Business Objects Reports Second Quarter 2000 Results; Revenues Increase 47% Over Prior Year; Net Income Climbs 79%.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--July 20, 2000

Business Objects (Nasdaq:BOBJ) (PARIS BOURSE: code SICOVAM 12074) today announced its results for the second quarter and six months ended June 30, 2000.

Second quarter revenues were $84.6 million, an increase of 47 percent compared to revenues of $57.5 million for the quarter ended June 30, 1999. Net income for the second quarter was $9.2 million, compared to $5.1 million for the same period last year. Diluted net income per share and per ADS for the quarter ended June 30, 2000 were $0.21, compared to $0.14 in the second quarter of last year. Diluted net income per share and per ADS has been adjusted to reflect the two-for-one split of ordinary shares and ADS in January of 2000.

Revenues for the six months ended June 30, 2000 were $157.1 million, compared to revenues of $107.1 million during the same period last year. Net income for the six months ended June 30, 2000 was $16.2 million, compared to $8.4 million for the same period last year. Diluted net income per share and per ADS for the six months ended June 30, 2000 were $0.37, compared to $0.22 for the same period last year.

"Our strong second quarter results reflect our momentum in the e-business market," said Bernard Liautaud, president and chief executive officer of Business Objects. "In the second quarter, extranet revenues grew 225% over the same period last year. We added 72 new extranet customers, and current customers continued to deploy business-to-business extranets worldwide. In addition, we are taking the lead in providing business intelligence capabilities for on-line trading exchanges, with the signing of leading companies such as Ventro.

"Demand was strong in all regions, but we are especially pleased with the growth rate of 61% in North America in the second quarter, reflecting our momentum in this important market," Liautaud added. "We also had an exceptional contribution from our indirect channels, which provided 51% of total revenues. This quarter we again demonstrated our ability to expand our operating margins, while investing in a rapidly growing market."

During the second quarter, we announced a new initiative in the North American application service provider (ASP) market, including new partnerships (Corporate Systems, Mitratech, NewChannel, PricewaterhouseCoopers, and RZ Solutions), and an ASP Starter Pack," Liautaud said. "We created the ASP Starter Pack to help our partners facilitate the deployment of Business Objects solutions to markets serving the customer relationship management (CRM), financial, legal, and sales force automation (SFA) industries."

Business Objects expanded its customer base in the second quarter, adding over 358,000 new licenses for a total of 2,268,000 worldwide. Key customers in the second quarter included: British Airways, BP Amoco, Sogei, McDonald's, EDS, Rightworks, Rolls Royce, Nestle, Toshiba, and GE Medical Systems.

During the second quarter, the company announced BusinessObjects(TM) 5i, a new version of the company's full-client e-business intelligence tool. BusinessObjects 5i is the first e-BI solution to enable users to build reports from both traditional corporate data stores (data warehouses and enterprise resource planning (ERP) systems), and from the Internet. The new solution is a self-installing, self-updating product, which provides a zero-administration environment for information technology (IT) staffs.

BusinessObjects 5i enables users to work with their reports through BusinessObjects InfoView, the company's business intelligence portal (BIP), which was introduced in May, 2000. BusinessObjects INFOVIEW collects and consolidates a company's business intelligence (BI) information, and presents this content in a secure, focused, and personalized view to business users throughout an organization. As part of the INFOVIEW launch, the company introduced the Business Objects Open Portal Initiative, a partnership with the leading enterprise information portal (EIP) vendors such as IBM, Plumtree, and Viador, to provide a complete enterprise portal solution.

Business Objects also unveiled a new strategy for accessing online analytical processing (OLAP) servers, and announced BusinessObjects MDX CONNECT(TM), an interface to Microsoft's OLAP Server. BusinessObjects MDX CONNECT is the first product to result from the company's acquisition of OLAP@Work in April, 2000.

The company's balance sheet continued to be strong with $181.8 million in cash and cash equivalents at June 30, 2000. Total assets at June 30, 2000 were $307.5 million, compared to $272.5 million at December 31, 1999.

About Business Objects

Business Objects is the world's leading provider of e-business intelligence (e-BI) solutions. The company coined the term e-business intelligence in 1998 to describe the intersection of business intelligence and the Internet. Using e-business intelligence, organizations can access, analyze, and share information in intranet, extranet, and e-business environments. In intranets, the company's products provide employees with information to make better business decisions, and are used in environments ranging from workgroups of 20 users to enterprise deployments exceeding 20,000. In the extranet environment, the company is pioneering the use of e-BI in applications that allow organizations to build stronger relationships by linking customers, partners, and suppliers via the Internet. In addition, the company's products can improve the performance of an e-business by providing reporting and analysis against the ever-expanding amount of transaction and profile data that is collected each day throughout the World Wide Web.

Founded in 1990, Business Objects pioneered the modern business intelligence industry by inventing and patenting a "semantic layer" that insulates users from the technical complexity of database systems. Today, the company has sold more than 2,268,000 licenses to over 10,900 organizations in more than 80 countries. The company's stock is publicly traded under the ticker symbols NASDAQ: BOBJ and PARIS BOURSE: code SICOVAM 12074, and included in the SBF 120 and IT CAC 50 French stock market indexes. Business Objects can be reached at 408/953-6000 and www.businessobjects.com.

This press release may contain forward looking statements with respect to demand for the company's e-business intelligence solutions. Such forward looking statements are subject to risks and uncertainties including, without limitation, historical variability in the performance of the company, changes in the company's market, and the ability of the company to gain acceptance of its products, and increased competition, which could cause actual results to differ materially from those anticipated. For a more complete discussion of risk factors that could affect the company's current and future operating results, see the discussions in the company's reports filed with the SEC from time to time, including but not limited to the company's Form 10-K for the fiscal year ended December 31, 1999, and the Form 10Q for the quarterly period ended March 31, 2000.

Note to Editors: BusinessObjects is a trademark and WebIntelligence is a registered trademark of Business Objects SA. Other company and product names may be trademarks of the respective companies with which they are associated. A full-text copy of this announcement may be obtained by calling the Company's fax retrieval line at 800-414-2114 and selecting option "two." The announcement may also be downloaded from the Web; access "http://www.businesswire.com/cnn" and search on "Business Objects." Business Objects product inquiries should contact 800-527-0580.

                         BUSINESS OBJECTS S.A.
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
            (Unaudited, in thousands of US dollars, except per
             ADS and per share data)

                       Three Months Ended          Six Months Ended
                             June 30,                  June 30,
                        2000         1999         2000         1999
                     ---------    ---------    ---------    ---------

Revenues:
 License fees        $  53,162    $  35,533    $  98,208    $  67,067
 Services               31,391       22,010       58,927       39,984
                     ---------    ---------    ---------    ---------
   Total revenues       84,553       57,543      157,135      107,051
Cost of revenues:
 License fees            1,013        1,142        1,462        1,957
 Services               13,643        8,850       25,441       17,126
                     ---------    ---------    ---------    ---------
  Total cost of
   revenues             14,656        9,992       26,903       19,083
                     ---------    ---------    ---------    ---------
Gross margin            69,897       47,551      130,232       87,968
Operating expenses:
 Sales and
  marketing             41,312       28,106       78,696       53,454
 Research and
  development           10,115        6,426       18,294       12,422
 General and
  administrative         4,676        4,184        9,278        7,900
 Goodwill                1,117          770        2,106        1,252
                     ---------    ---------    ---------    ---------
  Total operating
   expenses             57,220       39,486      108,374       75,028
                     ---------    ---------    ---------    ---------
Income from
 operations             12,677       8,065       21,858        12,940

Interest and other
 income, net             2,680          645        5,141        1,216
                     ---------    ---------    ---------    ---------
Income before
 provision for
 income taxes           15,357        8,710       26,999       14,156
Provision for
 income taxes           (6,143)      (3,571)     (10,800)      (5,804)
                     ---------    ---------    ---------    ---------
Net income           $   9,214    $   5,139    $  16,199    $   8,352
                     =========    =========    =========    =========

Net income per
 ADS and share
 - basic             $    0.23    $    0.15    $    0.41    $    0.24
                     =========    =========    =========    =========

ADS and shares
 used in computing
 net income per
 ADS & per share
 - basic                39,846       35,242       39,531       35,050

Net income per
 ADS and share
 - diluted           $    0.21    $    0.14    $    0.37    $    0.22
                     =========    =========    =========    =========
ADS and shares
 and common share
 equivalents used
 in computing net
 income per ADS
 and per share
 - diluted              43,668       38,035       43,746       38,102


                        BUSINESS OBJECTS S.A.
                      CONSOLIDATED BALANCE SHEETS
                     (In thousands of US dollars)

                                             June 30,     December 31,
                                               2000            1999
                                             --------        --------
                                            (unaudited)

ASSETS
Current assets:
 Cash and cash equivalents                   $181,792        $176,233
 Accounts receivable, net                      65,041          53,993
 Other current assets                          18,923          13,947
                                             --------        --------
    Total current assets                      265,756         244,173

Property and equipment, net                    15,895          13,831
Goodwill and other intangible assets, net      22,505          12,556
Deposits and other assets                       3,384           1,986
                                             --------        --------
    Total assets                             $307,540        $272,546
                                             ========        ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable                            $ 16,881        $ 11,780
 Accrued payroll and related expenses          25,497          23,994
 Deferred revenue                              38,129          31,849
 Other current liabilities                     42,056          37,946
                                             --------        --------
    Total current liabilities                 122,563         105,569

Notes payable - long term                       4,304           2,924

Shareholders' equity                          180,673         164,053
                                             --------        --------
    Total liabilities and
     shareholders' equity                    $307,540        $272,546
                                             ========        ========