VIRAGE ANNOUNCES RECORD FOURTH QUARTER REVENUES UP 116% YEAR-TO-YEAR

Full Fiscal Year Revenues More Than Double to $11.4 Million

33 New Customers Include Anatel, Cisco, The Economist, NEC, NHL, Schlumberger

SAN MATEO, Calif - April 24, 2001 - Virage, Inc. [Nasdaq: VRGE], a leading provider of software and services that enable video for strategic online applications, today reported record revenues for its fourth fiscal quarter and fiscal year ended March 31, 2001.

Total revenues for the quarter were up 11% to $3.6 million from $3.3 million in the prior quarter ended December 31, 2000 and 116% over the same quarter last year, reflecting revenue growth in all areas of the business. License revenues increased 16% sequentially to $2.0 million. Service revenues totaled $1.6 million, an increase of 9% from the prior quarter.

Gross margins for the quarter improved to 35% versus 32% in the prior quarter, primarily attributable to the growth in the company's license and maintenance revenues.

Pro forma net loss, which excludes $1.0 million of non-cash, stock-based charges, was $6.0 million, or $0.30 per share (based on 19.9 million weighted-average shares outstanding). This compares to a pro forma net loss of $5.8 million, or $0.29 per share (based on 19.8 million pro forma, weighted-average shares outstanding), for the prior quarter ended December 31, 2000.

Including non-cash, stock-based charges in accordance with generally accepted accounting principles, net loss was $7.0 million, or $0.35 per share (based on 19.9 million weighted-average shares outstanding). This compares to a net loss applicable to common stockholders of $7.0 million or $0.35 per share (based on 19.8 million weighted-average shares outstanding) for the prior quarter ended December 31, 2000.

"In an environment where customers are demanding value and return on investment from their information technology initiatives, our performance last quarter is proof that we are delivering that value," stated Paul G. Lego, chairman and CEO of Virage. "Even in a tough economic climate, our business expanded in a number of new areas. We delivered breakthrough streaming video applications for Major League Baseball and the National Hockey League, leveraging their marquee content and driving increased traffic and revenue. Additionally, corporations and educational institutions such as Cisco, Schlumberger, Princeton and Stanford chose Virage to deliver video-enhanced training and enterprise communications. Finally, we continued to expand our business internationally with major new accounts in Brazil, Japan and several European countries."

For the fiscal year ended March 31, 2001, total revenues were $11.4 million, a 105% increase over total revenues of $5.6 million reported for the same period last fiscal year. Pro forma net loss was $24.1 million, or $1.33 per share (based on 18.1 million pro forma, weighted-average shares outstanding), for the fiscal year ended March 31, 2001, versus $12.0 million, or $1.09 per share (based on 11.0 million pro forma, weighted-average shares outstanding) for the fiscal year ended March 31, 2000.

Including non-cash, stock-based charges in accordance with generally accepted accounting principles, net loss applicable to common stockholders for the fiscal year ended March 31, 2001 was $28.9 million, or $1.88 per share (based on 15.4 million weighted-average shares outstanding). This compares to a net loss applicable to common stockholders of $18.4 million, or $8.06 per share (based on 2.3 million weighted-average shares outstanding), for the fiscal year ended March 31, 2000.

"We experienced growing demand for our solutions this past quarter, and this is reflected in our financial results," said Al Castino, CFO of Virage. "We are especially pleased with our strong growth in repeat business as well as our excellent win-rate in new accounts. We begin our new fiscal year with a strong financial position and a solid pipeline for the current quarter."

Cash and short-term investments totaled $48.1 million as of March 31, 2001 versus $54.1 million as of December 31, 2000. Accounts receivable totaled $2.3 million, representing 58 days sales outstanding. The company had no debt as of March 31, 2001.

Other Fourth Quarter Highlights

Virage Adds 33 New Customers

During the fourth quarter, Virage added 33 new customers, bringing its total number of customers to over 250. New enterprise customers include Cisco, EDS, Foundry Networks, McGraw-Hill, NEC, Pentamark (BBDO) and Schlumberger. Media and Entertainment customers adopting the Virage platform include Belo, The Economist, Swedish Television, Televisio de Catalunya (TV3 Spain), and Turner Broadcasting Europe. Virage also saw continued growth in both the education and government markets with the addition, among others, of Princeton, Stanford Graduate School of Business, University of Pennsylvania and University of Southern California along with the National Library of Medicine, Westminster Digital, and Hillsboro County (Florida) Board of Commissioners.

Continued Strong International Growth

In Q4, Virage saw continued strong growth outside the United States, with major new deals in Europe, Latin America, and Japan. In Latin America, Virage announced that Anatel, the National Telecommunications Agency of Brazil, will use the Virage Video Application Platform in an initiative that will allow the government to consolidate, manage and distribute critical digital video information from across the country.

In Japan, Virage announced that Sumitomo Corporation has become a certified integrator and distributor of Virage solutions to the Japanese market. As a major Japanese software distributor and systems integrator, Sumitomo will help Virage expand its existing presence in the overseas markets for its Video Application Platform.

In Europe, Virage expanded its application service business with new projects for The Economist, Schlumberger and Westminster Digital for the British Parliament.

Significant Growth in Repeat Business from License Software Customers

In Q4, Virage saw a significant increase in revenue generated by repeat business to current license software customers as they confirmed the strong value proposition of the Virage platform. Repeat customers included CNN, E Biscom, Library of Congress, Motorola, Path Fire (formerly Video Networks), Sony, Structural Preservation Systems, Toshiba, University of Arizona, Williams Communication, WorldNow and a major US intelligence agency.

Rapid Adoption in the Sports Market

Virage significantly expanded its presence in sports coverage by bringing online major new projects with Major League Baseball, the National Hockey League, EXPN and a recent major golf tournament. These sports franchises rely on Virage application services to transform their daily television coverage into on-demand streaming video programming within hours after each live event.

EMC Joins Growing List of Virage Partners

In an agreement reached in Q4, EMC Corporation plans to integrate the Virage Video Application Platform into EMC's information storage systems and media asset management software. The Virage and EMC interoperability will allow enterprises worldwide to easily and efficiently manage, store and distribute their content to maximize the value of their digital video assets. EMC joins a steadily growing list of Virage developer and distribution partners that topped 100 members in Q4.

Also in Q4, Virage conducted successful nationwide seminars with CacheFlow, EMC, Foundry Networks and Inktomi. Virage and its partners demonstrated a complete solution for seamlessly integrating streaming media into strategic business applications, and providing an infrastructure that dynamically scaled in terms of streaming quality, bandwidth and manageability.

Looking Forward

"Having entered the past quarter with a cautious outlook on the business, we now have increased confidence in our ability to execute in the current environment," said Paul G. Lego. "This year, we expect to leverage our well-defined value proposition in the Media and Entertainment space while further expanding our solutions in the Enterprise market. We will also increase the breadth of our products and services to offer a wider range of customers an out-of-the-box solution for their specific application needs. As a result of these ongoing efforts and our strong competitive position, we expect healthy revenue growth in the coming fiscal year which, combined with higher gross margins and stronger expense controls, should move us towards profitability."

Virage Fourth Quarter Webcast

Virage management will host a webcast to discuss fourth quarter financial performance, operating and strategic developments and forward-looking guidance at 3:00 pm Pacific Time (6:00 pm Eastern Time) today, Tuesday, April 24, 2001. The webcast will be available live at www.virage.com/ir or www.streetfusion.com and will be available for replay at the same URLs through May 31, 2001.

Forward Looking Statements

This press release contains forward looking statements, including statements about our future sales growth and move toward profitability, particularly in the paragraph entitled "Looking Forward." Our forward looking statements are based on currently available information which management has assessed but which is dynamic and subject to rapid and even abrupt change due to risks and uncertainties that affect our business, including the unpredictability of future revenues due to our short operating history and limited visibility into future demand on which to base our forecasts; the current uncertainty in our marketplace which may impact expected demand, customer selection criteria and sales cycle; our ability to execute on service and software deliverables and major customer contracts, and, in particular, our relationship with Major League Baseball; slower economic growth generally, slower adoption of broadband technology, or cutbacks in information technology spending; and factors beyond our control such as power outages or work stoppages at key customers. Our forward looking statements should be considered in the context of these and other risk factors disclosed from time to time in the company's filings with the Securities and Exchange Commission, including its Registration Statement on Form S-1, as amended, and subsequent Form 10-Q filings.

About Virage, Inc.

Headquartered in San Mateo, CA, Virage is the leading provider of solutions that enable video for strategic online applications. The Virage Video Application Platform transforms video into an effective online medium that is easy to publish, manage and distribute on the Internet or corporate intranets. The Virage platform provides content owners with the complete infrastructure for seamlessly integrating streaming video into business, entertainment and information applications. From ABC to Yahoo! over 250 customers across a broad range of markets have turned to Virage to help them improve production efficiencies and create new revenue opportunities with video. Contact Virage at http://www.virage.com/ or (650) 573-3210.

Virage and VideoLogger are registered trademarks and the Virage logo and SmartEncode are trademarks of Virage, Inc. Other company product and service names may be trademarks or service marks of others, and are hereby acknowledged.

Virage, Inc. Pro Forma Condensed Consolidated Statements of Operations

Virage, Inc. Condensed Consolidated Statements of Operations

Virage, Inc. Condensed Consolidated Balance Sheets

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