Acquisition adds business performance management (BPM) expertise Company provides updated outlook for balance of 2004 fiscal year

Wakefield, MA — October 5, 2004 – Custom development and system integration consulting firm, Edgewater Technology, Inc. (NASDAQ: EDGW, www.edgewater.com, “Edgewater Technology” or the “Company”), today announced it has completed the acquisition of Ranzal & Associates, Inc. (“Ranzal”), a premiere provider of business intelligence and business performance management solutions.

The acquisition will be accounted for as an asset purchase, with $5.2 million paid in upfront consideration and a potential cash earn-out contingent upon meeting performance objectives over an 18 month period. The acquisition, which is expected to be accretive and add approximately $7.2 million in annualized revenues, will further provide Edgewater Technology with the ability to deliver corporate performance management solutions to a wide range of industries.

Edgewater Technology believes that acquiring Ranzal also achieves the following strategic goals:

• Provides new service offerings in Business Intelligence and Business Performance Management;
• Expands Company’s vertical expertise in areas such as healthcare, retail and insurance, while adding manufacturing/consumer packaged goods;
• Enhances Company’s presence on the East Coast and provides access to the New York/New Jersey market;
• Leverages future growth opportunities of both organizations.

“We are delighted to welcome Ranzal’s staff and customers to Edgewater,” stated Shirley Singleton, President and Chief Executive Officer of Edgewater Technology, Inc. “The acquisition of Ranzal strengthens our capabilities in strategy and design, solidifies our east coast presence, and expands our vertical expertise and service offerings to the middle market, in particular in the high-growth area of Business Performance Management.”

“We’re very excited about becoming a part of Edgewater Technology. We are impressed with Edgewater Technology’s management and their vision for the future,” stated Robin Ranzal Knowles, President of Ranzal. “Ranzal and Edgewater share a passion for providing customers with customized solutions to solve their complex and unique business needs. This shared vision will benefit both existing and new customers from both organizations.”

Headquartered in White Plains, New York with office locations in Florida, Massachusetts and Virginia, Ranzal works hand in hand with corporate executives, line-of-business management, end users, and information systems departments to address the business issues and challenges inherent in data gathering, management, and dissemination. With 34 employees, Ranzal delivers solutions to organizations ranging from established Fortune 500 firms to businesses entering the new economy; spanning industries including healthcare, banking, finance, insurance, pharmaceuticals, utilities, consumer packaged goods, manufacturing, retail and biotechnology. By combining their expertise in rapid, enterprise-wide system development with the use of leading products such as Hyperion’s Essbase, Hyperion Planning, Hyperion Analyzer, Hyperion Reports, Hyperion Scorecard, Hyperion Business Modeling, Hyperion Financial Management, Microsoft’s Excel and development tools and IBM’s DB2 OLAP, Ranzal empowers clients to get the most out of their information and delivers solutions that fit each client’s specific business needs. Ranzal has partnerships with such as organizations as Hyperion, IBM and Microsoft.

Results for Ranzal’s acquired operations, effective today, will be included in Edgewater’s fourth quarter 2004 results and, therefore, will not be reflected in third quarter 2004 results to be announced on October 20, 2004.

“As mentioned on our second quarter 2004 financial results conference call, we have been concerned that customers would continue to be slow in approving spending for new IT initiatives,” commented Shirley Singleton, President and CEO of Edgewater Technology. “That trend continued during the third quarter and despite a healthy sales pipeline, the closing of several client engagements did not occur until late in the quarter. Accordingly, we presently expect third quarter 2004 revenue to be approximately $4.8 million. We now anticipate that total revenues for 2004 will approximate 2003 levels. This would likely result in an operating loss for 2004, which could be approximately $1.0 million, assuming actual 2004 revenues come in at a level comparable to 2003 revenues.”

Ms. Singleton concluded, “Nonetheless, we remain enthusiastic about our organic sales pipeline, the full year 2005 effects of the Ranzal acquisition, and the opportunity to provide a combined, more robust custom development and BPM service offering to existing and prospective clients in 2005 and thereafter.”

The Company expects to release its third quarter 2004 results of operations on Wednesday, October 20, 2004.

DecisionPoint International, a boutique technology investment bank, represented Edgewater Technology in this transaction.

More information about Ranzal can be found on their Website at www.ranzal.com