Callidus Software Announces Third Quarter 2009 ResultsQ3 2009 Total Revenues $17.4 Million; Recurring Revenues $11.2 Million, Up 3% Year Over Year; Cumulative ACV Up 15% Year Over Year to $28.6M; Net ACV Booked in the Quarter of $3.6M
SAN JOSE, CA -- (Marketwire - October 29, 2009) - Callidus Software Inc. (NASDAQ: CALD), the leader in Sales Performance Management (SPM), today announced financial results for the third quarter ended September 30, 2009.
Total third quarter revenues were $17.4 million, down 38%, compared to the same quarter last year, reflecting the expected declines in both services and license revenues resulting from the company's shift to a recurring revenue business. Recurring revenues, which include subscription and support, were $11.2 million, an increase of 3% compared to Q3 2008. Recurring revenues, while lagging total ACV as customers come online, now account for approximately 64% of total revenues.
The net new Annual Contract Value (ACV) of on-demand and term license bookings in the third quarter was $3.6 million, up from $1.3 million booked in the third quarter of 2008, bringing the cumulative ACV to $28.6 million.
Third quarter services revenues were $5.3 million, down 50%, while third quarter license revenues were $0.9 million, down 87%, in each case, compared to the third quarter of 2008. The decline in services revenues reflects primarily the planned shift to the on-demand business, but also reflects some revenue deferrals and delays in implementations. With this shift to our on-demand business, we expect services revenues to continue to decline because on-demand implementations cost significantly less than on-premise software implementations, benefitting our customers through reduced costs, shorter implementation times, and greater value.
Third quarter GAAP net loss was $6.7 million or ($0.22) per share, which included $2.0 million of restructuring expense, $1.0 million of stock-based compensation expense and $0.1 million of amortization of acquired intangible assets. This compares to GAAP net loss of $1.4 million, or ($0.05) per share, for the third quarter of 2008, which included $2.0 million of stock-based compensation expense and $0.5 million of amortization of acquired intangible assets. Third quarter non-GAAP net loss was $3.6 million, or ($0.12) per share, compared to a non-GAAP net income of $1.1 million, or $0.04 per share, for the same period last year. Non-GAAP net loss excludes stock-based compensation expense, restructuring expense and amortization of acquired intangible assets. Non-GAAP operating expenses for Q3 of $10.2 million are down $3.3 million, or approximately 24%, from Q3 2008.
Cash and investments totaled $36.8 million at September 30, 2009, a decrease of $3.2 million from June 30, 2009.
"With significant competitive wins, we had a strong ACV performance in Q3 as we closed a number of deals in both our on-demand business as well as our term on-premises business. This success validates our move to recurring revenues. Our Monaco suite has real momentum and the transactions we closed in Q3 demonstrate that this product release together with our move to the recurring revenue model is meeting with success. We also signed several key partnerships in the quarter," said Leslie Stretch, president and CEO at Callidus Software. "Further, over the course of the last year we have significantly reduced our fixed costs and right-sized the Company to fit our new recurring revenue business model. This has resulted in Q3 non-GAAP operating expenses which are down approximately 24% from the prior year period."
"Our product offerings continue to expand across all business lines, including our growing Force.com solution suite, which offers sales performance solutions for businesses of all sizes. We continue to add world-class companies to our list of partners to further expand our global reach and customer base. Our subscription and support recurring revenues are now the primary contributor to our total revenue and margin performance, and we are driving to achieve profitability in the second half of 2010," continued Stretch.
Recent Business Highlights
- -- New Products: Callidus launched Commissions Manager, a 100% native
Force.com solution that enables sales professionals to manage commissions
as part of the salesforce CRM solution. This self-service solution enables
sales professionals to project their target earnings in-line with their
opportunities, initiate claims for credit and payment approval, and track
the status and amounts of paid and pending commissions, all as part of
their day-to-day opportunity management.
- -- Partners: Callidus expanded its geographic reach by signing a reseller
agreement with HAND Enterprise Solutions in China and SevenSeas
Technologies in Africa.
- -- Industry Recognition: Callidus Software was named a winner of Customer
Interaction Solutions' 10th Annual CRM Excellence Awards; Callidus was
named a leader in CRM Magazine's 2009 CRM Market Awards; for the fifth
consecutive year, Callidus Software was included into Software Magazine's
Software 500, a ranking of the world's largest software and service
providers.
Financial Outlook
- -- Total revenues for the fourth quarter of 2009 are expected to be
between $16 million and $17.5 million, reflecting increased recurring
revenues offset by further decline in services revenues as the shift to the
on-demand business continues and our customers experience even shorter
implementation times.
- -- GAAP operating expenses, including stock-based compensation of
approximately $1.1 million, are expected to be between $10.6 million and
$11.6 million in the fourth quarter of 2009.
Conference Call
A conference call to discuss the third quarter 2009 results and outlook is scheduled for 1:30 p.m. Pacific Time (PT) today. The conference call will be available via live webcast at the Investor Relations section of Callidus Software's website at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=146634&eventID=2445617. To participate in the call via telephone, the dial-in number will be 800-299-0148 (international: +1 617-801-9711), passcode 68498415.
A webcast replay of the conference call will be available after 3:30 p.m. PDT today through November 5, 2009. The webcast replay will be available at the Investor Relations section of Callidus Software's website under Calendar of Events.
About Callidus Software®
Callidus Software (www.callidussoftware.com) (NASDAQ: CALD) is the market and technology leader in Sales Performance Management (SPM). Callidus' customers gain a competitive advantage by maximizing sales cost efficiencies and driving improvements in sales execution. Our award-winning Software-as-a-Service (SaaS) applications set the standard for performance management across the sales force. Over 2 million employees and channel partners have their performance managed by Callidus Software.
Note on Forward-Looking Statements
The forward-looking statements included in this press release, including statements regarding our business strategy and on-demand business, estimates of profitability in the second half of 2010 and fourth quarter 2009 total revenues, services revenues, recurring revenues, operating expenses and stock-based compensation expense, reflect management's best judgment based on factors currently known and involve risks and uncertainties. These risks and uncertainties include, but are not limited to, potential disruption of customer purchase decisions resulting from global economic conditions, timing and size of orders, potential material fluctuations in financial results and future growth rates, decreases in customer spending, uncertainty regarding SPM market, customer cancellations or non-renewal of maintenance contracts or on-demand services, our potential inability to manage effectively any growth we experience, potential disruptions to our business due to restructuring activities and management changes, uncertainty regarding the demand for and profitability of our on-demand services, increased competition or new entrants in the marketplace, litigation and other risks detailed in Callidus' reports filed with the Securities and Exchange Commission (SEC), including its Form 10-K for 2008 and its Form 10-Q for the second quarter ended June 30, 2009, copies of which may be obtained by contacting Callidus Software's Investor Relations department at 408-808-6577, or from the Investor Relations section of Callidus Software's website (www.callidussoftware.com). Actual results may differ materially from those presently reported. We assume no obligation to update the information contained in this release.
Non-GAAP Financial Measures
Callidus has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP net income and earnings per share. Callidus uses non-GAAP measures internally in analyzing its financial results and believes that they are useful to investors, as a supplement to GAAP measures, in evaluating Callidus' operating performance. Callidus believes that the use of these non-GAAP measures provides additional insight for investors to use in evaluation of ongoing operating results and trends and in comparing its financial measures with other companies in Callidus' industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial measures exclude stock-based compensation expense, restructuring expense and amortization of acquired intangibles. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
© 1998-2009 Callidus Software Inc. All rights reserved. Callidus Software, the Callidus Software logo, Callidus TrueAnalytics, TrueComp, TrueComp Grid, TrueComp Manager, TrueConnection, TrueFoundation, TrueInformation, TruePerformance, TruePerformance Index, TruePerformance Indicator, TrueMBO, TrueAllocation, TrueProducer, TrueQuota, TrueReferral, TrueResolution, TrueTarget and TrueService+ are trademarks, servicemarks, or registered trademarks of Callidus Software Inc. in the United States and other countries. All other brand, service or product names are trademarks or registered trademarks of their respective companies or owners.
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Revenues:
Recurring $ 11,170 $ 10,874 $ 34,669 $ 29,208
Services 5,349 10,597 25,958 37,992
License 872 6,782 5,034 12,638
-------- -------- -------- --------
Total revenues 17,391 28,253 65,661 79,838
Cost of revenues:
Recurring (1) 5,711 4,147 16,912 11,095
Services (1) (2) 5,054 10,092 22,034 33,739
License 214 355 656 705
-------- -------- -------- --------
Total cost of revenues 10,979 14,594 39,602 45,539
-------- -------- -------- --------
Gross profit 6,412 13,659 26,059 34,299
Operating expenses:
Sales and marketing (1) (2) 4,586 7,748 15,892 22,337
Research and development (1) 3,397 3,808 10,871 10,958
General and administrative (1) 3,072 3,529 9,322 10,261
Restructuring 1,973 - 2,778 397
-------- -------- -------- --------
Total operating expenses 13,028 15,085 38,863 43,953
-------- -------- -------- --------
Operating loss (6,616) (1,426) (12,804) (9,654)
Interest and other income, net 49 103 239 914
-------- -------- -------- --------
Income (loss) before provision
for income taxes (6,567) (1,323) (12,565) (8,740)
Provision (benefit) for income
taxes 173 64 319 407
-------- -------- -------- --------
Net Income (loss) $ (6,740) $ (1,387) $(12,884) $ (9,147)
======== ======== ======== ========
Basic net income (loss)
per share $ (0.22) $ (0.05) $ (0.43) $ (0.31)
======== ======== ======== ========
Diluted net income (loss)
per share $ (0.22) $ (0.05) $ (0.43) $ (0.31)
======== ======== ======== ========
Shares used in basic per
share computation 30,205 30,063 29,901 29,937
======== ======== ======== ========
Shares used in diluted per
share computation 30,205 30,063 29,901 29,937
======== ======== ======== ========
(1) Stock-based compensation
included in amounts above
by category:
Cost of recurring 108 184 402 497
Cost of services 185 320 441 970
Sales and marketing 221 401 795 1,487
Research and development 181 294 590 915
General and administrative 310 795 989 2,021
-------- -------- -------- --------
Total stock-based
compensation $ 1,005 $ 1,994 $ 3,217 $ 5,890
======== ======== ======== ========
(2) Acquisition related asset
amortization $ 125 $ 500 $ 438 $ 1,417
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
September 30, December 31,
Assets 2009 2008
------------- -------------
Current assets:
Cash and cash equivalents $ 22,308 $ 35,390
Short-term investments 13,637 1,455
Accounts receivable, net 12,072 22,710
Deferred income taxes 360 360
Prepaid and other current assets 3,474 4,104
------------- -------------
Total current assets 51,851 64,019
Long-term investments 897 3,828
Property and equipment, net 4,825 4,890
Goodwill 5,528 5,655
Intangible assets, net 3,601 3,208
Deferred income taxes, noncurrent 811 811
Deposits and other assets 675 1,468
------------- -------------
Total assets $ 68,188 $ 83,879
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,523 $ 2,447
Accrued payroll and related expenses 5,127 7,128
Accrued expenses 3,456 5,027
Deferred income taxes 816 816
Deferred revenue 19,168 21,881
------------- -------------
Total current liabilities 31,090 37,299
Long-term deferred revenue 394 1,202
Deferred income taxes, noncurrent 111 -
Other liabilities 1,430 1,412
------------- -------------
Total liabilities 33,025 39,913
------------- -------------
Stockholders' equity
Common stock 30 29
Additional paid-in capital 211,312 207,493
Accumulated other comprehensive income 230 121
Accumulated deficit (176,409) (163,677)
------------- -------------
Total stockholders' equity 35,163 43,966
------------- -------------
Total liabilities and
stockholders' equity $ 68,188 $ 83,879
============= =============
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Nine months ended
September 30,
-----------------------------
2009 2008
------------- -------------
Cash flows from operating activities:
Net loss $ (12,884) $ (9,147)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation expense 2,184 1,782
Amortization of intangible assets 1,450 2,138
Provision for doubtful accounts and
service remediation reserves (128) 451
Stock-based compensation 3,217 5,890
Loss on disposal of property - 24
Deferred income taxes 111 -
Net accretion on investments 32 (159)
Put option (gain) loss 306 -
(Gain) loss on investments classified
as trading securities (472) -
Changes in operating assets and
liabilities:
Accounts receivable 10,921 8,744
Prepaid and other current assets 691 (1,007)
Other assets 232 730
Accounts payable (57) (1,031)
Accrued expenses (2,252) (2,808)
Accrued payroll and related
expenses (1,640) (1,200)
Accrued restructuring (417) (972)
Deferred revenue (3,542) 1,906
------------- -------------
Net cash provided by (used in)
operating activities (2,248) 5,341
------------- -------------
Cash flows from investing activities:
Purchases of investments (18,311) (13,919)
Proceeds from maturities and sale
of investments 9,670 35,720
Purchases of property and equipment (1,554) (1,927)
Purchases of intangible assets (1,487) (280)
Acquisition, net of cash acquired (14) (7,500)
Change in restricted cash 202 -
------------- -------------
Net cash provided by (used in)
investing activities (11,494) 12,094
------------- -------------
Cash flows from financing activities:
Net proceeds from issuance of
common stock 1,719 4,785
Repurchases of stock (742) (5,140)
Repurchase of common stock from
employees for payment of taxes on
vesting of restricted stock units (372) -
------------- -------------
Net cash (used in) provided
by financing activities 605 (355)
------------- -------------
Effect of exchange rates on cash and cash
equivalents 55 30
------------- -------------
Net increase (decrease) in cash and cash
equivalents (13,082) 17,110
Cash and cash equivalents at beginning of
period 35,390 21,813
------------- -------------
Cash and cash equivalents at end of period $ 22,308 $ 38,923
============= =============
Supplemental disclosures of cash flow
information:
Cash paid for income taxes $ - $ 8
============= =============
Non-cash investing and financing activities:
Purchases of property and equipment
not paid as of quarter-end $ 113 $ 533
============= =============
Purchases of intangible assets not
paid as of quarter-end $ 456 $ 81
============= =============
Deferred direct stock-based
compensation costs $ 2 $ -
============= =============
CALLIDUS SOFTWARE INC.
UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES
(In thousands, except for percentages and per share data)
Three months ended Nine months ended
September 30, September 30,
------------------- -------------------
2009 2008 2009 2008
-------- -------- -------- --------
Non-GAAP operating expense
reconciliation:
Operating expenses $ 13,028 $ 15,085 $ 38,863 $ 43,953
Operating expenses, as
a % of total revenues 75% 53% 59% 55%
Add back:
Non-cash stock-based
compensation $ (712) $ (1,490) $ (2,374) $ (4,423)
Non-cash amortization of
acquired intangible assets (125) (125) (375) (354)
Special charges (1,973) - (2,778) (397)
-------- -------- -------- --------
Non-GAAP Operating Expenses $ 10,218 $ 13,470 $ 33,336 $ 38,779
-------- -------- -------- --------
Non-GAAP Operating expenses,
as a % of total revenues 59% 48% 51% 49%
Non-GAAP operating income
(loss) reconciliation:
Operating income (loss) $ (6,616) $ (1,426) $(12,804) $ (9,654)
Operating income (loss),
as a % of total revenues -38% -5% -20% -12%
Add back:
Non-cash stock-based
compensation $ 1,005 $ 1,994 $ 3,217 $ 5,890
Non-cash amortization of
acquired intangible assets 125 500 438 1,417
Special Charges 1,973 - 2,778 397
-------- -------- -------- --------
Non-GAAP Operating income
(loss) $ (3,513) $ 1,068 $ (6,371) $ (1,950)
-------- -------- -------- --------
Non-GAAP Operating income
(loss), as a % of total
revenues -20% 4% -10% -2%
Non-GAAP net income (loss)
reconciliation:
Net income (loss) $ (6,740) $ (1,387) $(12,884) $ (9,147)
Net income (loss), as
a % of total revenues -39% -5% -20% -11%
Add back:
Non-cash stock-based
compensation $ 1,005 $ 1,994 $ 3,217 $ 5,890
Non-cash amortization of
acquired intangible assets 125 500 438 1,417
Special Charges 1,973 - 2,778 397
-------- -------- -------- --------
Non-GAAP Net income (loss) $ (3,637) $ 1,107 $ (6,451) $ (1,443)
-------- -------- -------- --------
Non-GAAP Net income (loss),
as a % of total revenues -21% 4% -10% -2%
Non-GAAP net income (loss)
per share reconciliation:
Net income (loss) per basic
and diluted share $ (0.22) $ (0.05) $ (0.43) $ (0.31)
Add back:
Non-cash stock-based
compensation 0.03 0.07 0.11 0.20
Non-cash amortization of
acquired intangible assets - 0.02 0.01 0.05
Special Charges 0.07 - 0.09 0.01
-------- -------- -------- --------
Non-GAAP net income (loss)
per basic and diluted share $ (0.12) $ 0.04 $ (0.22) $ (0.05)
-------- -------- -------- --------
Shares used in calculation of
GAAP and Non-GAAP net income
(loss) per share:
-------- -------- -------- --------
Basic 30,205 30,063 29,901 29,937
-------- -------- -------- --------
Diluted 30,205 30,063 29,901 29,937
-------- -------- -------- --------
Investor Relations Contact:
Ron Fior
408-808-6518
ir@callidussoftware.com
Press Contact:
Jock Breitwieser
408-975-6683
pr@callidussoftware.com
