Forward-looking information contained in this Report is subject to risk and uncertainty.

We have made forward-looking statements in this Report, including this Management's Discussion and Analysis of Financial Condition and Results of Operations. We have tried, wherever possible, to identify such statements by using words such as "believes," "anticipates," "may," "will," "should," "expects," "plans," "estimates," "predicts," "potential," "continue," "intends" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans and prospects. We believe it is important to communicate our expectations to investors. However, there may be events in the future we are not able to predict accurately or that we do not fully control, which could cause actual results to differ materially from those expressed or implied by our forward-looking statements, including changes in general economic and business conditions, changes in the information and internet services industries, and changes in our business strategies. Readers should bear this in mind as they consider forward-looking statements. Additional information that may impact these forward-looking statements is included in "Part II - Item 1A - Risk Factors" and elsewhere in this Report, and in "Part I - Item 1A - Risk Factors" in our 2007 Annual Report on Form 10-K. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are advised, however, to consult any further disclosures we make on related subjects in reports we file from time to time with the Securities and Exchange Commission, or SEC.

In this Report, the words "we," "our," "us," "Onvia," or the "Company" refer to Onvia, Inc. and its wholly owned subsidiary.

Company Overview

Onvia is a leading provider of business solutions that help companies plan, market and sell to targeted markets throughout the United States, or U.S. We have developed a unique process for collecting and organizing transactional information, which we convert into actionable market intelligence. We believe our business solutions provide our clients with a distinct competitive advantage.

Many companies react to business opportunities instead of proactively and intelligently pursuing the best prospects for their products and services. Our business solutions help clients more effectively target federal, state, local and educational purchasing entities, and as of February 2008, our solutions include in-depth analysis on early stage commercial and residential infrastructure projects. Our business solutions allow clients to track their competitors, analyze market trends, and identify new market opportunities to stay ahead of market changes. Our clients can leverage our database to identify prospects, establish alerts for upcoming contracting opportunities, review history on public and private infrastructure projects, and research government agencies and private sector businesses to effectively establish and maintain lucrative business relationships.

Our proprietary database, Onvia Dominion®, has been compiled over the last ten years, and includes comprehensive, historical and real-time information on public and private infrastructure activities unavailable elsewhere in the marketplace. Public sector information within the Onvia Dominion® database is classified and linked within four key hubs of data: project history, agency research, buyer research and competitive intelligence. Our database provides information on approximately 5 million procurement related records connected to over 275,000 companies from across approximately 78,000 government agencies and purchasing offices nationwide. Thousands of records are added to our database each day. Private sector data includes over 110,000 current and historical opportunities covering activity within the top 85 U.S. markets, and comprehensive information on tens of thousands of companies, including architects, developers, owners and land use attorneys. The data collected covers high demand land use planning details, including zoning changes, development type, proposed use and key contacts for each

project. We also provide contact information for over 24,000 planning and zoning officials. Information in our database has been collected, formatted and classified by an in-house team of researchers and third-party providers so that our clients are able to quickly find and analyze information relevant to their businesses.

Historically, comprehensive market intelligence was only available to large companies with the resources to perform the research and store the data themselves, or companies that could afford to hire outside firms to perform the research for them. Advances in technology, broad use of the Internet by government agencies, and the diligent work of our research team to collect and classify this information have enabled us to make the same high-value sales intelligence affordable to businesses of all sizes.

Our revenues are currently generated from three main business channels: client subscriptions, content licenses, and management information reports. Contracts for our subscription-based services are typically prepaid, have a minimum term of one year and revenues are recognized ratably over the term of the subscription. Subscriptions are priced based upon the geographic range, nature of content purchased and, with respect to certain products, the number of users or number of records purchased.

Revenue from content licenses is generated from clients who resell our business intelligence data to their customers. Content license contracts are generally multi-year arrangements that are invoiced on a monthly or quarterly basis, and these agreements typically have a higher annual contract value than our subscription-based services. Revenue from content license agreements is recognized ratably over the term of the agreement.

Revenue from fees charged for management information reports is recognized upon delivery of the report to the client. Pricing for management information reports is generally based on one or a combination of the following: the number of records included in the report; the geographic range of the report; or a flat fee based on the type of report. We also generate revenue from document download services and list rental services, and these fees are recognized upon delivery.

Onvia was incorporated in January 2000 in the state of Delaware. Our principal corporate office is located in Seattle, Washington. Our common stock trades on the NASDAQ Global Market under the symbol ONVI.

Industry Background

The infrastructure marketplace, defined as the industries supported by public and private construction projects and facilities maintenance, spends over $1 trillion annually on new projects and in support of new and existing facilities. Over 3.4 million businesses compete for opportunities within this highly competitive marketplace and identifying qualified business partners and prospects is essential to a company's success. Identifying relevant infrastructure projects and partners can be difficult and companies spend a substantial amount of time and effort to locate and research new partners and opportunities to grow their businesses. The Internet provides short-term visibility into government and private sector contracting information for both government agencies and businesses alike, but does not provide the on-demand intelligence required to guide strategic decisions.

Even after a new business opportunity is identified, many companies do not have enough information about the project to prequalify the opportunity, such as decision maker information, the purchasing history of the government agency or project owner, and who competes for similar projects. This information is useful not only for companies contracting directly with the project owner, but also for subcontractors that would like to compete for work on awarded contracts. This information is rarely available from one source, and may not be available at all for historical projects.

Success in the private commercial and residential construction marketplace is largely based upon strong business relationships and corporate positioning. Development projects must be identified early in the planning and zoning process for a contractor or architect to be considered for the engagement. Business relationships are essential for some specialties, such as environmental engineers, who may need to identify projects before presentation to the zoning and planning board. Strong segment contacts are the primary

way for companies to identify private sector projects at the very earliest stage. Companies competing in this market need to understand who the key decision makers are within their segment and geographic footprint to ensure that they are properly positioned to win future opportunities.

Public sector opportunities are difficult to prequalify for most businesses. Often, revenue opportunities are included within the specification documents behind the request for proposal, or RFP, and request for quote, or RFQ, documents. Without tools to quickly identify the pertinent information, businesses must read the entire documents to determine if there are opportunities relevant to their business. Our comprehensive database contains much of this information on both a historical and real-time basis and thousands of records are added to our database each day. Much of the information in our database is linked, so clients can quickly research information relevant to a particular project in one centralized location. Clients can also perform customized searches on both the public record and within the project specification documents to identify relevant opportunities using any number of variables, such as publication date, geographic location and contract value, among others. Using our database and tools, our clients spend less time on research and more time preparing winning proposals, establishing relationships, and executing contracts.

Products and Services

Our products and services provide access to our proprietary Dominion® database of project specific information and provide clients specialized tools for analyzing information relevant to their business. We expect to continue to expand our content and develop new database analysis and access tools to meet the needs of our existing clients as well as potential new categories of clients.

We leverage technology, tools and business processes to research, classify and publish actionable public and private sector opportunities from public and private sources. Through an automated process, we link related records within our database, prequalify business opportunities for our clients based upon the client's profile, and provide access to the information in a timely manner, generally within 24 hours of their public release. Our database contains information on the largest industry verticals, with a focus on the infrastructure verticals, which include:

· Architecture and Engineering

· Construction and Building Supplies

· IT / Telecommunications

· Business Consulting Services

· Operations and Maintenance Services

· Transportation Equipment

Within these verticals we also provide hard to find content, which creates a comprehensive view of a project throughout the most critical phases of the procurement lifecycle. These transactional records include:

· Advance Notice - alerts businesses of projects in the early stages of the development process, before the bid or RFP is released in its final form, or before final zoning and planning board approval;

· RFPs, RFQs, and related amendments;

· Planholders and Bidders Lists - provides competitive intelligence by presenting a list of competitors that have acquired plans, specifications, bidding documents and/or proposals for specific projects in the active bid or proposal stage, and a list of competitors who submit bids for prime contracts with the owner of the project;

· Bid Results and Awards Information - notifies businesses of awarded bids, providing valuable information for use in their own sales and marketing activities; and

· Grants - supplies federal grant information critical to anyone tracking or applying for publicly-funded projects.

Onvia's public and private sector solutions are two distinct service offerings, but when used together, the combined information provides a comprehensive view of the infrastructure marketplace.

Onvia's business solutions are comprised of the following products:

Onvia Business Builder
Onvia Business Builder is our most comprehensive public sector product and is intended to enable businesses of all sizes to compete more effectively in the government procurement marketplace. This product leverages Onvia's proprietary database of historical information gathered from local, state and federal government agencies and education entities to help clients evaluate and respond to new bid requests and RFPs with more competitive responses by allowing them to easily research competitor and buyer information.

Subscribers to Onvia Business Builder receive customized daily email notifications about relevant business opportunities focused on the verticals described above and associated around four key data hubs; project history, agency research, agency buyer research, and competitor research. The association of each record makes it possible to evaluate purchasing trends by agency and by agency buyer and identify or evaluate potential competitors.

Project History
Project History tracks and provides information through a project's life cycle, including advance notice information, planholder/bidder lists and bid results. This information offers competitive intelligence as well as leads on potential subcontracting opportunities.

Agency Research
Agency Research offers historical research into government agencies, including procurement archives, decision maker contact lists and purchasing contact lists. This intelligence provides insight into purchasing trends within each agency and allows clients to tailor bids and proposals for each sales opportunity.

Buyer Research
Buyer Research provides clients with a more comprehensive view of their potential client, including their areas of expertise and past relationships with other vendors. This information enables clients to effectively target their sales activity and manage relationships with government purchasers.

Competitor Research
Competitor Research is a public sector activity archive that informs clients about where their competitors have won work and provides detailed product and price information that enables clients to conduct competitive analysis prior to submitting bids and proposals.

Onvia Business Builder provides information necessary to qualify opportunities, improve decision making, prepare tailored bids, and manage agency relationships, all of which should improve the success rates of our clients.

Onvia Navigator
Onvia Navigator is our database research tool, which allows clients to easily identify market opportunities within our proprietary database and search the contents of the related specification documents. Onvia Navigator enables users to focus their research in many ways, including by procurement types, submittal dates, contract locations, agencies and contract values. Once the desired results are identified using Onvia Navigator, clients can employ Onvia Business Builder to provide detailed information on the search results.

The Onvia Guide
Onvia Guide subscribers receive the same customized daily email notifications about relevant business opportunities that subscribers to the Onvia Business Builder product receive, without the user interface to research information in our database. This product is an affordable entry level option for our clients.

Onvia Planning and Construction
In February 2008, Onvia expanded its business solutions to include information on the commercial and residential development market. Onvia Planning and Construction provides early stage project information on commercial and residential development projects. This market intelligence solution is comprehensive, covering the top 85 metropolitan areas within the U.S. Our database of over 110,000 commercial and residential records provides a detailed overview of the commercial and residential marketplace. This market intelligence can be leveraged to identify business expansion opportunities and growth markets, evaluate overall market conditions, forecast demand for specific products and services, and align personnel and resources with future opportunities. At the tactical level, Onvia Planning and Construction helps companies identify upcoming projects and sales opportunities by monitoring land use planning and zoning information. New and updated land use activities can be tracked with daily customized alerts delivered directly to our clients' inbox. Clients can research projects and the companies associated with each project, and track permit approval and project status as the engagement progresses. The company and project information can be used to build relationships with corporate decision makers and planning officials to be in a good position to act upon future opportunities.

Management Information Reports
In addition to our subscription services, we also offer a number of custom market information reports. These reports are generally one-time deliverables and revenue is recognized upon delivery.
· Term Contracts - The Term Contract report contains actionable sales information on term or continuing service contracts at public agencies coming up for renewal. With this report clients know what contracts exist, when they are coming up for renewal, who the incumbent is and who the buyers are, allowing them to perform an early evaluation of the opportunity so they can be more competitive with their proposals to increase their public sector business.

· Contact Lists - Provide our clients a comprehensive list of decision makers, agency procurement officers and zoning officials that can be used to develop relationships and identify potential business partners.

· Market Opportunity Reports - Provides vital market intelligence needed for strategic planning and marketing, such as:

o Year-over-year growth rates by market or category to help understand buying trends;

o Market growth rates to assist in business planning;

o Distribution of state and local opportunities by sales territory to help allocate resources;

o Competitive analysis; and

o Seasonality and buying trends.

· Winning Proposals Library - Compare and contrast winning proposals submitted by competing firms in order to gain valuable competitive insights. Provides insight into how other companies position their qualifications and personnel, structure and format persuasive proposals, incorporate supporting materials, price goods and services, and differentiate themselves from their competitors.

Executive Summary of Operations and Financial Position

For the quarter ended September 30, 2008, revenue was down approximately 4% to $5.2 million compared to $5.4 million in the same period in 2007. For the nine months ended September 30, 2008, revenue was $15.6 million, compared to $15.4 million in the same period in 2007, representing an increase of 1%. Because we recognize revenue ratably over the term of a subscription, current period sales impact GAAP revenue over the following twelve months. The decline in year-over-year quarterly revenue is the result of weakness in our business during the latter part of 2007 and the first quarter of 2008. The weakness we experienced was partly attributable to a planned change in focus of our sales organization, partly

attributable to execution issues that we believe we have addressed, and partly attributable to economic challenges facing a portion of our client base.

Net loss in the third quarter of 2008 was $831,000, or $0.10 per share, compared to net income of $2.9 million, or $0.33 per diluted share, in the third quarter of 2007. For the nine month periods, net loss was $2.5 million, or $0.31 per share, in 2008, compared to net income of $1.5 million, or $0.18 per diluted share, in 2007. Our 2007 results include the impact of the termination of the operating lease on our former corporate headquarters, which resulted in the reversal of accrued idle lease expenses and acceleration of depreciation on certain leasehold improvements. The net impact of this transaction for the three and nine month periods in 2007 was an approximately $2.4 million reduction in operating expenses. We also recognized charges totaling $264,000 during the second quarter of 2008 related to a sales tax assessment and abandonment of internal use software. Sales and marketing expenses increased because we increased the size of our acquisition sales force to accelerate new client acquisition, and we incurred higher third party content costs in the first nine months of 2008 as a result of the launch of Onvia Planning and Construction. These factors, combined with the decline in revenue discussed above, resulted in the increased net loss.

The execution issues mentioned above relate to the transfer of our first year clients to new account managers in the first quarter of 2008. This change was necessary to implement an enhanced on-boarding process for new clients, which we expect will improve first year client retention rates in the future. This transfer of accounts was not smoothly executed and had a negative impact on our first year client retention rates. To address this, we have developed health scores for all of our clients, and the scores for our new clients indicate that our first year client retention should begin to noticeably improve in the first quarter of 2009 when these clients first begin to come up for renewal.

We also believe our revenue growth has been affected by the increasing impact of the weak economy on a portion of our client and prospect base. The majority of our clients and prospects are in the segments hardest hit by the economic slowdown; predominantly small to medium sized businesses in industries impacted by the soft construction market, including architects, engineers and construction companies. While it's difficult to estimate the impact of the weak economy on our business, we believe that new client acquisition and client retention has been slowed by the current economic environment.

We responded to our slowing revenue growth rate in the first quarter of 2008, in part, by increasing the size of our acquisition sales force, which contributed to 59% growth in new client sales in the third quarter of 2008 compared to the same period in 2007. We continued to invest in sales and marketing in order to drive revenue and productivity per sales person in the face of the current economic headwinds.

In the third quarter, we tested a new high volume, lower touch sales process intended to create a profitable revenue channel from the smallest business segments. The clients acquired through this channel have a lower contract value, which reduced overall Quarterly Contract Value per Client, or QCVC, in the third quarter of 2008 compared to the second quarter of 2008, but contributed to the growth in third quarter Annual Contract Value, or ACV. We will continue to evaluate the profitability of this team through the fourth quarter.

The changes we implemented have stabilized GAAP revenue in the third quarter of 2008, and accelerated growth in metrics that indicate future revenue growth, such as ACV. Year-over-year growth in ACV has accelerated to 9% over the third quarter of 2007, compared to 6% growth in the second quarter of 2008 over the same period in 2007. In addition, client retention rates remained steady compared to the third quarter of last year, and the number of high value clients, which represent clients subscribing at the state level or above, and total clients has remained stable for three straight quarters. We expect these improvements to be reflected in our GAAP statements over the next four quarters.

We evaluate the following four key operating metrics, among others, to assist in the evaluation of our operating performance, and believe these metrics provide a means to compare our business with other businesses in the information industry.

Annual Contract Value ("ACV")
Annual contract value is the aggregate annual revenue value of our client base. Growth in ACV demonstrates our success in increasing the number of high value clients and upgrading existing clients to new and higher valued products. At September 30, 2008, ACV was $19.0 million, up 9% compared to $17.5 million at September 30, 2007 and up 4% compared to $18.2 million at June 30, 2008.

Number of Clients
Number of clients represents the number of individual businesses subscribing to our products. At September 30, 2008 we had approximately 8,100 clients, down 8% from approximately 8,800 at September 30, 2007 and flat compared to 8,100 at June 30, 2008. At September 30, 2008, high value clients, or clients subscribing at the state level or above, totaled 7,500, down 5% compared to 7,900 at September 30, 2007 and flat compared to 7,500 at June 30, 2008. The number of clients and high value clients has remained stable for three straight quarters.

Annual Contract Value per Client ("ACVC") Annual contract value per client is the annual contract value divided by the number of clients and indicates the average value of each of our subscriptions. At September 30, 2008, ACVC was $2,338, an increase of 18% compared to $1,984 at September 30, 2007.

Quarterly Contract Value per Client ("QCVC") Quarterly contract value per client represents the average annual contract value of all new and renewing clients transacting during the quarter and is a leading indicator of future annual contract value per client. In the third quarter of 2008, QCVC was $2,351, an increase of 9% compared to $2,163 in the third quarter of 2007.

Seasonality

Our customer acquisition business is subject to some seasonal fluctuations. The third quarter is generally our slowest quarter for customer acquisition. The construction industry is our single largest market and these prospects are typically engaged on projects during the summer months, not prospecting for new work, which causes customer acquisition to decline compared to the remaining quarters in the year. For this reason, it may not be possible to compare the performance of our business quarter to consecutive quarter, and our quarterly results should be considered on the basis of results for the whole year or by comparing results in a quarter with the results in the same quarter of the previous year.

Results of Operations for the Three and Nine Months Ended September 30, 2008
Compared to the Three and Nine Months Ended September 30, 2007

The following table provides selected consolidated results of operations for the
periods presented as a percentage of total revenue:

                                              Three Months Ended September 30,            Nine Months Ended September 30,
                                               2008                     2007               2008                     2007
. . .