Websense, Inc. 

10240 Sorrento Valley Road
San Diego, California 92121
858-320-8000
www.websense.com

Sales

$82 million

Business Description
We provide employee Internet management (EIM) products that enable organizations to analyze, report and manage how their employees use computing resources, including Internet access, instant messaging (IM), peer-to-peer file sharing, network bandwidth and desktop applications. Our primary product offering is the Websense Enterprise® software application, our central policy engine and management console. Websense Enterprise gives businesses the ability to improve employee productivity, conserve network bandwidth, mitigate potential legal liability, and enhance network security by identifying potential risks and rapidly configuring and implementing policies to manage their employees’ Internet access and use of software applications. Websense Enterprise also serves as a platform for related Websense add-on modules, such as Client Application Manager™, Bandwidth Optimizer™, Instant Messaging (IM) Attachment Manager™, and Client Policy Manager™, and supports a variety of reporting options that allow organizations to document patterns of employees’ use of computing resources.

Our flexible software applications operate in conjunction with our proprietary databases to manage employee access to websites, employee use of network bandwidth, and employee software application use at the desktop. They operate at three primary points of policy enforcement: the Internet gateway, the network and the employee desktop. Our databases, including website URLs, commonly used network and Internet protocols, software applications, and other executable files, are available for daily differential downloads. The Websense URL database is organized into more than 90 categories and encompasses more than 5.5 million websites as of December 31, 2003, representing more than one billion

webpages. The software application database has classified over 250,000 software executable files in more than 50 categories. Our databases are updated each business day using a proprietary process of automated content assessment and classification, with manual verification.

Websense Enterprise and the add-on modules are easy to deploy and use. Our products are integrated with a wide range of network access platforms, including market-leading firewalls, caching appliances, proxy-servers, switches, routers and other network appliances, and can scale with our customers’ needs to serve an unlimited number of users across multiple locations.

Products and Services

Websense Enterprise. Websense Enterprise is the foundation of our software offerings and includes our proprietary central policy engine, central management console and multiple reporting options. Websense Enterprise allows organizations to manage employees’ use of corporate computing resources by filtering access to websites, applications, protocols and bandwidth based on management-defined policies. We sell subscriptions to the Websense Enterprise platform and databases based on the number of users to be managed. Additional application modules and enhanced technical support are priced separately. Revenues from sales of subscriptions to Websense Enterprise accounted for 100% of total revenues in 2003 and 2002, and 99% of total revenues in 2001.

Websense Enterprise integrates with an organization’s network server, proxy server, switch, router or firewall and is designed to work in networks of virtually any size and configuration. We currently offer three deployment options:

• Integrated deployment on a separate server that is tightly integrated with the network gateway platform to offer pass-through filtering that maximizes stability, scalability and performance.

• Embedded deployment on an appliance or gateway product to reduce hardware expense and enhance ease-of-use, particularly in remote locations.

• Stand-alone deployment utilizing a network agent to deliver pass-by filtering capabilities in any network environment.

Web Filtering. Websense Enterprise enables employers to proactively analyze, report and manage employee access to websites based on the content of the requested website. Our software application gives managers patented ability to customize, implement and modify Internet access policies for various groups, user types and individuals by filtering access to websites. A graphical interface enables business managers to define the categories of websites to which access will be managed. The filtering software examines each Internet access request, determines the category of the requested website and applies the policies that have been defined by the company. Some examples of management options include:

• Allow. The request is allowed to proceed, because the organization has chosen not to restrict access to the category applicable to the website.

• Block. The requested website is in a category that is not allowed to be accessed according to the policy in effect.

• Time-based Quotas. Users are allowed a specified amount of personal surfing time within categories that are determined by the administrator. Once the user reaches his or her quota time, he or she is no longer able to access sites in those categories.

• Continue with Exception Report. The user is reminded about the organization’s Internet usage policy, but can choose to access the requested website.

• Time of Day. Filtering options can be managed by time of day. For example, access to shopping sites could be blocked during business hours and permitted at all other times.

The Websense URL Database. We offer extensive and regularly updated databases of websites. Our URL database currently catalogs more than 5.5 million websites, representing approximately one billion webpages in more than 50 languages, cataloged into more than 90 categories. Through proprietary techniques that create unique digital fingerprints of individual webpages, as well as customer features such as WebCatcher, we add approximately 5,000 newly categorized websites per business day to our database and make these updates available for daily differential downloads. In addition, our database is refreshed daily to remove dead links and irrelevant content and to identify changing content and newly emerging sites.

The breadth and specificity of website categories we have defined provide flexibility in selecting which types of material should be allowed, blocked or reported. We identify the types of content that we believe employers would deem to be unacceptable, inappropriate or undesirable in a work environment based on input we receive from our customers, and define the categories accordingly.

Reporting and Analysis. Websense Enterprise includes several reporting modules to meet the information needs of different management groups.

• Websense Reporter is a batch-based reporting application that can generate more than 80 tabular and graphical reports based on an organization’s historical Internet use. It analyzes information from Internet monitoring logs and builds visual charts in a variety of pre-set or customizable formats for easy distribution to and interpretation by managers.

• Websense Real-Time Analyzer™ utilizes the network agent in Websense Enterprise to monitor and analyze network traffic on-the-fly. This allows IT managers to identify potential risks and bandwidth bottlenecks associated with different types of network traffic.

• Websense Explorer is a browser-based forensics and analytics reporting tool for non-technical business managers that enables them to drill down on Internet use data by risk class, user group, or individual.

Add-On Application Modules. In March 2003, we introduced Websense Enterprise v5, which extended the reach of our policy enforcement capabilities beyond the Internet gateway to include the employee desktop computer and the network. We also introduced two new modules that provide enterprises with additional flexibility in managing employee use of corporate computing resources: Client Application Manager (manages software applications at the desktop and employees' laptop computers) and Bandwidth Optimizer (manages bandwidth consumption on the network). In February 2004, we introduced the IM Attachment Manager (manages the sending and receiving of attachments with instant messages). These new modules rely on the application framework of the Websense Enterprise platform and our proprietary databases of software applications and protocols. We plan to continue to develop and market new products and services based on our Websense Enterprise platform and our proprietary search and categorization technologies, including Client Policy Manager, which was announced in February 2004 for launch in May 2004.

• Client Application Manager/Client Policy Manager. The Client Application Manager (CAM) module allows our customers to implement management policies, such as block, allow or continue, for usage of software applications and other executables on desktop computers, by application type, by user type, or by individual user. CAM can be used to inventory desktop software, provide a categorized view of applications in the desktop environment and identify potential security threats from hacking and spyware applications. It can also be used to create lists of allowable applications and block the launch of others, enhancing network security by preventing the launch of viruses or other malicious executables. The functionality of CAM will be enhanced through the planned release of the Client Policy Manager (CPM) module in May 2004.

CAM utilizes the application framework of Websense Enterprise and references our Client Application Manager database of over 250,000 software executable files. We are expanding this database as well as adapting the database to actual employee computing patterns through the use of AppCatcher™, a patent-pending feature by which customers anonymously send uncategorized applications and other executables launched by their employees to us for review and categorization into our Client Application Manager database. CAM includes two reporting modules, CAM Reporter, which provides Web-based reports based on historical application usage, and Explorer for CAM, a click-through browser-based interface that provides immediate access to application usage information by user, group, category, machine or risk class.

• Bandwidth Optimizer. The Bandwidth Optimizer module allows customers to dynamically manage network traffic by prioritizing business and non-business related traffic flows. Our customers can apply management policies based on content category, protocols, user, group or network segment. Bandwidth Optimizer relies on the central policy engine in the Websense Enterprise platform, a network agent that monitors network traffic and databases of protocols, file types and content categories to automatically monitor network bandwidth levels and dynamically allow or deny network application requests.

• Instant Messaging (IM) Attachment Manager. The IM Attachment Manager module allows organizations to control the ability to transmit and receive files via instant messaging clients. Used in conjunction with the IM management capabilities in Websense Enterprise, the IM Attachment Manager module allows customers to apply policies to file attachments over the most popular IM applications, define custom file attachment policies by user, by group, or by workstation, using popular management options such as warn/continue screens, and provide real-time and historical views of employee use of IM file attachments. Used in conjunction with Bandwidth Optimizer, the IM Attachment Manager can manage the transmission of attachments by bandwidth availability.

Customers

Our more than 20,000 customers range from companies with as few as 100 employees to members of the Global 1000 to government agencies and educational institutions.