<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                _______________
 
                                   FORM 10-Q
 

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

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998


                                 OR

        [_]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                                        
                                        
         FOR THE TRANSITION PERIOD FROM _____________ TO _____________
                                        

                    COMMISSION FILE NUMBER: 0-20725


                                        
                              SIEBEL SYSTEMS, INC.
                                        
             (Exact name of registrant as specified in its charter)


                  DELAWARE                          94-3187233

    (State or other jurisdiction of   (I.R.S. Employer Identification No.)
     incorporation or organization)


                            1855 SOUTH GRANT STREET
                              SAN MATEO, CA 94402
          (Address of principal executive offices, including zip code)


                                 (650) 295-5000
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                Yes [X]  No [_]

  The number of shares outstanding of the registrant's common stock, par value
              $.001 per share, as of May 6, 1998, was 71,695,276.

                                       1
<PAGE>
 
                              SIEBEL SYSTEMS, INC.

                                   FORM 10-Q

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                               TABLE OF CONTENTS

                                        

<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION                                                                          PAGE
                                                                                                        ----

<S>                                                                                                     <C> 
     Item  1.  Financial Statements

               a)  Consolidated Balance Sheets
                   as of March 31, 1998 and December 31, 1997                                             3

               b) Consolidated Statements of Operations
                  for the three months ended March 31, 1998 and 1997                                      4

               c) Consolidated Statements of Cash Flows
                  for the three months ended March 31, 1998 and 1997                                      5

               d) Notes to Consolidated Financial Statements                                              6


     Item 2.   Management's Discussion and Analysis of Financial Condition and
               Results of Operations                                                                      8

PART II. OTHER INFORMATION

     Item 1.   Legal Proceedings                                                                         14

     Item 2.   Changes in Securities and Use of Proceeds                                                 14

     Item 6.   Exhibits and Reports on Form 8-K                                                          15

SIGNATURE                                                                                                16
</TABLE>

                                       2
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                   PART I. FINANCIAL INFORMATION
                                                   Item 1. Financial Statements

                                                       SIEBEL SYSTEMS, INC.

                                                    CONSOLIDATED BALANCE SHEETS
                                               (In thousands, except per share data)
                                                                                                                
                                                                                                                

                                                                                    March 31,        December 31,
                                                                                      1998               1997
                                                                                      ----               ----
                                                    Assets
                                                    ------
                                                                                (unaudited)
<S>                                                                         <C>                <C>  
Current assets:
      Cash and cash equivalents                                              $        45,768    $        31,257
      Short term investments                                                          61,976             62,894
      Accounts receivable, net                                                        38,124             33,246
      Deferred income taxes                                                            3,076              3,076
      Prepaids and other                                                               4,827              4,954
                                                                             ---------------    ---------------

                Total current assets                                                 153,771            135,427
                                                                                                                
Property and equipment, net                                                           10,965             11,129
Other assets                                                                           2,900              2,756
                                                                             ---------------    ---------------
                Total assets                                                 $       167,636    $       149,312
                                                                             ===============    ===============
                                                                                                                
                                     Liabilities and Stockholders' Equity
                                     ------------------------------------
Current liabilities:
      Accounts payable                                                       $         1,801    $         1,702
      Accrued expenses                                                                20,788             20,802
      Income taxes payable                                                             2,639              1,178
      Deferred revenue                                                                15,635             12,903
                                                                             ---------------    ---------------

                Total current liabilities                                             40,863             36,585
                                                                                                                
      Deferred income taxes                                                              162                162
                                                                             ---------------    ---------------

                Total liabilities                                                     41,025             36,747
                                                                             ---------------    ---------------
                                                                                                                
Stockholders' equity:
      Common stock;  $.001 par value;  300,000 shares authorized;
          71,470 and 70,894 shares issued and outstanding, respectively                   71                 71
      Additional paid in capital                                                     116,649            110,927
      Notes receivable from stockholders                                                (406)              (406)
      Deferred compensation                                                             (522)              (578)
      Retained earnings                                                               11,199              2,914
      Cumulative translation adjustment                                                 (380)              (363)
                                                                             ---------------    ---------------

                Total stockholders' equity                                           126,611            112,565
                                                                             ---------------    ---------------
                                                                                                                
                Total liabilities and stockholders' equity                   $       167,636    $       149,312
                                                                             ===============    ===============
</TABLE> 

         See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
 
<TABLE> 
<CAPTION> 

                                                                                                    
                                SIEBEL SYSTEMS, INC.

                        CONSOLIDATED STATEMENTS OF OPERATIONS
                        (In thousands, except per share data)
                                    (unaudited)

                                                                                                    
                                                                                                    
                                                                           Three Months Ended
                                                                                March 31,
                                                                                ---------
                                                                          1998               1997
                                                                          ----               ----
<S>                                                             <C>                <C>                      
Revenues:
       Software                                                          $38,802            $16,561
       Maintenance, consulting and other                                   8,298              2,924
                                                                         -------            -------

                   Total revenues                                         47,100             19,485

                                                                                                    
Cost of revenues:
       Software                                                              572                113
       Maintenance, consulting and other                                   4,412              1,601
                                                                         -------            -------
                   Total cost of revenues                                  4,984              1,714
                                                                         -------            -------
                                                                                                    
                   Gross margin                                           42,116             17,771

Operating expenses:
       Product development                                                 4,500              2,580
       Sales and marketing                                                23,018              9,367
       General and administrative                                          2,613              1,983
                                                                         -------            -------

                   Total operating expenses                               30,131             13,930
                                                                         -------            -------

                   Operating income                                       11,985              3,841
                                                                                                    
Other income, net                                                            960                607
                                                                         -------            -------

                   Income before income taxes                             12,945              4,448
                                                                                                    
Income taxes                                                               4,660              1,690
                                                                         -------            -------
                                                                                                    
                   Net income                                            $ 8,285            $ 2,758
                                                                         =======            =======

Diluted net income per share                                             $  0.10            $  0.03
                                                                         =======            =======

Shares used in diluted net income per share computation                   84,789             79,063
                                                                         =======            =======

Basic net income per share                                               $  0.12            $  0.04
                                                                         =======            =======

Shares used in basic net income per share computation                     71,254             67,962
                                                                         =======            =======
</TABLE> 

         See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                                                                
                                                       SIEBEL SYSTEMS, INC.

                                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          (In thousands)
                                                            (unaudited)
                                                                                                                                
                                                                                                                                
                                                                                                         Three Months Ended
                                                                                                             March 31,
                                                                                                             ---------
                                                                                                        1998              1997
                                                                                                        ----              ----
<S>                                                                                                 <C>                <C>     
Cash flows from operating activities:
        Net income                                                                                    $ 8,285           $ 2,758
        Adjustments to reconcile net income to net cash provided by
               operating activities:
                     Compensation related to stock options                                                 46                61
                     Depreciation and amortization                                                      1,212               652
                     Tax benefit from exercise of stock options                                         2,450                60
                     Loss on disposal of property and equipment                                           200               299
                     Allowance for doubtful accounts and returns                                          435                97
                     Changes in operating assets and liabilities:
                                 Accounts receivable                                                   (5,313)             (728)
                                 Prepaids and other                                                       127                68
                                 Accounts payable                                                          99            (2,506)
                                 Accrued expenses                                                         (14)            2,177
                                 Income taxes payable                                                   1,461              (436)
                                 Deferred revenue                                                       2,732            (1,480)
                                                                                                      -------           -------
                                              Net cash provided by operating activities                11,720             1,022
                                                                                                      -------           -------
Cash flows from investing activities:
        Purchases of property and equipment                                                            (1,248)             (734)
        Purchases and sales of short term investments                                                     918              (841)
        Other assets                                                                                     (144)              (11)
                                                                                                      -------           -------
                                              Net cash used in investing activities                      (474)           (1,586)
                                                                                                      -------           -------
Cash flows from financing activities:
        Proceeds from issuance of common stock                                                          3,265                98
                                                                                                      -------           -------
                                              Net cash provided by financing activities                 3,265                98
                                                                                                      -------           -------

Change in cash and cash equivalents                                                                    14,511              (466)
                                                                                                                                
Cash and cash equivalents, beginning of period                                                         31,257            22,671
                                                                                                      -------           -------
Cash and cash equivalents, end of period                                                              $45,768           $22,205
                                                                                                      =======           =======
Supplemental disclosures of cash flows information:
               Cash paid for income taxes                                                             $   602           $ 1,251
                                                                                                      =======           =======
</TABLE> 

         See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
 
                              SIEBEL SYSTEMS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


1. BASIS OF PRESENTATION

   The accompanying unaudited consolidated financial statements have been
   prepared on substantially the same basis as the audited consolidated
   financial statements, and in the opinion of management include all
   adjustments, consisting only of normal recurring adjustments, necessary for
   their fair presentation. The interim results presented are not necessarily
   indicative of results for any subsequent quarter or for the year ending
   December 31, 1998.

   For information as to the significant accounting policies followed by the
   Company and other financial and operating information, see the Company's
   Annual Report on Form 10-K, filed with the Securities and Exchange Commission
   on March 17, 1998 (the "Annual Report"). These consolidated financial
   statements should be read in conjunction with the consolidated financial
   statements included in that Annual Report.

2. NET INCOME PER SHARE

   Basic earnings per share is computed using the weighted average number of
   shares of common stock outstanding. Diluted earnings per share is computed
   using the weighted average number of shares of common stock and, when
   dilutive, outstanding common equivalent shares from options to purchase
   common stock using the treasury stock method.


   The following is a reconciliation of the numerators and denominators of the
   basic and diluted earnings per share computations for the periods presented:


<TABLE>
<CAPTION>
(in thousands)                                        Income                Shares                   Per Share Amount
                                                      (Numerator)           (Denominator) 
<S>                                                   <C>                   <C>                      <C> 
For the three months ended March 31, 1997:
Basic EPS:
  Net income                                           $2,758                67,962                 $0.04
Effect of dilutive potential common shares                  -                11,101                 $0.01
                                                  -------------------------------------------------------------------
Diluted EPS:
  Net income                                           $2,758                79,063                 $0.03
                                                  ===================================================================
For the three months ended March 31, 1998:
Basic EPS:
  Net income                                           $8,285                71,254                 $0.12
Effect of dilutive potential common shares                  -                13,535                 $0.02
                                                  -------------------------------------------------------------------
Diluted EPS:
  Net income                                           $8,285                84,789                 $0.10
                                                  ===================================================================
</TABLE>


 Note:  All share and per share amounts for the periods ended March 31, 1997
have been restated to reflect a two-for-one stock split (effected in the form of
a stock dividend) which was effective March 20, 1998.

3. COMPREHENSIVE INCOME

   Effective January 1, 1998, the Company adopted Statement of Financial
   Accounting Standards No. 130, "Reporting Comprehensive Income." This
   Statement requires that all items recognized under accounting standards as
   components of comprehensive earnings be reported in an annual financial
   statement that is displayed with the same prominence as other annual
   financial statements. This Statement also requires that an 

                                       6
<PAGE>
 
   entity classify items of other comprehensive earnings by their nature in an
   annual financial statement. For example, other comprehensive earnings may
   include foreign currency translation adjustments, minimum pension liability
   adjustments and unrealized gains and losses on marketable securities
   classified as available-for-sale. Annual financial statements for prior
   periods will be reclassified, as required. The Company's total comprehensive
   earnings were as follows:

<TABLE>
<CAPTION>
 
 
                                     Three Months Ended
                                         March 31,
                                         ---------
<S>                                  <C>      <C>
(in thousands, unaudited)              1998     1997
----------------------------------------------------
 
Net income                           $8,285   $2,758
Cumulative translation adjustment       (17)       0 
----------------------------------------------------
Total comprehensive income           $8,268   $2,758
----------------------------------------------------
</TABLE> 

4. STOCK SPLIT

   All share and per share amounts for all periods presented have been restated
   to reflect a two-for-one stock split (effected in the form of a stock
   dividend) which was effective March 20, 1998.

5. RECENT ACCOUNTING PRONOUNCEMENTS

   In October, 1997, the American Institute of Certified Public Accountants
   issued Statement of Position (SOP) 97-2 Software Revenue Recognition, which
   superseded SOP 91-1. SOP 97-2 is effective for transactions entered into
   after December 31, 1997. SOP No. 97-2 generally requires revenue earned on
   software arrangements involving multiple elements to be allocated to each
   element based on the relative fair values of the elements. The fair value of
   an element must be based on evidence that is specific to the vendor. If a
   vendor does not have evidence of the fair value for all elements in a
   multiple-element arrangement, all revenue from the arrangement is deferred
   until such evidence exists or until all elements are delivered. The effect of
   adopting SOP 97-2 did not have a material impact on the Company's
   consolidated results of operations or financial position.

6. RECENT DEVELOPMENTS

   In March 1998, the Company entered into a definitive agreement to acquire
   Scopus Technology, Inc. ("Scopus") of Emeryville, California, a leading
   provider of customer service, field service, and call center software
   solutions. Under the terms of the agreement, each outstanding share of Scopus
   common stock will be exchanged, at a fixed exchange ratio of .7281 (adjusted
   for any stock split, stock dividends, reverse stock split, reclassification,
   recapitalization or similar transaction), for newly issued shares of common
   stock of the Company. This will result in the issuance of approximately 15.0
   million additional shares of the Company's Common Stock, valued at
   approximately $350 million, based upon the Company's Common Stock closing
   price as reported on the Nasdaq National Market on Wednesday, May 6, 1998. In
   addition, all outstanding stock options of Scopus will convert into the right
   to acquire the Company's Common Stock at the same exchange ratio with an
   appropriate adjustment to the exercise price. The Company anticipates that
   the transaction will be accounted for as a pooling of interests and will
   qualify as a tax-free reorganization. The acquisition of Scopus is subject to
   a number of closing conditions, including the approval of the acquisition by
   the Scopus shareholders and approval of the issuance of the Company's Common
   Stock in connection with the merger by the Company's stockholders. There can
   be no assurance that the merger will be consummated.

   The Company has received notice from the Federal Trade Commission that early
   termination of the Hart-Scott-Rodino Act waiting period has been granted with
   respect to the Company's proposed merger with Scopus. The Company and Scopus
   have scheduled special meetings of their respective shareholders for May 18,
   1998 to approve the merger and related matters, and expect to consummate the
   merger agreement immediately thereafter.

                                       7
<PAGE>
 
   ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE
SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED HEREIN AND
UNDER THE CAPTION "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS--RISK FACTORS" IN THE COMPANY'S ANNUAL REPORT ON FORM
10-K. ANY SUCH FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE SUCH
STATEMENTS ARE MADE AND THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE
THE RESULTS OF ANY REVISION TO THESE FORWARD-LOOKING STATEMENTS.

OVERVIEW

Siebel Systems, Inc. ("Siebel" or the "Company") is the global market leader in
enterprise-class sales, marketing and customer service information systems for
global organizations focused on increasing sales and service effectiveness in
field sales, service organizations, telesales, telemarketing, call centers, and
third-party resellers.  The Company designs, develops, markets, and supports
Siebel Enterprise Applications, a leading Internet-enabled, object oriented
client/server application software product family designed to meet the sales,
marketing and customer service information system requirements of even the
largest multi-national organizations.

In today's increasingly competitive global markets, businesses must continuously
improve their operations. Having spent considerable effort and resources in
previous years automating finance, manufacturing, distribution, human resources
management, and general office operations, many businesses are now looking to
apply the leverage of information technology to their sales, marketing and
customer service processes. Unlike previous automation efforts which have
focused on decreasing expenses, sales, marketing and customer service
information systems focus primarily on increasing revenues.

The Siebel Enterprise Applications are comprised of a broad range of advanced
client/server application products designed to allow corporations to deploy
comprehensive customer information systems, product information systems,
competitive information systems, and decision support systems on a global basis.
The Company's products provide support for multiple languages and multiple
currencies with support for a number of frequently interdependent distribution
channels, including direct field sales, telesales, telemarketing, distribution,
retail and Internet-based selling and support.

RECENT DEVELOPMENTS

In March 1998, the Company entered into a definitive agreement to acquire Scopus
Technology, Inc. ("Scopus") of Emeryville, California, a leading provider of
customer service, field service, and call center software solutions. Under the
terms of the agreement, each outstanding share of Scopus common stock will be
exchanged, at a fixed exchange ratio of .7281 (adjusted for any stock split,
stock dividends, reverse stock split, reclassification, recapitalization or
similar transaction), for newly issued shares of common stock of the Company.
This will result in the issuance of approximately 15.0 million additional shares
of the Company's Common Stock, valued at approximately $350 million, based upon
the Company's Common Stock closing price as reported on the Nasdaq National
Market on Wednesday, May 6, 1998. In addition, all outstanding stock
options of Scopus will convert into the right to acquire the Company's Common
Stock at the same exchange ratio with an appropiate adjustment to the exercise
price. The Company anticipates that the transaction will be accounted for as a
pooling of interests and will qualify as a tax-free reorganization. The
acquisition of Scopus is subject to a number of closing conditions, including
the approval of the acquisition by the Scopus shareholders and approval of the
issuance of the Company's Common Stock in connection with the merger by the
Company's stockholders. There can be no assurance that the merger will be
consummated.

The Company has received notice from the Federal Trade Commission that early
termination of the Hart-Scott-Rodino Act waiting period has been granted with
respect to the Company's proposed merger with Scopus. The Company and Scopus
have scheduled special meetings of their respective shareholders for May 18,
1998 to approve the merger and related matters, and expect to consummate the
merger agreement immediately thereafter.

                                       8
<PAGE>
 
RESULTS OF OPERATIONS

REVENUES

Software.  License revenues increased to $38,802,000 for the three months ended
March 31, 1998 from $16,561,000 for the three months ended March 31, 1997 and
decreased as a percentage of total revenues to 82% in the first quarter 1998
from 85% in the first quarter 1997. License revenues increased in absolute
dollar amount during these periods from the prior year period due to an increase
in the number of licenses of Siebel Enterprise Applications to new and existing
customers.  This increase in the number of licenses was primarily due to
continued demand by new and existing customers for products in the Siebel
Enterprise Applications family both in the United States and internationally.
In December 1996, the Company introduced Siebel Service Enterprise, its customer
service applications suite.  Increases in revenues from the prior year period
was due in part to new and existing customers licensing Siebel Service
Enterprise to manage their customer service functions.  Siebel Service
Enterprise license revenues increased to approximately $13,100,000 for the three
months ended March 31, 1998 from approximately $1,700,000 for the three months
ended March 31, 1997. The decrease in license revenues as a percentage of total
revenues was primarily due to increased levels of maintenance, consulting and
other revenues.

Maintenance, Consulting and Other.  Maintenance, consulting and other revenues
increased to $8,298,000 for the three months ended March 31, 1998 from
$2,924,000 for the three months ended March 31, 1997 and increased as a
percentage of total revenues to 18% in the first quarter 1998 from 15% in the
first quarter 1997. These increases in absolute dollar amount and as a
percentage of total revenues were due to the widespread licensing of products to
customers pursuant to agreements with a maintenance component, maintenance
renewals from products licensed in prior periods and certain customers obtaining
implementation services for the Siebel Enterprise Applications through the
Company.  The Company expects that maintenance, consulting and other revenues
will remain the same or increase as a percentage of total revenues due to
maintenance components of new and existing license agreements and due to the 
Company's expansion of its customer support organization to meet anticipated 
customer demands in connection with product implementation.

COST OF REVENUES

Software.  Cost of software license revenues includes product packaging,
documentation and production. Cost of license revenues through March 31, 1998
have averaged less than 2% of software license revenues. All costs incurred in
the research and development of software products and enhancements to existing
products have been expensed as incurred, and, as a result, cost of license
revenues includes no amortization of capitalized software development costs.
These costs are expected to remain the same or increase as a percentage of total
revenues.

Maintenance, Consulting and Other.  Cost of maintenance, consulting and other
revenues consists primarily of personnel, facility and systems costs incurred in
providing customer support.  Cost of maintenance, consulting and other revenues
increased to $4,412,000 for the three months ended March 31, 1998 from
$1,601,000 for the three months ended March 31, 1997 and increased as a
percentage of total revenues to 9% in the first quarter 1998 from 8% in the
first quarter 1997. The increases in the absolute dollar amount reflect the
effect of fixed costs resulting from the Company's expansion of its maintenance
and support organization and the costs of certain customers obtaining
implementation services for the Siebel Enterprise Application through the
Company. The Company expects that maintenance, consulting and other costs will
continue to increase in absolute dollar amount as the Company expands its
customer support organization to meet anticipated customer demands in connection
with product implementation. These costs are expected to remain the same or
increase as a percentage of total revenues.

OPERATING EXPENSES

Product Development.  Product development expenses include expenses associated
with the development of new products, enhancements of existing products and
quality assurance activities, and consist primarily of employee salaries,
benefits, consulting costs and the cost of software development tools. Product
development expenses increased to $4,500,000 for the three months ended March
31, 1998 from $2,580,000 for the three months ended March 31, 1997 and decreased
as a percentage of total revenues to 10% in the first quarter 1998 from 13% in
the first quarter 1997.  The increases in the dollar amount of product
development expenses were primarily attributable to costs of additional
personnel in the Company's product development operations. The Company
anticipates that it will continue to devote substantial resources to product
development. The Company expects product development 

                                       9
<PAGE>
 
expenses to increase in absolute dollar amount but remain at a similar
percentage of total revenues as the first three months of 1998. The Company to
date has not capitalized any software development costs.

Sales and Marketing.  Sales and marketing expenses consist primarily of
salaries, commissions and bonuses earned by sales and marketing personnel, field
office expenses, travel and entertainment and promotional expenses. Sales and
marketing expenses increased to $23,018,000 for the three months ended March 31,
1998 from $9,367,000 for the three months ended March 31, 1997 and increased
slightly as a percentage of total revenues to 49% in the first quarter 1998 from
48% in the first quarter 1997. The increases in the dollar amount of sales and
marketing expenses reflect primarily the hiring of additional sales and
marketing personnel and, to a lesser degree, costs associated with expanded
promotional activities.  The Company expects that sales and marketing expenses
will continue to increase in absolute dollar amount as the Company continues to
expand its sales and marketing efforts, establishes additional sales offices in
the United States and internationally and increases its promotional activities.
These expenses are expected to remain at a similar percentage of total revenues
as the first three months of 1998.

General and Administrative.  General and administrative expenses consist
primarily of salaries and occupancy costs for administrative, executive and
finance personnel. General and administrative expenses increased to $2,613,000
for the three months ended March 31, 1998 from $1,983,000 for the three months
ended March 31, 1997 and decreased as a percentage of total revenues to 6% in
the first quarter 1998 from 10% in the first quarter 1997. The increases in the
absolute dollar amount of general and administrative expenses were primarily due
to increased staffing and associated expenses necessary to manage and support
the Company's increased scale of operations.  The Company believes that its
general and administrative expenses will continue to increase in absolute dollar
amount as a result of the continued expansion of the Company's administrative
staff and facilities to support growing operations.  The Company anticipates
that its general and administrative expenses as a percentage of total revenues
should remain at a similar percentage as the first three months of 1998.

Year 2000. The Company is reviewing its information systems for any potential
problems that might arise as a result of the need for its installed computer
systems and software to reference dates following December 31, 1999 ("Year 2000
Issues") and does not believe such systems will be adversely affected by the
upcoming change in century. The Company has not made an assessment as to whether
any of its customers, suppliers or service providers will be adversely affected
by Year 2000 Issues. The failure of the Company's software or the software of
its customers, suppliers or service providers as a result of Year 2000 Issues
could have a material adverse effect on the Company's business, financial
condition and results of operations.

OPERATING INCOME AND OPERATING MARGIN

Operating income increased to $11,985,000 for the three months ended March 31,
1998 from $3,841,000 for the three months ended March 31, 1997 and operating
margin increased to 25% in the first quarter 1998 from 20% in the first quarter
1997. These increases in operating income and margin were due to increases in
license revenues without a proportionate increase in cost, particularly costs
associated with the hiring of new personnel.  The Company expects operating
margins to decline as compared to operating margin for the first three months of
1998 as it continues to invest heavily in sales, marketing, development and
support activities globally.

OTHER INCOME, NET

Other income, net is primarily comprised of interest income earned on the
Company's cash and cash equivalents and short-term investments and reflects
earnings on increasing cash and cash equivalents and short-term investment
balances.

                                       10
<PAGE>
 
PROVISION FOR INCOME TAXES

The provision for income taxes was $4,660,000 and $1,690,000 and approximately
36% and 38% for the three months ended March 31, 1998 and 1997, respectively.
The tax rate for the three months ended March 31, 1998 decreased primarily due
to an anticipated increase in the amount of U.S. federal and California state
research tax credits and the expectation of certain benefits attributable to 
international sales.

NET INCOME

The Company had net income (after provision for income taxes) of $8,285,000 for
the three months ended March 31, 1998 compared to net income of $2,758,000 for
the three months ended March 31, 1997.  Diluted net income per share increased
to $0.10 per share in the first quarter of 1998 from $0.03 in the comparable
period in 1997.  Net income increased as a percentage of total revenues to 18%
for the three months ended March 31, 1998 from 14% for the three months ended
March 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash, cash equivalents and short-term investments increased to
$107,744,000 as of March 31, 1998 from $94,151,000 as of December 31, 1997,
representing approximately 64% of total assets.  This increase was primarily
attributable to net income and increases in the tax benefit received from
exercises of stock options, deferred revenue and issuances of common stock,
partially offset by increases in accounts receivable and purchases of property
and equipment.  The Company's Days Sales Outstanding (DSO) in accounts
receivable was 73 as of March 31, 1998 compared with 71 as of December 31, 1997.
The Company expects DSO will fluctuate significantly in future quarters and that
future levels of DSO will likely be higher than those experienced in the current
and prior periods.

The Company believes that the anticipated cash flows from operations, cash, cash
equivalents and short-term investments will be adequate to meet its cash needs
for working capital and capital expenditures for at least the next twelve
months.

FACTORS AFFECTING OPERATING RESULTS

Limited Operating History. The Company commenced operations in July 1993 and
shipped the first version of Siebel Sales Enterprise in April 1995 and the first
version of Siebel Service Enterprise in December 1996.  The Company has only a
limited operating history, and its prospects must be evaluated in light of the
risks and uncertainties encountered by a company in its early stage of
development.

Reliance on Andersen Consulting and Other Relationships; Dependence on System
Integrators. The Company has established strategic relationships with a number
of organizations that it believes are important to its worldwide sales,
marketing and support activities and the implementation of its products. The
Company believes that its relationships with such organizations provide
marketing and sales opportunities for the Company's direct sales force and
expand the distribution of its products. These relationships also assist the
Company in keeping pace with the technological and marketing developments of
major software vendors, and, in certain instances, provide it with technical
assistance for its product development efforts. In particular, the Company has
established a non-exclusive strategic relationship with Andersen Consulting, a
principal stockholder of the Company. For the year ended December 31, 1997 and
the three months ended March 31, 1998, approximately 35% and 7%, respectively,
of the Company's license revenues were derived from customers for which Andersen
Consulting had been engaged to provide system integration services. Any
deterioration of the Company's relationship with Andersen Consulting could have
a material adverse effect on the Company's business, financial condition and
results of operations.

Limited Deployment. Many of the Company's customers are in the pilot phase of
implementing the Company's software. There can be no assurance that enterprise-
wide deployments by such customers will be successful. The Company's customers
frequently contemplate the deployment of its products commercially to large
numbers of sales, marketing and customer service personnel, many of whom have
not previously used application software systems, and there can be no assurance
of such end-users' acceptance of the product. If any of the Company's customers
are not able to customize and deploy Siebel Enterprise Applications successfully
and on a timely basis to the number of anticipated users, the Company's
reputation could be significantly damaged, which could have a material adverse

                                       11
<PAGE>
 
effect on the Company's business, operating results and financial condition.

Reliance on Single Product Family. Approximately 66% of the Company's license
revenues in the three months ended March 31, 1998 were attributable to sales of
Siebel Sales Enterprise. The remaining revenues were attributable to sales of
Siebel Service Enterprise. The Company currently expects Siebel Sales Enterprise
and related maintenance and training services to continue to account for a
substantial majority of the Company's future revenues. As a result, factors
adversely affecting the pricing of or demand for Siebel Sales Enterprise, such
as competition or technological change, could have a material adverse effect on
the Company's business, operating results and financial condition.

Competition.  The market for the Company's products is intensely competitive,
subject to rapid change and significantly affected by new product introductions
and other market activities of industry participants.  The Company's products
are targeted at the emerging market for sales, marketing and customer service
information systems, and the Company faces competition primarily from customers'
internal information technology departments and systems integrators, as well as
from other application software providers that offer a variety of products and
services to address this market.  Many of the Company's customers and potential
customers have in the past attempted to develop sales, marketing and customer
service information systems, in-house either alone or with the help of systems
integrators and there can be no assurance that the Company will be able to
compete successfully against such internal development efforts.

The Company relies on a number of systems consulting and systems integration
firms, particularly Andersen Consulting, for implementation and other customer
support services, as well as recommendations of its products during the
evaluation stage of the purchase process.  Although the Company seeks to
maintain close relationships with these service providers, many of them have
similar, and often more established, relationships with the Company's
competitors.  If the Company is unable to develop and retain effective, long-
term relationships with these third parties, the Company's competitive position
could be materially and adversely affected.  Further, there can be no assurance
that these third parties, many of which have significantly greater resources
than the Company, will not market software products in competition with the
Company in the future or will not otherwise reduce or discontinue their
relationships with, or support of, the Company and its products.

A large number of personal, departmental and other products exist in the sales
automation market. Companies (Products) such as Symantec (ACT!), Borealis
Corporation (Arsenal), Saratoga Systems (Avenue), Early Cloud & Co. (CallFlow),
Epiphany (Clarity, Momentum, Relevance), Clarify Inc. (ClearSales,
ClearSupport), Sales Technologies (Cornerstone), Onyx (Customer Center), IMA
(EDGE), Applix (Enterprise), Dendrite International, Inc. (Force One),
Marketrieve Company (Marketrieve PLUS), Firstwave Technologies, Inc. (Netgain),
Broadvision, Inc. (One-To-One Application System), Oracle Corporation (Oracle
Sales and Marketing, Oracle Service and Oracle Call, Front Office Application)),
Pivotal Software, Inc. (Relationship), SAP AG (Sales Force Automation Solution)
Software Artistry (SA-Expert Sales), SalesKit Software Corporation (SalesKit),
SalesLogix (SalesLogix), Kiefer & Veittinger GmbH (K&V) International (SALES
Manager) (SAP AG has recently announced its intention to acquire a 50% equity
interest in K&V), Scopus Technology, Inc. (SalesTEAM, ServiceTEAM, Voyager),
Aurum (SalesTrak) (recently acquired by Baan Company N.V.), MEI (UniverSell) and
The Vantive Corporation (Vantive Enterprise) are among the many firms in this
market segment. Some of these competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
significantly greater name recognition and a larger installed base of customers
than the Company. In addition, many competitors have well-established
relationships with current and potential customers of the Company. As a result,
these competitors 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 and sale of their products, than can the
Company. The Company believes it competes favorably in this marketplace based on
the following competitive advantages: breadth and depth of functionality,
configurable business objects, Internet and intranet enablement, strategic
alignments with industry leaders, support for the global enterprise, scalability
allowing support for large user communities and a modern and enduring product
architecture. In general, the Company has priced its products at or above those
of its competitors, which pricing the Company believes is justified by the scope
of functionality delivered and the performance characteristics afforded by the
Company's products.

It is also possible that new competitors or alliances among competitors may
emerge and rapidly acquire significant market share.  The Company also expects
that competition will increase as a result of consolidation in the software

                                       12
<PAGE>
 
industry.  Increased competition may result in price reductions, reduced gross
margins and loss of market share, any of which could materially adversely affect
the Company's business, operating results and financial condition.  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 and adversely affect its business, operating results
and financial condition.

Management of Growth; Dependence upon Key Personnel. In the event that the
significant growth of the Company's revenues continues, such growth may place a
significant strain upon the Company's management systems and resources. 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 employee work force. There can be no assurance that the Company
will be able to do so successfully. The Company's failure to do so could have a
material adverse effect upon the Company's business, operating results and
financial condition. The Company's future performance depends in significant
part upon the continued service of its key technical, sales and senior
management personnel, particularly Thomas M. Siebel, the Company's Chairman and
Chief Executive Officer, none of whom has entered into an employment agreement
with the Company. The loss of the services of one or more of the Company's
executive officers could have a material adverse effect on the Company's
business, operating results and financial condition.

International Operations. The Company's sales are primarily to large multi-
national companies. To service the needs of such companies, both domestically
and internationally, the Company must provide worldwide product support
services. As a result, the Company has expanded and intends to continue to
expand its international operations and enter additional international markets,
which will require significant management attention and financial resources and
could adversely affect the Company's operating margins and earnings, if any.
Revenues from international sales accounted for approximately 30% and 31% of the
Company's total license revenues in fiscal 1997 and the three months ended March
31, 1998, respectively.

The growth in the Company's revenues from international sales is expected to
continue to subject a portion of the Company's revenues to the risks associated
with international sales, including foreign currency fluctuations, economic or
political instability, shipping delays and various trade restrictions, any of
which could have a significant impact on the Company's ability to deliver
products on a competitive and timely basis.  Future imposition of, or
significant increases in the level of, customs duties, export quotas or other
trade restrictions, could have an adverse effect on the Company's business,
financial condition and results of operations.  As the Company develops an
international sales force, it expects to be more directly subject to foreign
currency fluctuations.  To the extent such direct sales are denominated in
foreign currency, any such fluctuation may adversely affect the Company's
business, financial condition and results of operations.  Finally, the laws of
certain foreign countries do not protect the Company's intellectual property
rights to the same extent as do the laws of the United States.

Risk Relating to Acquisitions. The Company has acquired in the past, and may
acquire in the future, other products or businesses which are complementary to
the Company's business. The Company is currently in the process of acquiring
Scopus Technology, Inc.  The integration of products and personnel as a result
of any such acquisitions has and will continue to divert the Company's
management and other resources. There can be no assurance that difficulties will
not arise in integrating such operations, products, personnel or businesses. The
failure to successfully integrate such products or operations could have a
material adverse effect on the Company's business, financial condition and
results of operations.

                                       13
<PAGE>
 
                          PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

The Company is engaged in certain legal proceedings as disclosed in the
Company's Annual Report on Form 10-K filed March 17, 1998.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

The effective date of the Company's first registration statement, filed on Form
S-1 filed under the Securities Act of 1933 (No. 333-12061), was June 27, 1996
(the "Registration Statement"). The class of securities registered was Common
Stock. The offering commenced on June 27, 1996 and all securities were sold in
the offering. The managing underwriters for the offering were Hambrecht & Quist
LLC, Montgomery Securities and Robertson, Stephens, & Company LLC.

Pursuant to the Registration Statement, the Company sold 2,094,450 shares of its
Common Stock for its own account, for an aggregate offering price of
$33,113,000, and 163,000 shares of its Common Stock for the account of certain
selling stockholders, for an aggregate offering price of $2,577,030.

The Company incurred expenses of approximately $1,125,000. All such expenses
were direct or indirect payments to others. The net offering proceeds to the
issuer after total expenses was $31,988,000.

The Company has not used any of the net proceeds from the offering. All net
proceeds have been invested in U.S. Government obligations and certificates of
deposit.  The use of the proceeds from the offering does not represent a
material change in the use of the proceeds described in the prospectus.

                                       14
<PAGE>
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


(a) Exhibits

Exhibit Number           Description of Document
--------------           -----------------------
2.1  Agreement and Plan of Merger and Reorganization, dated March 1,1998,
     among the Registrant, Syracuse Acquisition Sub, Inc. and Scopus Technology,
     Inc.(4)

3.1  Amended and Restated Certificate of Incorporation of the Registrant, as
     amended.(6)

3.2  Bylaws of the Registrant.(1)

4.1  Reference is made to Exhibits 3.1 and 3.2.

4.2  Specimen Stock Certificate.(1)

4.3  Restated Investor Rights Agreement, dated December 1, 1995, between the
     Registrant and certain investors, as amended April 30, 1996 and June 14,
     1996.(1)

10.1 Registrant's 1996 Equity Incentive Plan, as amended.(3)

10.2 Registrant's Employee Stock Purchase Plan, as amended.(3)

10.3 Form of Indemnity Agreement entered into between the Registrant and its
     officers and directors.(1)

10.4 Registrant's Deferred Compensation Plan, dated January 10,1997.(5)

10.5 Master Alliance Agreement, dated March 17, 1995, between the Registrant
     and Andersen Consulting  LLP.(1)(2)

10.6 Assignment Agreement, dated September 20, 1995, by and between the
     Registrant and Thomas M. Siebel.(1)

10.7 Lease Agreement, dated June 4, 1996, by and between the Registrant and
     Crossroad Associates and Clocktower Associates.(1)

10.8 Form of Voting Agreement dated as of March 1, 1998, a substantially
     similar version of which has been executed by and between the Registrant,
     Scopus Technology, Inc. and each of Thomas M. Siebel, Thomas M. Siebel as
     Trustee under the Siebel Living Trust u/a/d 7/29/93, the Thomas and Stacey
     Siebel Foundation and First Virtual Capital, Inc.(7)

10.9 Form of Affiliate Agreement, substantially similar versions of which are to
     be executed by the Registrant, Scopus Technology, Inc. and each of the
     affiliates of the Registrant.(8)

21.1 Subsidiaries of the Registrant.(6)

27.1 Financial Data Schedule.(9)



(1) Incorporated by reference to the Registrant's Registration Statement on Form
    S-1 (No. 333-03751), as amended.

(2) Confidential treatment has been granted with respect to portions of this
    exhibit.

(3) Incorporated by reference to the Registrant's Registration Statement on Form
    S-8 (No. 333-07983), as amended.

(4) Incorporated by reference to exhibit 99.1 of the Registrant's Current Report
    on Form 8-K filed by the Registrant on March 16, 1998.

(5) Incorporated by reference to the Registrant's Annual Report on Form 10-K for
    the year ended December 31, 1996.

(6) Incorporated by reference to the Registrant's Annual Report on Form 10-K for
    the year ended December 31, 1997.

(7) Incorporated by reference to exhibit 99.3 of the Registrant's Current Report
    on Form 8-K filed by the Registrant on March 16, 1998.

(8) Incorporated by reference to exhibit 99.5 of the Registrant's Current Report
    on Form 8-K filed by the Registrant on March 16, 1998.

(9) Filed herewith.

    (b) Reports on Form 8-K

On March 3, 1998, the Company filed a report on Form 8-K relating to the
       Company's two-for-one stock split effected on March 20, 1998.

On March 16, 1998, the Company filed a report on Form 8-K relating to the
       Company's proposed merger with Scopus Technology, Inc.

                                       15
<PAGE>
 
                                   SIGNATURE


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



                                    SIEBEL SYSTEMS, INC.



Date:  May 15, 1998             By: /s/ Howard H. Graham
                                   -------------------------------------
                                    Howard H. Graham
                                    Senior Vice President Finance and
                                    Administration
                                    and Chief Financial Officer

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