Interwoven Announces Third Quarter Financial Results

Sunnyvale, CA – 26 October 2006

Revenues of $50.9 Million; Non-GAAP Profit of $0.12 per Share; 68 New Customers

Interwoven, Inc. (Nasdaq: IWOV), provider of Enterprise Content Management (ECM) solutions for business, today announced financial results for the three and nine months ended September 30, 2006.

Interwoven reported total revenues of $50.9 million for the third quarter of 2006, an increase of 16% from total revenues of $43.9 million for the third quarter last year. Net income for the third quarter of 2006, calculated in accordance with generally accepted accounting principles, was $1.8 million, or $0.04 per share, compared to net loss of $184,000, or roughly break even on a per share basis, for the same period last year. On a non-GAAP basis, Interwoven reported a net income of $5.2 million for the third quarter of 2006, or $0.12 per share, compared to non-GAAP net income of $2.9 million, or $0.07 per share, for the third quarter last year. Non-GAAP results exclude restructuring and excess facilities charges, stock-based compensation charges, amortization of intangible assets, and the related tax impact of these adjustments and, in the case of non-GAAP per share results, include the dilutive impact of common stock options.

For the nine months ended September 30, 2006, Interwoven reported total revenues of $146.4 million, an increase of 15% from total revenues of $127.5 million for same period last year. Net income for the nine months ended September 30, 2006, calculated in accordance with generally accepted accounting principles, was $2.1 million, or $0.05 per share, compared to a net loss of $499,000, or $0.01 per share, for same period last year. On a non-GAAP basis, Interwoven reported net income of $13.1 million for the nine months ended September 30, 2006, or $0.30 per share, compared to non-GAAP net income of $7.9 million, or $0.19 per share, for the same period last year. Non-GAAP results exclude restructuring and excess facilities charges, expenses associated with the retirement of the company’s former chief executive officer recorded in the first quarter of 2006, stock-based compensation charges, amortization of intangible assets, and the related tax impact of these adjustments and, in the case of non-GAAP per share results, include the dilutive impact of common stock options.

Reconciliations of net income (loss) and net income (loss) per share calculated in accordance with generally accepted accounting principles and non-GAAP net income and non-GAAP net income per share are provided in the tables immediately following the consolidated statements of operations. Additional information about the company’s non-GAAP financial measures can be found under the caption “Non-GAAP Financial Information” below.

“We are extremely pleased with our excellent financial results in Q3,” said Interwoven’s president Max Carnecchia. “Our revenues for the third quarter increased 16% over last year and, so far for the first nine months of 2006, our revenues have increased 15% over last year. Our strategy is working, our team is executing and we are clearly focused on increasing market share.”

Customer Acquisition
Interwoven continued its strong global customer momentum in the third quarter by adding 68 new customers. As a result, Interwoven now has nearly 3,700 customers worldwide.

New customers that selected Interwoven in the third quarter include Advanta Bank, Analog Devices, ATK Thiokol, Fortis Investments, Hermes Precisa (HPA), Hunton & Williams, M|C Communications, Merchant & Gould, Mitsui & Co. USA, Prudential Insurance Co., Shin Kong Bank, TD Securities, Welch Allyn, and many others.

In the third quarter, Interwoven also received orders from existing customers, including: adidas, Amazon.com, Applied Biosystems, Avon, Astellas Pharma, Barclays, Bird & Bird, Blue Cross Blue Shield, Brodies, Campbell’s Soup, Canon, Cartoon Network, Ceridian, Chunghwa Telecom, Citibank, Deloitte Consulting, Elsevier Limited, Fujitsu, General Motors, Harrah’s, Howard Hughes Medical Institute, Kohler Company, Library of Congress, MasterCard, Mazda, Mitsubishi Securities, NASD, NEC, Novo Nordisk, OCBC, The Principal Life Insurance Co., Samsonite, Smithsonian Institution, Visa International, White & Case, and many others.

In the quarter, Interwoven continued its record of delivering software products and services that enable enterprises to provide richer customer experiences across multiple touchpoints. As an example, Analog Devices, a leader in high performance signal processing solutions, replaced its existing Web content management software with Interwoven’s solution. Analog Devices tested Interwoven against its existing software and selected Interwoven because its test results indicated that Interwoven’s solution is more scalable, more flexible, more open, reduces the cost of ownership, and provides unique functionality that will enable Analog Devices to provide superior support to its customers worldwide.

M|C Communications, a premier medical education and event management company, selected Interwoven as a foundation for its future business growth. For a major expansion of its online and offline business, M|C Communications needed to enable teams of physicians, educators, and medical reviewers from several institutions to collaborate to create complex educational materials for its customers, to be delivered with marketing information through print and online channels. Comparative tests and evaluations of software from several vendors indicated to M|C Communications that only Interwoven offered a comprehensive solution that met its needs for both collaborative document management and web content management.

Interwoven secured key wins in the professional services market, with sales to law firms, accounting firms, and corporate legal departments, including our first law firm in India, J. Sagar Associates, and a major firm in Singapore, Allen & Gledhill. Of several new competitive conversions this quarter, one of note was Hunton & Williams, one of the largest law firms in North America, with over 800 attorneys. In addition to the dozens of new law firms added in the quarter, Interwoven also added several accounting firms as new customers, bringing the total to over 60 accounting firm customers worldwide. The company also completed sales to major corporate departments, including Prudential Insurance. Prudential’s corporate legal and compliance departments purchased Interwoven’s collaborative document management and record management offerings to enable the secure creation, management, retention and ultimate disposal of its corporate documents.

In the financial services market, Interwoven continued to add some of the largest global financial institutions as customers in the third quarter. One example was Grupo Santander, the world’s tenth-largest financial group by market value, headquartered in Madrid, Spain. Santander purchased Interwoven’s OTC Derivatives Solution to replace its internally-developed systems to automate over-the-counter derivatives confirmation. This win is a classic example of the value Interwoven’s solutions provide to its financial services customers, enabling increased internal efficiencies while mitigating compliance risks.

Solution and Product Leadership

During the third quarter, Interwoven delivered enhancements to several of its products:
• Interwoven TeamSite, the industry’s top product for Web content management, was upgraded to make it easier to execute, manage, and control complex projects that span multiple Websites and multiple delivery channels. Enhancements included improved support for Linux, a next-generation drag-and-drop builder to create and manage workflows to automate the business processes that drive Web publishing, single sign-on enhancements, and FormsPublisher improvements that make it even faster for business users to quickly add and change Web content. These enhancements reduce the total cost of ownership and accelerate time to market.

• A new Adobe InDesign plug-in enables both Mac and PC users to use Interwoven MediaBin’s power from inside the Adobe product, so InDesign users can place, manipulate, extract, and share images, publications, and media, strengthening brand consistency, accelerating campaigns, and reducing marketing costs.
• Interwoven also delivered enhancements to the Interwoven Composite Application Provisioning Solution, Interwoven WorkSite, and Interwoven MetaTagger.

Company Developments
• Max Carnecchia Appointed President – The Interwoven board of directors appointed Max Carnecchia as Interwoven’s president. Mr. Carnecchia had been serving as Interwoven’s interim president since early this year. Prior to his appointment as interim president, Mr. Carnecchia served as Interwoven’s senior vice president of worldwide sales. Prior to joining Interwoven in 2001, Mr. Carnecchia held positions with several companies, among them IBM, Intel, and Group 1 Software.

• Ben Kiker Appointed SVP and CMO – Ben Kiker joined Interwoven as its senior vice president and chief marketing officer. Previously, Mr. Kiker was vice president of Americas marketing for Siebel Systems. Prior to Seibel, Mr. Kiker was the chief marketing officer for Onyx Software, where he led all marketing functions, including product management, corporate marketing, and channel support. He also held senior marketing positions for Clarify, Vantive, Octel, and Aspect Communications.

• Interwoven GearUp ’06 Europe Conference – Earlier this month, hundreds of Interwoven customers and partners joined industry experts and media at Interwoven’s GearUp ’06 Europe conference in London, England. The filled-to-capacity event, with more than twice as many customers attending as last year, enabled Interwoven users to share information and best practices. Dozens of presentations were given by Interwoven and its customers, including AXA Group, DLA Piper, Eurocontrol, Garrigues, HBOS, Hilton Hotels, HSBC, SJ Berwin, SKY Italia, Telenor, Tesco, and more. Partners sponsoring with Interwoven included Microsoft, Sun Microsystems, Avenue A| Razorfish, Tikit, LexisNexis, eCopy, Morningstar Systems, SDL International, and others.

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