=======================================================================
                                 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 JUNE 30, 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                                     77-0266
       (STATE OR OTHER JURISDICTION OF                       (I.R.S. EM
        INCORPORATION OR ORGANIZATION)                     IDENTIFICATI
</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 report
required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 mo
for such shorter period that the registrant was required to file such r
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 S
outstanding on August 10, 1998 was 26,106,690.


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




                            THE VANTIVE CORPORATION

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                    June 30,       Dece
                                                    1998           1997
                                                    ------------   ----
                                                    (unaudited)
<S>                                                 <C>            <C>
                             ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                             $25,709        
  Short-term investments                                 75,541        
  Accounts receivable, net                               36,928        
  Prepaid expenses and other current assets              16,151        
                                                    ------------   ----
          Total current assets                          154,329        
Property and equipment, net                              18,203        
Other assets                                              6,241        
                                                    ------------   ----
TOTAL ASSETS                                           $178,773       $
                                                    ============   ====

                  LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                                       $9,871        
  Accrued Liabilities                                    22,456        
  Current portion of capital lease obligations              140        
  Deferred revenues                                      16,569        
                                                    ------------   ----
          Total current liabilities                      49,036        

Convertible debt                                         69,000        
Capital lease obligations, net of current portion            --        
Other                                                       282        

STOCKHOLDERS' EQUITY:
  Preferred Stock: $.001 par value, 2,000,000 
     shares authorized; no shares issued and 
     outstanding at June 30, 1998                            --        
  Common Stock:  $.001 par value, 50,000,000 
     shares authorized; 26,005,683 shares at 
     June 30, 1998 and 25,275,191 shares at 
     December 31, 1997 issued and outstanding                26        
  Additional paid-in-capital                             65,646        
  Accumulated Deficit                                    (5,217)       
                                                    ------------   ----
          Total stockholders' equity                     60,455        
                                                    ------------   ----
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY             $178,773       $
                                                    ============   ====
</TABLE>
     See accompanying notes.
<PAGE>
                            THE VANTIVE CORPORATION

                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                         Three Months Ended Six Months 
                                              June 30,          June 30
                                          ----------------- -----------
                                          1998     1997     1998     19
                                          -------- -------- -------- --
<S>                                       <C>      <C>      <C>      <C
REVENUES 
  License                                 $19,182  $16,893  $41,699  $3
  Service                                  18,560    9,117   32,323   1
                                          -------- -------- -------- --
          Total revenues                   37,742   26,010   74,022   4
                                          -------- -------- -------- --
COST OF REVENUES:
  License                                     115      182      319    
  Service                                  10,937    4,975   18,249    
                                          -------- -------- -------- --
          Total cost of revenues           11,052    5,157   18,568    
                                          -------- -------- -------- --
GROSS MARGIN                               26,690   20,853   55,454   3
                                          -------- -------- -------- --
OPERATING EXPENSES 
  Sales and marketing                      16,191   10,674   30,317   2
  Research and development                  6,235    3,610   12,179    
  General and administrative                2,860    2,037    5,862    
  Acquired in-process 
   research and development                 8,206      --     8,206    
  Acquisition-related 
   compensatory expense                     1,290      --     1,290    
                                          -------- -------- -------- --
          Total operating expenses         34,782   16,321   57,854   3
                                          -------- -------- -------- --
INCOME (LOSS) FROM OPERATIONS              (8,092)   4,532   (2,400)   
OTHER INCOME                                  213      390      424    
                                          -------- -------- -------- --
INCOME (LOSS) BEFORE PROVISION
  FOR INCOME TAXES                         (7,879)   4,922   (1,976)   
PROVISION FOR INCOME TAXES                    121    1,817    2,305    
                                          -------- -------- -------- --
NET INCOME (LOSS)                         ($8,000)  $3,105  ($4,281)  $
                                          ======== ======== ======== ==

NET INCOME (LOSS) PER BASIC SHARE          ($0.31)   $0.13   ($0.17)   
                                          ======== ======== ======== ==
NET INCOME (LOSS) PER DILUTED SHARE        ($0.31)   $0.12   ($0.17)   



BASIC-SHARES USED IN 
 PER SHARE COMPUTATION                     25,666   24,265   25,525   2
                                          ======== ======== ======== ==
DILUTED-SHARES USED IN 
 PER SHARE COMPUTATION                     25,666   26,141   25,525   2

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

<TABLE>
<CAPTION>
                                                              SIX MONTH
                                                                  June 
                                                       ----------------
                                                       1998          19
                                                       ------------  --
<S>                                                    <C>           <C
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                                        ($4,281)    
  Adjustments to reconcile net income(loss)to net cash
     provided by operating activities:
     Acquired in-process research and development            8,206     
     Acquisition-related compensatory expense                1,290     
     Depreciation and amortization                           2,414     
     Provision for sales allowances and
       doubtful accounts                                       696     
    Changes in net assets and liabilities, net of acquisition --
       Increase in accounts receivable                      (4,322)    
       Increase in prepaid expenses and other current assets
       Increase in other assets                             (2,889)    
       Increase in other assets                             (1,170)    
       Increase (decrease) in accounts payable and
          accrued liabilities                               (2,078)    
       Increase (decrease) in long-term liabilities           (109)    
       Increase  in deferred revenues                        5,850     
                                                       ------------  --
          Net cash provided by operating activities          3,607     
                                                       ------------  --
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of short-term investments                       (51,741)    
  Purchase of property and equipment                        (7,517)    
  Cash acquired in Wayfarer acquisition                        101     
                                                       ------------  --
          Net cash used in investing activities            (59,157)    
                                                       ------------  --
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                     4,058     
  Payments on capital lease obligations                       (192)    
                                                       ------------  --
          Net cash provided by financing activities          3,866     
                                                       ------------  --
NET DECREASE IN CASH AND CASH EQUIVALENTS                  (51,684)    
EFFECT OF EXCHANGE RATE CHANGES ON CASH                       (190)    
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD              77,583     
                                                       ------------  --
CASH AND CASH EQUIVALENTS, END OF PERIOD                   $25,709     
                                                       ============  ==
</TABLE>
     See accompanying notes
<PAGE>

        THE VANTIVE CORPORATION
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
        (UNAUDITED)


1.      BASIS OF PRESENTATION

        The 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 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 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 and six months ended June 30, 1998 are 
not necessarily indicative of the results expected for any 
future periods.

2. ACQUISITION

In June 1998, the Company acquired Wayfarer 
Communications, Inc. ("Wayfarer"), a privately held 
California corporation that specializes in web-based 
information delivery by merging a wholly owned subsidiary of 
the Company into Wayfarer (the "Acquisition").  The Company 
issued 163,969 shares of its common stock and assumed all 
outstanding warrants, which were converted to 2,251 shares 
of the Company's common stock in exchange for approximately 
89% of Wayfarer shares.  In addition, the Company received 
$101,000 in cash as part of the acquisition.  The Company 
anticipates that it will record charges associated with 
acquiring the remaining minority interest of approximately 
11% upon the completion of the acquisition of the remaining 
shares in the quarter ending September 30, 1998.  The 
Acquisition was recorded under the purchase method of 
accounting and the results of operations of Wayfarer and the 
fair value of the acquired assets and liabilities were 
included in the Company's financial statements beginning on 
the acquisition date.  A Form 8-K was filed by the Company 
on July 15, 1998 in connection with the acquisition.  

In connection with the Acquisition, acquired in-process 
research and development of approximately $8.2 million 
associated with the 89% acquired interest was expensed in 
the quarter ended June 30, 1998.   The Company anticipates 
that an additional in-process research and development 
charge of approximately $1.0 million, associated with the 
acquisition of the remaining minority interest will be 
charged in the quarter ending September 30, 1998.  The 
Company has also recorded a compensatory expense of $1.3 
million associated with the Acquisition for the quarter 
ended June 30, 1998.  An additional compensatory expense of 
approximately $300,000 is expected to be charged in each of 
the quarters ending September 30, 1998 and December 31, 
1998.  The remaining intangibles were recorded as goodwill 
and will be amortized on a straight-line basis over five 
years.  

The following table presents the unaudited pro forma 
results assuming that the Company had acquired Wayfarer at 
the beginning of 1998 and 1997, respectively.  Net income 
and basic and diluted earnings per share amounts have been 
adjusted to exclude the write-off of acquired in process 
research and development of approximately $8.2 million and 
the acquistion-related compensatory expense of $1.2 million 
and include the goodwill amortization of approximately 
$98,000 for the six months ended June 30, 1998 and 1997.  
This information may not necessarily be indicative of the 
future combined results of operations of the Company.



3.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

        Principles of Consolidation

        The 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 the fee is fixed and 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 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 
June 30, 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 
common stock equivalents from outstanding stock options for 
the quarter ended June 30, 1997.  Common stock equivalents 
are calculated using the treasury stock method and represent 
incremental shares issuable upon exercise of the Company's 
outstanding options.  For the quarter and the six months 
ended June 30, 1998, net loss per diluted share is based on 
weighted average common shares and excludes any common stock 
equivalents as they would be anti-dilutive due to the 
reported loss. The following table provides a reconciliation 
of the numerators and denominators used in calculating basic 
and diluted earnings per share for the three and six months 
ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>
                                           (In thousands except per sha
                                         Three Months Ended  Six Months
                                              June 30,          June 30
                                          ----------------- -----------
                                          1998     1997     1998     19
                                          -------- -------- -------- --
<S>                                       <C>      <C>      <C>      <C
Net income (loss)                         ($8,000)  $3,105  ($4,281)  $
Basic Earnings Per Share:
  Income (loss) available to
    common shareholders                   ($8,000)  $3,105  ($4,281)  $

   Weighted average common 
     shares outstanding                    25,666   24,265   25,525   2
                                          -------- -------- -------- --
Basic earnings (loss) per share:           ($0.31)   $0.13   ($0.17)   
                                          -------- -------- -------- --
Diluted Earnings Per Share:
  Income (loss) available to
    common shareholders                   ($8,000)  $3,105  ($4,281)  $
   Weighted average common 
     shares outstanding                    25,666   24,265   25,525   2
   Common stock equivalents                    --    1,876     --     1
                                          -------- -------- -------- --
     Total weighted average common shares
       and equivalents                     25,666   26,141   25,525   2
                                          -------- -------- -------- --
Diluted earnings (loss) per share:         ($0.31)   $0.12   ($0.17)   
                                          -------- -------- -------- --

</TABLE>

Approximately 1.8 million and 1.9 million shares of weighted 
average common stock equivalents were   excluded in the 
computation of diluted earnings per share during the quarter 
and the six months ended June 30, 1998, respectively as a 
result of their anti-dilutive effect due to the reported 
loss.  Approximately 900,000 and 1.7 million shares of 
weighted average common stock equivalents were excluded in 
the computation of diluted earnings per share for the 
quarter and six months ended June 30, 1997 respectively, 
because the options' exercise price was greater than the 
average market price of the common shares.

Stock Option Repricing Program:

        Effective as of July 27, 1998, the Compensation 
Committee of the Company's Board of Directors authorized 
employees the right to exchange certain outstanding stock 
options for option grants with an exercise price of $13.25 
per share (the fair market value on July 24, 1998), provided 
that such employees made the election to convert by that 
date.  In connection to the reprice, optionholders who 
exchange their options will not be permitted to exercise any 
exchanged options for a six-month period beginning on the 
effective date of the exchange.

Convertible Subordinated Notes

        On August 21, 1997, the Company sold an aggregate of 
$69.0 million in principal amount of convertible 
subordinated notes, due August 2002, to certain investors 
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 investor's option, if and when 
the share price exceeds $41.93 per share.


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 and six months ended June 30, 1998 and 1997.

<TABLE>
<CAPTION>
                                           (In thousands except per sha
                                           Three Months Ende Six Months
                                              June 30,          June 30
                                          -------- -------- -----------
                                          1998     1997     1998     19
                                          -------- -------- -------- --
<S>                                       <C>      <C>      <C>      <C
Net income (loss)                         ($8,000)  $3,105  ($4,281)  $
Other Comprehensive income 
       (loss), net of tax:
   Unrealized Currency gain (loss)           (142)      31     (114)   
                                          -------- -------- -------- --
Comprehensive income (loss)               ($8,142)  $3,136  ($4,395)  $
                                          -------- -------- -------- --
</TABLE>

Property
In June 1998, the Company entered into a seven year agreement 
 whereby it leased new facilities in Santa Clars for a
 total commitment of $18.4 million. The Company will 
occupy the facilities on an incremental basis over term of 
the lease and has various options to extend term of lease, 
if deemed necessary, or to terminate the lease in accordance 
with provisions of the agreement.  

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'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 
Company made available Vantive 8 in the second quarter of 
1998, which contains significant enhancements including the 
integration of Vantive Inventory and Vantive Procurement and 
the global Vantive Enterprise with the addition of the 
Partner Desktop feature.  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 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 18.3% and 12.6% 
of total revenues for the quarters ended June 30, 1998 and 
1997, respectively, and accounted for approximately 17.2% 
and 12.5% of total revenues for the first six months of 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 
June 30, 1998 and 1997.  As significant sales to a 
particular end user customer are typically non-recurring, 
the Company does not believe its future results are 
dependent on recurring revenues from any particular 
customer, however the Company has derived recurring revenues 
from customers who use the Company's products to deliver 
software services to other customers.

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 
and six months ended June 30, 1998 and 1997.
<TABLE>
<CAPTION>
                                        Three Months Ended  Six Months 
                                              June 30,          June 30
                                          ----------------- -----------
                                          1998     1997     1998     19
                                          -------- -------- -------- --
<S>                                       <C>      <C>      <C>      <C
REVENUES 
  License                                    50.8%    64.9%    56.3%   
  Service                                    49.2%    35.1%    43.7%   
                                          -------- -------- -------- --
          Total revenues                    100.0%   100.0%   100.0%   
                                          -------- -------- -------- --
COST OF REVENUES:
  License                                     0.3%     0.7%     0.4%   
  Service                                    29.0%    19.1%    24.6%   
                                          -------- -------- -------- --
          Total cost of revenues             29.3%    19.8%    25.0%   
                                          -------- -------- -------- --
GROSS MARGIN                                 70.7%    80.2%    75.0%   
                                          -------- -------- -------- --
OPERATING EXPENSES 
  Sales and marketing                        42.9%    42.9%    53.8%   
  Research and development                   16.5%    14.7%    16.5%   
  General and administrative                  7.6%     7.8%     7.9%   
  Acquired in-process 
   research and development                  21.7%      --     11.1%   
  Acquisition-related 
   compensatory expense                       3.4%      --      1.7%   
                                          -------- -------- -------- --
          Total operating expenses           92.2%    62.8%    78.2%   
                                          -------- -------- -------- --
INCOME (LOSS) FROM OPERATIONS             (-21.5%)    17.4%  (-3.2%)   
OTHER INCOME                                  0.6%     1.5%     0.5%   
                                          -------- -------- -------- --
INCOME (LOSS) BEFORE PROVISION
  FOR INCOME TAXES                        (-20.9%)    17.9%  (-2.7%)   
PROVISION FOR INCOME TAXES                    0.3%     6.0%     3.1%   
                                          -------- -------- -------- --
NET INCOME (LOSS)                         (-21.2%)    11.9%  (-5.8%)   
                                          ======== ======== ======== ==
</TABLE>

Revenues

License.  The Company increased its license revenues by 
13.6% to $19.2 million from $16.9 million for the three 
months ended June 30, 1998 and 1997, respectively, and by 
30.6% to $41.7 million from $31.9 million in the first six 
months of June 30, 1998 and 1997, respectively.  The increase 
in license revenues was due to market growth for the 
Company's products.  The Company does not believe that the 
historical growth rates of license revenues will necessarily 
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 103.6% to 
$18.6 million from $9.1 million for the three months ended 
June 30, 1998 and 1997, respectively, and by 94.6% to $32.3 
million from $16.6 million in the first six months of June 
30, 1998 and 1997, respectively.  The increase in service 
revenues was primarily due to the increased demand for 
consulting, customer support and, to a lesser extent, 
training services associated with 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, but demand for consulting 
services provided by the Company has continued to grow even 
while the Company has pursed this strategy.  

Cost of Revenue

License.  Cost of license revenues includes the cost of 
product media, product duplication and manuals.  Cost of 
license revenues decreased by 36.8% to $115,000, or 0.8% of 
the related license revenues from $182,000, or 1.1% of 
related license revenues for the three months ended June 30, 
1998 and 1997, respectively.  The decrease in cost of license 
revenues as a percentage of the related license revenues was 
primarily due to the costs reduction in developing the 
product media and product duplication during the quarter 
ended June 30, 1998.  The cost of license revenues increased 
by 5.6% to $319,000, or 0.8% of the related license revenues 
from $302,000, or 0.9% of related license revenues in the 
first six months of June 30, 1998 and 1997, respectively.  
The increase in absolute dollar was primarily attributed to 
the increases in volume shipments of the Company's software 
applications and royalties due on embedded third-party 
licenses.  

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 119.8% to $10.9 million, or 58.9% of the related 
service revenues from $5.0 million, or 54.6% of related 
service revenues for the quarters ended June 30, 1998 and 
1997, respectively.  Cost of service revenues increased by 
102.3% to $18.2 million, or 56.5% of the related service 
revenues from $9.0 million, or 54.3% of the related service 
revenues in the first six months of 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 increase 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 51.7% to $16.2 million, or 42.9% of total 
revenues from $10.7 million, or 41.1% of total revenues for 
the quarters ended June 30, 1998 and 1997, respectively.  
Sales and marketing expenses increased by 49.1% to $30.3 
million, or 41.0% of total revenues from $20.3 million, or 
41.9% of total revenues in the first six months of 1998 and 
1997, respectively.  This increase in absolute dollars was 
primarily related to the expansion of the Company's sales 
force and marketing activities, increased expenses as a 
result of the increase in sales related headcount, 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 72.7% to $6.2 million, or 16.5% of 
total revenues from $3.6 million, or 13.9% of total revenues 
for the quarters ended June 30, 1998 and 1997, respectively. 
 Research and development expenses increased by 76.3% to 
$12.2 million, or 16.5% of total revenues from $6.9 million, 
or 14.2% of total revenues in the first six months of 1998 
and 1997, respectively.  Research and development expenses 
increased in absolute dollars and as percentage of total 
revenues 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 40.4% to $2.9 million, or 7.6% of 
total revenues from $2.0 million or 7.8% of total revenues 
in the quarters ended June 30,1998 and 1997, respectively.  
General and administrative expenses increased by 56.1% to 
$5.9 million, or 7.9% of total revenues from $3.8 million, 
or 7.8% of total revenues in the first six months of 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.

Acquired in-process research and development. In June 
1998, the Company acquired Wayfarer Communications, Inc. 
("Wayfarer"), a privately-held California corporation that 
specializes in web-based information delivery by merging a 
wholly-owned subsidiary of the Company into Wayfarer (the 
"Acquisition").  The Company issued 163,969 shares of its 
common stock, received $100,000 in cash, and assumed all 
outstanding warrants, which were converted to 2,251 shares 
of the Company's common stock in exchange for approximately 
89% of Wayfarer shares.  In addition, the Company received 
$101,000 in cash as part of the acquisition.   The Company 
anticipates that it will record charges associated with 
acquiring the remaining minority interest of approximately 
11%  upon the completion of the acquisition of the remaining 
shares in the quarter ending September 30, 1998.  The 
Acquisition was recorded under the purchase method of 
accounting and the results of operations of Wayfarer and the 
fair value of the acquired assets and liabilities were 
included in the Company's financial statements beginning on 
the acquisition date. A Form 8-K was filed by the Company on 
July 15, 1998 in connection with the acquisition.  

In connection with the acquisition, acquired in-process 
research and development of approximately $8.2 million 
associated with the 89% acquired interest was expensed in 
the quarter ended June 30, 1998.   The Company anticipates 
that an additional in-process research and development 
charge of approximately $1.0 million, associated with the 
acquisition of the remaining minority interest will be 
charged in the quarter ending September 30, 1998.   The 
Company has also recorded a compensatory expense of $1.3 
million associated with the Acquisition for the quarter 
ended June 30, 1998.  An additional compensatory expense of 
approximately $300,000 is expected to be charged in each of 
the quarters ending September 30, 1998 and December 31, 
1998.  The remaining intangibles were recorded as goodwill 
and will be amortized on a straight-line basis over five 
years.

        Provision for Income Taxes.  The Company's provision 
for state, federal and foreign income taxes was $121,000 and 
$1.8 million for the quarters ended June 30, 1998 and 1997, 
respectively, based upon an estimated effective tax rate of 
37% for both periods. The Company's provision for state, 
federal and foreign income taxes was $2.3 million and $3.3 
million in the first six months of 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 its operations 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 and significant fluctuations 
in 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 
substantially 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, sales execution, 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, or failure by the Company to close 
anticipated transactions 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, and as occurred in the 
quarter ended June 30, 1998, 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.  

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. 

        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, and Siebel Systems, 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 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.

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, Vantive HelpDesk, and Vantive Sales.  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 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.

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 and 
marketing 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.  

International Operations, Foreign Currency Fluctuations.  
International revenue, or revenue derived from sales to 
customers in foreign countries, accounted for approximately 
28% and 15% of the Company's revenue in the quarter ended 
June 30, 1998 and 1997, and 28% and 13% of the Company's 
revenue in the six months ended June 30, 1998 and 1997, 
respectively.  International revenues increased by 177% for 
the quarter ended June 30, 1998 compared to quarter ended 
June 30, 1997 and by 214% for the six months ended June 30, 
1998 compared to six months ended June 30, 1997 
demonstrating the increased acceptance of Vantive's front 
office automation products internationally.  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.

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.  

Leverage; Subordination. In connection with the August 
1997 sale of its 4.75% Convertible Subordinated Notes (the 
"Notes"), the Company has incurred $69 million of 
indebtedness.  As a result of this additional indebtedness, 
the Company's principal and interest obligations have 
increased substantially.  The degree to which the Company is 
leveraged could materially and adversely affect the 
Company's ability to obtain financing for working capital, 
acquisitions or other purposes and could make it more 
vulnerable to industry downturns and competitive pressures. 
 The Company's ability to meet its debt service obligations 
is dependent upon the Company's future performance, which 
will be subject to financial, business and other factors 
affecting the operations of the Company, many of which are 
beyond its control.

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 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 Company's distribution 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.


        Anti-Takeover Effects of Restated Certificate of 
Incorporation, Bylaws and Delaware Law. Certain provisions 
of the Company's Restated Certificate of Incorporation and 
Bylaws and of Delaware law could discourage potential 
acquisition proposals and could delay or prevent a change in 
control of the Company.  Such provisions could diminish the 
opportunities for a stockholder to participate in tender 
offers, including tender offers at a price above the then 
current market value of the Common Stock.  Such provisions 
may also inhibit increase in the market price of the Common 
Stock that could result from takeover attempts.  In 
addition, the Restated Certificate of Incorporation 
authorizes 2,000,000 shares of undesignated preferred stock. 
 The Board of Directors of the Company, without further 
stockholder approval, may issue this preferred stock with 
such terms as the Board of Directors may determine, which 
could have the effect of delaying or preventing a change in 
control of the Company.  The issuance of preferred stock 
could also adversely affect the voting power of the holders 
of Common Stock, including the loss of voting control.  Such 
preferred stock could be utilized to implement, without 
stockholder approval, a stockholders' right plan that could 
be triggered by certain change in control transactions, 
which could delay or prevent a change in control of the 
Company or could impede a merger, consolidation, takeover or 
other business Combination involving the Company, or 
discourage a potential acquiror from making a tender offer 
or otherwise attempting to obtain control of the Company.  
The Company's Bylaws and indemnity agreements provide that 
the Company will indemnify officers and directors against 
losses that they may incur in legal proceedings resulting 
from their service to the Company.  In addition, the 
Restated Certificate of Incorporation and Bylaws eliminate 
the right of stockholders to take action by written consent. 
 Moreover, Section 203 of the Delaware General Corporation 
Law restricts certain business combinations with "interested 
stockholders" as defined by that statute.  The provisions of 
the Restated Certificate of Incorporation and Bylaws and of 
Delaware law are intended to encourage potential acquirers 
to negotiate with the Company and allow the Board of 
Directors the opportunity to consider alternative proposals 
in the interest of maximizing stockholder value.  However, 
such provisions may also have the effect of discouraging 
acquisition proposals or delaying or preventing a change in 
control of the Company, which in turn may have an adverse 
effect on the market price of the Company's Common Stock.

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. 

Financial Condition

Total assets as of June 30, 1998 increased by 9.9%, or 
$16.0 million from December 31, 1997.  The combined balance 
of cash and short-term investments decreased by $133,000 
primarily due to operating activities.  Net property and 
equipment increased $5.7 million primarily due to equipment 
purchases associated with supporting the growth of the 
Company's business during this period.

Total current liabilities as of June 30, 1998 increased 
by 30.3%, or $11.4 million from December 31, 1997.  The 
increase was primarily due to increases in accounts payable 
of $6.2 million and deferred revenues of $6.7 million, 
partially offset by a decrease in accrued liabilities of 
$1.4 million.  The increase in accounts payable is primarily 
due to increased business activities and the increase in 
deferred revenues is primarily due to deferrals associated 
with higher volume of revenues related to post-contract 
support.  

Liquidity and Capital Resources

Operating activities provided cash of $3.6 million in the 
six months ended June 30, 1998.  The primary source of these 
funds was an increase in deferred revenues and long-term 
liabilities, partially offset by increases in accounts 
receivable, prepaid expenses and other assets.  Operating 
activities provided cash of $4.1 million in the six months 
ended June 30, 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 and other assets.  

Investing activities used cash of $59.2 million and $7.2 
million in the six months ended June 30, 1998 and 1997, 
respectively, 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.

Financing activities provided cash of $3.9 million in the 
six months ended June 30, 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 $401,000, in the six months ended 
June 30, 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.  

        On August 21, 1997, the Company sold an aggregate of 
$69.0 million in principal amount of convertible 
subordinated notes, due August 2002, to certain investors 
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 investor's option, if and when 
the share price exceeds $41.93 per share.  The Company has 
used the proceeds primarily for operating activities and 
equipment purchases.   

At June 30, 1998, the Company's principal sources of 
liquidity were its cash, cash equivalents and short-term 
investments of $101.3 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:

                The Company's Annual Meeting of Stockholders was 
held on May 5, 1998.  Proxies for the meeting 
were solicited pursuant to Regulation 14A.  At 
the meeting, management's nominees for directors 
were elected.  A summary of the nominees and 
voting results is as follows:

<TABLE>
<CAPTION>
<S>                                     Shares        Shares
Nominee                                 Voting For    Withheld

                                        <C>           <C>
John R. Luongo                            21,046,360   31,250
Aneel Bhusri                              20,929,915  147,695
William Davidow                           21,046,460   31,150
Kevin Hall                                21,046,460   31,150
Raymond Ocampo                            21,044,960   32,650
Peter Roshko                              21,046,260   31,350
</TABLE>

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 Th
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 Technologie
                        Corporation doing business as Summit Software 
                        Company and the Company.
        *+      10.9    International VAR Agreement dated March 26, 199
                        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   Application Bridge API VAR License Agreement 
                        dated January 22, 1993 between the Company and 
                        Prospect Software, Inc.
        *+      10.12   Compensation Letter dated May 10, 1995 between 
                        the Company and John R. Luongo.
               '10.13   Lease Agreement dated January 13, 1995 between 
                        John Arrillaga, Trustee, or his Successor 
                        Trustee, UTA dated July 20, 1977 (John Arrillag
                        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.
        #       10.14   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.
        **      10.15   Agreement and Plan of Merger dated August 13, 
                        1997 by and among The Vantive Corporation, Iglo
                        Acquisition Corporation and Innovative Computer
                        Concepts, Inc. as amended.  
                10.16   Lease Agreement dated June 22, 1998 between 
                        Augustine Partners, LLC and the Company.
                10.17   Offer Letter dated July 31, 1998 between the 
                        Company and Leonard Le Blanc.

                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 193
Registrant has duly caused this report to be signed on its behalf by th
undersigned thereunto duly authorized.

                                          THE VANTIVE CORPORATION

Dated: August 14, 1998

                                          By:      /s/ MICHAEL M. LOO
                                            ---------------------------
                                                       Michael M. Loo
                                                  Vice President, Finan
                                               (Principal Accounting Of