<PAGE>

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                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 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 APRIL 30, 1999

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


                         COMMISSION FILE NUMBER 0-23475

                           INFORMATION ADVANTAGE, INC.
             (Exact Name of Registrant as Specified in Its Charter)

                DELAWARE                                       41-1718445
      (State or Other Jurisdiction                          (I.R.S. Employer
    of Incorporation or Organization)                      Identification No.)

                      7905 GOLDEN TRIANGLE DRIVE, SUITE 190
                       EDEN PRAIRIE, MINNESOTA 55344-7227
          (Address of Principal Executive Offices, including Zip Code)

                                 (612) 833-3700
              (Registrant's Telephone Number, including Area Code)

Check 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
             ---     ---

     As of May 31, 1999, the issuer had outstanding 25,205,437 shares of Common
Stock, par value $0.01 per share.

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<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                      <C>
PART I......................................................................................1

         ITEM 1         FINANCIAL STATEMENTS................................................1
         ITEM 2         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS...........................................5
         ITEM 3         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........10

PART II....................................................................................10

         ITEM 1         LEGAL PROCEEDINGS..................................................10
         ITEM 2         CHANGES IN SECURITIES AND USE OF PROCEEDS..........................10
         ITEM 3         DEFAULTS UPON SENIOR SECURITIES....................................10
         ITEM 4         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................10
         ITEM 5         OTHER INFORMATION..................................................11
         ITEM 6         EXHIBITS AND REPORTS ON FORM 8-K...................................11

SIGNATURES.................................................................................11

EXHIBIT INDEX..............................................................................12
</TABLE>

                                      i

<PAGE>

                                     PART I

ITEM 1  FINANCIAL STATEMENTS

                           INFORMATION ADVANTAGE, INC.
                           CONSOLIDATED BALANCE SHEET
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                   APRIL 30,    JANUARY 31,
                                                                                    1999          1999
                                                                                 -----------    -----------
                                                                                 (Unaudited)    (Audited)
<S>                                                                               <C>           <C>
ASSETS
Current Assets:
   Cash and cash equivalents .................................................     $ 16,228      $ 20,041
   Available-for-sale securities .............................................       15,072        12,725
   Accounts receivable, net ..................................................       14,503        23,534
   Prepaid expenses and other current assets .................................        2,323         1,363
   Current deferred tax assets, net ..........................................        5,812         5,812
                                                                                   --------      --------
     Total current assets ....................................................       53,938        63,475

Computers, furniture and office equipment, net ...............................        4,496         4,111
Long-term deferred taxes and other assets ....................................        5,656         3,621
                                                                                   --------      --------
                                                                                   $ 64,090      $ 71,207
                                                                                   --------      --------
                                                                                   --------      --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Current portion--long-term debt ...........................................     $    154      $    187
   Accounts payable ..........................................................        2,042         1,918
   Accrued expenses ..........................................................        7,377         9,752
   Deferred revenue ..........................................................        7,028         6,910
                                                                                   --------      --------
     Total current liabilities ...............................................       16,601        18,767

Long-term liabilities, less current portion ..................................          101           583
                                                                                   --------      --------
     Total liabilities .......................................................       16,702        19,350
                                                                                   --------      --------

Stockholders' equity:
   Common stock, $0.01 par value; 60,000,000 shares authorized; 25,150,697 and
     24,992,809 shares issued and outstanding,
     respectively ............................................................          251           250
   Additional paid-in capital ................................................       61,177        60,962
   Accumulated other comprehensive income ....................................          (76)          (43)
   Accumulated deficit .......................................................      (13,964)       (9,312)
                                                                                   --------      --------
     Total stockholders' equity ..............................................       47,388        51,857
                                                                                   --------      --------
                                                                                   $ 64,090      $ 71,207
                                                                                   --------      --------
                                                                                   --------      --------
</TABLE>

        The accompanying notes are an integral part of these
               consolidated financial statements.

                                      1

<PAGE>

                           INFORMATION ADVANTAGE, INC.
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                     APRIL 30,
                                                             ----------------------
                                                                1999          1998
                                                             --------      --------
<S>                                                          <C>           <C>
Revenues:
   License .............................................     $  5,183      $  8,621
   Services ............................................        7,597         6,650
                                                             --------      --------
     Total revenues ....................................       12,780        15,271
                                                             --------      --------
Cost of revenues:
   License .............................................          394           504
   Services ............................................        3,382         3,153
                                                             --------      --------
     Total cost of revenues ............................        3,776         3,657
                                                             --------      --------
Gross margin ...........................................        9,004        11,614
                                                             --------      --------
Operating expenses:
   Sales and marketing .................................       11,307         7,199
   Research and development ............................        2,665         2,083
   General and administrative ..........................        1,977         1,579
                                                             --------      --------
     Total operating expenses ..........................       15,949        10,861
                                                             --------      --------
Income (loss) from operations ..........................       (6,945)          753
Other income (expense)
   Other income, primarily investment earnings .........          244           412
   Interest expense ....................................           (4)          (12)
                                                             --------      --------
     Total other income (expense) ......................          240           400
Income (loss) before provision for (benefit from) income
  taxes ................................................       (6,705)        1,153
Provision for (benefit from) income taxes ..............       (2,053)          325
                                                             --------      --------
Net income (loss) ......................................     $ (4,652)     $    828
                                                             --------      --------
                                                             --------      --------
Net income (loss) per share:
   Basic and diluted ...................................     $  (0.19)     $   0.03
                                                             --------      --------
                                                             --------      --------
Shares used in computing net income (loss) per share:
   Basic ...............................................       25,054        24,666
                                                             --------      --------
                                                             --------      --------
   Diluted .............................................       25,054        26,644
                                                             --------      --------
                                                             --------      --------
</TABLE>

        The accompanying notes are an integral part of these
               consolidated financial statements.

                                      2

<PAGE>

                           INFORMATION ADVANTAGE, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED
                                                                             APRIL 30,
                                                                  ---------------------------
                                                                     1999              1998
                                                                  --------           --------
<S>                                                               <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ......................................          $ (4,652)          $    828
Adjustments to reconcile net income (loss) to net
     cash used by operating activities -
   Depreciation and amortization .......................               653                877
   Deferred taxes ......................................            (2,388)               (78)
   Provision for doubtful accounts .....................               208               --
Changes in operating assets and liabilities -
   Accounts receivable .................................             8,822             (2,227)
   Prepaid expenses and other current assets ...........              (907)              (143)
   Accounts payable ....................................               156               (694)
   Accrued expenses ....................................            (2,781)               787
   Deferred revenue ....................................               (33)              (875)
   Other ...............................................                11                 (9)
                                                                  --------           --------
     Net cash used in operating activities .............              (911)            (1,534)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to computers, furniture and office equipment .              (894)              (440)
Additions to capitalized software development costs ....              --                 (237)
Purchase of marketable securities ......................            (2,339)           (10,475)
                                                                  --------           --------
     Net cash used in investing activities .............            (3,233)           (11,152)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options ................               217                 44
Principal payments on long-term liabilities ............               (58)               (84)
                                                                  --------           --------
     Net cash provided by (used in) financing activities               159                (40)
Effect of exchange rates on cash .......................               172                 52
                                                                  --------           --------
Net increase (decrease) in cash and cash equivalents ...            (3,813)           (12,674)
Cash and cash equivalents, beginning of period .........            20,041             27,765
                                                                  --------           --------
Cash and cash equivalents, end of period ...............          $ 16,228           $ 15,091
                                                                  --------           --------
                                                                  --------           --------
</TABLE>

        The accompanying notes are an integral part of these
               consolidated financial statements.

                                      3

<PAGE>

                           INFORMATION ADVANTAGE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                   (UNAUDITED)

1.   BASIS OF PRESENTATION

     In September 1998, Information Advantage, Inc. (the "Company" or "IA")
     completed a merger with IQ Software Corporation ("IQ") which was accounted
     for as a pooling of interests. The accompanying fiscal 1999 financial
     statements have been presented to reflect the results of operations and
     cash flows of the companies as if they had been combined from the earliest
     date presented.

     The financial information furnished is unaudited except for the balance
     sheet as of January 31, 1999. The unaudited consolidated financial
     statements as of and for the quarters ended April 30, 1999 and 1998 have
     been prepared on the same basis as the audited consolidated financial
     statements for the year ended January 31, 1999, and include all
     adjustments, consisting only of normal recurring accruals, which in the
     opinion of management are necessary for the fair presentation of such
     information for the periods presented.

     Certain notes normally included in financial statements prepared in
     accordance with generally accepted accounting principles have been omitted.
     These financial statements should be read in conjunction with the Company's
     audited financial statements and notes thereto for the three years ended
     January 31, 1999, included in the Company's annual report on Form 10-K. In
     addition, the results of operations for the interim periods presented may
     not be indicative of results for the entire year.

2.   NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998 the Financial Accounting Standards Board issued FASB No. 133,
     ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. This
     Statement establishes accounting and reporting standards for derivative
     instruments and for hedging activities. It requires that an entity
     recognize all derivatives as either assets or liabilities in the statement
     of financial position and measure those instruments at fair value. If
     certain conditions are met, a derivative may be specifically designated as
     (a) a hedge of the exposure to changes in the fair value of a recognized
     asset or liability or an unrecognized firm commitment, (b) a hedge of the
     exposure to variable cash flows of a forecasted transaction, or (c) a hedge
     of the foreign currency exposure of a net investment in a foreign
     operation, an unrecognized firm commitment, an available-for-sale security,
     or a foreign-currency-denominated forecasted transaction. Changes in the
     fair value of a derivative (that is, gains and losses) are accounted for
     within earnings or as a component of other comprehensive income, depending
     on the intended use of the derivative and the resulting designation. This
     Statement is effective for all fiscal quarters of fiscal years beginning
     after June 15, 1999, but should not be applied retroactively to financial
     statements of prior periods. Because the Company does not currently utilize
     derivative instruments or hedges, the implementation of this accounting
     standard will have no impact on the Company's results of operations or
     financial condition.

3.   EARNINGS PER SHARE

     A reconciliation of the denominators of the basic and diluted earnings per
     share (EPS) computations for the three months ended April 30 is presented
     below:

                                      4

<PAGE>

<TABLE>
<CAPTION>
                                                                              1999               1998
                                                                        ---------------    ----------------
<S>                                                                     <C>                <C>
     Net Income (Loss)                                                         $(4,652)               $ 828
                                                                        ---------------    ----------------
                                                                        ---------------    ----------------
     Shares Calculation:
        Weighted average basic shares outstanding                            25,053,507          24,665,864
        Effect of dilutive securities
          Options                                                                     --           1,879,537
          Warrants                                                                    --              98,893
                                                                        ---------------    ----------------
     Total shares used to compute
        diluted earnings per share                                           25,053,507          26,644,294
                                                                        ---------------    ----------------
                                                                        ---------------    ----------------
     Net Income (Loss) per Basic Share                                         $ (0.19)              $ 0.03
                                                                        ---------------    ----------------
                                                                        ---------------    ----------------
     Net Income (Loss) per Diluted Share                                       $ (0.19)              $ 0.03
                                                                        ---------------    ----------------
                                                                        ---------------    ----------------
</TABLE>

4.   SUBSEQUENT EVENT

     In June 1999, the Company paid approximately $2.4 million to a third
party in exchange for a perpetual license to embed that party's software into
the Company's Customer Relationship Management (CRM) products. Because the
technological feasibility of this purchased software has already been
established, this investment will be capitalized and amortized to expense
over the expected useful life of the software.

ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
       OF OPERATIONS

         THE FOLLOWING DISCUSSION AND ANALYSIS DESCRIBES CERTAIN FACTORS
AFFECTING THE RESULTS OF OPERATIONS OF INFORMATION ADVANTAGE, INC. (THE
"COMPANY") FOR THE FISCAL QUARTER ENDED APRIL 30, 1999 AND ITS FINANCIAL
CONDITION AS OF APRIL 30, 1999. THIS DISCUSSION AND ANALYSIS SHOULD BE READ IN
CONJUNCTION WITH THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED JANUARY 31, 1999.

         CERTAIN OF THE STATEMENTS IN THE FOLLOWING DISCUSSION CONSTITUTE
FORWARD-LOOKING STATEMENTS WHICH ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. VARIOUS FACTORS MAY
CAUSE ACTUAL RESULTS OF OPERATIONS AND FINANCIAL CONDITION TO VARY SIGNIFICANTLY
FROM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENT MADE HEREIN OR IN OTHER
REPRESENTATIONS MADE BY THE COMPANY'S MANAGEMENT OR BY OTHERS ON BEHALF OF THE
COMPANY. PLEASE REFER TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED JANUARY 31, 1999 FOR A DESCRIPTION OF THE FACTORS KNOWN TO THE
COMPANY THAT MAY CAUSE ACTUAL RESULTS TO VARY.

         All dollar amounts within this section, except per share amounts, are
in thousands, unless otherwise indicated.

OVERVIEW

         Information Advantage, Inc. develops, markets and supports a
comprehensive suite of enterprise scalable Business Intelligence software.
MyEureka!, the Company's Internet-based Business Intelligence solution, combines
the industry's first Business Intelligence portal with powerful, robust and
flexible reporting and analysis capabilities to provide easy access to all
business information and transform raw data into meaningful information.
MyEureka! enables organizations to leverage e-commerce activities and become
closer to their customers at all levels, thereby creating an "intelligent
enterprise," capable of quickly identifying and reacting to market
opportunities. MyEureka! supports UNIX and Windows NT operating systems,
includes an extensive and configurable set of Business Intelligence components
for information access, analysis and distribution, and is based on a secure and
scalable architecture.

         In September 1998, the Company completed a merger with IQ Software
Corporation ("IQ"), a software development company that develops and markets a
suite of business intelligence products and related services. The transaction
was accounted for as a pooling, and all financial information has been presented
as if the two companies had been combined as of the earliest period discussed.
References to "the Company" within this discussion are intended to mean the
combined company composed of the businesses of IA and IQ.

                                      5

<PAGE>

         The Company's license revenues are derived from (a) one-time
perpetual licenses for the right to use its software products, and (b)
licenses to resellers which authorize the sale of the Company's software as a
component of the resellers' software. License fees from resellers are
generally determined on the basis of the number of servers, the number of
users and the size of databases in the application. The Company's service
revenues, which have accounted for approximately 40 percent of the Company's
total revenues for the past three years, include fees for maintenance,
training and consulting services. The Company anticipates that service
revenues will continue to account for a significant portion of the Company's
total revenues.

         The Company licenses its software through its direct sales force and
through indirect channels, including solution development partners, sales
affiliates and marketing partners. Revenues from indirect channels were
approximately 25.0% and 32.3% of the Company's license revenues for fiscal
the quarters ended April 30, 1999, and 1998, respectively. The Company
intends to expand its strategic relationships, thereby increasing the
revenues generated from indirect channels as a percentage of total license
revenues. The Company intends to expand its international operations and has
committed, and continues to commit, significant management time and financial
resources to developing direct and indirect international sales and support
channels. The Company has international sales and support offices in Toronto,
Canada; London, England; Cologne, Germany; Paris, France; Amsterdam, Holland;
and Sydney, Australia. To date, most of the Company's international revenues
have been derived from the United Kingdom, Germany and Canada. There can be
no assurance that the Company will be successful in expanding its indirect
channels or international operations.

RESULTS OF OPERATIONS

         The following table sets forth certain statement of operations data as
a percentage of total revenues for the quarters ended April 30:

<TABLE>
<CAPTION>
                                                           1999             1998
                                                         ---------        --------
<S>                                                      <C>              <C>
Revenues:
   License ......................................          40.6 %          56.5 %
   Service ......................................           59.4            43.5
                                                           -----           -----
     Total revenues .............................          100.0           100.0
Cost of Revenues:
   License ......................................            3.1             3.3
   Service ......................................           26.4            20.6
                                                           -----           -----
     Total cost of revenues .....................           29.5            23.9
                                                           -----           -----
Gross margin ....................................           70.5            76.1
                                                           -----           -----
Operating expenses:
   Sales and marketing ..........................           88.5            47.1
   Research and development .....................           20.8            13.7
   General and administrative ...................           15.5            10.3
                                                           -----           -----
     Total operating expenses ...................          124.8            71.1
                                                           -----           -----
Income (loss) from operations ...................          (54.3)            4.9
Interest income, net ............................            1.8             2.6
                                                           -----           -----
Income (loss) before provision for (benefit from)
     income taxes ...............................          (52.5)            7.5
(Benefit from) provision for  income taxes ......          (16.1)            2.1
                                                           -----           -----
Net income (loss) ...............................          (36.4) %        5.4 %
                                                           -----           -----
                                                           -----           -----
</TABLE>

                                      6

<PAGE>

REVENUES

         LICENSE. License revenues decreased to $5,183 from $8,621,
between the quarters ended April 30, 1999 and 1998. The decrease in the
Company's license revenues was attributable primarily to the length of sales
cycles in larger enterprise application projects. To a lesser extent,
internal changes in the Company's sales process and Year 2000 marketplace
conditions also affected first quarter revenues. To date, price increases
have not had a significant impact on revenues.

         SERVICE. Service revenues include fees from maintenance contracts,
training, training materials and consulting services. Service revenues
increased 14.2%, to $7,597 from $6,650, between the quarters ended April 30,
1999 and 1998. The Company anticipates that service revenues will continue to
account for a significant percentage of the Company's total revenues.

         INTERNATIONAL REVENUES. International revenues include all revenues
other than from the United States. International revenues from the Company's
direct sales organizations in Europe and export sales to or through strategic
partners in Europe and other areas outside of the United States accounted for
24.1% and 20.5% of total revenues for the quarters ended April 30, 1999 and
1998, respectively. The Company expects that international license and
related service revenues will continue to account for a significant portion
of its total revenues in the future. However, the Company does not believe
that the historical percentage growth rate of international revenue will be
sustainable or is indicative of future results.

COST OF REVENUES

         LICENSE. Cost of license revenues consists primarily of salaries,
product packaging, documentation and production costs. Cost of license revenues
was $394 and $504 for the quarters ended April 30, 1999 and 1998, respectively,
representing 7.6% and 5.8% of license revenues for these periods. The increase
in cost of license revenues as a percentage of license revenue between the
quarters ended April 30, 1999 and 1998 was primarily due to a decrease in
license revenues without a corresponding decrease in fixed costs.

         SERVICE. Cost of service revenues consists primarily of
personnel-related and facilities costs incurred in providing customer support,
training and consulting services, as well as third-party costs incurred in
providing training and consulting services. Cost of service revenues was $3,382
and $3,153 for the quarters ended April 30, 1999 and 1998, respectively,
representing 44.5% and 47.4% of service revenues for these periods. The decrease
in cost of service revenues as a percentage of service revenues for the quarters
ended April 30, 1999 and 1998 was primarily due to increased productivity and
improved economies of scale of the technical support center.

OPERATING EXPENSES

         SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions and incentives earned by sales and marketing personnel,
field office expenses, travel and entertainment and promotional expenses. Sales
and marketing expenses were $11,307 and $7,199 for the quarters ended April 30,
1999 and 1998, respectively. The increase in sales and marketing expenses was
predominantly due to the hiring of additional sales and marketing personnel and,
to a lesser extent, the increase in the number of sales offices.

         RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of salaries and benefits of software engineering personnel, payments
to contract programmers and expendable equipment purchases. Research and
development expenses were $2,665 and $2,083 for the quarters ended April 30,
1999 and 1998, respectively. This increase was primarily attributable to
additional hiring of research and development personnel. The Company anticipates
that it will continue to devote substantial resources to research and
development.

         GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries, professional fees, occupancy expenses and bad debt
expense. General and administrative expenses were $1,977 and $1,579 for the
quarters ended April 30, 1999 and 1998, respectively. The increase was
predominantly due to increased staffing

                                      7

<PAGE>

and, to a lesser extent, associated expenses necessary to manage and support
the Company's increased scale of operations.

         PROVISION FOR (BENEFIT FROM) INCOME TAXES. During the quarter ended
April 30, 1999, the Company increased its deferred tax assets and recognized a
tax benefit of ($2,053) as a result of the quarterly operating loss, compared
with a tax provision of $325 for the quarter ended April 30, 1998, during which
the Company had operating profits. Management believes that it is more likely
than not that the deferred tax asset will be fully utilized by the Company.

LIQUIDITY AND CAPITAL RESOURCES

         Net cash used in operating activities was $911 and $1,534 for the
quarters ended April 30, 1999 and 1998, respectively. During the quarter ended
April 30, 1999, cash used in operating activities included a pre-tax operating
loss of $6,705, a decrease of $2,781 in accrued expenses and $907 in prepaid
expenses, offset by a net reduction of $8,822 in accounts receivable. During the
quarter ended April 30, 1998, cash used in operating activities resulted
primarily from an increase in accounts receivable.

         Net cash used in investing activities during the quarter ended April
30, 1999 of $3,233 related to the acquisition of short-term investments and
purchases of computers, furniture and office equipment. Net cash used in
investing activities during the quarter ended April 30, 1998 consisted primarily
of $10,475 in purchases of marketable securities.

         Net cash provided by financing activities during the quarter April 30,
1999 of $159 consisted of $217 in proceeds from the exercise of stock options
offset by $58 in principal payments on capital leases.

         As of April 30, 1999, the Company had no material commitments for
capital expenditures. Subsequent to April 30, 1999, the Company entered into
a software license agreement with a third party and paid approximately $2.4
million to the third party in exchange for a perpetual license to embed that
party's software into the Company's products.

         The Company has a revolving credit line of $4,000. There were no
amounts outstanding under this facility as of or during the quarter ended April
30, 1999.

         The Company believes that its existing cash, cash equivalents and
short-term investments will be adequate to meet its cash needs for at least the
next 12 months. If, in the future, the Company requires additional financing,
there can be no assurance that additional financing will be available at all or
that, if available, such financing will be on terms favorable or acceptable to
the Company. Nor can there be any assurance that any future financing will not
be dilutive.

RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1998 the Financial Accounting Standards Board issued FASB No.
133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. This
Statement establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (a) a hedge of the exposure
to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment, (b) a hedge of the exposure to variable cash flows
of a forecasted transaction, or (c) a hedge of the foreign currency exposure of
a net investment in a foreign operation, an unrecognized firm commitment, an
available-for-sale security, or a foreign-currency-denominated forecasted
transaction. Changes in the fair value of a derivative (that is, gains and
losses) are accounted for within earnings or as a component of other
comprehensive income, depending on the intended use of the derivative and the
resulting designation. This Statement is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999, but should not be applied
retroactively to financial statements of prior periods. Because the Company does
not currently utilize derivative instruments or hedges, the implementation of
this accounting standard will have no impact on the Company's results of
operations or financial condition.

                                      8

<PAGE>

YEAR 2000 READINESS DISCLOSURE

         The Company is presently assessing its Year 2000 readiness for
operations worldwide, focusing on critical operating and applications
systems, particularly the Year 2000 compliance of: (a) product lines, (b) key
software/hardware vendors, and (c) financial accounting systems.

         The Company believes that its products are Year 2000 compliant. With
respect to other areas of its operations, the Company has performed an
initial high-level assessment of mission critical systems that will require
Year 2000 modification. During this initial assessment, the Company
determined that Year 2000 issues exist with regard to its internal financial
reporting application, its voicemail system, and one stand-alone component of
the sales transaction process. The Company plans to replace or modify each of
these systems during calendar 1999.

         During the second quarter of calendar 1999, management plans to use
internal staff, supplemented by consultants, to conduct a more thorough,
detailed analysis of remaining systems, including all personal computers, the
computer networking hardware and software, the electronic mail system, and
non-IT systems such as building security and climate control systems. The
Company plans to conduct Year 2000 readiness testing and take appropriate action
during the last half of calendar 1999 to correct any remaining Year 2000 issues
that arise during this second quarter review.

         The Company uses outside vendors to supply its most significant
financial accounting software. As part of the integration of IQ, the Company is
currently in the process of converting its financial application to a platform
that is Year 2000 compliant. The replacement of the voicemail system and the
stand-alone component of the sales transaction process is still in the planning
phase, and no reliable estimate of the ultimate cost has been determined.
However, the Company believes that its internal Year 2000 issues are of lesser
complexity than other industries that may have huge, custom-programmed legacy
computer systems or numerous embedded microprocessors controlling complex
processes. Replacements for any of the Company's non-compliant internal systems
are commercially available, and will be purchased and installed as necessary
during calendar 1999.

         To date, all remediation efforts have been conducted by internal staff,
and the costs incurred have not been material. The Company intends to complete
its Year 2000 remediation efforts with both internal resources and external
consultants. The Company believes it has sufficient liquidity to fund the
internal Year 2000 remediation described above. The Company believes that
capital expenditures related to replacing non-compliant systems may exceed
$1,000. Management believes that the expense related to completing the Company's
readiness assessment will not exceed $250.

         During the second quarter of calendar 1999, the Company intends to
perform a compliance survey of its critical vendors. The critical external
systems on which the Company's operations, both domestically and
internationally, depend include:

-   telephone systems,
-   utilities, such as electricity and water,
-   airline transportation,
-   delivery and courier services,
-   product packaging manufacturers,
-   payroll processing providers, and
-   financial institutions.

       The Company intends to develop alternative sources of these critical
services, as necessary and where available, based on the results of its
survey. In the event that any such key suppliers do not achieve Year 2000
compliance in a timely manner, or at all, and a suitable replacement service
cannot be located (for example, electrical power), the Company's business or
operations could be adversely affected.

         The Company recognizes the need for Year 2000 contingency plans in the
event that remediation is not fully successful or that the remediation efforts
of its vendors, suppliers and governmental/regulatory agencies are not completed
in a timely manner. To the extent possible, the Company will develop alternative
relationships to ensure

                                      9

<PAGE>

the availability of critical products and services, or will implement
alternative means of packaging, selling and delivering its products. The
Company intends to more formally address contingency planning during the
second half of calendar 1999, following its completion of its detailed
readiness and risk assessment.

         The Company recognizes that issues related to Year 2000 constitute a
material known uncertainty. Except as discussed above, the Company is not aware
of any potential material adverse effects which could result from these issues.
There can be no assurance that the processes described above can be completed on
the timetable described above or that remediation will be fully effective. The
Company's failure to identify and remediate Year 2000 issues, or the failure of
customers, key vendors or other critical third parties who do business with the
Company to timely remediate their Year 2000 issues could cause system failures
or errors, business interruptions or, in a worst case scenario, the inability to
engage in normal business practices for an unknown length of time. The effect on
the Company's operations, income and financial condition could be materially
adverse.

ITEM 3    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

            Market risk represents the risk of changes in value of a financial
instrument, derivative or non-derivative, caused by fluctuations in interest
rates, foreign exchange rates and equity prices.

         The Company's primary market risk is interest rate risk. The Company
minimizes such risk by investing in accordance with established policies. The
Company does not engage in derivative transactions, and no financial instrument
transactions are entered into for hedging purposes.

         There have been no material changes in the nature or significance of
the Company's market risk as previously disclosed in the Company's Annual Report
on Form 10-K for the year ended January 31, 1999.

                                     PART II

ITEM 1    LEGAL PROCEEDINGS

         On October 23, 1997, a complaint was served on IQ and certain of its
executive officers on behalf of purchasers of IQ Common Stock between May 8,
1996 and February 3, 1997 alleging violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934. The claim alleges that IQ failed to disclose
the risks and liabilities assumed by IQ in connection with the transition of its
sales force from an inside telesales model to an outside field-based model. The
Company believes that the claim is without merit and is vigorously defending the
action. During fiscal 1999, the parties to the action reached a tentative
agreement to settle the action. The agreement is subject to court approval by
the U.S. District Court of the Northern District of Georgia, Atlanta Division,
before it becomes final. In the event the Company is unsuccessful in finalizing
the agreement and ultimately defending against the claim, the Company's
business, operating results and financial condition could be materially and
adversely affected.

ITEM 2    CHANGES IN SECURITIES AND USE OF PROCEEDS

         From the effective date of the Registration Statement on Form S-1
through April 30, 1999, the Company had used approximately $3,544 of the net
proceeds from its initial public offering for the repayment of indebtedness, and
$3,014 for the purchase of furniture and equipment.

ITEM 3    DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

ITEM 4    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.

                                      10

<PAGE>

ITEM 5    OTHER INFORMATION

         Not applicable.

ITEM 6    EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibit 27.1 - Financial Data Schedule

(b)      Reports on Form 8-K
         The Company did not file any such reports during the quarter ended
         April 30, 1999.

                                   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 on June 11, 1999.


                                   INFORMATION ADVANTAGE, INC.

                                   By:   /s/ Larry J. Ford
                                        -----------------------------
                                            Larry J. Ford
                                            President and Chief
                                              Executive Officer

                                   By:   /s/ Kurt L. Betcher
                                        -----------------------------
                                            Kurt L. Betcher
                                            Vice President and Chief
                                              Financial Officer

                                      11

<PAGE>
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No.                   Description
------------                  -----------
<S>                           <C>
     27.1                     Financial Data Schedule
</TABLE>

                                      12