Second Consecutive Quarter of Sequential Revenue Growth; Recurring Revenues $13.3 Million, Up 12% Year Over Year
SAN JOSE, CA -- (Marketwire - July 29, 2010) - Callidus Software Inc. (NASDAQ: CALD), the leader in Sales Performance Management (SPM), today announced financial results for the second quarter ended June 30, 2010.
"Revenues grew sequentially for the second quarter in a row from $16.2 million to $17.1 million, and recurring revenues are up 12% year over year, now accounting for 77% of our total revenues," said Leslie Stretch, president and CEO at Callidus Software. "In parallel, we made significant progress in our operational efficiency, reducing quarterly operating expenses by approximately $2.0 million over the prior year and $1.2 million over the prior quarter. We also generated $2.3 million of positive cash flows from operations versus using approximately $2 million in Q1."
"In the quarter, we continued to drive growth in our business, successfully adding 54,000 new payees, and implementing a record-high 24 customers. We continued to see strong renewal rates for our existing customers at over 90% during the quarter, attesting to the high on-going return on investment generated by the solutions. At the same time, we added good new customer wins on our new Monaco SPM solutions, including MetroPCS Wireless and CoBiz Financial."
Total second quarter revenues of $17.1 million, represented a decrease of 23% compared to the same quarter last year; however, revenues were up 6% compared to first quarter this year revenues of $16.2 million. Recurring revenues, which include subscription and support, were $13.3 million, an increase of 12% compared to the same quarter last year and up 8% compared to first quarter this year revenues of $12.3 million. Recurring revenues now contribute 77% of total revenues, up from 53% in the same quarter last year.
Second quarter services revenues were $3.5 million, down 63% from Q2 2009, and down slightly from Q1 2010. Second quarter license revenues were $0.4 million, down 67% as compared to the second quarter of 2009 and up slightly from Q1, reflecting the planned, on-going shift to a business model which focuses predominantly on recurring revenues.
While total and recurring revenues grew over Q1, cost control continued to play an important role in Q2 2010 resulting in a gross margin of 40% consistent with Q2 of 2009 and an increase from Q1 2010's level of 32% primarily due to an improvement in the recurring revenue margin from 48% in Q1 2010 to 54% in Q2 2010. The negative margin in our services business continued to pull down the overall margin and is a focus of senior management. Operating costs of $10.5 million in Q2 2010 were down $2 million or 15.6% from Q2 2009 and down $1.2 million or 10.5% from Q1 2010 as the benefits of off shoring and other Q1 expense control actions were fully realized.
Second quarter GAAP net loss was $3.7 million, or ($0.12) per share, which included $0.5 million of restructuring expense, $1.9 million of stock-based compensation expense, and $0.2 million of amortization of acquired intangible assets. This compares to GAAP net loss of $3.3 million, or ($0.11) per share, for the second quarter of 2009, which included $0.6 million of restructuring expense, $1.2 million of stock-based compensation expense and $0.1 million of amortization of acquired intangible assets. The significant improvement in Q2 results over the Q1 GAAP net loss of $6.0 million or ($0.19) per share resulted from the improvement in margin and the reductions in operating costs.
Second quarter non-GAAP net loss was $1.2 million, or ($0.04) per share, compared to a non-GAAP net loss of $1.3 million, or ($0.04) per share, for the same period last year and a non-GAAP net loss of $3.7 million or ($0.12) per share in Q1 2010. Non-GAAP net loss excludes restructuring expense, stock-based compensation expense and amortization of acquired intangible assets. Non-GAAP operating expenses for Q2 2010 of $8.3 million were down $2.5 million or approximately 23% from Q2 2009 and $1.6 million or 15.9% from Q1 2010. Non-GAAP operating expenses exclude restructuring expense, stock based compensation expense and amortization of acquired intangible assets.
Cash and investments totaled $29.7 million at June 30, 2010; a decrease of $0.5 million from March 31, 2010. Cash generated from Operations was $2.3 million in the quarter while total deferred revenue of $29.2 million is up $1.9 million from the prior quarter.
Recent Business Highlights
- Products: Callidus launched the newest addition to the Monaco SPM suite with Sales Coaching. With this new SaaS product, powered by ForceLogix, Callidus now enables businesses to build improved sales process and coaching programs to help drive gains in overall attainment and revenues. Under the agreement, Callidus has received exclusive rights to be the only SPM vendor to sell ForceLogix' SalesForce Optimizer solution. Callidus showcased the new Sales Coaching solution at the WorldatWork Total Rewards Conference and Exhibition in Grapevine, Texas in May.
- Partners: Callidus expanded its European geographic reach by signing a partnership agreement with Tagetik, an Italian global provider of Performance Management, Financial Governance, and Business Intelligence software solutions. The agreement further expands and strengthens Callidus' EMEA reseller network, which already extends to Spain, Greece, Romania, Bulgaria, Turkey, Africa, Poland, and Israel.
Financial Outlook
- Total revenues for the third quarter of 2010 are expected to be between $16.7 million and $17.7 million.
- GAAP operating expenses, including stock-based compensation expenses of approximately $1.6 million, are expected to be between $9.6 million and $10.6 million in the third quarter of 2010.
Conference Call
A conference call to discuss the second quarter 2010 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=3208877. To participate in the call via telephone, the dial-in number will be: (800) 901-5241 (international: +1 (617) 786-2963), passcode 14356702.
A webcast replay will be available after 3:30 p.m. PT on July 29, 2010 through August 6, 2010. The webcast replay will be available at the Investor Relations section of our website under Calendar of Events.
About Callidus Software®
Callidus Software (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 effectiveness. Our award-winning Software-as-a-Service (SaaS) applications set the standard for performance management of a company's sales force and channel partners. Over 2 million employees and channel partners have their performance managed by Callidus Software. For more information, please visit www.callidussoftware.com.
Note on Forward-Looking Statements
The forward-looking statements included in this press release, including estimates of third quarter 2010 total 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 purchasing trends in the SPM market, customer cancellations or non-renewal of maintenance contracts or on-demand services, our potential inability to manage effectively any growth we experience, 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 Ex change Commission (SEC), including its Form 10-K for 2009 and Form 10-Q for the first quarter of 2010, 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 operating expense, income (loss) from operations, net loss and net loss 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 pursuant to SFAS 123®, 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.
© 1998-2010 Callidus Software Inc. All rights reserved. Callidus Software, the Callidus Software logo, and TrueComp Manager are trademarks, service marks, 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 Six months ended June 30, June 30, ------------------- ------------------- 2010 2009 2010 2009 -------- -------- -------- -------- Revenues: Recurring $ 13,265 $ 11,802 $ 25,551 $ 23,499 Services 3,488 9,407 7,134 20,609 License 387 1,161 616 4,162 -------- -------- -------- -------- Total revenues 17,140 22,370 33,301 48,270 Cost of revenues: Recurring (1) 6,120 5,416 12,535 11,201 Services (1) (2) 4,045 7,671 8,457 16,980 License 87 251 197 442 -------- -------- -------- -------- Total cost of revenues 10,252 13,338 21,189 28,623 -------- -------- -------- -------- Gross profit 6,888 9,032 12,112 19,647 Operating expenses: Sales and marketing (1) (2) 3,993 5,444 8,638 11,306 Research and development (1) 2,427 3,673 5,564 7,474 General and administrative (1) 3,627 2,683 6,859 6,250 Restructuring 451 639 1,170 805 -------- -------- -------- -------- Total operating expenses 10,498 12,439 22,231 25,835 -------- -------- -------- -------- Operating loss (3,610) (3,407) (10,119) (6,188) Interest and other (expense) income, net (100) 161 (94) 190 -------- -------- -------- -------- Loss before provision (benefit) for income taxes (3,710) (3,246) (10,213) (5,998) Provision (benefit) for income taxes 38 88 (514) 146 -------- -------- -------- -------- Net loss $ (3,748) $ (3,334) $ (9,699) $ (6,144) ========= ========= ========= ========= Basic and diluted net loss per share $ (0.12) $ (0.11) $ (0.31) $ (0.21) ========= ========= ========= ========= Shares used in basic and diluted per share computation 31,284 29,942 31,125 29,747 ======== ======== ======== ======== (1) Stock-based compensation included in amounts above by category: Cost of recurring revenues 113 131 237 294 Cost of services revenues 201 243 442 256 Sales and marketing 307 342 579 574 Research and development 249 267 468 409 General and administrative 1,031 252 1,528 679 -------- -------- -------- -------- Total stock-based compensation $ 1,901 $ 1,235 $ 3,254 $ 2,212 ========= ========= ========= ========= (2) Acquisition related asset amortization $ 159 $ 125 $ 316 $ 313 CALLIDUS SOFTWARE INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (unaudited) June 30, December 31, 2010 2009 ------------- ------------- Assets Current assets: Cash and cash equivalents $ 12,456 $ 11,565 Short-term investments 16,181 21,985 Accounts receivable, net 14,319 12,715 Deferred income taxes 170 170 Prepaid and other current assets 4,560 3,872 ------------- ------------- Total current assets 47,686 50,307 Long-term investments 1,102 1,142 Property and equipment, net 5,623 4,355 Goodwill 8,054 5,528 Intangible assets, net 5,256 2,993 Deferred income taxes, noncurrent 1,255 1,255 Deposits and other assets 1,975 679 ------------- ------------- Total assets $ 70,951 $ 66,259 ============= ============= Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,430 $ 3,407 Accrued payroll and related expenses 3,468 3,929 Accrued expenses 7,578 3,219 Deferred income taxes 1,229 1,229 Deferred revenue 24,841 21,440 Capital lease obligations, short-term 130 - ------------- ------------- Total current liabilities 39,676 33,224 Long-term deferred revenue 4,406 668 Other liabilities 761 1,136 Capital lease obligations, long-term 386 - ------------- ------------- Total liabilities 45,229 35,028 ------------- ------------- Stockholders' equity: Common stock 31 30 Additional paid-in capital 216,578 212,435 Acquisition contingent consideration 203 - Accumulated other comprehensive income 87 244 Accumulated deficit (191,177) (181,478) ------------- ------------- Total stockholders' equity 25,722 31,231 ------------- ------------- Total liabilities and stockholders' equity $ 70,951 $ 66,259 ============= ============= CALLIDUS SOFTWARE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) Six months ended June 30, ---------------------------- 2010 2009 ------------- ------------- Cash flows from operating activities: Net loss $ (9,699) $ (6,144) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation expense 1,095 1,436 Amortization of intangible assets 1,271 848 Provision for doubtful accounts and service remediation reserves (167) (46) Stock-based compensation 3,051 2,212 Stock-based compensation related to acquisition contingent consideration 203 - Revaluation of acquisition contingent consideration 41 - Release of valuation allowance (614) - Net amortization on investments 104 15 Put option loss 52 306 Gain on investments classified as trading securities (52) (373) Changes in operating assets and liabilities: Accounts receivable (421) 7,704 Prepaid and other current assets (748) 935 Other assets (702) 189 Accounts payable (945) 234 Accrued expenses 1,348 (2,270) Accrued payroll and related expenses (446) (1,814) Accrued restructuring (117) (488) Deferred revenue 7,008 (2,442) Deferred income taxes 89 72 ------------- ------------- Net cash provided by operating activities 351 374 ------------- ------------- Cash flows from investing activities: Purchases of investments (6,703) (13,260) Proceeds from maturities and sale of investments 12,438 3,450 Purchases of property and equipment (760) (1,147) Purchases of intangible assets (1,554) (506) Acquisition, net of cash acquired (1,922) (14) Change in restricted cash (600) 202 ------------- ------------- Net cash provided by (used in) investing activities 899 (11,275) ------------- ------------- Cash flows from financing activities: Net proceeds from issuance of common stock 854 990 Repurchases of stock - (742) Repurchase of common stock from employees for payment of taxes on vesting of restricted stock units (220) (319) Repayment of debt assumed through acquisition (899) - ------------- ------------- Net cash used in financing activities (265) (71) ------------- ------------- Effect of exchange rates on cash and cash equivalents (94) 83 ------------- ------------- Net increase (decrease) in cash and cash equivalents 891 (10,889) Cash and cash equivalents at beginning of period 11,565 35,390 ------------- ------------- Cash and cash equivalents at end of period $ 12,456 $ 24,501 ============= ============= Non-cash activities: Fair value of common shares issued in connection with acquisition $ 453 - ============= ============= Fair value of liability-classified contingent consideration $ 514 - ============= ============= Purchases of property and equipment not paid as of period end $ 2,042 1,445 ============= ============= Capital lease not paid as of period end $ 516 - ============= ============= Purchases of intangible assets not paid as of period end $ 1,114 981 ============= =============
CALLIDUS SOFTWARE INC. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (In thousands, except for percentages and per share data) (unaudited) Three months ended Six months ended June 30, June 30, ------------------ ------------------ 2010 2009 2010 2009 -------- -------- -------- -------- Non-GAAP operating expense reconciliation: Operating expenses $ 10,498 $ 12,439 $ 22,231 $ 25,835 Operating expenses, as a % of total revenues 61% 56% 67% 54% Add back: Non-cash stock-based compensation $ (1,587) $ (861) $ (2,575) $ (1,662) Non-cash amortization of acquired intangible assets (159) (125) (316) (250) Restructuring (451) (639) (1,170) (805) -------- -------- -------- -------- Non-GAAP Operating Expenses $ 8,301 $ 10,814 $ 18,170 $ 23,118 -------- -------- -------- -------- Non-GAAP Operating expenses, as a % of total revenues 48% 48% 55% 48% Non-GAAP operating income (loss) reconciliation: Operating income (loss) $ (3,610) $ (3,407) $(10,119) $ (6,188) Operating income (loss), as a % of total revenues -21% -15% -30% -13% Add back: Non-cash stock-based compensation $ 1,901 $ 1,235 $ 3,254 $ 2,212 Non-cash amortization of acquired intangible assets 159 125 316 313 Restructuring 451 639 1,170 805 -------- -------- -------- -------- Non-GAAP Operating income (loss) $ (1,099) $ (1,408) $ (5,379) $ (2,858) -------- -------- -------- -------- Non-GAAP Operating income (loss), as a % of total revenues -6% -6% -16% -6% Non-GAAP net income (loss) reconciliation: Net income (loss) $ (3,748) $ (3,334) $ (9,699) $ (6,144) Net income (loss), as a % of total revenues -22% -15% -29% -13% Add back: Non-cash stock-based compensation $ 1,901 $ 1,235 $ 3,254 $ 2,212 Non-cash amortization of acquired intangible assets 159 125 316 313 Restructuring 451 639 1,170 805 -------- -------- -------- -------- Non-GAAP Net income (loss) $ (1,237) $ (1,335) $ (4,959) $ (2,814) -------- -------- -------- -------- Non-GAAP Net income (loss), as a % of total revenues -7% -6% -15% -6% Non-GAAP net income (loss) per share reconciliation: Net income (loss) per basic and diluted share $ (0.12) $ (0.11) $ (0.31) $ (0.21) Add back: Non-cash stock-based compensation 0.06 0.04 0.10 0.08 Non-cash amortization of acquired intangible assets 0.01 0.01 0.01 0.01 Restructuring 0.01 0.02 0.04 0.03 Non-GAAP net income (loss) per basic and diluted share $ (0.04) $ (0.04) $ (0.16) $ (0.09) -------- -------- -------- -------- Shares used in calculation of GAAP and Non-GAAP net income (loss) per share: -------- -------- -------- -------- Basic and diluted 31,284 29,942 31,125 29,747 -------- -------- -------- --------
Investor Relations Contact: Ron Fior 408-808-6518 ir@callidussoftware.com Press Contact: Lorna Heynike 408-808-6441 pr@callidussoftware.com