<PAGE>
 
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                                 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 SEPTEMBER 30, 1997

                                      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 0-24720

                             BUSINESS OBJECTS S.A.
            (Exact name of registrant as specified in its charter)

     REPUBLIC OF FRANCE                               NONE
     (State or other jurisdiction of            (I.R.S. Employer
     incorporation or organization)             Identification No.)

               1, SQUARE CHAPTAL, 92309 LEVALLOIS-PERRET, FRANCE
                   (Address of principal executive offices)

                                (408) 953-6024
             (Registrant's telephone number, including area code)

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

              Yes____X___                      No_________ 



The number of outstanding share of each of the issuer's classes of capital or
common stock as of September 30, 1997 was 16,747,177 Ordinary Shares of 1 French
Franc nominal value, including 13,214,221 American Depositary Shares (as
evidenced by American Depositary Receipts), each corresponding to one Ordinary
Share.
 

--------------------------------------------------------------------------------
<PAGE>
 
                             BUSINESS OBJECTS S.A.
                                     INDEX



<TABLE> 
<CAPTION> 

PART I.  FINANCIAL INFORMATION                                                    PAGE
<C>      <S>                                                                      <C>

Item 1.   Consolidated Financial Statements:
 
          Condensed Consolidated Balance Sheets at
          September 30, 1997 and December 31, 1996                                 3
 
          Condensed Consolidated Statements of Operations for the
          three and nine months ended September 30, 1997 and 1996                  4
 
          Condensed Consolidated Statements of Cash Flows for the
          nine months ended September 30, 1997 and 1996                            5
 
          Notes to Condensed Consolidated Financial Statements                     6
 
Item 2.   Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                                      8

PART II.  OTHER INFORMATION
 
Item 6.   Exhibits and Reports on current Form 8-K                                 15
 
SIGNATURE                                                                          16
 
</TABLE>

                                       2
<PAGE>
 
PART 1. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

                             BUSINESS OBJECTS S.A.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (In thousands except share data)

<TABLE> 
<CAPTION> 
                                                                     September 30,  December 31,
                                                                         1997           1996
                                                                     ------------   ------------
                                                                      (Unaudited)       (Note)
<S>                                                                     <C>             <C>
ASSETS
Current assets:
        Cash and cash equivalents                                       $24,931         $21,862
        Short-term investments                                            6,711          20,309
        Accounts receivable, net of allowances                           31,917          24,176
        Inventories                                                         660             510
        Other current assets                                              4,139           3,200
                                                                        -------         -------
                Total current assets                                     68,358          70,057


        Goodwill, net                                                     2,274               -
        Property and equipment, net                                      11,461          10,101
        Deposits and other assets                                           677             612
                                                                        -------         -------
                Total assets                                            $82,770         $80,770
                                                                        =======         =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
        Accounts payable                                                $ 5,638         $ 4,533
        Accrued payroll and related expenses                              7,867           7,541
        Investment grant                                                    674             764
        Deferred revenue                                                 13,781          10,386
        Other current liabilities                                         5,639           5,710
                                                                        -------         -------
                Total current liabilities                                33,599          28,934


Shareholders' equity
        Ordinary shares, FRF 1 nominal value:
         outstanding - 16,747,177 and 16,385,024
         at September 30, 1997 and
         December 31, 1996, respectively                                  3,080           3,017
        Additional paid-in capital                                       34,169          33,036
        Retained earnings                                                16,465          15,230
        Cumulative translation adjustment                                (4,543)            615
        Unearned compensation                                                 -             (62)
                                                                        -------         -------
                Total shareholders' equity                               49,171          51,836
                                                                        -------         -------
                  Total liabilities and shareholder's equity            $82,770         $80,770
                                                                        =======         =======
</TABLE> 

Note: The balance sheet at December 31, 1996 has been derived
from the audited financial statements at that date.

                            See accompanying notes.


                                       3
<PAGE>
 
                             BUSINESS OBJECTS S.A.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (IN THOUSANDS, EXCEPT PER SHARE & PER ADS DATA, UNAUDITED)


<TABLE> 
<CAPTION> 
                              Three months ended       Nine months ended
                                 September 30,           September 30,
                                 1997     1996           1997     1996
                               -------- --------        -------  -------
<S>                             <C>     <C>             <C>     <C>
Revenues:
   License fees                 $19,442  $13,113        $54,213  $44,948
   Services                       9,060    5,372         24,006   14,363
                                -------  -------        -------  -------
        Total revenues           28,502   18,485         78,219   59,311
Cost of revenues:
   License fees                     826      822          2,386    2,198
   Services                       3,505    1,763          8,729    4,785
                                -------  -------        -------  -------
        Total cost of revenues    4,331    2,585         11,115    6,983
                                -------  -------        -------  -------
Gross margin                     24,171   15,900         67,104   52,328
Operating expenses:
   Sales and marketing           17,095   11,853         48,372   35,290
   Research and development       3,503    2,712          9,917    7,698
   General and administrative     2,874    2,004          7,620    5,436
                                -------  -------        -------  ------- 
        Total operating 
          expenses               23,472   16,569         65,909   48,424
                                -------  -------        -------  -------
Income (loss) from operations       699     (669)         1,195    3,904
Net interest and other income       178      325          1,478    1,586
                                -------  -------        -------  -------
Income (loss) before 
  provision for income taxes 
  and minority interest             877     (344)         2,673    5,490
Provision for income taxes         (716)      23         (1,471)  (2,141)
                                -------  -------        -------  -------
Income (loss) before minority 
  interest                          161     (321)         1,202    3,349
Minority interest                    35        -             33        -
                                -------  -------        -------  -------
Net income (loss)               $   196  $  (321)       $ 1,235  $ 3,349
                                =======  =======        =======  =======    

Net income (loss) per share 
  and per ADS                   $  0.01  $ (0.02)       $  0.07  $  0.20
                                =======  =======        =======  =======    
Shares and ADS used in 
  computing net income (loss) 
  and per share and per ADS      16,800   16,276         16,770   17,037
                                =======  =======        =======  =======

</TABLE> 

                            See accompanying notes.
<PAGE>
 
                             BUSINESS OBJECTS S.A.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (IN THOUSANDS, UNAUDITED)

<TABLE> 
<CAPTION> 
                                                                   Nine months ended
                                                                      September 30,
                                                                  1997            1996
                                                                --------        --------
<S>                                                             <C>             <C>
Cash flows from operating activities:
   Net income                                                   $  1,235        $  3,349
   Adjustments necessary to reconcile net income
     to net cash provided by operating activities:
        Depreciation and amortization                              3,362           1,347
        Compensation expense and other                                62              96
  Changes in operating assets and liabilites:
        Accounts receivable                                       (9,452)         (1,437)
        Inventories                                                 (181)           (188)
        Deposits and other assets, net                            (1,429)           (963)
        Accounts payable                                           1,496           1,657
        Accrued payroll and related expenses                         933            (546)
        Deferred revenue                                           3,916           1,265
        Other current liabilities                                    238          (2,136)
                                                                --------        --------
Net cash provided by operating activities                            180           2,444
                                                                --------        --------

Cash flows from investing activities:
   Purchases of property and equipment                            (4,959)         (7,147)
   Acquisition of Italian and Swiss distributors                  (2,640)              -
   Purchases of short-term investments                           (58,516)       (142,343)
   Proceeds from sales of short-term investments                  69,970         153,361
                                                                --------        --------
Net cash provided by investing activities                          3,855           3,871
                                                                --------        --------

Cash flows from financing activities:
   Principal payments on capital lease obligations                   (76)           (119)
   Issuance of shares upon exercises of options                    1,022           2,031
                                                                --------        --------
Net cash provided by financing activities                            946           1,912
                                                                --------        --------

Effect of foreign exchange rate changes on cash
   and cash equivalents                                           (1,912)           (621)
                                                                --------        --------  
Net increase in cash and cash equivalents                          3,069           7,606
Cash and cash equivalents at the beginning of 
   the period                                                     21,862          14,645
                                                                --------        --------
Cash and cash equivalents at the end of the
   period                                                       $ 24,931        $ 22,251
                                                                ========        ========
Supplimental disclosure of cash flow information:
   Cash paid for income taxes                                   $  1,344        $  5,121
                                                                ========        ========

</TABLE> 


                            See accompanying notes.
<PAGE>
 
                             BUSINESS OBJECTS S.A.
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1997

1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation   S-X.  Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included.  Operating results for the three and nine month periods ended
September 30, 1997 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1997.  For further information, refer
to the consolidated financial statements and footnotes thereto included in the
Business Objects S.A. Annual Report on Form 20-F for the year ended December 31,
1996.

2.  ACCOUNTS RECEIVABLE

Accounts receivable are stated net of allowances for doubtful accounts of
$1,430,000 and $1,060,000 at September 30, 1997 and December 31, 1996,
respectively.

3.  INCOME TAXES

The Company provides for income taxes for each interim period based on the
estimated effective tax rate for the full fiscal year.

4.  NET INCOME (LOSS) PER SHARE AND PER ADS

Net income per share and per ADS is computed using the weighted average number
of shares and dilutive equivalent shares from stock options and warrants (using
the treasury stock method).  Net loss per share and per ADS is computed using
the weighted average number of shares outstanding.  Earnings per share and per
ADS reflect the adjustment in May of 1996 of the conversion between Ordinary
Shares and American Depositary Shares (ADS) from two-to-one to one-to-one,
producing the same results as a two-for-one stock split.

5.  ACQUISITION OF ITALIAN AND SWISS DISTRIBUTORS

Effective April 1, 1997, the Company acquired 51% of its Italian distributor for
$1,300,000 in cash.  Effective May 15, 1997, the Company acquired its Swiss
distributor for $900,000 million in cash.  Both acquisitions were accounted for
as purchases.  The excess of the purchase price over the fair value of net
assets acquired ($1,539,000 for the Italian distributor and $1,058,000 for the
Swiss distributor) has been recorded as goodwill and is being amortized over
three years, its estimated useful life.  The operating results of the acquired
companies have been included in the consolidated results of the Company from the
date of acquisition.

                                       6
<PAGE>
 
6.   Recent Accounting Pronouncements

In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share".  This statement is effective for the year ending
December 31, 1997.    The statement redefines earnings per share and per ADS
under generally accepted accounting principles.  Under the new standard, primary
earnings per share and per ADS is replaced by basic earnings per share and per
ADS and fully diluted earnings per share and per ADS is replaced by diluted
earnings per share and per ADS.  The impact is not expected to result in a
change in earnings per share and per ADS for the three month periods ended
September 30, 1997 and 1996.  The impact is not expected to result in a change
in earnings per share and per ADS for the nine month period ended September 30,
1997, and will increase primary earnings per share by $.01 for the nine month
period ended September 30, 1996.

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

The following discussion contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.  Actual results could differ
materially from those projected in the forward-looking statements as a result of
certain factors including those described in the line item discussion of the
Company's financial statements set forth below and in the section titled
"Additional Factors That Could Affect Operating Results", the Company's last
filed Annual Report on Form 20-F and other documents the Company files from time
to time with the Securities and Exchange Commission.

OVERVIEW

The Company develops, markets and supports decision support software tools for
the client/server and Intranet market.  The Company's revenue is derived from
license fees and charges for services, including consulting, training and
maintenance.  Revenue from product licensing is generally recognized on shipment
of the product, provided that no significant vendor or post support obligations
remain and that the collection of the receivable is deemed probable by
management.  Consulting and training revenues are recognized upon performance of
the related services.  The Company recognizes the revenue associated with
software maintenance contracts on a pro rata basis over the life of the
contract, which is typically one year.  The Company operates on a multinational
basis and a significant portion of its business is conducted in currencies other
than the US dollar (mainly the French franc, the British pound sterling, the
Italian lira, the German mark and the Japanese yen).  Fluctuations in the value
of currencies in relation to the US dollar have caused and will continue to
cause dollar-translated amounts to vary from one period to another.

RESULTS OF OPERATIONS

REVENUES

Revenues increased to $28.5 million in the third quarter of 1997, from $18.5
million for the comparable period in 1996, representing an increase of 54%.
Revenues increased to $78.2 million in the nine month period ended September 30,
1997, from $59.3 million for the comparable period in 1996, representing an
increase of 32%.  The Company's European operations generated 59% of the
Company's revenue, the North American operations 34% and the Asian operations 7%
for the third quarter of 1997, while the Company's European operations generated
61%, the North American operations 32% and the Asian operations 7% for the
comparable period in 1996.  The percentage of the Company's total revenues
attributable to license fees decreased to 68% for the three month period ended
September 30, 1997 from 71% for the comparable fiscal 1996 three month period,
and to 69% for the nine month period ended September 30, 1997 from 76% for the
comparable fiscal 1996 nine month period.  The percentage decrease is due
primarily to an increase in the Company's installed base, which resulted in an
increase in maintenance and service revenue, and increased sales focus on
consulting and training services.

LICENSE FEES

Revenues from license fees increased to $19.4 million in the third quarter of
1997, from $13.1 million for the comparable period in 1996, representing an
increase of 48%, and to $54.2 million 

                                       8
<PAGE>
 
for the nine month period ended September 30, 1997 from $44.9 million in the
comparable period in 1996, representing an increase of 21%. The increase in
license fees generally reflects the greater number of licenses sold during the
period.

SERVICES

Revenues from services increased to $9.1 million in the third quarter of 1997,
from $5.4 million for the comparable period in 1996, representing an increase of
69%, and to $24.0 million for the nine month period ended September 30, 1997
from $14.4 million in the comparable period in 1996, representing an increase of
67%.  The increase in service revenue is due to a larger installed base
providing incremental maintenance and support, as well as higher demand for the
Company's consulting and training services.

COST OF REVENUES

Cost of revenues increased to $4.3 million in the third quarter of 1997, from
$2.6 million for the comparable period in 1996, representing 15% and 14%,
respectively, of total revenues in the related periods. Cost of revenues
increased to $11.1 million in the nine month period ended September 30, 1997,
from $7.0 million for the comparable period in 1996, representing 14% and 12%,
respectively of total revenues in the related periods.  The cost of revenue as a
percentage of total revenue increased primarily due to the change in the mix of
total revenue between license fees and services.  A higher percentage of
revenues for the three and nine month periods ended September 30, 1997 than in
the comparable 1996 periods were derived from services, which have a higher cost
of revenue than do license fees.

LICENSE FEES

Cost of license fees, consisting primarily of accrued post-sales expenses,
materials, packaging and freight, increased to $826,000 in the third quarter of
1997, from $822,000 for the comparable period in 1996, representing 4% and 6%,
respectively, of revenues from license fees in the related periods.  Cost of
license fees increased to $2.4 million in the nine month period ended September
30, 1997, from $2.2 million for the comparable period in 1996, representing 4%
and 5%, respectively, of revenues from license fees in the related periods.

SERVICES

Cost of services, consisting of the cost of providing consulting, training and
maintenance, increased to $3.5 million for the third quarter of 1997, from $1.8
million for the comparable period in 1996, representing 39% and 33%
respectively, of revenues from services in the related periods.  Cost of
services increased to $8.7 million in the nine month period ended September 30,
1997, from $4.8 million for the comparable period in 1996, representing 36% and
33%, respectively, of revenues from services in the related periods.  The
increases in cost of services in both absolute amount and as a percentage of
revenues were mainly attributable to increased headcount necessary to support
the Company's consulting, training and maintenance activities, and, to a lesser
extent, to the subcontracting of training activities.

OPERATING EXPENSES

SALES AND MARKETING

Sales and marketing expenses increased 44% to $17.1 million in the third quarter
of 1997, from $11.9 million for the comparable period in 1996, and represented
60% and 64% of total revenues in the related periods.  Sales and marketing
expenses increased 37% to $48.4 million in the nine month period ended September
30, 1997, from $35.3 million for the comparable period in 1996, 

                                       9
<PAGE>
 
and represented 62% and 59% of total revenues in the related periods. The
increase in sales and marketing expenses in absolute dollars from period to
period was due to increased staffing levels, the acquisition of distributors in
Italy and Switzerland, and to increases in spending for product promotion and
marketing.

RESEARCH AND DEVELOPMENT

Research and development expenses increased 30% to $3.5 million in the third
quarter of 1997, from $2.7 million for the comparable period of 1996, and
represented 12% and 15% of total revenues in the related periods.  Research and
development expenses increased 29% to $9.9 million in the nine month period
ended September 30, 1997, from $7.7 million for the comparable period in 1996,
and represented 13% of total revenues in both periods. The increase in research
and development expenses in absolute dollars from period to period was due to
increased staffing and associated support costs for engineers working on
expanding and enhancing the Company's products.  As of September 30, 1997, the
Company has not capitalized any software development costs and all research and
development costs have been expensed as incurred.

GENERAL AND ADMINISTRATIVE

General and administrative expenses increased 45% to $2.9 million in the third
quarter of 1997, from $2.0 million for the comparable period in 1996, and
represented 10% and 11% respectively, of total revenues in the related periods.
General and administrative expenses increased 41% to $7.6 million in the nine
month period ended September 30, 1997, from $5.4 million for the comparable
period in 1996, and represented 10% and 9%, respectively, of total revenues in
the related periods. The increase in general and administrative expenses in
absolute dollars from period to period primarily resulted from increased
staffing to support the Company's growth, the acquisition of distributors in
Italy and Switzerland during the quarter ended June 30, 1997, and the
amortization of goodwill associated with the acquisitions, which totaled
$213,000 and $380,000, respectively, for the three and nine month periods ending
September 30, 1997.

NET INTEREST AND OTHER INCOME

Net interest and other income totaled $178,000 for the third quarter of 1997 and
$325,000 for the comparable period in 1996. Net interest and other income
totaled $1.5 million for the nine month period ended September 30, 1997 and $1.6
million for the comparable period in 1996. Net interest and other income
primarily consist of interest earned on the Company's cash and short-term
investment balances and unrealized exchange gains and losses on US dollar
denominated intercompany receivables.

PROVISION FOR INCOME TAXES

The Company's effective tax rate for the nine month periods ended September 30,
1997 and September 30, 1996 was 55% and 39%, respectively. The Company increased
its effective tax rate during the quarter ended September 30, 1997 due to
limitations on its ability to utilize certain foreign country losses and an
increase in the corporate income tax rate in France from 36.7% to 41.6%. The
Company provides for income taxes for each interim period based on the estimated
annual effective tax rate for the year.

LIQUIDITY AND CAPITAL RESOURCES

                                       10
<PAGE>
 
As of September 30, 1997, the Company had cash and cash equivalents and short-
term investments of $31.6 million and working capital of $34.8 million.  The
Company generated $180,000 in cash from operating activities during the nine
month period ended September 30, 1997.  This cash was primarily provided by net
income, adjusted for depreciation and amortization and increases in deferred
revenue and accounts payable, offset by increases in accounts receivable and
deposits and other assets, net.  The Company's year to date investing activities
included the purchase of $5.0 million in capital equipment and the acquisitions
of distributors in Italy and Switzerland for $2.6 million.

The Company believes that cash from operating activities, together with existing
cash and cash equivalents and short term investments, will be sufficient to meet
its cash requirements for at least the next 12 months.

FACTORS THAT COULD AFFECT OPERATING RESULTS

The foregoing statements contained in this Management Discussion of Financial
Condition and Results of Operations include forward looking statements that
involve a number of risks and uncertainties. Among the factors that could cause
actual results to differ materially are the following:

Variability of Operating Results.  The Company's revenues and operating results
can vary, sometimes substantially, from quarter to quarter.  License fees, which
represented approximately 68% of total revenues in the third quarter of 1997,
are relatively difficult to forecast due to a number of reasons, including the
timing of the introduction of products or product enhancements, competition and
pricing in the computer software industry, the size and timing of individual
license transactions, variability of the Company's sales cycle, customer order
deferrals in anticipation of new products and customers' budget changes.  The
Company's software products are generally shipped as orders are received.  As a
result, license revenues in any quarter are substantially dependent on orders
booked and shipped in that quarter.  The Company has often recognized a
substantial portion of its revenues in the last month of a quarter, with these
revenues frequently concentrated in the last weeks of a quarter.  Because the
Company's operating expenses are based on anticipated revenue levels and a high
percentage of the Company's expenses are relatively fixed, a minor delay in the
recognition of specific revenue can cause significant variations in operating
results from quarter to quarter and may result in losses.  For example, the
Company plans to continue to increase its expenditures to fund greater levels of
research and development, a larger direct sales and marketing staff, development
of new distribution and resale channels,  broader customer support capability
and the additional general and administrative staffing necessary to support
these functions.  To the extent such expenses precede or are not subsequently
followed by increased revenues, the Company's results of operations and
financial condition could be materially and adversely affected.

Dependence on Principal Product.  The Company generated  the majority of its
total revenues from licenses of BusinessObjects in the third quarter of 1997,
and the Company expects that revenues from such licenses will continue to
represent a substantial majority of its total revenues for the foreseeable
future.  The remaining portion of the Company's total revenues are comprised of
revenues from other licensed products and services related to licenses of
BusinessObjects.  As a result, any factor adversely affecting licenses of
BusinessObjects would have a material adverse effect on the Company.  The
Company's future financial performance will depend in part on the 

                                       11
<PAGE>
 
Company's successful development and introduction, and customer acceptance of
new and enhanced versions of BusinessObjects and other products. In addition,
competitive pressures or other factors may result in significant price erosion
that could have a material adverse effect on the Company's results of operations
and financial condition.

Competition. Many of the Company's competitors have longer operating histories
and significantly greater financial, technical, sales, marketing and other
resources, as well as greater name recognition and a larger installed base, than
the Company. In addition, many competitors, particularly relational database
management system vendors, have well-established relationships with customers of
the Company. The Company's competitors could in the future introduce products
with more features and lower prices than the Company's products. These companies
could also bundle existing or new products with other more established products
in order to compete with the Company. The Company's focus on decision support
tools may be a disadvantage in competing with vendors who offer a broader range
of products. Furthermore, as the decision support market develops, a number of
companies with significantly greater resources than the Company could attempt to
increase their presence in this market by acquiring or forming strategic
alliances with competitors of the Company.

During the third quarter of 1997, the Company generated approximately 34% of its
revenues from its operations in North America. This market is highly
competitive. The Company believes that its continued success is partly dependent
on its ability to operate successfully in this geographic region. Marketing
activities and purchasing decisions made by companies in this region influence
purchasing decisions made by companies on a worldwide basis. The inability of
the Company to compete successfully in this region, or the ineffectiveness of
its marketing activities, could have a material adverse affect on the Company's
results of operations and financial condition.

Rapid Technological Change and New Products. The market for decision support
tools is characterized by frequent product introductions and rapid technological
change. In the second quarter of 1996, the Company introduced a new release of
its BusinessObjects product, version 4.0. The development of this next
generation of BusinessObjects required the implementation of significant
architectural changes and extensive rewriting of the product source code. New
products when first released by the Company, may contain undetected errors or
"bugs" that, despite testing by the Company, are discovered only after a product
has been installed and used by customers. Products which have been extensively
rewritten, such as version 4.0, may take longer to achieve stability of
operation, than products which have been less extensively rewritten. In 1996,
the Company experienced material adverse effects resulting from "bugs" and a
significantly longer period than expected to achieve stability of operation of
its version 4.0. There can be no assurance that errors will not be discovered in
the future, causing delays in product introduction and shipments or requiring
design modifications which could adversely affect the Company's competitive
position and operating results. In addition, there can be no assurance that new
products or product enhancements developed by the Company will achieve market
acceptance.

During September 1997, the Company began shipping version 4.1 of its
BusinessObjects product.  The new version includes enhancements to the core
product, new intelligent agent functionality and features to support the broad
range of users across the enterprise.  Version 4.1 of BusinessObjects is
available for Microsoft Windows 3.1, Microsoft Windows 95 and Microsoft 

                                       12
<PAGE>
 
Windows NT. The Company plans to have version 4.1 available for UNIX Motif.
The delay between the availability of the Microsoft Windows versions and that
of the UNIX Motif version could result in certain customers delaying their
purchase of, or not purchasing at all, the Company's current products, and
could have a material adverse impact on the Company's financial performance.
The Company currently does not plan to make version 4.1 available for Apple
Macintosh. The prior version of BusinessObjects was available for Apple
Macintosh. While only approximately 2% of the Company's installed base is on
this platform, the non-availability of version 4.1 for Apple Macintosh could
cause certain customers to not purchase the Company's current products and
could have a material adverse impact on the Company's financial performance
and results of operations.

Version 4.1 was designed primarily on and for use with Microsoft Windows 95 and
Windows NT.  The Company believes that Microsoft Windows 3.1, and not Windows 95
or Windows NT is currently the predominant operating system used by its existing
and potential customers, and that the rate of adoption of Windows 95 and NT is
slower than original industry forecasts. While the Company has released version
4.1 for use with Windows 3.1, implementation is more difficult, performance may
be slower and its response times unacceptable to users. Poor performance of
version 4.1 on Windows 3.1 could have a material adverse impact on the Company's
financial performance. The efficient use of version 4.1 also requires a personal
computer with greater performance characteristics and Random Access Memory (RAM)
than is required for the efficient use of version 3.1 of BusinessObjects. This
could impact the rate at which customers purchase and implement version 4.1 and
could have a material adverse impact on the Company's results of operations and
financial performance.

The Company is currently developing WebIntelligence, a version of
BusinessObjects which will be deployable in an intranet environment, utilizing
World Wide Web technology.  The first release of the product is intended to
allow users to execute queries and prepare reports directly from a JAVA enabled
Web browser. While the Company intends to provide virtually the same level of
functionality in the long term in WebIntelligence as in BusinessObjects, there
can be no assurance that this equivalent or sufficient functionality will be
achieved. The mode of user interaction with WebIntelligence may be different
than BusinessObjects, including lighter query and reporting capabilities.  While
WebIntelligence will only address a subset of multidimensional analysis, the
Company intends to include broader multi-dimensional analysis capability in a
future enhancement to WebIntelligence. The Company's ability to successfully
develop a functional and scalable WebIntelligence could impact the rate at which
customers purchase and implement WebIntelligence, if at all, and could have a
material adverse impact on the Company's financial performance and results of
operations.

WebIntelligence requires development by the Company of server-based components,
an area in which the Company has not developed products in the past. Development
also requires the use of new emerging technologies such as the JAVA programming
language and IIOP (Internet Inter-Orb Protocol), which may contain "bugs" or not
yet operate properly.  Additionally, the Company is relying on certain software
that it licenses from third parties that is integrated with the Company's
internally developed software to develop WebIntelligence.  There can be no
assurance that this third party software will not contain "bugs" or operate
properly, and that the software will continue to be available to the Company on
commercially reasonable terms. The first release of WebIntelligence will support
Microsoft NT as the operating system for its 

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<PAGE>
 
server-based components, rather than Unix, which is the current predominate
operating system for Web servers. A Unix version of WebIntelligence is planned
for future releases; however, this will require a significant engineering
commitment that may delay or prohibit the Company's development of a Unix
version. The inability of the Company to successfully develop a commercially
acceptable, Web deployable version of BusinessObjects for either Windows NT or
Unix could have a material adverse impact on the Company's financial performance
and results of operations.

Any significant delay in shipping WebIntelligence could result in certain
customers delaying their purchase of, or not purchasing at all, the Company's
current products.  The inability of the Company to timely and successfully bring
WebIntelligence , the Web-deployable version of BusinessObjects, to market could
have a material adverse impact on the Company's financial performance and
results of operations.

Multinational Operations and Currency Exchange Rate Fluctuations. A significant
portion of the Company's business is conducted in currencies other than the U.S.
dollar, (the currency in which its financial statements are stated). The Company
has historically recorded a majority of its expenses in French francs,
especially research and development expenses, with the substantial majority of
its revenues denominated in U.S. dollars, French francs and British pounds
sterling. Moreover, fluctuations in the value of the currencies in which the
Company conducts its business relative to the U.S. dollar have caused and will
continue to cause dollar-translated amounts to change in comparison with
previous periods. Due to the number of currencies involved, the constantly
changing currency exposures, and the substantial volatility of currency exchange
rates, the Company cannot predict the effect of exchange rate fluctuations upon
future operating results. To date, the Company has not undertaken hedging
transactions to cover its currency transaction exposure.
Product Distribution and Support. Although the Company currently sells its
products through indirect sales channels, revenues from such sales represent a
smaller portion of the Company's total revenues than direct sales and there can
be no assurance that the Company will be able to expand its use of indirect
sales channels by using firms that will be able to market and support the
Company's software effectively. There can be no assurance that any VAR, system
integrator, consulting partner, distributor or reseller of the Company's
products will continue to represent the Company's products, and the inability to
recruit or retain a significant number of VARs, system integrators, consulting
partners, distributors or resellers could adversely affect the Company's results
of operations. Additionally, the inability of the Company to expand its sales
and marketing organization, to implement new indirect sales channels to
penetrate different and broader markets than those addressed by its existing
direct sales force and international distributors, and to expand its support
organization commensurate with the base of its installed products could
adversely affect the Company's results of operations and financial performance.

Management of Growth. To date, the Company's business has grown rapidly.
Continued growth may place a significant strain on the Company's management and
operations. The Company's future operating results will depend on the ability of
its officers and key employees to continue to implement and improve its
operational and financial control systems and to expand, train, retain and
manage its employee base. The Company's inability to manage growth effectively
could have a material adverse effect on the Company's results of operations and
financial performance.

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<PAGE>

PART II. OTHER INFORMATION

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

   a)  Exhibits

       11.1  Statement Regarding Computation of Earnings Per Share

       27.1  Financial Data Schedule


   B)  Reports on Form 8-K

       No Reports on Form 8-K were filed during the quarter ended September 
       30, 1997.
 
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<PAGE>
 
SIGNATURES

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


BUSINESS OBJECTS S.A.


Date:  November 14, 1997                 By:   /s/ Bernard Liautaud
                                            -----------------------------
                                                   Bernard Liautaud
                                               Chief Executive Officer


Date:  November 14, 1997                 By:  /s/ Clifton T. Weatherford
                                            ------------------------------
                                                  Clifton T. Weatherford
                                                 Chief Financial Officer
 
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