Exchange Applications Inc. –

BOSTON – Exchange Applications Inc., a provider of open enterprise customer optimization software and solutions, held an initial public offering December 8. The company offered 3 million shares at $11 each, above its $8 to $10 filing range.

The offering, underwritten by BT Alex. Brown, Hambrecht & Quist and Adam Harkness & Hill Inc., left 9.7 million shares outstanding.

Insight Venture Associates owns a 46% stake in the company. Cyrk Inc., the only selling shareholder, unloading one million shares, and Grant & Partners were other venture backers.

Exchange Application’s continuous customer management solution, including its VALEX software and related consulting and integration services, enables businesses to profitably retain and expand existing customer relationships. The software also helps to obtain new customers by analyzing databases and identifying growth opportunities; planning and prioritizing investments in high priority customers; creating targeted, real-time marketing campaigns; selecting the most effective channels of customer communications, such as direct mail or the Internet; and evaluating the impact of campaigns on profitability. Customers include Bell Atlantic, Federal Express and Fleet Bank.

The net proceeds from the offering, estimated to be approximately $19.1 million, will be used for general corporate purposes.

The company has never been profitable, losing $1.2 million in the first nine months of 1998 and $2.6 million in 1997.

Ramanan Raghavendran and Jeffrey Horing, managing members of Insight Venture Associates, joined the company’s board of directors in March 1997.

Exchange Applications – Selected Finanicals

(in thousands, except per share data)

Year Ended December 31, Nine Months Ended September 30,

1995 1996 1997 1997 1998

Total revenue

1,693 6,034 12,669 8,149 17,166

Net loss

-554 -1,606 -2,613 -1,750 -1,164

Net loss per share* -0.48 -0.16

*Pro forma