Tumbleweed Communications Corp. Reports Q1 2000 Financial Results

REDWOOD CITY, CA - April 19, 2000 - Tumbleweed® Communications Corp. (Nasdaq:TMWD), a leading provider of secure Internet communications services, today reported results for the first quarter ended March 31, 2000.

Total revenue for the quarter was $6.61 million, up from fourth quarter 1999 revenue of $4.54 million, and first quarter 1999 revenue of $3.27 million (excluding revenue of $638,000 from discontinued products). Transaction fee revenue grew to $730,000, up from $457,000 in the fourth quarter of 1999 and from $3,000 in the first quarter of 1999.

Excluding merger related expenses and the amortization of stock compensation expense, Tumbleweed reported a net loss of $6.75 million, or $0.26 per basic share. The net loss for the first quarter, including acquisition related costs and the amortization of stock compensation expense, was $18.62 million or $0.73 per basic share.

"We had an excellent quarter. We acquired over one hundred new customers, extending our leadership position in secure messaging," said Jeffrey C. Smith, chairman, president and CEO of Tumbleweed Communications Corp. "In addition, our transaction based revenue - the per message fee that reflects the usage of our products - remains the fastest growing source of revenue.

"We more than doubled the size of our company, growing from 118 people to 258 during the quarter, yet we reduced our operating loss by over one million dollars as compared to the previous quarter. We continue to make steady progress towards profitability, which we demonstrated by once again growing our operating margins quarter over quarter. In other words, we are scaling the business more rapidly than anticipated, but burning less cash to do so."

Tumbleweed's customer base has grown to include leaders in insurance, investment banking, commercial banking, online brokerage, healthcare, pharmaceutical, law and government. In addition, Tumbleweed expanded geographically. The company opened offices in Amsterdam, Chicago, Dallas, Stockholm, Sydney and Washington D.C. during the first quarter.

Tumbleweed recently launched Tumbleweed Integrated Messaging Exchange™ (IME™) 4.0, the fourth major release of Tumbleweed's products and services that leverage the Internet and existing email to create a secure online communications channel between e-businesses and their customers and partners. Tumbleweed also launched Tumbleweed Messaging Management System (MMS)™, a set of email management products and services that enables businesses to protect valuable corporate information on the Internet.

During the first quarter, Tumbleweed defined and sold combined Tumbleweed IME/MMS security and management communications solutions. Travelers Property Casualty became the first significant customer to purchase the combined Tumbleweed solution.

"We're pleased to demonstrate real synergies between our MMS product line and our IME product line, six short weeks after closing our acquisition of WorldTalk," said Smith. "The MMS product line combined with our IME product line allows Tumbleweed to advance our objective of growing the amount of business-critical email traffic under management."

The financial results include the January 31, 2000 acquisition of Worldtalk Corporation, accounted for under the pooling of interests method. All consolidated financial statements of Tumbleweed have been restated to include the results and balances of Worldtalk for all periods presented. One time costs associated with the acquisition of Worldtalk and recorded as merger related expenses in the first quarter totaled $10.80 million.

About Tumbleweed Communications Corp.
Tumbleweed is a leading provider of solutions for managing secure communication and collaboration to enable the business Internet. Tumbleweed's robust policy-based framework empowers organizations to safely share and protect critical information, increase customer loyalty and privacy and dramatically reduce costs. Tumbleweed is trusted by 1,000 blue-chip customers including American Express, Chevron, Datek Online, the European Union's Joint Research Council, First Union Wachovia, John Deere, Merrill Lynch, Nike, Northern Trust, NTT, Salomon Smith Barney, Travelers and US Food and Drug Administration. One hundred of the Fortune 500 are Tumbleweed customers. Tumbleweed Communications was founded in 1993 and is headquartered in Redwood City, Calif., with offices around the world.

Except for the historical information contained herein, the matters discussed in this press release may constitute forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those projected, particularly with respect to the security features of Tumbleweed's products and the activities of any third party. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions. For further cautions about the risks of investing in Tumbleweed, we refer you to the documents Tumbleweed files from time to time with the Securities and Exchange Commission, particularly Tumbleweed's Form 10-K filed March 30, 2001 and Form 10-Q filed November 13, 2001. Tumbleweed assumes no obligation to update information contained in this press release.