClick commenced operations of Abacus Deutschland, a joint venture with AZ Direct GmbH, a subsidiary of Bertelsmann AG, a global media company. DoubleClick has a 50% interest in the joint venture which has required investments to date of approximately $1.2 million.

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

      The changes in the carrying amount of goodwill for the first quarter of 2005 are as follows (in thousands):

      Goodwill at March 31, 2005 and December 31, 2004 by reporting unit consisted of the following:

      The Email, Performics and EMS reporting units are all part of DoubleClick’s TechSolutions segment.

      Intangible assets consist of the following:

      Amortization expense was $2.9 million and $1.5 million for the first quarter of 2005 and 2004, respectively. For the first quarter of 2005 and 2004, $1.2 million and $0.9 million, respectively, of amortization expense relating to purchased technology has been included as a component of cost of revenue in the Consolidated Statements of Operations.

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

      Based on the balance of intangible assets at March 31, 2005, the annual amortization expense for each of the succeeding two fiscal years is estimated to be $8.4 million and $3.5 million in 2006 and 2007, respectively. Amortization expense for the remaining balance of fiscal 2005 is estimated to be $7.6 million.

      Accounts payable at March 31, 2005 and December 31, 2004 consists of the following

      Site payments represent amounts owed to Web sites in connection with search engine and affiliate marketing advertising campaigns managed by our Performics division on behalf of our advertiser clients. Site payments are remitted to the applicable Web sites only upon collection of the underlying receivable due from our advertiser clients. The net accounts receivable balance associated with our Performics business was $23.3 million and $27.9 million at March 31, 2005 and December 31, 2004, respectively.

      On June 23, 2003, DoubleClick issued $135.0 million aggregate principal amount of Zero Coupon Convertible Subordinated Notes due 2023 (the “Zero Coupon Notes”) in a private offering. The Zero Coupon Notes do not bear interest and have a zero yield to maturity. The Zero Coupon Notes are convertible under certain circumstances into DoubleClick common stock at a conversion price of approximately $13.12 per share, which would result in an aggregate of approximately 10.3 million shares, subject to adjustment upon the occurrence of specified events. Each $1,000 principal amount of the Zero Coupon Notes will initially be convertible into 76.2311 shares of DoubleClick common stock prior to July 15, 2023 if the sale price of DoubleClick’s common stock issuable upon conversion of the Zero Coupon Notes reaches a specified threshold for a defined period of time, if specified corporate transactions have occurred or if DoubleClick calls the Zero Coupon Notes for redemption. The specified thresholds for conversion prior to the maturity date are (a) during any calendar quarter, the last reported sale price of DoubleClick’s common stock for at least 20 trading days in the 30 consecutive trading days ending on the last trading day of the previous calendar quarter is greater than or equal to 120% of the applicable conversion price on that 30th trading day and (b) subject to certain exceptions, during the five business day period following any five consecutive trading day period, the trading price per $1,000 principal amount of Zero Coupon Notes for each of the five consecutive trading days is less than 98% of the product of the last reported sale price of DoubleClick’s common stock and the conversion rate (initially 76.2311) on each such day. As of March 31, 2005, these thresholds had not been met.

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

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

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

      The Zero Coupon Notes contain an embedded derivative, the fair value of which as of March 31, 2005 has been determined to be immaterial to our consolidated financial position. For financial accounting purposes, the ability of the holder to convert upon the satisfaction of a trading price condition constitutes an embedded derivative. Any significant changes in its value will be reflected in our future income statements, in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.”

      In the first quarter of 2005, no restructuring charges or credits were recorded. Cash paid during the first quarter of 2005 with respect to previously accrued restructuring charges was approximately $1.1 million relating to subleased facilities in Louisville and Chicago.

      The restructuring accrual as of March 31, 2005 of approximately $16.2 million consists primarily of DoubleClick’s facilities in London, England and Louisville, Colorado. The restructuring accrual associated with DoubleClick’s facilities represents the excess of future lease commitments over estimated sublease income in locations where DoubleClick has excess or idle space. In most cases, subleases have been signed for the entire term of these leases and DoubleClick’s estimate of sublease income is based on the agreed upon sublease rates. In facilities for which DoubleClick does not have a sublease signed for the entire term of the lease, sublease assumptions are made with the assistance of a real estate firm and are based on the current real estate market conditions in the local markets where these facilities are located. Should market conditions or other circumstances change, this information may be updated and restructuring charges or credits may be required.

      As of March 31, 2005, approximately $3.8 million and $12.4 million remained accrued as a component in “Accrued expenses and other current liabilities” and “Other long-term liabilities” on the Consolidated Balance Sheet, respectively, and relates wholly to future lease costs.

      The following table sets forth a summary of the costs and related charges for DoubleClick’s restructuring charges and the balance of the restructuring reserves established:

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

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

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

      In June 2003, DoubleClick’s Board of Directors conditionally approved a proposed partial settlement with the plaintiffs in this matter. In June 2004, an agreement of settlement was submitted to the court for preliminary approval. The court granted the preliminary approval motion on February 15, 2005, subject to certain modifications. If the parties are able to agree upon the required modifications, and such modifications are acceptable to the court, notice will be given to all class members of the settlement, a “fairness” hearing will be held and if the court determines that the settlement is fair to the class members, the settlement will be approved. There can be no assurance that this proposed settlement would be approved and implemented in its current form, or at all. If this settlement is not finalized, DoubleClick intends to dispute these allegations and defend this lawsuit vigorously.

      DoubleClick is defending a class action lawsuit filed in September 2003 in the Court of Common Pleas in Allegheny County, Pennsylvania alleging, among other things, deceptive business practices, fraud, misrepresentation, invasion of privacy and right of association relating to allegedly deceptive content of online advertisement that plaintiffs assert we delivered to consumers. The action seeks, among other things, injunctive relief, compensatory and punitive damages and attorneys’ fees and costs. DoubleClick believes the claims in this case are without merit and intends to defend this action vigorously.

      On April 23, 2005, DoubleClick signed a definitive agreement to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity. If the merger is terminated under certain circumstances, DoubleClick will be obligated to pay a termination fee of $28 million (See Note 12).

      On April 27, 2005, a purported class action lawsuit related to the merger was filed against DoubleClick, each of its directors, certain of its executive officers and Hellman & Freidman LLC and JMI Equity in the Supreme Court of the State of New York for the County of New York. The lawsuit alleges, among other things, that the merger consideration to be paid to DoubleClick’s stockholders in the merger is unfair and inadequate. In addition, the complaint alleges that DoubleClick’s directors violated their fiduciary duties by, among other things, failing to take all reasonable steps to assure the maximization of stockholder value, including the implementation of a bidding mechanism to foster a fair auction of DoubleClick to the highest bidder or the exploration of strategic alternatives that will return greater or equivalent short-term value to DoubleClick’s stockholders. The complaint seeks, among other relief, certifications of the lawsuit as a class action, a declaration that the merger is unfair, unjust and inequitable to our stockholders, an injunction preventing completion of the merger at a price that is not fair and equitable, compensatory damages to the class, attorneys’ fees and expenses, along with such other relief as the court might find just and proper.

      DoubleClick is organized into two segments: TechSolutions and Data. Our TechSolutions business unit consists of our Ad Management, Marketing Automation and Performics divisions and our Data business unit consists of our Abacus and Data Management divisions. Adjustments to reconcile segment reporting to consolidated results are included in “corporate.” Corporate represents the results of operations of DoubleClick’s unallocated corporate overhead. The accounting policies of DoubleClick’s segments are the same as those described in the summary of significant accounting policies in Note 1.

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

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

      Comprehensive income consists of net income (loss), unrealized gains and losses on marketable securities and foreign currency translation adjustments. Comprehensive loss was $1.9 million for the first quarter of 2005 as compared to comprehensive income of $15.0 million for the first quarter of 2004.

      On April 7, 2005, DoubleClick and America Online, Inc. (“AOL”) entered into a services agreement (the “Services Agreement”). Pursuant to the terms of the Services Agreement, DoubleClick will provide a DoubleClick-hosted service to AOL that will enable AOL to manage, serve, and report on online advertisements through DoubleClick’s “DART for Publishers” platform (the “DFP Service”). Over the course of three phases, DoubleClick will also perform customization work to incorporate new features and functionality to the DFP Service required by AOL. AOL will pay monthly service fees for the DFP Service based on the monthly volume of advertisement impressions AOL serves using the customized DFP Service, and AOL will pay for customization work that DoubleClick successfully completes. DoubleClick will be using equipment and additional software purchased by AOL and procuring additional space at co-location facilities that will be exclusively dedicated to supporting DoubleClick’s provision of the DFP Service.

      The Services Agreement provides for an initial term that expires on the third anniversary of the date AOL begins serving advertisements though the customized DFP Service and, upon the expiration of the initial term, five subsequent one-year renewal terms at the election of AOL. AOL may terminate the Services Agreement upon the occurrence of certain specified events, including but not limited to certain service level failures, certain types of change in control of DoubleClick, financial distress of DoubleClick as defined by the Services Agreement, and an announcement by DoubleClick of its intention to cease or ceasing to provide services similar to the DFP Service. Upon the expiration or termination of the Agreement, AOL will receive certain termination assistance services from DoubleClick.

      On April 23, 2005, DoubleClick signed a definitive agreement to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity. Under the terms of the agreement, DoubleClick stockholders will receive $8.50 in cash for each share of DoubleClick common stock. The aggregate consideration to be paid to DoubleClick stockholders is approximately $1.1 billion. DoubleClick’s

DOUBLECLICK INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

March 31, 2005

(unaudited)

existing Zero Coupon Subordinated Notes due 2023 in the principal amount of $135 million will remain outstanding, subject to the rights of the holders to require DoubleClick to repurchase such notes at par following consummation of the transaction. The transaction is expected to be completed in the third quarter. If the merger agreement is terminated under certain circumstances, DoubleClick will be obligated to pay a termination fee of $28 million.

      On April 24, 2005, DoubleClick entered into an agreement with Kevin P. Ryan, DoubleClick’s chief executive officer, in connection with DoubleClick’s previously disclosed entry into a definitive agreement on April 23, 2005 pursuant to which DoubleClick will be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity. Pursuant to the agreement between the DoubleClick and Mr. Ryan, Mr. Ryan agreed to resign as a director and chief executive officer of DoubleClick upon the closing of the transaction. Additionally, DoubleClick agreed to treat Mr. Ryan’s resignation as a termination without cause, for purpose of any severance, retention or other payment or benefit to which Mr. Ryan is entitled upon such termination.

Cautionary Note Regarding Forward-Looking Statements

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

Overview

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

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

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

Recent Developments

      On October 31, 2004, we announced that we retained Lazard Freres & Co. to explore strategic options for the business to achieve greater shareholder value. On April 23, 2005, we signed a definitive agreement to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity. Under the terms of the agreement, our stockholders will receive $8.50 in cash for each share of our common stock. The aggregate consideration to be paid to our stockholders is approximately $1.1 billion. Our existing Zero Coupon Subordinated Notes due 2023 in the principal amount of $135 million will remain outstanding, subject to the rights of the holders to require us to repurchase such notes at par following consummation of the transaction. The transaction is expected to be completed in the third quarter. If the merger agreement is terminated under certain circumstances, we will be obligated to pay a termination fee of $28 million.

Critical Accounting Policies and Significant Estimates

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

      Our restructuring reserves as of March 31, 2005 were approximately $16.2 million, and consisted primarily of reserves for our facilities in London, England and Louisville, Colorado. The restructuring accrual associated with our facilities represents the excess of future lease commitments over estimated sublease income in locations where we have excess or idle space. In most cases, subleases have been signed for the entire term of these leases and our estimate of sublease income is based on the agreed upon sublease rates. In facilities for which we do not have a sublease signed for the entire term of the lease, sublease assumptions are made with the assistance of a real estate firm and are based on the current real estate market conditions in the local markets where these facilities are located. The most material estimate is associated with our facility in London where the office space is currently sublet for only a portion of the remaining lease term. The total remaining obligation for this facility is approximately $42.0 million. Our London reserve is based on our estimate of future sublease income relative to the total remaining obligation and was determined based on the weighted probability of various future sublease scenarios. These scenarios resulted in a weighted average sublease rate where for each $1.00 change in this assumption, additional restructuring charges or credits of approximately $0.3 million would be required. If market conditions or other circumstances change, this information may be updated and additional charges or credits may be required.

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

      When it is determined that the carrying value of goodwill may be impaired, management measures impairment based on projected discounted cash flows, recent transactions involving similar businesses and price/revenue multiples at which they were bought and sold and price/revenue multiples of competitors.

      We assess the recoverability of intangible assets held and used whenever events or changes in circumstances indicate that future cash flows, undiscounted and without interest charges, expected to be

generated by an asset’s disposition or use may not be sufficient to support its carrying amount. If such undiscounted cash flows are not sufficient to support the recorded value of an intangible asset, an impairment loss is recognized to reduce the carrying value of the intangible asset to its estimated fair value. Intangible assets include patents, trademarks, customer relationships, purchased technology and a covenant not to compete.

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

      On October 31, 2004, we announced that we retained Lazard Freres & Co. to explore strategic options for our business to achieve greater shareholder value. In connection with this initiative, on December 9, 2004 we entered into retention agreements with key employees, including each of our named executive officers as of that date, as disclosed in our Current Report on Form 8-K filed with the SEC on December 13, 2004. Under the terms of the retention agreements, these employees were entitled to receive a retention bonus if they remained continuously employed through April 30, 2005 and are entitled to receive a second retention bonus if they remain continuously employed through January 31, 2006. The employees received the first retention bonus on April 30, 2005, which totaled approximately $1.4 million in aggregate. Payment of the second retention bonuses will accelerate in full if we terminate the employment of the employee without cause or if the employee terminates his or her employment for good reason prior to January 31, 2006. Additionally, if, while an employee is employed by us, we complete the sale of our TechSolutions or Data business segment, which we refer to as a division change of control, payment of half of the second retention bonus will accelerate for the employees of the applicable business segment, except for the President of Data, whose retention bonuses will accelerate in full. The consummation of the transaction with an affiliate of Hellman & Friedman LLC and JMI Equity that we signed on April 23, 2005 will constitute a division change in control with respect to each business segment for purposes of these retention agreements.

      We record compensation expense ratably over the service period of each retention bonus. The service period of the first and second retention bonuses are approximately five and fourteen months, respectively. If the payment of these retention bonuses accelerates, the remaining unamortized expense will be recorded in the period such termination is made and/or sale is consummated. Aggregate future payments in connection with these retention bonuses and other retention bonuses may range up to $3.3 million, excluding the payments made on April 30, 2005 and potential tax gross-up payments under the agreements. In the first quarter of 2005, we recognized $1.6 million in compensation expense relating to these retention bonuses.

      Pursuant to SFAS 109, we record a valuation allowance to the extent realization of our net deferred tax asset is not more likely than not. As of March 31, 2005 and December 31 2004, we maintained a valuation allowance against those net deferred tax assets that we believe, after considering all the available objective evidence, both positive and negative, historical and prospective, with greater weight given to historical evidence, are not more likely than not expected to be realized. If we determine that we would be able to realize additional or all of our deferred tax assets, an adjustment to the valuation allowance would increase income and/or adjust additional paid-in capital and/or goodwill in the period such determination was made.

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

      In December 2004, the Financial Accounting Standards Board, referred to as FASB, issued SFAS No. 123R, “Share-Based Payment”, known as SFAS 123R, which replaces SFAS No. 123, and supercedes APB Opinion No. 25. SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. SFAS 123R is effective for fiscal years beginning after June 15, 2005. Early application of SFAS 123R is encouraged, but not required. SFAS 123R permits companies to adopt its requirements using either a “modified prospective” method, or a “modified retrospective” method. Under the “modified prospective” method, compensation cost is recognized in the financial statements beginning with the effective date, based on the requirements of SFAS 123R for all share-based payments granted after that date, and based on the requirements of SFAS 123 for all unvested awards granted prior to the effective date of SFAS 123R. Under the “modified retrospective” method, the requirements are the same as under the “modified prospective” method, but also permits entities to restate financial statements of previous periods based on proforma disclosures made in accordance with SFAS 123. We will adopt SFAS 123R as of January 1, 2006; however, we have not yet determined which of the adoption methods we will use.

      In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29”. SFAS No. 153 requires that exchanges of productive assets be accounted for at fair value unless fair value cannot be reasonably determined or the transaction lacks commercial substance. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in the fiscal year beginning January 1, 2006 and is not expected to have a material effect on our Consolidated Financial Statements.

      In November 2004, the Emerging Issues Task Force, referred to as EITF, reached a consensus on EITF Issue No. 03-13, “Applying the Conditions in Paragraph 42 of FAS 144 in Determining Whether to Report Discontinued Operations”, known as EITF 03-13. EITF 03-13 provides guidance for evaluating whether the criteria in paragraph 42 of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, have been met for classifying as a discontinued operation a component of an entity that either has been disposed of or is classified as held for sale. To qualify as a discontinued operation, paragraph 42 of SFAS No. 144 requires that cash flows of the disposed component be eliminated from the operations of the ongoing entity and that the ongoing entity not have any significant continuing involvement in the operations of the disposed component after the disposal transaction. EITF 03-13 defines which cash flows are relevant for assessing whether cash flows have been eliminated and it provides a framework for evaluating what types of ongoing involvement constitute significant continuing involvement. The guidance contained in EITF 03-13 is effective for components of an enterprise that are either disposed of or classified as held for sale in fiscal periods beginning after December 15, 2004. EITF 03-13 may have a material impact on our financial position or results of operations in 2005 depending on the outcome of our review of strategic options and the definitive agreement for the Company to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity which was signed on April 23, 2005.

      In October 2004, the FASB ratified the consensus reached by the EITF with respect to EITF Issue No. 04-10, “Determining Whether to Aggregate Operating Segments That Do Not Meet the Quantitative Thresholds”, known as EITF 04-10. EITF 04-10 clarifies the guidance in paragraph 19 of SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information”. According to EITF 04-10, operating

segments that do not meet the quantitative thresholds can be aggregated under paragraph 19 only if aggregation is consistent with the objective and basic principle of SFAS No. 131, the segments have similar economic characteristics, and the segments share a majority of the aggregation criteria listed in items (a)-(e) in paragraph 17 of SFAS No. 131. The FASB staff is currently working on a FASB Staff Position, known as FSP, to provide guidance in determining whether two or more operating segments have similar economic characteristics. The effective date of EITF 04-10 has been delayed in order to coincide with the effective date of the anticipated FSP. We do not foresee any significant changes in the reporting practices used to report our segment information.

      In September 2004, the EITF confirmed their tentative conclusion on EITF Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share”, known as EITF 04-8. EITF 04-8 requires contingently convertible debt instruments to be included in diluted earnings per share, if dilutive, regardless of whether a market price contingency for the conversion of the debt into common shares or any other contingent factor has been met. Prior to this consensus, such instruments were excluded from the calculation until one or more of the contingencies were met. EITF 04-8 is effective for reporting periods ending after December 15, 2004, and requires restatement of prior period earnings per share amounts. We adopted EITF 04-8 during the fourth quarter of 2004 and have restated prior period earnings per share amounts and presented 2005 earnings per share amounts based on the requirements of EITF 04-8. For the first quarter of 2004, diluted earnings per share amounts reflect our Zero Coupon Convertible Subordinated Notes due 2023, which represented 10.3 million potential shares of common stock. In the first quarter of 2005, diluted earnings per share amounts excluded our Zero Coupon Convertible Subordinated Notes due 2023 because to do so would have an anti-dilutive effect for the period. Due to the adoption of this pronouncement, diluted earnings per share for the first quarter of 2004 were unchanged.

Business Transactions

      On June 22, 2004, we completed our acquisition of Performics Inc., a privately held search engine marketing and affiliate marketing company based in Chicago, Illinois, for approximately $58.2 million in cash. In addition, we paid the former shareholders of Performics an additional $6.6 million during the first quarter of 2005 based on their attainment of certain 2004 revenue objectives. Performics’ search engine marketing solutions are designed to help clients automate their paid placement, paid inclusion and comparison shopping listings across multiple search providers and publishers. Performics also provides the infrastructure for affiliate marketing, through which marketers manage, track, and report on their offers across multiple affiliate sites.

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

Results of Operations

      A summary of our financial results is as follows:

      Revenues for the first quarter of 2005 were $76.3 million, an increase of $8.3 million or 12.2% compared to $68.0 million for the first quarter of 2004. This increase was due to the acquisitions of Performics in June 2004 and SmartPath in March 2004 and organic growth from within our Data segment and email products and services. The increase in revenues was partially offset by the decline in revenues relating to our Ad Management division. Revenues associated with our Performics and SmartPath acquisitions were $7.5 million

in aggregate for the first quarter of 2005. Gross profit for the first quarter of 2005 was $53.0 million, an increase of $7.5 million or 16.5% compared to the first quarter of 2004. Gross margin improved by over 250 basis points to 69.4%. These increases were driven primarily by reduced costs in Ad Management, an increase in revenues in Marketing Automation, and the addition of the relatively high gross margin Performics and SmartPath businesses.

      Operating loss was $3.7 million for the first quarter of 2005 as compared to operating income of $2.6 million in the first quarter of 2004. Operating results declined due to an increase in operating expenses of $13.9 million, or 32.3%, partially offset by an increase in gross profit. The increase in operating expenses was primarily the result of the assumption of headcount associated with our acquisitions of Performics and SmartPath and the hiring of additional employees in our Data segment. These personnel-related increases primarily occurred in our sales and marketing and product development departments and were net of a $1.5 million reserve reversal recorded in the first quarter of 2004 relating to a prior acquisition. In addition, operating expenses included the accrual of retention payments and professional fees associated with the review of our strategic options totaling $3.0 million in aggregate.

      Net loss was $0.9 million, or $0.01 per diluted share, for the first quarter of 2005 as compared to net income of $7.7 million, or $0.05 per diluted share, in the first quarter of 2004. Net income in the first quarter of 2004 benefited from a distribution from MaxWorldwide of approximately $2.4 million in connection with its plan of liquidation and dissolution.

      We expect revenue to increase throughout 2005 as compared to 2004 as a result of our acquisition of Performics and organic growth. In addition, we expect operating income to increase throughout 2005 as compared to 2004 primarily due to anticipated operational improvements in our EMS and Data Management businesses.

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

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

      TechSolutions revenue for the first quarter of 2005 was $51.5 million, an increase of $6.2 million or 13.7% compared to $45.3 million for the first quarter of 2004. The increase in TechSolutions revenue was primarily attributable to the acquisitions of Performics and SmartPath, as well as organic growth from our email products and services. Ad Management revenue declined slightly to $31.7 million in the first quarter of 2005 compared to $33.3 million for the first quarter of 2004. For the first quarter of 2005, the increase in volumes for both our DART for Advertisers Service and our DART for Publishers Service did not outpace the decline in effective price for these products. The blended effective price of both products continued to decline as a result of aggressive client retention practices and sustained competitive pressure. Marketing Automation revenue was $13.5 million, an increase of $1.5 million or 12.5% compared to $12.0 million for the first quarter of 2004. This increase was primarily due to the acquisition of SmartPath and volume-driven growth in our email products and services. Performics revenues were $6.3 million for the first quarter of 2005 as we began recognizing revenue for this division in July 2004.

      TechSolutions gross profit was $38.4 million, or 74.5% of revenue for the first quarter of 2005, an increase of $6.5 million compared to $31.9 million or 70.4% of revenue for first quarter of 2004. Gross profits increased by 20.3% or by approximately 410 basis points as a percentage of revenue, primarily due to gross profits associated with our acquisitions of Performics and SmartPath and a decrease in cost of revenue. Performics and SmartPath gross profits were $5.8 million in the aggregate for the first quarter of 2005 and included intangible amortization relating to purchased technology of $1.0 million. Excluding cost of revenue relating to Performics and SmartPath of $1.6 million, cost of revenue decreased $1.9 million, which outweighed our net decline in revenue of $1.2 million. The reduction in cost of revenue was primarily due to a decline in depreciation expense of approximately $1.8 million associated with the continued efficient use of our existing hardware.

      TechSolutions operating income was $6.6 million for the first quarter of 2005, a decrease of $1.9 million or 21.9% compared to $8.5 million for the first quarter of 2004. This decline was the result of an increase in operating expenses of approximately $8.3 million, partially offset by the increase in gross profit. Personnel-related costs increased by approximately $7.7 million mainly in relation to the assumption of headcount associated with our acquisitions of Performics and SmartPath. This change in personnel-related costs was net of a $1.5 million reserve reversal recorded in the first quarter of 2004 relating to a prior acquisition. Amortization expense increased $1.0 million driven by the addition of acquired intangibles associated with our acquisitions of Performics and SmartPath. In addition, we incurred costs during the first quarter of 2005 in anticipation of our Ad Management agreement with AOL. The increase in operating expenses was partially offset by a decline in bad debt expense of $1.6 million. Bad debt expense benefited during the first quarter of 2005 from a legal settlement as well as recoveries of previously written-off receivables and continued improvement in our collection efforts.

      We expect TechSolutions revenue to increase throughout 2005 as compared to 2004 as a result of our acquisition of Performics and organic growth. In addition, we expect operating income to increase throughout 2005 as compared to 2004 primarily due to anticipated operational improvements in our EMS business.

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

      Data revenue for the first quarter of 2005 was $24.8 million, an increase of $2.1 million or 9.2% compared to $22.7 million for the first quarter of 2004. The increase in revenue was attributable to organic growth from our Data Management and Abacus divisions. Data Management revenues were $4.1 million for the first quarter of 2005 compared to $2.4 million for first quarter of 2004. Abacus revenues increased slightly to $20.7 million for the first quarter of 2005 compared to $20.4 million for the first quarter of 2004. The year over year increase in Abacus revenues was driven from continued growth in our U.S. Business-to-Business Alliance, which more than offset a slight year over year decline in revenue from both our U.S. and U.K. Business-to-Consumer Alliances.

      Data gross profit for the first quarter of 2005 was $14.6 million or 58.8% of revenues, an increase of $1.0 million or 7.5% compared to $13.6 million or 59.6% of revenues for the first quarter of 2004. The increase in gross profit was primarily due to revenue growth in our Data Management division. Gross margin for the first quarter of 2005 was negatively impacted primarily due to a higher percentage of the segment’s sales being generated by our lower margin Data Management division.

      Data operating income for the first quarter of 2005 was $1.5 million, a decrease of $1.0 million or 39.6% compared to $2.5 million for the first quarter of 2004. This change was due to an increase in operating expenses of $2.0 million partially offset by the increase in gross profit. Operating expenses included an increase in personnel-related costs of approximately $1.8 million from the hiring of additional employees to support both our Data Management division and our International Alliances.

      We anticipate Data revenue to increase throughout 2005 as compared to 2004 primarily as a result of new product offerings and customer acquisition in the Data Management division and growth from within our international businesses. We anticipate operating income will increase throughout 2005 compared to 2004 primarily due to operational improvements in our Data Management division.

Operating Expenses

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

      Sales and marketing expenses consist primarily of compensation and related benefits, sales commissions, general marketing costs, advertising, bad debt expense and other operating expenses associated with our sales and marketing departments. Sales and marketing expenses for the first quarter of 2005 were $29.1 million or

38.1% of revenue, an increase of $3.4 million or 13.3% compared to $25.7 million or 37.7% of revenue for the first quarter of 2004. The increase was primarily attributable to increases in personnel-related costs of $4.8 million partially offset by a decrease in bad debt expense of approximately $1.6 million. Personnel-related costs increased primarily due to the assumption of headcount as a result of our acquisitions of SmartPath and Performics, the hiring of additional employees in our Data business and costs associated with the accrual of retention payments relating to our review of strategic options. The change in personnel-related costs was net of a $1.5 million reserve reversal recorded in the first quarter of 2004 relating to a prior acquisition. Bad debt expense benefited during the first quarter of 2005 from a legal settlement as well as recoveries of previously written-off receivables and continued improvement in our collection efforts.

      We expect the absolute dollar amount of sales and marketing expenses to increase throughout 2005 compared to 2004 due to the hiring of additional employees, but to remain relatively flat as a percentage of revenues due to anticipated higher revenues.

      General and administrative expenses consist primarily of compensation and related benefits, professional services and other operating expenses associated with our executive, finance, human resources, legal, facilities and administrative departments. General and administrative expenses were $11.5 million or 15.1% of revenue for the first quarter of 2005, an increase of $3.4 million or 42.5% compared to $8.1 million or 11.9% of revenue for the first quarter of 2004. The increase was primarily due to an increase in professional fees of $1.4 million and the accrual of retention payments of approximately $1.1 million, both relating to our review of strategic options.

      We expect the absolute dollar amount of general and administrative expenses to increase throughout 2005 as compared to 2004 due to the previously discussed retention payments and professional fees. However, we expect these costs to remain flat as a percentage of revenues due to anticipated higher revenues.

      Product development expenses consist primarily of compensation and related benefits, consulting fees, and other operating expenses associated with our product development departments. Our product development departments perform research and development, enhance and maintain existing products, and provide quality assurance. Product development expenses were $14.5 million or 19.0% of revenue for the first quarter of 2005, an increase of $6.0 million or 70.8% compared to $8.5 million or 12.5% of revenue for the first quarter of 2004. The increase was primarily due to increases in personnel-related costs of $5.0 million that was primarily attributable to additional headcount assumed from our acquisitions of SmartPath and Performics.

      We believe that ongoing investment in product development is critical to the attainment of our strategic objectives. As such, we expect product development expenses to increase in absolute dollars throughout 2005 as compared to 2004 due to the allocation of additional resources, but to remain flat as a percentage of revenues due to anticipated higher revenues.

      Amortization expense consists of the amortization of customer relationships and a covenant not to compete. Amortization expense was $1.6 million and $0.6 million for the first quarter of 2005 and 2004, respectively. Amortization expense increased $1.0 million due to acquired intangible assets with respect to the acquisitions of SmartPath and Performics in March and June 2004, respectively

      We expect amortization of intangible assets to decrease throughout 2005 as compared to 2004 primarily due to intangible assets becoming fully amortized during the year.

Non-Operating Expenses and Income Taxes

      Equity in losses of affiliates was $0.1 million and $0.2 million for the first quarter of 2005 and 2004, respectively. In the first quarter of 2005, we recognized an equity loss of approximately $0.2 million from the equity investment in our Abacus Deutschland joint venture and an equity gain of approximately $0.1 million from our equity investment in DoubleClick Japan. In the first quarter of 2004, we recognized equity losses of $0.1 million from our equity investment in our Abacus Deutschland joint venture and $0.1 million from our equity investment in DoubleClick Japan.

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

      We did not recognize any gain or losses from affiliate distributions for the first quarter of 2005.

      Interest and other, net was $3.3 million and $3.5 million for the first quarter of 2005 and 2004, respectively. In the first quarter of 2005, interest income decreased by $0.1 million due to a decrease of average total cash, which includes cash and cash equivalents, investments in marketable securities and restricted cash, of $105.8 million compared to 2004. Average total cash decreased due to the purchases of our common stock and the acquisitions of Performics and SmartPath. The decline in average total cash was partially offset by an increase in average interest rates.

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

      The provision for income taxes recorded for the first quarter of 2005 of $0.4 million consists principally of income taxes of $0.3 million on the earnings of certain of our foreign subsidiaries and federal alternative minimum taxes of $0.1 million. The provision for income taxes recorded for the first quarter of 2004 of $0.6 million consists principally of income taxes of $0.4 million on the earnings of certain of our foreign subsidiaries, federal alternative minimum taxes of $0.1 million and state and local taxes of $0.1 million.

      In the first quarter of 2005, cash used in operating activities was $1.7 million, an increase of $5.7 million compared to the first quarter of 2004. The increase was primarily a result of stronger working capital and the absence of lease termination payments made in the first quarter of 2004, partially offset by a decline in net income. Lease termination payments were $7.6 million for first quarter of 2004 and related to our previous New York headquarters. Accrued expenses decreased by $3.8 million in first quarter of 2005 compared to $13.0 million in the first quarter of 2004. The decreases in payments associated with accrued expenses were primarily a result of additional restructuring activities in 2004.

      In 2005, we expect cash flow from operating activities to increase in 2005 as compared to 2004 due to the anticipated increase in revenue and net income.

      In the first quarter of 2005, cash used in investing activities was $4.8 million, a decrease of $32.6 million compared to the first quarter of 2004. Cash used in the first quarter of 2005 included a $6.6 million payment associated with our acquisition of Performics based on their attainment of certain 2004 revenue objectives and capital expenditures of $6.3 million. These cash flows were partially offset by net maturities of investments in marketable securities of $6.1 million and positive movements in restricted cash of $2.0 million. Cash used in the first quarter of 2004 included net purchases of investments in marketable securities of $22.9 million, the acquisition of SmartPath for $22.4 million and capital expenditures of $6.1 million. These cash flows were partially offset by positive movements in restricted cash of $12.1 million and the receipt of an affiliate distribution from MaxWorldwide of $2.4 million.

      For the remainder of 2005, capital expenditures are expected to be in excess of $20.0 million and primarily relate to the replacement of obsolete equipment to support anticipated volume expansion.

      In the first quarter of 2005, cash provided by financing activities was $1.3 million, an increase of $19.4 million compared to the first quarter of 2004. Cash provided by financing activities in the first quarter of 2005 related solely to the proceeds from the exercise of stock options and the issuance of common stock associated with our employee stock purchase program. Cash used in financing activities in the first quarter of 2004 included the purchase of approximately 1.9 million shares of our common stock for $20.4 million partially offset by proceeds of $2.4 million from the exercise of stock options and the issuance of common stock associated with our employee stock purchase program.

      For the remainder of 2005, cash flow from financing activities may be impacted based on the outcome of our review of strategic options and the definitive agreement for the Company to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity, which was signed on April 23, 2005.

      We do not have transactions, arrangements or relationships with “special purpose” entities, and we do not have any off-balance sheet debt.

      We maintain a 15.5% interest in DoubleClick Japan. On December 26, 2002, we sold 45,049 shares of common stock in DoubleClick Japan. As a result of this transaction, we account for our remaining 31,271 shares in DoubleClick Japan under the equity method of accounting. DoubleClick Japan continues to sell our suite of DART technology products as part of a long-term technology reseller agreement. Revenue recognized through services provided to DoubleClick Japan was approximately $0.8 million and $0.9 million for the first quarter of 2005 and 2004, respectively.

      In addition, we hold a 19.8% interest in MaxWorldwide. This interest was acquired in July 2002 as a result of the sale of our North American Media business. In 2005 and 2004, we did not provide any services to MaxWorldwide as a result of the sale of its MaxOnline division and its plan of liquidation and dissolution.

      In 2004, we sold our 15% interest in AdLINK to United Internet AG, the majority shareholder of AdLINK. Prior to the sale, we recognized revenue of approximately $0.5 million during first quarter of 2004 relating to services provided to AdLINK.

          Interest Rate Risk

      The primary objective of our investment activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and marketable securities in a variety of government and corporate debt obligations and money market funds. As of March 31, 2005, our investments in marketable securities had a weighted average time to maturity of 231 days.

      The following table presents the amounts of our financial instruments that are subject to interest rate risk by expected maturity and average interest rates as of March 31, 2005:

      As of March 31, 2005, the current portion of restricted cash was $1.6 million and the average interest rate associated with this cash was 2.2% and the non-current portion of restricted cash was $11.7 million with an average interest rate of 1.9%. Restricted cash primarily represents amounts placed in escrow relating to funds to cover office lease security deposits and our automated clearinghouse payment function.

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

      The Zero Coupon Convertible Subordinated Notes due 2023 contain an embedded derivative, the value of which as of March 31, 2005 has been determined to be immaterial to our consolidated financial position. For financial accounting purposes, the ability of the holder to convert upon the satisfaction of a trading price condition constitutes an embedded derivative. Any changes in its value will be reflected in our future income statements, in accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.” As of March 31, 2005, we did not hold any other derivative financial instruments.

          Foreign Currency Risk

      We transact business in various foreign countries and are thus subject to exposure from adverse movements in foreign currency exchange rates. This exposure is primarily related to revenue and operating

expenses denominated in European and Asian currencies, as well as cash balances held in currencies other than our functional currency and the functional currency of our subsidiaries. For the first quarter of 2005 and 2004, our international revenues were approximately $13.2 million and 14.2 million, respectively. Revenues for the first quarter of 2005 and 2004 included beneficial foreign currency movements of approximately $0.5 million and $1.9 million, respectively, primarily due to the strength of the Euro and British pound compared to the U.S. dollar. The effect of foreign exchange rate fluctuations on operations resulted in a gain of $0.7 million for each of the first quarters of 2005 and 2004.

      To date we have not used financial instruments to hedge operating activities denominated in foreign currencies. We assess the need to utilize financial instruments to hedge currency exposures on an ongoing basis. As of March 31, 2005 and December 31, 2004 we had $50.6 million and $53.9 million, respectively, in cash and cash equivalents denominated in foreign currencies.

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

RISK FACTORS

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

RISKS RELATING TO OUR COMPANY AND OUR BUSINESS

Failure to complete the recently announced acquisition of DoubleClick could negatively impact the market price of our common stock and our future business and operations.

      On October 31, 2004, we announced that we had retained Lazard Frères & Co. to explore strategic options for our business in order to achieve greater shareholder value, including a sale of part or all of our businesses, recapitalization, extraordinary dividend, share repurchase or a spin-off. On April 23, 2005, we signed a definitive agreement to be acquired by an affiliate of the private equity investment firms of Hellman & Friedman LLC and JMI Equity. If this transaction is not completed for any reason, we will be subject to a number of material risks, including:

      If this proposed transaction is not completed for any reason, including without limitation the inability of the acquiror to obtain the necessary debt financing, we may not be able to identify alternative strategic options that are worth pursuing. Prior to the closing of this proposed transaction, or, if this proposed transaction is not consummated, prior to the identification and closing of an alternative transaction, we will be subject to other uncertainties and risks, including:

      During the pendency of this proposed transaction, we may not be able to enter into a merger or business combination with another party at a favorable price because of restrictions in the definitive merger agreement. Covenants in that agreement also impede our ability to make acquisitions or complete other transactions that are not in the ordinary course of business but that could be favorable to us and our stockholders. As a result, if this proposed transaction is not consummated, we may be at a disadvantage to our competitors.

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

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

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

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

      Prior to 2003, we incurred net losses each year since inception, including net losses of $117.9 million and $265.8 million for the years ended December 31, 2002 and 2001, respectively. We incurred a net loss of approximately $0.9 million for the quarter ended March 31, 2005 and as of March 31, 2005 our accumulated deficit was $612.9 million. Prior to 2003, we did not achieve profitability on an annual basis and we may incur operating losses at times in the future. We expect to continue to incur significant operating and capital expenditures, which may include obligations for facilities that currently constitute excess or idle facilities. Periodically, we evaluate the expenses likely to be incurred for these facilities, and where appropriate, have taken restructuring charges with respect to these expenses. We cannot assure you that there will not be additional restructuring charges recognized with respect to our excess or idle facilities, in particular with respect to our facility in London, England where the office space is currently sublet for only a portion of the remaining lease term. As a result of our expenditures, we will need to generate significant revenue to achieve profitability. Even if we do continue to achieve profitability, we cannot assure you that we can sustain or increase profitability on a quarterly or annual basis in the future. If revenue does not meet our expectations, or if operating expenses exceed what we anticipate or cannot be reduced accordingly, our business, results of operations and financial condition will be materially and adversely affected.

A decrease in expenditures by marketers, Web publishers and advertising agencies or a downturn in the economy could cause our revenues to decline significantly in any given period.

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

      The number of ad impressions and emails delivered by DoubleClick TechSolutions has, at times in the past, declined and may in the future decline or fail to grow, which would adversely affect our revenues. In addition, the prices that DoubleClick TechSolutions can charge for its Ad Management products and services has declined in recent years, and if these declines continue, it may adversely affect our revenues. In addition, a decline in the economic prospects of marketers or the economy in general would also adversely impact the revenue outlook for our Marketing Automation business and our search engine marketing and affiliate marketing businesses. DoubleClick Data, which provides products and services to direct marketers, may face similar pressures. Some direct marketers may respond to economic downturns by reducing the number of

catalogs mailed, thereby possibly reducing the demand for DoubleClick Data’s services, or by seeking price reductions for our products and services. If direct marketing activities fail to grow or decline, our revenues could be adversely affected.

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

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

      Some of our TechSolutions and Data technologies reside in our data centers in multiple locations in the United States and abroad. Continued and uninterrupted performance of our technology is critical to our success. Customers may become dissatisfied by any system failure that interrupts our ability to provide our services to them, including failures affecting our ability to deliver advertisements without significant delay to the viewer or our ability to deliver a customer’s online marketing campaign. Sustained or repeated system failures would reduce the attractiveness of our products and services to our customers and could result in contract terminations or fee rebates or credits, thereby reducing revenue, or could result in damages from claims or litigation. Slower response time or system failures may also result from straining the capacity of our technology due to an increase in the volume of advertising or emails delivered through our servers. To the extent that we do not effectively address any capacity constraints or system failures, our business, results of operations and financial condition could be materially and adversely affected.

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

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

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

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

      In recent years, we have had to respond to significant changes in our industry. As a result, we have experienced industry shifts, continuing evolution of product and service offerings and other changes that have increased the complexity of our business and placed considerable demands on our managerial, operational and

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

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

      A significant part of our business model involves generating revenue by providing marketing technology and data products and services to marketers, Web publishers and advertising agencies. The long term profit potential for our business model has not yet been proven. The profitability of our business model is subject to external and internal factors and our revenue outlook is sensitive to downturns in the economy, including declines in advertising and marketing budgets. The profit potential of our business model is also subject to the acceptance of our products and services by marketers, Web publishers and advertising agencies. Intensive marketing and sales efforts may be necessary to educate prospective customers regarding the uses and benefits of, and to generate demand for, our products and services. Enterprises may be reluctant or slow to adopt a new approach that may replace existing techniques, or may feel that our offerings fall short of their needs. If these outcomes occur, it could have an adverse effect on the profit potential of our business model.

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

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

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

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

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

      Some of our existing and potential competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than do we. These factors could allow them to compete more effectively than we can, including devoting greater resources to the development, promotion and sale of their products and services, engaging in more extensive research and development, undertaking more far-reaching marketing campaigns, adopting more aggressive pricing policies and making more attractive offers to existing and potential employees, strategic partners, marketers, Web publishers and advertising agencies.

      We cannot assure you that our competitors will not develop products or services that are equal or superior to our products and services or that achieve greater acceptance than our products and services. In addition, current and potential competitors have or may merge or have established or may establish cooperative relationships among themselves or with third parties to increase the ability of their products or services to address the needs of our prospective marketer, Web publisher and advertising agency customers. As a result, it is possible that new competitors may emerge and rapidly acquire significant market share. We also face competition from point solution providers that may offer expertise in a particular segment or solutions within a specialized market, including providers of online advertising and email products and services. Increased competition may result in price reductions, reduced gross profits and loss of market share. We cannot assure you that we will be able to compete successfully or that competitive pressures will not materially and adversely affect our business, results of operations or financial condition.

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

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

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

      We may not be able to adjust spending quickly enough to offset any unexpected revenue shortfall. Our expenses primarily include upgrading and enhancing our ad management and email delivery technology, expanding our product and service offerings, marketing and supporting our products and services and

supporting our sales and marketing operations. If we have a shortfall in revenue in relation to our expenses, or if our expenses exceed our expectations, then our business, results of operations and financial condition could be materially and adversely affected.

Seasonal trends may cause our operating results to fluctuate.

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

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

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

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

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

      Our business has expanded in part as a result of acquisitions or investments in other companies, including our acquisitions of SmartPath and Performics. We have recorded goodwill in connection with a number of our

acquired businesses, including MessageMedia, FloNetwork, SmartPath and Performics. We have in the past recognized impairment charges with respect to the goodwill of some acquired businesses as a result of significantly lower-than-expected revenues generated with respect to acquired businesses and considerably reduced estimates of future performance. If market conditions require, we may in the future record additional impairments in the value of our acquired businesses.

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

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

We depend on third-party Internet, telecommunications and technology providers for key aspects in the provision of our products and services and any failure or interruption in the products and services that third parties provide could disrupt our business.

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

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

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

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

      Our future success depends to a significant extent on the continued service of our key technical, sales and senior management personnel. We do not have employment agreements with these executives and do not maintain key person life insurance on any of these executives. The loss of the services of one or more of our key employees could significantly delay or prevent the achievement of our product development and other business objectives and could harm our business. Our future success also depends on our continuing ability to attract, retain and motivate highly skilled employees for key positions. While we entered into retention agreements with our key employees in late 2004, there can be no assurances that the retention agreements will provide adequate incentives to retain these employees. There is competition for qualified employees in our industry. We may not be able to retain our key employees or attract, assimilate or retain other highly qualified employees in the future, including as a result of the proposed acquisition of DoubleClick.

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

Changes to financial accounting standards and new exchange rules could make it more expensive to issue stock options to employees, which will increase our compensation costs and may cause us to change our business practices.

      We prepare our financial statements to conform with GAAP in the United States of America. These accounting principles are subject to interpretation by the Public Company Accounting Oversight Board, the SEC and various other bodies. A change in those policies could have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced. For example, we have used stock options as a component of our employee compensation packages. We believe that stock options directly motivate our employees to maximize long-term stockholder value and, through the use of vesting, encourage employees to remain with us. In December 2004, the Financial Accounting Standards Board issued a final standard that requires us to record a charge to earnings for the fair value of employee stock option grants. This standard will be effective for annual periods beginning after June 15, 2005. We could adopt the standard in one of two ways — the modified prospective transition method or the modified retrospective transition method, and we have not concluded how we will adopt the new standard. In addition, regulations implemented by The Nasdaq National Market generally require stockholder approval for all stock option plans, which could make it more difficult or expensive for us to grant stock options to employees. We will, as a result of these changes, incur increased compensation costs, which could be material and we may change our equity compensation strategy or find it difficult to attract, retain and motivate employees.

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

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

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

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

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

      In September 1999, the U.S. Patent and Trademark Office issued to us a patent that covers our DART ad serving and ad management technology. We are currently seeking reissue of this patent, which would limit the scope of the existing patent, and this reissue proceeding is pending before the U.S. Patent and Trademark Office. The patent examiner has rejected our reissue application and we are currently appealing this rejection. We cannot assure you that this patent will be reissued. If our patent is not reissued it could have a material and adverse effect on our business, financial condition and results of operations. We own other patents, and have patent applications pending for some of our other technology. We cannot assure you that the patent applications that we have filed in the United States and internationally will be issued or that patents issued or acquired by us now or in the future will be valid and enforceable or provide us with any meaningful protection.

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

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

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

      Infringement claims may be asserted against us, which could adversely affect our reputation and the value of our intellectual property rights. From time to time we have been, and we expect to continue to be, subject to claims or notices in the ordinary course of our business, including assertions of alleged infringement of the patents, trademarks and other intellectual property rights of third parties by us or our customers. We do not conduct exhaustive patent searches to determine whether our technology infringes patents held by others. In addition, the protection of proprietary rights in Internet-related industries is inherently uncertain due to the rapidly evolving technological environment. As such, there may be numerous patent applications pending, many of which are confidential during a large part of their prosecution, that provide for technologies similar to ours.

      Third party infringement claims and any resultant litigation against us or our technology partners or providers, should it occur, could subject us to significant liability for damages, restrict us from using our or their technology or operating our business generally, or require changes to be made to our technology. Even if we prevail, litigation is time consuming and expensive to defend and would result in the diversion of management’s time and attention.

      Claims from third parties may also result in limitations on our ability to use the intellectual property subject to these claims unless we are able to enter into royalty, licensing or other similar agreements with the third parties asserting these claims. Such agreements, if required, may not be available on terms acceptable to us, or at all. If we are unable to enter into these types of agreements, we would be required to either cease using the subject product or change the technology underlying the applicable product. If a successful claim of infringement is brought against us and we fail to develop non-infringing technology as an alternative or to license the infringed or similar technology on a timely and cost effective basis, it could materially adversely affect our business, financial condition and results of operations.

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

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

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

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

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

      We also may be held liable to third parties for the content in the advertising and emails we deliver on behalf of our customers. We may be held liable to third parties for content in the advertising we serve if the music, artwork, text or other content involved violates the copyright, trademark or other intellectual property rights of such third parties or if the content is defamatory, deceptive or otherwise violates applicable laws or regulations. In addition, we may be held liable if our online products and services are manipulated or used by our customers or other third parties in a manner that is deceptive or violates applicable laws or regulations. Any claims or counterclaims could be time consuming, result in costly litigation or governmental inquiries, harm our reputation or divert management’s attention.

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

      We have operations in a number of countries and have limited experience in developing localized versions of our products and services and in marketing, selling and distributing our products and services internationally. We sell most of our TechSolutions products and services through our directly and indirectly owned subsidiaries primarily located in Australia, Canada, China, France, Germany, Hong Kong, Ireland, Spain and the United Kingdom. In Japan, we sell our technology products and services through DoubleClick Japan, of

which we own approximately 15%. In addition, we develop and provide support for some of our technology products and services in Canada, Europe and Asia. We also operate the DoubleClick Data business in the United Kingdom, Japan, Australia, Canada, France and, through a joint venture, in Germany.

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

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

Our customers could experience unfavorable business conditions that could adversely affect our business.

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

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

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

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

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

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

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

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

      As of March 31, 2005, we had 126,077,976 shares of common stock outstanding, excluding 19,953,674 shares subject to options outstanding as of such date under our stock option plans that are exercisable at prices ranging from $0.01 to $1,134.80 per share. We cannot predict the effect, if any, that future sales of common stock or the availability of shares of common stock for future sale will have on the market price of our common stock prevailing from time to time. Sales of substantial amounts of common stock, including shares issued upon the exercise of stock options, or the perception that such sales could occur, may materially reduce the market value for our common stock.

Risks Related to Our Industry

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

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

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

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

      In addition, the U.S. and many foreign countries have adopted laws that restrict the transmission of unsolicited commercial email. U.S. law requires senders of commercial electronic mail messages to, among other things, identify their messages as advertisements or solicitations and provide recipients a mechanism to decline (opt out of) future commercial email from the sender. The Federal Trade Commission is authorized to regulate commercial email and may impose additional measures such as labeling requirements or a national “Do Not E-Mail” registry. The Federal Communications Commission is authorized to regulate commercial messages sent specifically to wireless devices and has adopted rules requiring senders to obtain the express prior authorization of the addressee before sending such messages. Other countries, including the countries of the European Union, either require, or may in the future require, senders to obtain recipients’ direct

affirmative consent before sending commercial email messages. Although our email delivery is consent-based, we may be subjected to increased liabilities and may be required to change our current email practices in ways that make email communications less effective or more costly.

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

      Future laws and regulations could also have a material adverse effect on our business. In particular, new consumer protection requirements could impose significant, unanticipated compliance costs and could make it inefficient or infeasible to operate certain parts of our business. Governments in the U.S. and other countries are considering new limitations and/or requirements with respect to the collection, use, storage and disclosure of personal information for marketing purposes. The U.S. Congress and several U.S. states are presently considering legislation that, if enacted into law, could impose substantial restrictions, including consumer notice and consent requirements, on our use of ad serving cookies and other online tracking technologies and our client’s use of marketing data. Some states have recently enacted laws intended to promote physical, technical and administrative measures to protect the security of personally-identifiable information. The U.S. Congress and a number of other states are considering such legislation, which may include, for example, specific data security requirements, new restrictions on disclosures of personal information, and/or mandatory notification of persons whose information is improperly accessed or disclosed. Any legislation enacted or regulation issued could dampen the growth and acceptance of our industry in general and of our offerings in particular and could have a material adverse effect on our business, financial condition and results of operations. We are unable to predict whether any particular proposal will pass, or the nature of the limitations that may be imposed.

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

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

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

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

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

effectiveness of email marketing may decrease as a result of increased consumer resistance to email marketing in general.

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

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

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

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

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

      Because many online marketing technology and data products and services remain relatively new disciplines, there is often no generally accepted methods or tools for measuring the efficacy of online marketing and advertising as there are for advertising in television, radio, cable and print. Therefore, many advertisers may be reluctant to spend sizable portions of their budget on online marketing and advertising until there exist more widely accepted methods and tools that measure the efficacy of their campaigns. In addition, direct marketers are often unable to accurately measure campaign performance across all response channels or identify which of their marketing methodologies are driving customers to make purchases. Therefore, our Data customers may not be able to assess the effectiveness of our products and services and as a result, we could lose customers, fail to attract new customers or existing customer could reduce their use of our Data products and services.

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

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

      The future success of DoubleClick Data is dependent in large part on the continued demand for our services from the direct marketing industry, including the catalog industry, as well as the continued willingness of catalog operators to contribute their data to us. Most of our Abacus customers are large consumer merchandise catalog operators in the United States, with a number of operators in the United Kingdom. A

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

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

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

      DoubleClick’s management, with the participation of DoubleClick’s chief executive officer and chief financial officer, evaluated the effectiveness of DoubleClick’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2005. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, DoubleClick’s chief executive officer and chief financial officer concluded that, as of March 31, 2005, DoubleClick’s disclosure controls and procedures were effective at the reasonable assurance level.

      No change in DoubleClick’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended March 31, 2005 that has materially affected, or is reasonably likely to materially affect, DoubleClick’s internal control over financial reporting.

PART II: OTHER INFORMATION

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

      In June 2003, our Board of Directors conditionally approved a proposed partial settlement with the plaintiffs in this matter. In June 2004, an agreement of settlement was submitted to the court for preliminary approval. The court granted the preliminary approval motion on February 15, 2005, subject to certain modifications. If the parties are able to agree upon the required modifications, and such modifications are acceptable to the court, notice will be given to all class members of the settlement, a “fairness” hearing will be held and if the court determines that the settlement is fair to the class members, the settlement will be approved. There can be no assurance that this proposed settlement will be approved and implemented in its current form, or at all. Due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of the litigation. An unfavorable outcome in litigation could materially and adversely affect our business, financial condition and results of operations.

      We are defending a class action lawsuit filed in September 2003 in the Court of Common Pleas in Allegheny County, Pennsylvania alleging, among other things, deceptive business practices, fraud, misrepresentation, invasion of privacy and right of association relating to allegedly deceptive content of online advertisements that plaintiffs assert we delivered to consumers. The action seeks, among other things, injunctive relief, compensatory and punitive damages and attorneys’ fees and costs. We believe the claims in this case are without merit and intend to defend this action vigorously. However, due to the inherent uncertainties of litigation, we cannot accurately predict the ultimate outcome of this litigation. An unfavorable outcome in litigation could materially and adversely affect our business, financial condition and results of operations.

      On April 27, 2005, a purported class action lawsuit related to the merger was filed against us, each of our directors, certain of our executive officers and Hellman & Friedman, LLC and JMI Equity in the Supreme Court of the State of New York for the County of New York. The lawsuit, Adele Brody v. Hellman & Friedman LLC et al, alleges, among other things, that the merger consideration to be paid to our stockholders in the merger is unfair and inadequate. In addition, the complaint alleges that our directors violated their fiduciary duties by, among other things, failing to take all reasonable steps to assure the maximization of stockholder value, including the implementation of a bidding mechanism to foster a fair auction of our company to the highest bidder or the exploration of strategic alternatives that will return greater or equivalent short-term value to our stockholders. The complaint seeks, among other relief, certification of the lawsuit as a class action, a declaration that the merger is unfair, unjust and inequitable to our stockholders, an injunction preventing completion of the merger at a price that is not fair and equitable, compensatory damages to the class, attorneys’ fees and expenses, along with such other relief as the court might find just and proper. We believe this lawsuit is without merit and plan to defend it vigorously.

SIGNATURE

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

Date: May 10, 2005

EXHIBIT INDEX