<PAGE>
RULE 424(b)(3)
REGISTRATION NO. 333-83343
BREAKAWAY SOLUTIONS, INC.
PROSPECTUS SUPPLEMENT NO. 1, DATED OCTOBER 26, 1999
(TO PROSPECTUS DATED OCTOBER 5, 1999)
On October 26, 1999, Breakaway Solutions, Inc. issued the attached press release
regarding its results of operations for the fiscal quarter ended September 30,
1999.
<PAGE>
<TABLE>
<S> <C> <C>
[LOGO] Contact
Press: Investor:
Joanna Bolles Raymond Ruddy
Breakaway Solutions Investor Relations
617-960-3458 Breakaway Solutions
[email protected] 617-960-3874
[email protected]
</TABLE>
BREAKAWAY SOLUTIONS ANNOUNCES
RECORD THIRD QUARTER RESULTS
FULL SERVICE PROVIDER OF E-BUSINESS SOLUTIONS TO GROWING ENTERPRISES
REPORTS REVENUE INCREASE OF 61% FROM PREVIOUS QUARTER
BOSTON, MA - OCTOBER 26, 1999 - Breakaway Solutions, Inc. (NASDAQ-NM: BWAY), a
leading Full Service Provider (FSP) of e-business solutions that offers
strategy, systems integration and application hosting to growing enterprises,
today announced its financial results for the quarter ended September 30, 1999.
For the third quarter 1999, revenues were $7.2 million, an increase of 61% over
revenues of $4.5 million over the second quarter ended June 30, 1999. Employee
headcount increased by 31% to 276. Furthermore, the company's ASP revenue as a
percent of total revenue increased from 1% in the second quarter of 1999 to 9%
in the third quarter of 1999. Net operating loss was approximately
$4.5 million. On a pro-forma basis, revenues increased 38%, while ASP revenues
grew 205% over the previous quarter.
"We are extremely pleased with our performance this quarter. The combination of
our innovative services, world-class delivery infrastructure and high level of
client satisfaction has enabled us to achieve record revenue growth," said
Gordon Brooks, president and chief executive officer of Breakaway Solutions.
"Our results reflect the dynamic growth of the mid-market and underscores the
power of our FSP model."
RECENT HIGHLIGHTS
- - Received strategic financing from investors, including Internet Capital
Group, Intel, Crosslink Capital, GE Equity and Morgan Stanley.
- - Completed an Initial Public Offering of 3,450,000 shares of common stock at
$14 per share on October 5, 1999.
- - Began work with 22 new clients during the quarter, including Arbinet,
SiVault, David's Bridal, American Imaging Management, Cruise411.com and
eRisks.com.
- - Increased the application hosting client base from seven to 20 customers.
- - Added Sun Microsystems' StarOffice as a new application hosting client.
StarOffice's suite of products has been downloaded over 1 million times
through Breakaway Solutions' distributed global Application Hosting Centers.
- - Recorded a gross margin of 52% and consultant utilization of 73%.
- - Opened Breakaway's tenth Application Hosting Center in Amsterdam.
- - Opened Breakaway's fourth Solution Center and seventh regional office in
Dallas, Texas.
<PAGE>
- - Increased headcount from 210 employees in the second quarter of 1999 to 276
employees in the third quarter of 1999, representing a growth of 31%.
- - Strengthened the executive team with the addition of Adam Sholley, with over
18 years of brand building experience as vice president of marketing, and
Joseph Johnson, who brings over 12 years of organizational development
management experience, as chief people officer.
- - Formed new strategic alliances with Oracle and OrderTrust.
- - Expanded the company's partnership with Clarify by becoming Clarify's first
application solution provider.
- - Initiated a branding campaign in leading business, trade and online media.
BREAKAWAY SOLUTIONS WILL HOST A CONFERENCE CALL ON TUESDAY, NOVEMBER 2, 1999 AT
4:30 P.M. EST. THE CALL WILL BE BROADCAST VIA WWW.VCALL.COM.
ABOUT BREAKAWAY SOLUTIONS
Breakaway Solutions Inc. is a Full Service Provider (FSP) of E-business
solutions that allow growing enterprises to capitalize on the power of the
Internet to reach and support customers and markets. As an application service
provider (ASP), systems integrator and consulting firm, Breakaway Solutions
offers four key services to its mid-market clients: strategy, eCRMS, E-business
and application hosting. Headquartered in Boston, Mass., Breakaway Solutions has
seven regional offices and four Internet solutions centers in the U.S., along
with 10 application hosting facilities in North America, Europe, Asia and
Australia. Breakaway Solutions can be reached at 617-960-3400 or at
http://www.breakaway.com.
Except for the historical information contained in this announcement, the
matters discussed in this announcement are ``forward-looking statements" (as
that term is used in the Private Securities Litigation Reform Act of 1995) that
involve risks and uncertainties, including risks of business change, product
acceptance and customer demand and growth management detailed from time-to-time
in Breakaway Solutions' filings with the Securities and Exchange Commission.
Breakaway Solutions draws the reader's attention to the factors described in its
final Prospectus dated October 5, 1999 under the heading "Risk Factors." Any
such forward-looking statements speak only as of the date such statements are
made, and the company undertakes no obligation to publicly release the results
of any revision to these forward-looking statements or otherwise update or
supplement this announcement or the risk factors contained herein.
<PAGE>
BREAKAWAY SOLUTIONS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
UNAUDITED UNAUDITED
JUNE 30, 1999 SEPTEMBER 30, 1999
<S> <C> <C>
Revenues
Application Hosting $ 36,169 $ 668,496
Services 4,415,455 6,512,276
----------- -----------
Gross Revenues $ 4,451,624 $ 7,180,772
Cost of Sales $ 2,063,821 $ 3,420,920
----------- -----------
Gross Profit $ 2,387,803 $ 3,759,852
Sales, General and Administrative $ 4,102,016 $ 7,040,053
Depreciation & Amortization $555,509 $ 1,220,778
----------- -----------
Operating Income (Loss) ($2,269,722) ($4,500,979)
Other Income (Expense) ($12,229) $35,101
----------- -----------
Net Loss ($2,281,951) ($4,465,878)
=========== ===========
Net Loss per Share
Basic and Diluted ($0.50) ($0.97)
Weighted Average Common Shares Outstanding (000's) 4,587 4,587
</TABLE>
###