================================================================================
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON DC 20549
                            ------------------------

                                   FORM 10-Q
(MARK ONE)

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
     SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934

        FOR THE TRANSITION PERIOD FROM                TO

                        COMMISSION FILE NUMBER: 0-26592
                            ------------------------

                            THE VANTIVE CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                           <C>
                   DELAWARE                                     77-0266662
       (STATE OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                     IDENTIFICATION NO.)
</TABLE>

                              2455 AUGUSTINE DRIVE
                         SANTA CLARA, CALIFORNIA 95054
                                 (408) 982-5700
         (ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------

     Indicate by check mark whether registrant (1) has filed all reports
required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.  YES [X]  NO [ ]
     The number of shares of the Registrant's $0.001 par value Common Stock
outstanding on May 1, 1998 was 25,569,068.


================================================================================
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements

                            THE VANTIVE CORPORATION

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                    March 31,      December 31,
                                                    1998           1997
                                                    ------------   ------------

<S>                                                 <C>            <C>
                             ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                             $40,744        $77,583
  Short-term investments                                 64,063         23,800
  Accounts receivable, net                               33,884         33,295
  Prepaid expenses and other current assets              13,118         11,896
                                                    ------------   ------------
          Total current assets                          151,809        146,574
Property and equipment, net                              13,844         12,465
Other assets                                              3,558          3,700
                                                    ------------   ------------
TOTAL ASSETS                                           $169,211       $162,739
                                                    ============   ============

                  LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable and accrued liabilities              $25,412        $27,818
  Deferred revenues                                      13,836          9,827
                                                    ------------   ------------
          Total current liabilities                      39,248         37,645

Convertible debt                                         69,000         69,000
Long-term liabilities                                       339            362

STOCKHOLDERS' EQUITY:
  Common Stock                                               26             25
  Additional paid-in-capital                             57,866         56,643
  Retained earnings (deficit)                             2,732           (936)
                                                    ------------   ------------
          Total stockholders' equity                     60,624         55,732
                                                    ------------   ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $169,211       $162,739
                                                    ============   ============
</TABLE>
     See accompanying notes.
<PAGE>
                            THE VANTIVE CORPORATION

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                     (In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                March 31,
                                                              -------------------
                                                              1998      1997
                                                              --------- ---------
<S>                                                           <C>       <C>
REVENUES 
  License                                                      $22,517   $15,026
  Service                                                       13,763     7,497
                                                              --------- ---------
          Total revenues                                        36,280    22,523
                                                              --------- ---------
COST OF REVENUES:
  License                                                          204       120
  Service                                                        7,312     4,044
                                                              --------- ---------
          Total cost of revenues                                 7,516     4,164
                                                              --------- ---------
GROSS MARGIN                                                    28,764    18,359
                                                              --------- ---------
OPERATING EXPENSES 
  Sales and marketing                                           14,126     9,662
  Research and development                                       5,944     3,299
  General and administrative                                     3,002     1,719
                                                              --------- ---------
          Total operating expenses                              23,072    14,680
                                                              --------- ---------
OPERATING INCOME                                                 5,692     3,679
OTHER INCOME                                                       211       367
                                                              --------- ---------
INCOME BEFORE PROVISION
  FOR INCOME TAXES                                               5,903     4,046
PROVISION FOR INCOME TAXES                                       2,184     1,497
                                                              --------- ---------
NET INCOME                                                      $3,719    $2,549
                                                              ========= =========

NET INCOME PER BASIC SHARE                                       $0.15     $0.11
                                                              ========= =========
NET INCOME PER DILUTED SHARE                                     $0.14     $0.10



BASIC-SHARES USED IN PER SHARE COMPUTATION                      25,384    24,194
                                                              ========= =========
DILUTED-SHARES USED IN PER SHARE COMPUTATION                    27,210    26,215

</TABLE>
     See accompanying notes 
<PAGE>
                            THE VANTIVE CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED
                                                               March 31,
                                                       --------------------------
                                                       1998          1997
                                                       ------------  ------------
<S>                                                    <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                $3,719        $2,549
  Adjustments to reconcile net income to net cash
     provided by operating activities:
     Depreciation and amortization                           1,177           454
     Provision for sales allowances and
       and doubtful accounts                                   696           124
     Changes in operating assets and liabilities --
       Increase in accounts receivable                      (1,278)       (3,154)
       (Increase) decrease in prepaid expenses and
         other current assets                               (1,221)          193
       (Increase) decrease in other assets                     109           (64)
       Increase (decrease) in accounts payable and
         other accrued liabilities                          (2,323)        2,490
       Increase (decrease) in long-term liabilities            (23)          132
       Increase (decrease) in deferred revenues              4,009          (159)
                                                       ------------  ------------
          Net cash provided by operating activities          4,865         2,565
                                                       ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of short-term investments                       (40,263)          (10)
  Purchase of property and equipment                        (2,522)       (2,079)
                                                       ------------  ------------
          Net cash used in investing activities            (42,785)       (2,089)
                                                       ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                     1,125           318
  Payments on capital lease obligations                        (90)         (120)
                                                       ------------  ------------
          Net cash provided by financing activities          1,035           198
                                                       ------------  ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS       (36,885)          674
EFFECT OF EXCHANGE RATE CHANGES ON CASH                         46           (32)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD              77,583        26,017
                                                       ------------  ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                   $40,744       $26,659
                                                       ============  ============
</TABLE>
     See accompanying notes
<PAGE>

        THE VANTIVE CORPORATION
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
        (UNAUDITED)


1.      Basis of Presentation

        The condensed consolidated financial statements included herein 
have been prepared by the Company, without audit, pursuant to the 
rules and regulations of the Securities and Exchange Commission.  
Certain information and footnote disclosures normally included in 
financial statements prepared in accordance with generally 
accepted accounting principles have been condensed or omitted 
pursuant to the rules and regulations.  The Company believes the 
disclosures included in the unaudited condensed consolidated 
financial statements, when read in conjunction with the financial 
statements and the notes thereto included in the Company's Annual 
Report on Form 10-K for the year ended December 31, 1997, are 
adequate to make the information presented not misleading.

        The unaudited condensed consolidated financial statements 
included herein reflect all adjustments which are, in the opinion 
of the Company's management, necessary for a fair presentation of 
the information for the periods presented.  These adjustments are 
of a normal, recurring nature.  Operating results for the three 
months ended March 31, 1998 are not necessarily indicative of the 
results expected for any future periods.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

        Principles of Consolidation

        The condensed consolidated financial statements include the 
accounts of the Company and its subsidiaries.  All intercompany 
accounts and transactions have been eliminated in consolidation.

        Cash and Cash Equivalents

        For purposes of the Statements of Cash Flows, the Company 
considers all highly liquid investments with an original maturity 
of 90 days or less to be cash equivalents.  Cash equivalents 
primarily consist of certificates of deposit, money market 
accounts, treasury bills and commercial paper with a maturity of 
less than 90 days.

        Investments

        The Company accounts for its investments under the provision of 
Statement of Financial Accounting Standards No.  115 (SFAS 115), 
"Accounting for Certain Investments in Debt and Equity 
Securities."  The Company has classified all marketable debt 
securities and long-term debt investments as held-to-maturity and 
has accounted for these investments at amortized cost.


        Revenue Recognition

        The Company generates revenues from licensing the rights to use 
its software products directly to end-users and indirectly through 
sublicense fees from resellers.  The Company also generates 
revenues from sales of customer support, consulting and training 
services performed for customers that license its products.

        Revenues from software license agreements are recognized upon 
shipment of the software if collection is probable, payment is due 
within one year, the fee is fixed or determinable and vendor 
specific evidence exists to allocate the total fee to all elements 
of the arrangement.  If an acceptance period is required, revenues 
are recognized upon the earlier of customer acceptance or the 
expiration of the acceptance period.  If significant post-delivery 
obligations exist or if a product is subject to customer 
acceptance, revenues are deferred until no significant obligations 
remain or acceptance has occurred.  Revenues from services have to 
date consisted primarily of consulting revenues, customer support 
revenues and, to a lesser extent, training revenues.  The Company 
enters into reseller arrangements that typically provide for 
sublicense fees payable to the Company based on a percent of the 
Company's list price.  Sublicense fees are generally recognized as 
reported by the reseller in re-licensing the Company's products to 
end-users.  In certain circumstances, sublicense fees are 
recognized upon the initial sale if all products subject to 
sublicensing are shipped in the current period, no rights of 
return policy exists, collection is probable, payment is due 
within one year, and fee is fixed or determinable.  If these 
conditions are not met, the Company does not recognize sublicense 
fees until reported by the reseller in re-licensing the Company's 
products to end-users.

        Revenues from customer support services are recognized ratably 
over the term of the support period.  If customer support services 
are included free or at a discount in a license agreement, these 
amounts are allocated out of the license fee at their fair market 
value based on the value established by independent sale of the 
customer support services to customers.  Consulting revenues are 
primarily related to implementation services performed on a time 
and materials basis under separate service arrangements related to 
the installation of the Company's software products.  Revenues 
from consulting and training services are recognized as services 
are performed.  If a transaction includes both license and service 
elements, license fee revenue is recognized upon shipment of the 
software, provided services do not include significant 
customization or modification of the base product and the payment 
terms for licenses are not subject to acceptance criteria.  In 
cases where license fee payments are contingent upon the 
acceptance of services, revenues from both the license and the 
service elements are deferred until the acceptance criteria are 
met.

        Cost of license revenues includes the costs of product media, 
product duplication and manuals.  Cost of service revenues is 
primarily comprised of employee-related costs and fees for third-
party consultants incurred in providing consulting, customer 
support and training services.

        Deferred revenues primarily relate to customer support fees, 
which have been paid by the customers prior to the performance of 
these services.

Software Development Costs

        The Company capitalizes internally generated software 
development costs under the provision of Statement of Financial 
Accounting Standards No.  86 (SFAS 86), "Accounting for Costs of 
Computer Software to be Sold, Leased or Otherwise Marketed."  
Capitalization of computer software development costs begins upon 
the establishment of technological feasibility, which the Company 
has defined as completion of a working model.  Internally 
generated capitalizable software development costs have not been 
material for the periods presented and thus, the Company has 
charged its software development costs to research and development 
expense in the accompanying condensed consolidated statements of 
operations.

Earnings per Share:

        Statement of Financial Accounting Standards No. 128 (SFAS 128), 
"Earnings per Share," requires companies to compute net income per 
share under two different methods- basic and diluted per share 
data- for all periods for which an income statement is presented. 
 Basic earnings per share is computed by dividing net income by 
the weighted average number of common shares outstanding for the 
quarters ended March 31, 1998 and 1997.  Diluted earnings per 
share reflects the potential dilution that could occur if the 
income were divided by the weighted-average number of common and 
potential common shares outstanding during the period.  Diluted 
earnings per share is computed by dividing net income by weighted 
average number of common shares and potential common shares from 
outstanding stock options for the quarters ended March 31, 1998 
and 1997.  For the quarter ended March 31, 1998, the diluted 
earnings per share calculation excludes the effects of convertible 
debt securities because such inclusion would be anti-dilutive.  
Potential common shares are calculated using the treasury stock 
method and represent incremental shares issuable upon exercise of 
the Company's outstanding options.  

        The following table provides a reconciliation of the numerators 
and denominators used in calculating basic and diluted earnings 
per share for the three months ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
 (In thousands, except per share data)           
                                        For the Three Months Ended March 31,
                                                -------------------
                                                    1998      1997
                                                --------- ---------
<S>                                             <C>       <C>


 Net income                                       $3,719    $2,549

Basic Earnings Per Share 
 Income available to common shareholders          $3,719    $2,549
 Weighted average common shares outstanding       25,384    24,194
                                                --------- ---------
 Basic earnings per share                          $0.15     $0.11
                                                ========= =========
Diluted Earnings Per Share 
 Income available to common shareholders          $3,719    $2,549
 Weighted average common shares outstanding       25,384    24,194

 Common stock option grants                        1,826     2,021
                                                --------- ---------
 Total weighted average common shares
    and equivalents                               27,210    26,215
                                                ========= =========

 Diluted earnings per share                        $0.14     $0.10
                                                ========= =========

</TABLE>

Options to purchase approximately 900,000 shares and 800,000
shares of common stock were outstanding at March 31, 1998 and 
1997, respectively, but were not included in the computation of 
diluted earnings per share as a result of their anti-dilutive 
effect.

Convertible Subordinated Notes

        On August 21, 1997, the Company sold an aggregate of $69.0 
million in principal amount of convertible subordinated notes due 
2002 to certain investors in the United States and outside the 
United States and incurred approximately $2.4 million of offering 
expenses in connection with this issuance.  These notes have a 
4.75% coupon over a five-year term and are convertible into the 
Company's common stock at the Company's option, if and when the 
share price exceeds $41.93 per share.  The Company intends to use 
the net proceeds of $66.6 million for working capital and other 
general corporate purposes.

Comprehensive Income

        In June 1997, the Financial Accounting Standards Board 
issued SFAS No. 130 (SFAS 130), "Reporting Comprehensive Income," 
which establishes standards for reporting and display of 
comprehensive income and its components (revenue, expenses, gains 
and losses) in a full set of general-purpose financial statements. 
 The following table reconciles comprehensive income under the 
provisions of SFAS 130 for the three months ended March 31, 1998 
and 1997.


                                        (In thousands)
                                        For the Three Months Ended March 31, 
                                        -------------------
                                            1998      1997
                                        --------- ---------



       Net income                               $3,719    $2,549
       Other Comprehensive Loss, net of tax
           Unrealized Currency Loss            $  (32)   $  (36)
                                               --------- ---------
       Comprehensive Income                     $ 3,687   $2,513
                                              ========= =========


Item 2: Management's Discussion and Analysis of Financial 
Condition and Results of Operations

        THE VANTIVE CORPORATION

Overview

The Company was founded in October 1990 to develop software to 
enable businesses to improve their customer service.  The Company 
was engaged principally in research and development from inception 
through December 31, 1992.  The Company's suite of products 
addresses the front-office automation market and is called the 
Vantive Enterprise.  The Vantive Enterprise consists of the 
following applications: Vantive Sales, Vantive Support, Vantive 
FieldService, Vantive Inventory, Vantive Procurement, Vantive 
HelpDesk and Vantive Quality. The release of Vantive Enterprise 7 
in the third quarter of 1997 contains significant enhancements to 
all applications and a new development environment, Vantive Object 
Studio, which allows for rapid customization, deployment and 
administration of the Vantive Enterprise.  License fees for the 
Company's software products consist of (i) a per server fee based 
on the specific Vantive Enterprise application(s) licensed and 
(ii) a fee based on the maximum number of concurrent, named or 
mobile users allowed to access those applications.  Most of the 
Company's revenues to date have resulted from non-recurring 
license fees based on sales of concurrent user licenses.  The 
remaining revenues are primarily attributable to service revenues, 
which include customer support, consulting and training revenue.  
Of these service revenues, only customer support revenues are 
expected to be recurring. Customer support revenues accounted for 
approximately 16.1% and 12.5% of total revenues, for the quarters 
ended March 31, 1998 and 1997, respectively.  Because concurrent 
user fees are not application-specific, the Company cannot 
precisely determine the breakdown of revenues attributable to 
specific applications for customers that have purchased more than 
one application.  However, the Company believes that most of its 
revenues have been derived from fees associated with Vantive 
Support, Vantive Sales and, to a lesser degree, Vantive HelpDesk. 
 In any period, a significant portion of the Company's revenues 
may be derived from large sales to a limited number of customers. 
However, no customer accounted for over 10% of total revenues 
during the quarters ended March 31, 1998 and 1997.  As significant 
sales to a particular customer are typically non-recurring, the 
Company does not believe its future results are dependent on 
recurring revenues from any particular customer.

        The Company's revenues are derived from software license fees 
and fees for its services.  License revenues consist of license 
fees for the Company's products as well as fees from sublicensing 
third party software products. The Company generally recognizes 
license fees upon shipment of software products if collection is 
probable, the license agreement requires payment within one year, 
the fee is fixed or determinable and vendor specific evidence 
exists to allocate the total fee to all elements of the 
arrangement.  If significant post-delivery obligations exist or if 
a product is subject to customer acceptance, revenues are deferred 
until no significant obligations remain or acceptance has 
occurred.  Revenues from services have to date consisted primarily 
of consulting revenues, customer support revenues and, to a lesser 
extent, training revenues.  Consulting and training revenues 
generally are recognized as services are performed.  Customer 
support revenues are recognized ratably over the term of the 
support period, which is typically one year.  If customer support 
services are included free or at a discount in a license 
agreement, such amounts are allocated out of the license fee at 
their fair market value based on the value established by 
independent sale of such customer support services to customers.  
If a transaction includes both license and service elements, 
license fee revenue is recognized upon shipment of the software, 
provided services do not include significant customization or 
modification of the base product and the payment terms for 
licenses are not subject to acceptance criteria.  In cases where 
license fee payments are contingent upon the acceptance of 
services, revenues from both the license and the service elements 
are deferred until the acceptance criteria are met. 

This Management's Discussion and Analysis of Financial 
Condition and Results of Operations includes a number of forward-
looking statements which reflect the Company's current views with 
respect to future events and financial performance.  These 
forward-looking statements are subject to certain risks and 
uncertainties, including those discussed below that could cause 
actual results to differ materially from historical results or 
those anticipated. In this report, the words "anticipate," 
"believes," "expects," "future," "intends," and similar 
expressions identify forward-looking statements.  Readers are 
cautioned not to place undue reliance on these forward-looking 
statements, which speak only as of the date hereof.  Readers 
should carefully review the risk factors described in other 
documents the Company files with the Securities Exchange 
Commission, including the Annual Report on Form 10-K for the 
fiscal year ended December 31, 1997.  See "Business Risks."

Results of Operations

        The following table sets forth the percentages that income 
statement items are to total revenues for the three months ended 
March 31, 1998 and 1997.



                                           Three Months Ended
                                            March 31,
                                          -------------------
                                          1998      1997
                                          --------- ---------

REVENUES 
  License                                     62.1%     66.7%
  Service                                     37.9%     33.3%
                                          --------- ---------
          Total revenues                     100.0%    100.0%
                                          --------- ---------
COST OF REVENUES:
  License                                      0.5%      0.5%
  Service                                     20.2%     18.0%
                                          --------- ---------
          Total cost of revenues              20.7%     18.5%
                                          --------- ---------
GROSS MARGIN                                  79.3%     81.5%
                                          --------- ---------
OPERATING EXPENSES 
  Sales and marketing                         38.9%     42.9%
  Research and development                    16.4%     14.7%
  General and administrative                   8.3%      7.6%
                                          --------- ---------
          Total operating expenses            63.6%     65.2%
                                          --------- ---------
OPERATING INCOME                              15.7%     16.3%
OTHER INCOME                                   0.6%      1.6%
                                          --------- ---------
INCOME BEFORE PROVISION
  FOR INCOME TAXES                            16.3%     17.9%
PROVISION FOR INCOME TAXES                     6.0%      6.6%
                                          --------- ---------
NET INCOME                                    10.3%     11.3%
                                          ========= =========



Revenues

License.  The Company increased its license revenues by 49.9% to 
$22.5 million from $15.0 million for the quarters ended March 31, 
1998 and 1997, respectively.  The increase in license revenues was 
due to the market's growing acceptance of the Company's products 
and the release of Vantive Enterprise 7 in the third quarter of 
1997.  The Company does not believe that the historical growth 
rates of license revenues will be sustainable or are indicative of 
future results.

Service.  Service revenues are primarily comprised of fees from 
consulting, customer support and, to a lesser extent, training 
services.  Service revenues increased by 83.6% to $13.8 million 
from $7.5 million for the quarters ended March 31, 1998 and 1997, 
respectively.  The increase in service revenues was primarily due 
to the increase in consulting, customer support and, to a lesser 
extent, training services associated with increased sales of the 
Company's applications.  As the Company implements its strategy of 
encouraging third party organizations such as systems integrators 
to become proficient in implementing the Company's products, 
consulting revenues as a percentage of total revenues may decrease. 


Cost of Revenue

License.  Cost of license revenues includes the cost of product 
media, product duplication and manuals.  Cost of license revenues 
through the quarter ended March 31,1998 has averaged less than 1% 
of license revenues.  Cost of license revenues increased by 70.0% 
to $204,000, or 0.9% of the related license revenues from $120,000, 
or 0.8% of related license revenues for the quarters ended March 
31, 1998 and 1997, respectively.  The increase in absolute dollars 
in cost of license revenues was primarily due to the increase in 
volume shipments of the Company's software applications and the 
cost of sublicensing third-party software. 

Service.  Cost of service revenues is primarily comprised of 
employee-related costs and fees for third-party consultants 
incurred in providing consulting, customer support and training 
services.  Cost of service revenues increased by 80.8% to $7.3 
million, or 53.1% of the related service revenues from $4.0 
million, or 53.9% of related service revenues for the quarters 
ended March 31, 1998 and 1997, respectively.  The increase in 
absolute dollars was due primarily to increases in consulting, 
support and training personnel and third-party service providers 
during these periods.  The decrease in cost of service revenues as 
a percentage of the related service revenues was primarily due to 
the variation in the resources used during the period.  The cost of 
services as a percentage of service revenues may vary between 
periods due to the mix of services provided by the Company and the 
resources used to provide these services. 

Operating Expenses

        Sales and Marketing.  Sales and marketing expenses increased 
by 46.2% to $14.1 million, or 38.9% of total revenues from $9.7 
million, or 42.9% of total revenues for the quarters ended March 
31, 1998 and 1997, respectively. This increase in absolute dollars 
was primarily related to the expansion of the Company's sales and 
marketing resources, increased commissions expenses as a result of 
higher sales levels and increased marketing activities, including 
trade show, direct mail and other promotional expenses.  The 
Company plans to continue to invest heavily in expanding its sales 
and marketing activities.  Accordingly, sales and marketing 
expenses are anticipated to increase both in absolute dollars and 
as a percentage of revenues over the coming year.


        Research and Development.  Research and development expenses 
increased by 80.2% to $5.9 million, or 16.4% of total revenues 
from $3.3 million, or 14.7% of total revenues for the quarters 
ended March 31, 1998 and 1997, respectively.  Research and 
development expenses increased in absolute dollars primarily as a 
result of an increase in personnel and outside contractors to 
support the Company's product development activities.  Over the 
coming years, the Company plans to continue to invest heavily in 
research and development.  As a result, research and development 
expenses are anticipated to increase in absolute dollars over the 
coming year.

Research and development expenses are generally charged to 
operations as incurred.  In accordance with Statement of Financial 
Accounting Standards No. 86, internally-generated costs which were 
eligible for capitalization for these periods were insignificant 
and the Company charged all internally-generated software 
development costs to research and development expense.


        General and Administrative.  General and administrative 
expenses increased by 74.6% to $3.0 million, or 8.3% of total 
revenues from $1.7 million or 7.6% of total revenues in the 
quarters ended March 31,1998 and 1997, respectively.  General and 
administrative expenses increased in absolute dollars during these 
periods primarily due to the addition of staff and information 
system investments to support the growth of the Company's business 
during these periods.  The Company expects general and 
administrative expenses will increase in absolute dollars over the 
coming year

        Provision for Income Taxes.  The Company's provision for 
state, federal and foreign income taxes was $2.2 million and $1.5 
million for the quarters ended March 31, 1998 and 1997, 
respectively based upon an estimated effective tax rate of 37% for 
both periods. 


Business Risks

This report includes a number of forward-looking statements, 
which reflect the Company's current views on future events and 
financial performance.  These forward-looking statements are 
subject to certain risks and uncertainties, including those 
discussed below which could cause actual results to differ 
materially from historical results or those anticipated.  Some of 
the forward-looking statements are generally applicable to emerging 
growth companies or to the software industry, others are specific 
to the front-office automation market and others are specific to 
the Company.  In this report, the words "anticipates," "believes," 
"expects," "intends," "future" and similar expressions identify 
forward-looking statements.  Readers are cautioned not to place 
undue reliance on these forward-looking statements, which speak 
only as of the date hereof.

Future Operating Results Uncertain.  The Company has experienced 
significant growth in revenues in recent periods.  The Company does 
not believe that the historical growth rates of revenues will be 
sustainable or are indicative of future results.  In addition, the 
Company's limited operating history makes the prediction of future 
operating results difficult or impossible.  The Company's future 
operating results will depend on many things, including demand for 
the Company's products, the level of product and price competition, 
the ability of the Company to develop and market new products and 
to control costs, the ability of the Company to expand its direct 
sales force and indirect distribution channels and the ability to 
attract and retain key personnel.  The Company is currently 
investing, and intends to continue to invest, significant resources 
to develop its sales strategy, which could adversely affect the 
Company's operating margins.   Competition for good salespeople and 
sales managers is intense and there can be no assurance that the 
Company can retain its existing sales personnel or that it can 
attract, assimilate and retain additional highly qualified sales 
personnel in the future.  The Company's strategy also depends, in 
part, on relationships with third parties.  There also can be no 
assurance that the Company will attract and retain appropriate 
high-end integrators, resellers and other third party distributors 
to market the Company's products effectively.  Further, the Company 
believes, based on interactions with its customers and potential 
customers, that the purchase of its products is relatively 
discretionary and generally involves a significant commitment of 
capital.  As a result, in the event of any downturn in any 
potential customer's business or the economy in general, purchases 
of the Company's products may be deferred or canceled, which could 
have a material adverse effect on the Company's business, results 
of operations and financial condition. The Company was not 
profitable prior to 1995 and there can be no assurance that the 
Company will remain profitable on a quarterly or annual basis. 

Fluctuations in Quarterly Operating Results.  The Company's 
quarterly operating results have in the past varied and will 
probably in the future vary significantly depending on factors such 
as the size, timing and recognition of revenue from significant 
orders, increased competition, the timing of new product releases 
by the Company and its competitors, market acceptance of the 
Company's products, changes in the Company's and its competitors' 
pricing policies, the mix of license and service revenue, budgeting 
cycles of its customers, seasonality, the mix of direct and 
indirect sales, changes in operating expenses, changes in Company 
strategy, personnel changes, foreign currency exchange rates and 
general economic factors.  

A significant portion of the Company's revenues in any quarter 
is typically derived from non-recurring sales to a limited number 
of customers.  Accordingly, revenues in any one quarter are not 
indicative of revenues in any future period.  In addition, like 
many software applications businesses, the Company has generally 
recognized a substantial portion of its revenues in the last month 
of each quarter, with these revenues concentrated in the last weeks 
of the quarter.  Any significant deferral of purchases of the 
Company's products could have a material adverse effect on the 
Company's business, results of operations and financial condition 
in any particular quarter and to the extent that significant sales 
occur earlier than expected, operating results for subsequent 
quarters may be adversely affected. Product revenues are also 
difficult to forecast because the market for front-office 
automation software products is rapidly evolving.  The Company's 
sales cycle is typically six to nine months but varies 
substantially from customer to customer.  The Company expects that 
sales made through indirect channels, which are harder to predict 
and usually have lower margins than direct sales, will increase as 
a percentage of total revenues.  

The Company operates with little order backlog because its 
products are typically shipped shortly after orders are received. 
 As a result of these factors, quarterly revenues for any future 
quarter are not predictable with any significant degree of 
certainty.  The Company's expense levels are based, in part, on 
its expectations as to future revenues.  Net income may be 
disproportionately affected by a reduction in revenues, because 
most of the Company's expenses do not vary with revenues.  The 
Company may also choose to reduce prices or increase spending in 
response to competition or to pursue new market opportunities.  In 
particular, if new competitors, technological advances by existing 
competitors, or other competitive factors require the Company to 
invest significantly greater resources in research and development 
efforts, the Company's operating margins in the future may be 
adversely affected.  

The foregoing statements regarding the Company's future revenues 
and net income are forward-looking statements and actual results 
may vary substantially depending upon a variety of factors 
described in this section and elsewhere in this report.   

Because of these factors, the Company believes that period-to-
period comparisons of its results of operations are not necessarily 
meaningful and that such comparisons should not be relied upon as 
indications of future performance. Due to all of the foregoing 
factors, it is likely that in some future quarter the Company's 
operating results will be below the expectations of public market 
analysts and investors.  If this happens, the price of the 
Company's Common Stock will likely be materially adversely 
affected.

Rapid Technological Change and Product Development Risks.  The 
front-office automation software market is subject to rapid 
technological change, changing customer needs, frequent new product 
introductions and evolving industry standards that may render 
existing products and services less marketable or obsolete.  As a 
result, the Company's position in its existing markets or other 
markets that it may enter could be eroded rapidly by product 
advances.  The life cycles of the Company's products are difficult 
to estimate.  The Company's growth and future financial performance 
will depend in part on its ability to enhance existing 
applications, develop and introduce new applications that keep pace 
with technological advances, meet changing customer requirements, 
respond to competitive products and achieve market acceptance.  
These are increasingly complex and costly undertakings.  For 
example, the Company's customers have adopted a wide variety of 
hardware, software, database, Internet-based and networking 
platforms and as a result, to gain broad market acceptance, the 
Company must continue to support and maintain its products on a 
variety of such platforms.  The Company's future success will 
depend on its ability to address the increasingly sophisticated 
needs of its customers by supporting existing and emerging 
hardware, software, database, Internet-based and networking 
platforms and by developing and introducing enhancements to its 
products and new products on a timely basis that keep pace with 
technological developments, evolving industry standards and 
changing customer requirements.  The Company may not be able to 
successfully change other aspects of its business, such as its 
distribution channels or cost structure, if technological changes 
in its market require such change.  

The Company's product development efforts require substantial 
investments by the Company.  There can be no assurance that the 
Company will have sufficient resources to make the necessary 
investments.  The Company has in the past experienced development 
delays and there can be no assurance that the Company will not 
experience such delays in the future.  There can be no assurance 
that the Company will not experience difficulties that could delay 
or prevent the successful development, introduction or marketing of 
new or enhanced products in the future.  In addition, there can be 
no assurance that such products will meet the requirements of the 
marketplace and achieve market acceptance.  If the Company is 
unable, for technological or any other reasons, to develop and 
introduce new and enhanced products in a timely manner, the 
Company's business, results of operations and financial condition 
could be materially adversely affected.

Software products as complex as those offered by the Company may 
contain errors that may be detected at any point in the products' 
life cycles.  The Company has in the past discovered software 
errors in certain of its products and has delayed shipment of 
products during the period required to correct these errors.  There 
can be no assurance that, despite testing by the Company and by 
current and potential customers, errors will not be found, 
resulting in loss of, or delay in, market acceptance and sales, 
diversion of development resources, injury to the Company's 
reputation, or increased service and warranty costs, any of which 
could have a material adverse effect on the Company's business, 
results of operations and financial condition.  

International Operations, Foreign Currency Fluctuations.  
International revenue, or revenue derived from sales to customers 
in foreign countries, accounted for approximately 29% and 13% of 
the Company's revenue in the quarter ended March 31, 1998 and 
1997, respectively.  The majority of this international revenue 
has come from Europe.  The Company believes that its continued 
growth and profitability will require further expansion of its 
international operations.  To successfully expand international 
sales, the Company must establish additional foreign operations, 
hire additional personnel and recruit additional international 
resellers.  To the extent that the Company is unable to do so in a 
timely manner, the Company's growth in international sales, if any, 
will be limited and the Company's business, results of operations 
and financial condition could be materially adversely affected.  

 As the Company continues to expand its international 
operations, significant costs may be incurred before achieving any 
additional international revenues, which could have a material 
adverse effect on the Company's business, results of operations and 
financial condition.  In addition, future increases in the value of 
the U.S. dollar could make the Company's products less competitive 
in foreign markets.  There are certain risks inherent in doing 
business on an international level, such as unexpected changes in 
regulatory requirements, export restrictions, tariffs and other 
trade barriers, difficulties in staffing and managing foreign 
operations, longer payment cycles, problems in collecting accounts 
receivable, political instability, changes in foreign economic 
conditions, fluctuations in currency exchange rates, seasonal 
reductions in business activity during the summer months in Europe 
and certain other parts of the world and potentially adverse tax 
consequences, any of which could adversely impact the success of 
the combined company's international operations.  The Company's 
foreign subsidiaries operate primarily in local currencies, and 
their results are translated into US dollars.  If the value of the 
US dollar increases relative to foreign currencies, the Company's 
operating results could be materially adversely affected.  In 
particular, revenue from sales in the Pacific Rim could be 
adversely affected by declines in the value of such currencies 
against the dollar.

The Company has not been significantly affected by the recent 
unfavorable economic conditions in certain Asian and Pacific Rim 
countries.  If the economic conditions in these markets do not 
improve, this may have an adverse impact on the Company's business, 
results of operations, and financial condition.

        Competition.  The front-office automation software market is 
intensely competitive, highly fragmented and subject to rapid 
change.  Because the Company offers multiple applications that can 
be purchased separately or integrated as part of Vantive 
Enterprise, the Company competes with a variety of other 
businesses depending on the target market for their applications 
software products.  These competitors include a select number of 
businesses targeting the enterprise-level and department-level 
front-office markets, such as Astea International, Inc., Aurum 
Software, Inc. (a subsidiary of The Baan Company), Clarify, Inc., 
Onyx Software, Scopus Technology, Inc. and Siebel Systems, Inc.  
In March 1998, Siebel Systems, Inc. and Scopus Technology, Inc. 
announced that they had entered into a definitive agreement for 
Siebel to acquire all of the outstanding shares of Scopus 
Technology, Inc.  

The Company also competes with a substantial number of 
businesses that offer products targeted at one or more specific 
markets, including the customer support market, the help desk 
market, the quality assurance market and the sales and marketing 
automation market, such as Remedy Corporation and Software 
Artistry, Inc. (which was recently acquired by the IBM subsidiary, 
Tivoli Systems, Inc.).  The Company believes that such point 
solution providers may expand their product offerings, which could 
provide increased competition for the company across its market 
segments.  The Company also competes with third party professional 
service organizations that develop custom software and with 
internal information technology departments of customers that 
develop customer interaction applications.  Among the Company's 
current and potential competitors are also a number of large 
hardware and software businesses that may develop or acquire 
products that compete with the Company's products. In this regard, 
SAP AG, Oracle Corporation and The Baan Company have each 
introduced sales automation and/or customer support modules as 
part of their application suites.  Oracle has announced the 
creation of a network of third party dealers that will sell 
Oracle's application suites exclusively to medium-sized 
businesses.  

The Company expects that large software vendors in the 
enterprise resource planning market will continue to enter and 
pursue the front-office automation market.  These competitors have 
significantly greater financial, marketing, service, support, 
technical and other resources than the Company.

The Company also expects that competition will increase as a 
result of software industry consolidations. Current and potential 
competitors have established or may establish cooperative 
relationships among themselves or with third parties to increase 
the ability of their products to address the needs of the 
Company's prospective customers.  Accordingly, it is possible that 
new competitors or alliances among competitors may emerge and 
rapidly acquire significant market share.  The Company also 
expects that competition may increase as a result of both new 
software start ups entering the market as well as existing 
software industry vendors which may be planning to enter the 
market for front-office applications.  Increased competition is 
likely to result in price reductions, reduced operating margins 
and loss of market share, any of which could materially adversely 
affect the Company's business, results of operations and financial 
condition.  Many of the Company's current and potential 
competitors have significantly greater financial, marketing, 
service, support, technical and other resources than the Company. 
 As a result, they may be able to respond more quickly to new or 
emerging technologies and changes in customer requirements, or to 
devote greater resources to the development, promotion, service 
and sale of their products than can the Company.  There can be no 
assurance that the Company will be able to compete successfully 
against current and future competitors or that competitive 
pressures faced by the Company will not materially adversely 
affect its business, results of operations and financial 
condition.

The Company believes that the principal competitive factors 
affecting its market include product features such as 
adaptability, scalability, ability to integrate with products 
produced by other vendors, functionality, ease of use and such 
other factors as product reputation, quality, performance, price, 
customer service and support, the effectiveness of sales and 
marketing efforts and company reputation.  Although the Company 
believes that its products currently compete favorably with 
respect to such factors, there can be no assurance that the 
Company can maintain its competitive position against current and 
potential competitors, especially those with significantly greater 
financial, marketing, service, support, technical and other 
resources.

Management of Expanding Operations; Dependence Upon Key 
Personnel.  The Company's ability to compete effectively and to 
manage future growth, if any, will require the Company to continue 
to improve its financial and management controls, reporting systems 
and procedures on a timely basis and expand, train and manage its 
workforce. There can be no assurance that the Company will be able 
to do so.  The Company's failure to do so could have a material 
adverse effect on the Company's business, results of operations and 
financial condition.  The Company has recently hired a significant 
number of employees, including senior sales, marketing, research 
and development and finance personnel and in order to maintain its 
ability to grow in the future, the Company will be required to 
significantly increase its total headcount.  In addition, the 
Company's future performance depends in significant part upon 
attracting and retaining key technical, sales, senior management 
and financial personnel.  In particular, delays in hiring sales or 
research and development personnel may have a material adverse 
effect on the Company's business, results of operations and 
financial condition.  The loss of the services of one or more of 
the Company's officers or the inability to recruit other additional 
senior management could have a material adverse effect on the 
Company's business, results of operations and financial condition. 
 Competition for such personnel is intense and the inability to 
retain its key technical, sales, senior management and financial 
personnel or to attract, assimilate or retain other highly 
qualified technical, sales, senior management and financial 
personnel in the future on a timely basis could have a material 
adverse effect on the Company's business, results of operations and 
financial condition.  

Increased Use of Third Party Software.  The Company currently 
markets a proprietary application development environment for its 
customers to tailor its products.  This application development 
environment is also used by the Company to build and modify its 
products.  The Company believes, based on interactions with its 
customers and potential customers, that it currently derives a 
competitive advantage from this proprietary application development 
environment.  However, the Company believes that competitive 
pressures, technological changes demanded by customers and 
significant advances in the sophistication of third party 
application development tools such as Visual Basic will require the 
Company to make greater use of third party software in the future. 
 The greater use of third party software could require the Company 
to invest significant resources in rewriting some or all of its 
software applications products utilizing third party software 
and/or to enter into license arrangements with third parties which 
could result in higher royalty payments and a loss of product 
differentiation and any competitive advantage associated with the 
proprietary development environment.  There can be no assurance 
that the Company would be able to successfully rewrite its 
applications or enter into commercially reasonable licenses and the 
costs of, or inability or delays in, doing so could have a material 
adverse effect on the Company's business, results of operations and 
financial condition.  

Dependence on Emerging Markets for Front-Office Automation 
Software; Product Concentration.  The Company's future financial 
performance will depend in large part on the growth in demand for 
individual front-office automation applications as well as the 
number of organizations adopting comprehensive front-office 
automation software information systems.  To date, much of the 
Company's license revenues have resulted from sales of individual 
applications, particularly Vantive Support and Vantive HelpDesk.  
The markets for these applications are relatively new and 
undeveloped and failure of these markets to expand would have a 
material adverse effect on the Company's business, results of 
operations and financial condition.  Additionally, the Company is 
investing in the sales, field service and quality automation 
markets.  Should these markets fail to develop, not accept the 
Company's products or cause the company to lose new business and/or 
customers in its traditional markets, there would be an adverse 
effect on the Company's business, results of operations and 
financial condition.

The Company believes that an important competitive advantage for 
its software applications is their ability to be integrated with 
one another and with other back-office software applications to 
create an enterprise-wide information system.  If the demand for 
integrated suites of front-office automation applications fails to 
develop, or develops more slowly than the Company currently 
anticipates, it could have a material adverse effect on the demand 
for the Company's applications and on its business, results of 
operations and financial condition.  In addition, any other factor 
adversely affecting the demand for the Company's existing 
applications could have a material adverse effect on the Company's 
business, results of operations and financial condition.

Need to Expand Distribution Channels and Successfully Leverage 
Third Party Relationships.  An important element of the Company's 
distribution strategy is to expand its direct sales force, to 
create additional relationships with third parties and to dedicate 
certain direct sales resources and leverage third party 
relationships to cover key vertical markets.  An important element 
of the Company's strategy is to integrate its products with 
products from enterprise resource planning ("ERP") vendors.  The 
Company is currently investing and intends to continue to invest, 
significant resources toward these strategies, which could 
adversely affect the Company's operating margins.  In this regard, 
the Company has recently hired and continues to hire significant 
numbers of direct salespeople.  Competition for salespeople is 
intense and there can be no assurance that the Company can retain 
its existing salespeople or that it can attract, assimilate and 
retain additional highly qualified salespeople in the future.  The 
strategy also depends, in large part, on attracting and retaining 
beneficial third party relationships.  There also can be no 
assurance that the Company will be able to attract and retain 
appropriate high-end integrators, resellers, other third party 
distributors or ERP vendors.  The Company's agreements with these 
third parties are not exclusive and, in many cases, may be 
terminated by either party without cause.  In addition, many of 
these third parties sell or co-market competing product lines. 
Therefore, there can be no assurance that any of these parties will 
continue to represent or recommend the Company's products.  There 
also can be no assurance that the Company will effectively identify 
key vertical markets.  The inability to recruit, or the loss of, 
important direct sales personnel, high-end integrators, resellers, 
other third party distributors or ERP vendors, or the failure to 
effectively identify key vertical markets, could have a material 
adverse effect on the Company's business, results of operations and 
financial condition.

Possible Volatility of Stock Price.  Future announcements 
concerning the Company or its competitors, quarterly variations in 
operating results, announcements of technological innovations, the 
introduction of new products or changes in product pricing policies 
by the Company or its competitors, proprietary rights or other 
litigation, changes in earnings estimates by analysts or other 
factors could cause the market price of the Common Stock to 
fluctuate substantially.  In addition, stock prices for many 
technology companies fluctuate widely for reasons which may be 
unrelated to operating results of such companies.  These 
fluctuations, as well as general economic, market and political 
conditions such as changes in interest rates, recessions or 
military conflicts, may materially and adversely affect the market 
price of the Company's Common Stock.  In the past, following 
periods of volatility in the market price of a company's 
securities, securities class action litigation has often been 
instituted against such companies.  Such litigation could result in 
substantial costs and a diversion of management's attention and 
resources, which could have a material adverse effect on the 
Company's business, results of operations and financial condition.

Dependence on Licensed Technology.  Vantive licenses technology 
on a non-exclusive basis from several businesses for use with its 
products and anticipates that it will continue to do so in the 
future.  The inability of the Company to continue to license these 
products or to license other products for use with its products or 
substantial increases in royalty payments under these third party 
licenses could have a material adverse effect on its business, 
results of operations and financial condition.  In addition, the 
effective implementation of the Company's products depends upon the 
successful operation of these licensed products in conjunction with 
the Company's products and therefore any undetected errors in such 
licensed products may prevent the implementation or impair the 
functionality of the Company's products, delay new product 
introductions and/or injure the Company's reputation.  Such 
problems could have a material adverse effect on the Company's 
business, results of operations and financial condition.

Dependence on Proprietary Technology; Risks of Infringement.  
The Company's success is heavily dependent upon proprietary 
technology.  The Company relies primarily on a combination of 
copyright, trademark and trade secrets laws, as well as 
confidentiality procedures and contractual provisions to protect 
its proprietary rights.  There can be no assurance that such 
measures will be adequate to protect the Company from infringement 
of its technology.  The Company presently has no patents or patent 
applications pending.  Despite the Company's efforts to protect its 
proprietary rights, attempts may be made to copy aspects of the 
Company's products or to obtain and use information that the 
Company regards as proprietary.  In particular, as the Company 
provides its licensees with access to the proprietary information 
underlying the Company's licensed applications, there can be no 
assurance that licensees or others will not develop products which 
infringe the Company's proprietary rights.  

Policing unauthorized use of the Company's products is difficult 
and while the Company is unable to determine the extent to which 
piracy of its software products exists, software piracy can be 
expected to be a persistent problem.  In addition, the laws of some 
foreign countries do not protect the Company's proprietary rights 
to as great an extent as do the laws of the United States.  There 
can be no assurance that the Company's means of protecting its 
proprietary rights will be adequate or that the Company's 
competitors will not independently develop similar technology.  The 
Company is not aware that any of its products infringe the 
proprietary rights of third parties, although the Company has in 
the past and may in the future, receive communications alleging 
possible infringement of third party intellectual property rights. 
The Company expects that software product developers will 
increasingly be subject to infringement claims as the number of 
products and competitors in the Company's target markets grows and 
the functionality of products in such markets overlaps.  Any such 
claims, with or without merit, could be time-consuming, result in 
costly litigation, cause product shipment delays or require the 
Company to enter into royalty or licensing agreements.  Such 
royalty or licensing agreements, if required, may not be available 
on terms acceptable to the Company or at all, which could have a 
material adverse effect upon the Company's business, results of 
operations and financial condition.  

Product Liability.  The Company's license agreements with its 
customers typically contain provisions intended to limit the 
Company's exposure to potential product liability claims.  It is 
possible that the limitation of liability provisions contained in 
the Company's agreements may not be effective.  Although the 
Company has not experienced any product liability claims to date, 
the sale and support of products by the Company and the 
incorporation of products from other businesses may entail the risk 
of such claims.  A successful product liability action brought 
against the Company could have a material adverse effect upon the 
Company's business, results of operations and financial condition.

Year 2000 Compliance.  Many currently installed computer systems 
and software products are coded to accept only two digit entries in 
the date code field.  These date code fields will need to accept 
four digit entries to distinguish 21st century dates from the 20th 
century dates.  As a result many companies' software and computer 
systems may need to be upgraded or replaced in order to comply with 
such "Year 2000" requirements.  Although the Company believes that 
its systems are Year 2000 compliant, the Company utilizes third-
party equipment and software that may not be Year 2000 compliant.  
Failure of such third-party equipment or software to operate 
properly with regard to Year 2000 and thereafter could require the 
Company to incur unanticipated expenses to address any problems, 
which could have a material adverse effect on the Company's 
business, operating results and financial condition.  The business, 
operating results and financial condition of the Company's 
customers could be adversely affected to the extent that they 
utilize third-party software products which are not Year 2000 
compliant.  Furthermore, the purchasing patterns of customers or 
potential customers may be affected by Year 2000 issues as 
companies expend significant resources to correct their current 
systems for Year 2000 compliance.  These expenditures may result in 
reduced funds available to purchase products and services such as 
those offered by the Company, which could have a material adverse 
effect on the Company's business, operating results and financial 
condition.  The Vantive Enterprise has been designed to support 
dates well into the next century and to be Year 2000 compliant.  
Failure of the software to operate properly with regard to Year 
2000 and thereafter could require the Company to incur 
unanticipated expenses to address any problems, which could have a 
material adverse effect on the Company's business, operating 
results and financial condition. 

Risks Associated with Potential Acquisitions.  As part of its 
business strategy, the Company expects to review acquisition 
prospects that would complement its existing product offerings, 
augment its market coverage or enhance its technological 
capabilities or that may otherwise offer growth opportunities.  
Future acquisitions by the Company could result in potentially 
dilutive issuances of equity securities, the incurrence of debt and 
contingent liabilities or amortization expenses related to goodwill 
and other intangible assets, any of which could materially 
adversely affect the Company's operating results and/or the price 
of the Company's Common Stock.  Acquisitions entail numerous risks, 
including difficulties in the assimilation of acquired operations, 
technologies and products, diversion of management's attention to 
other business concerns, risks of entering markets which the 
Company has no or limited prior experience and potential loss of 
key employees of acquired organizations.  No assurance can be given 
as to the ability of the Company to successfully integrate any 
businesses, products, technologies or personnel that might be 
acquired in the future, and the failure of the Company to do so 
could have a material adverse effect on the business, operating 
results and financial condition of the Company. 


Financial Condition

Total assets as of March 31, 1998 increased by 4.0%, or 
$6.5 million from December 31, 1997.  The combined balance of cash 
and short-term investments increased by $3.4 million primarily due 
to collections of accounts receivable and operating activities.  
Net property and equipment increased $1.4 million primarily due to 
equipment purchases associated with supporting the growth of the 
Company's business during this period.


Total current liabilities as of March 31, 1998 increased by 
4.3%, or $1.6 million from December 31, 1997.  The increase 
primarily was due to increases in deferred revenues of $4.0 
million partially offset by a decrease in accounts payable and 
accrued liabilities of $2.4 million.  The increase in deferred 
revenues is primarily due to deferrals associated with higher 
volume of revenues related to post-contract support.  The decrease 
in accounts payable and accrued liabilities is due to reduced 
expense levels.



Liquidity and Capital Resources

Operating activities provided cash of $4.9 million in the 
quarter ended March 31, 1998.  The primary source of these funds 
was net income and an increase in deferred revenues, partially 
offset by increases in accounts receivable, prepaid and other 
assets and a decrease in accounts payable and accrued liabilities. 
 Operating activities provided cash of $2.6 million in the quarter 
ended March 31, 1997.  The primary source of these funds was net 
income and an increase in accounts payable and accrued 
liabilities, partially offset by an increase in accounts 
receivable.  

Investing activities used cash of $42.8 million in the quarter 
ended March 31, 1998, primarily for the purchase of short-term, 
interest-bearing, investment-grade securities and for the purchase 
of capital equipment.  The Company does not currently have any 
material commitments for capital equipment acquisitions.  
Investing activities used cash of $2.1 million, in the quarter 
ended March 31, 1997, primarily for purchase of capital equipment. 


Financing activities provided cash of $1.0 million in the 
quarter ended March 31, 1998.  The primary source of these funds 
was proceeds from the issuance of common stock pursuant to the 
exercise of outstanding stock options, partially offset by payments 
on capital lease obligations.  Financing activities provided cash 
of $198,000, in the quarter ended March 31, 1997.  The primary 
source of these funds was proceeds from the issuance of common 
stock pursuant to the exercise of outstanding stock options, 
partially offset by payments on capital lease obligations.  

At March 31, 1998, the Company's principal sources of liquidity 
were its cash, cash equivalents and short-term investments of 
$104.8 million.  The Company believes that existing cash and short-
term investment balances and potential cash flow from operations 
will be sufficient to meet its cash requirements for the next 
twelve months.  While operating activities may provide cash in 
certain periods to the extent the Company experiences growth in the 
future, operating and investing activities may use cash and 
consequently, such growth may require the Company to obtain 
additional sources of financing.




Part II:        Other Information

Item 1: Legal Proceedings:

                Not Applicable.

Item 2: Changes in Securities:

                Not Applicable.


Item 3: Defaults upon Senior Securities:

                Not Applicable.

Item 4: Submission of Matters to a Vote of Security Holders:

                Not Applicable.


Item 5: Other Information:

                Not Applicable.

Item 6: Exhibits and Reports on Form 8-K:

        A.      Exhibits

        *       3.1     Form of Agreement and Plan of Merger between The 
Vantive Corporation, a California corporation, and The 
Vantive Corporation, a Delaware corporation.
        *       3.2     Bylaws.
        =       4.1     Declaration of Registration Rights made on August 31, 
1997 by the Company for the benefit of the holders of 
Common Stock of Innovative Computer Concepts, Inc.
        *       10.1    Form of Indemnity Agreement for officers and 
directors.
        *       10.2    1991 Stock Option Plan, as amended.
        *       10.3    1995 Outside Directors Stock Option Plan.
        *       10.4    1995 Employee Stock Purchase Plan.
        *       10.5    Offer Letter dated May 21, 1993 between the Company 
and John R. Luongo.
        *       10.6    Offer Letter dated April 6, 1995 between the Company 
and John M.  Jack.
        *+      10.7    Value Added Reseller License Agreement dated 
October 5, 1993 by and between Inference Corporation 
and the Company.
        *+      10.8    Basicscript License Agreement dated October 4, 1994 by 
and between Henneberry Hill Technologies Corporation 
doing business as Summit Software Company and the 
Company.
        *+      10.9    International VAR Agreement dated March 26, 1992 
between Oracle Corporation and the Company, as 
amended.
                10.9.1  International VAR Agreement dated June 28, 1996 
between Oracle Corporation and the Company, as 
amended.
        *+      10.10   Value Added Remarketer Agreement dated December 20, 
1991 between Sybase, Inc.  and the Company, as 
amended.
        *       10.11   Security and Loan Agreement dated May 12, 1995 between 
the Company and Imperial Bank.
        *+      10.12   Application Bridge API VAR License Agreement dated 
January 22, 1993 between the Company and Prospect 
Software, Inc.
        *+      10.13   Compensation Letter dated May 10, 1995 between the 
Company and John R. Luongo.
        *+      10.14   Compensation Letter dated May 10, 1995 between the 
Company and Steven M. Goldsworthy. 
10.15  Lease Agreement dated January 13, 1995 between John 
Arrillaga, Trustee, or his Successor Trustee, UTA 
dated July 20, 1977 (John Arrillaga Separate Property 
Trust) as amended, and Richard T. Peery, Trustee, or 
his Successor Trustee, UTA dated July 20, 1977 
(Richard T. Peery       
Separate Property Trust) as amended, and the Company.
        #       10.16   Lease Agreement dated September 4, 1996 between John 
Arrillaga, Trustee, or his Successor Trustee, UTA 
dated July 20, 1977 (Arrillaga Family Trust) as 
amended, and Richard T. Peery, Trustee, or his 
Successor Trustee, UTA dated July 20, 1977 (Richard T. 
Peery Separate Property Trust) as amended, and the 
Company.
        **      10.17   Agreement and Plan of Merger dated August 13, 1997 by 
and among The Vantive Corporation, Igloo Acquisition 
Corporation and Innovative Computer Concepts, Inc. as 
amended.  
27.1    Financial Summary Table

*       Previously filed in the Company's Registration Statement (No.  
        33-94244), declared effective on August 14, 1995.
+       Confidential Treatment has been granted for portions of this 
        exhibit.
#       Previously filed in the Report on Form 10-K filed on March 31, 
        1997.   
**      Previously filed in the Company's Report on Form 8-K filed on 
        September 26, 1997 and on Form 8-K/A filed on November 4, 1997.
=       Incorporated by reference from the Company's Registration 
        Statement (No. 333-36547), declared effective on November 4, 
        1997.




                                   SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          THE VANTIVE CORPORATION

Dated: May 12, 1998
                                          By:      /s/ KATHLEEN MURPHY
                                            ------------------------------------
                                                      Kathleen Murphy
                                                  Chief Financial Officer
                                               (Principal Financial Officer)

Dated: May 12, 1998
                                          By:      /s/ MICHAEL M. LOO
                                            ------------------------------------
                                                       Michael M. Loo
                                                  Vice President, Finance
                                               (Principal Accounting Officer)