CHORDIANT SOFTWARE ANNOUNCES RESULTS
FOR THE THIRD QUARTER OF FISCAL YEAR 2005
ENDED JUNE 30, 2005
Quarterly License Revenue up 71% Year-over-Year
Announces Significant Enterprise License Transactions with Wachovia and ING
CUPERTINO, California - August 9, 2005 -- Chordiant Software, Inc. (Nasdaq: CHRD) today announced financial results for the third quarter of fiscal year (FY) 2005 ended June 30, 2005, and filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (SEC).
Third Quarter FY 2005 Results
Total revenues for the third quarter of FY 2005 were $21.6 million, which compares to revenues of $16.8 million reported for the three months ended June 30, 2004. For the first nine months of FY 2005, revenues were $62.5 million, compared to $56.7 million for the same period of the prior year. License revenues for the third quarter of FY 2005 were $9.2 million, compared to $5.4 million reported for the three months ended June 30, 2004. For the first nine months of FY 2005, license revenues were $25.0 million, compared to $23.9 million reported for the same period of 2004. Service revenues for the third quarter of FY 2005 were $12.4 million, compared to $11.4 million reported for the three months ended June 30, 2004. For the nine months ended June 30, 2005, service revenues were $37.4 million, compared to $32.7 million for the same period of 2004. Deferred revenue increased to $25.5 million as of June 30, 2005, as compared to a balance of $18.0 million at March 31, 2005 and a balance of $24.7 in the same calendar period of the prior year. Chordiant had $39.2 million in cash and cash equivalents, restricted cash, and marketable securities at June 30, 2005
Chordiant posted a U.S. GAAP (Generally Accepted Accounting Principles) net loss of $3.1 million, or $0.04 per share loss for the third quarter of FY 2005 ended June 30, 2005, compared to a GAAP net loss of $1.5 million, or $0.02 per share loss for the three months ended June 30, 2004. Chordiant reported a third quarter FY 2005 non-GAAP financial measure loss of $2.5 million (which excludes stock-based compensation, and amortization of intangible assets), or a non-GAAP loss of $0.03 per share, compared to non-GAAP net loss (which excludes, stock-based compensation and amortization of intangible assets) of $1.4 million, or non-GAAP loss of $0.02 per share for the three months ended June 30, 2004.
Non-GAAP Financial Measurements
The Company's management believes that the presentation of a non-GAAP financial measure of net income or net loss, excluding purchased in-process research and development, amortization of deferred stock-based compensation, amortization of intangible assets and restructuring expenses, provide useful information regarding the Company's financial performance and earnings potential by calculating and quantifying the effect of certain charges of net income or net loss per share calculated in accordance with GAAP and gives investors and analysts insight into profitability of the Company's operating business. Management also believes that the presentation of the non-GAAP financial measures is consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures presented in prior periods. The non-GAAP financial information may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
Operating Expenses
General and administrative expenses were $4.6 million for the three months ended June 30, 2005, compared to $1.7 million for the same period of 2004. The increase in these expenses was mainly attributable to an increase in consulting and professional services fees and expenses associated with efforts to comply with the Sarbanes-Oxley Act of 2002 (SOX) and to fill vacant accounting positions, as well as additional fees and expenses related to the filing of Chordiant's Form 10-Q for the periods ended December 31, 2004 and March 31, 2005.
Sales and marketing expenses were $7.1 million for the three months ended June 30, 2005, compared to $5.7 million for the same period of 2004. The increase is attributable to personnel related expenses such as commissions and travel expenses due to a higher number of sales representatives.
Research and development expenses were $5.2 million for the three months ended June 30, 2005, compared to $4.2 million for the same period of 2004. This increase is attributable to an increase in consulting expenses and the addition of the employees as a result of the KiQ acquisition completed in late December 2004.
Customer Success
"The third quarter of FY 2005 was a challenging quarter for Chordiant," said Stephen Kelly, Chordiant CEO. "However, we achieved a record license bookings quarter, grew deferred revenue 42 percent over the March 2005 quarter, and completed five million-dollar-plus license transactions with new and existing customers. Two license transactions each exceeded $5 million," Kelly stated. "Notable customer wins included Wachovia Corporation, ING, Carphone Warehouse, USAA and OnStar. In addition, we also completed transactions with Halifax Bank of Scotland, ABN AMRO, Fortis Bank Group, T-Mobile and UniCredit Servizi Informativi," Kelly added. "In terms of market perspective, we are continuing to see strong demand in our target markets of retail banking and insurance, and improvements in the broadband and wireless areas of telecommunications. The pipeline remains strong especially in North America."
Teleconference Webcast Tuesday - August 9, 2005 at 2:00 P.M. (Pacific)
Chordiant management has scheduled a teleconference for Tuesday, August 9, 2005, at 2:00 P.M. (Pacific), 5:00 P.M. (Eastern) and 22:00 (London) to discuss financial results and business events for the Company. This teleconference will be webcast live for the public from Chordiant's website at http://www.chordiant.com. The public, industry analysts and media are invited to attend the conference on a listen-only basis. For more information, including this press release and Chordiant's Current Report on Form 8-K, any non-GAAP financial measures that may be discussed on the webcast as well as the most directly comparable GAAP financial measures and a reconciliation of the difference between the GAAP and any non-GAAP financial measures discussed on the webcast (other than non-GAAP financial measures discussed and reconciled in this news release), and any other material financial and other statistical information contained in the webcast, please visit the Investor Relations section of Chordiant's web site at http://www.chordiant.com. From this site, you can listen to the teleconference, assuming that your computer system is configured properly. A phone replay will also be available for seven days after the live call at 303-590-3000, code 11036430.
About Chordiant Software, Inc.
Chordiant solutions automate and manage operational business processes for leading service-driven global organizations with a focus on retail finance and telecommunications.
Chordiant orchestrates the unique processes of an organization from the point of customer interaction, through the front and back offices to multiple transactional systems, corporate applications and data stores. Our solutions integrate existing infrastructure to orchestrate the assembly, enhancement and delivery of optimal role based business processes to the appropriate channels. Business value is realized through improved employee productivity, savings in operational costs, and increased business adaptability.
Headquartered in Cupertino, California, Chordiant maintains offices in Boston, MA; Mahwah, N.J.; Manchester, N.H.; New York City; London; Paris; Amsterdam; and Munich.
Safe Harbor StatementThis news release includes "forward-looking statements" that are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. Forward-looking statements in this release are generally identified by words, such as "believes," "anticipates," "plans," "expects," "will," "would," "guidance," "projects" and similar expressions which are intended to identify forward-looking statements. There are a number of important factors that could cause the results or outcomes discussed herein to differ materially from those indicated by these forward-looking statements, including, among others, interpretations of accounting principles which may impact the amount of revenues which may be recognized by Chordiant in the periods reported, difficulties in the implementation of our new financial information system, and difficulties in hiring and retaining staff for our finance department. Further information on potential factors that could affect Chordiant are included in risks detailed from time to time in Chordiant's Securities and Exchange Commission filings, including, without limitation, Chordiant's Annual Report on Form 10-K/T for the transition period of January 1, 2004 to September, 30, 2004, and our Quarterly Report filed on Form 10-Q for the quarterly period ended June 30, 2005 filed on August 9, 2005. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov. Chordiant does not undertake an obligation to update forward-looking or other statements in this release.
Chordiant and the Chordiant logo are registered trademarks of Chordiant Software, Inc. All other trademarks and registered trademarks are the properties of their respective owners.
Chordiant Investor Relations Contact: |
Steve Polcyn |
Chordiant Software, Inc. |
(408) 517-6282 |
steve.polcyn@chordiant.com |
CHORDIANT SOFTWARE, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended | Nine Months Ended | ||||||||||||
June 30, 2005 | June 30, 2004 | June 30, 2005 | June 30, 2004 | ||||||||||
Revenues: | |||||||||||||
License | $ | 9,228 | $ | 5,391 | $ | 25,029 | $ | 23,944 | |||||
Service | 12,393 | 11,433 | 37,440 | 32,729 | |||||||||
Total revenues | 21,621 | 16,824 | 62,469 | 56,673 | |||||||||
Cost of revenues: | |||||||||||||
License | 338 | 301 | 702 | 1,217 | |||||||||
Service | 7,134 | 6,499 | 21,985 | 19,021 | |||||||||
Stock-based compensation | 85 | (42 | ) | 77 | 843 | ||||||||
Amortization of intangible assets | 303 | 252 | 765 | 1,732 | |||||||||
Total cost of revenues | 7,860 | 7,010 | 23,529 | 22,813 | |||||||||
Gross profit | 13,761 | 9,814 | 38,940 | 33,860 | |||||||||
Operating expenses: | |||||||||||||
Sales and marketing | 7,051 | 5,666 | 21,144 | 17,375 | |||||||||
Research and development | 5,194 | 4,222 | 15,040 | 12,853 | |||||||||
General and administrative | 4,563 | 1,695 | 13,505 | 4,864 | |||||||||
Stock-based compensation | 272 | (79 | ) | 307 | 3,092 | ||||||||
Amortization of intangible assets | -- | 16 | 117 | 206 | |||||||||
Purchased in-process research and development | -- | -- | 1,940 | -- | |||||||||
Restructuring expense (reversal) | -- | -- | (97 | ) | 996 | ||||||||
Total operating expenses | 17,080 | 11,520 | 51,956 | 39,386 | |||||||||
Loss from operations | (3,319 | ) | (1,706 | ) | (13,016 | ) | (5,526) | ||||||
Interest income, net | 147 |
| 144 | 539 | 371 | ||||||||
Other income (expense), net | 186 |
| 120 | (45 | ) | 87 | |||||||
Net loss before income taxes |
| (2,986 | ) |
| (1,442 | ) | (12,522 | ) | (5,068) | ||||
Provision for income taxes | 138 | 100 | 293 | 765 | |||||||||
Net loss | $ | (3,124 | ) | $ | (1,542 | ) | $ | (12,815 | ) | $ | (5,833) | ||
Other comprehensive income: | |||||||||||||
Foreign currency translation gain (loss) | $ | (588 | ) | $ | (201 | ) | $ | (514 | ) | $ | 911 | ||
Comprehensive loss | $ | (3,712) | $ | (1,743) | $ | (13,329 | ) | $ | (4,922) | ||||
Net loss per share: | |||||||||||||
Basic and diluted | $ | (0.04 | ) | $ | (0.02 | ) | $ | (0.17 | ) | $ | (0.09) | ||
Shares used in per share calculation: | 75,080 | 70,345 | 73,966 | 66,128 | |||||||||
Supplemental information [1]: | |||||||||||||
Non-GAAP financial measures and reconciliation: | |||||||||||||
Net loss | (3,124 | ) | (1,542 | ) | (12,815 | ) | (5,833) | ||||||
Less: Stock-based compensation | 357 | (121 | ) | 384 | 3,935 | ||||||||
Less: Amortization of intangible assets | 303 | 268 | 882 | 1,938 | |||||||||
Less: Purchased in-process research and development | -- | -- | 1,940 | -- | |||||||||
Less: Restructuring expense (reversal) | -- | -- | (97 | ) | 996 | ||||||||
Pro forma net income (loss): | $ | (2,464 | ) | $ | (1,395 | ) | $ | (9,706 | ) | $ | 1,036 | ||
Basic pro forma net income (loss) per share: | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.13 | ) | $ | 0.02 | ||
Diluted pro forma net income (loss) per share: | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.13 | ) | $ | 0.01 | ||
| Basic | 75,080 | 70,345 | 73,966 | 66,128 | ||||||||
Shares used in per share calculation [2]: | Diluted | 75,080 | 70,345 | 73,966 | 71,325 | ||||||||
[1] The accompanying supplemental pro forma financial information represents a non-GAAP financial measure. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the company's financial statements. Non-GAAP financial measures of net income or net loss is used by investors and analysts of Chordiant Software, Inc. (the "Company") as an alternative to GAAP measures when evaluating the Company's performance in comparison to other companies. The Company's management believes that the presentation of a non-GAAP financial measure of net income or net loss, excluding purchased in-process research and development, amortization of deferred stock-based compensation, amortization of intangible assets and restructuring expenses, provide useful information regarding the Company's financial performance and earnings potential by calculating and quantifying the effect of certain charges of net income or net loss per share calculated in accordance with GAAP and gives investors and analysts insight into profitability of the Company's operating business. Management also believes that the presentation of the non-GAAP financial measures is consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures presented in prior periods. The above non-GAAP financial information may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.
[2] Diluted net loss per share for the three and nine months ended June 30, 2005, is computed excluding total potential outstanding common shares of 13,433 and 13,433 as their effect is anti-dilutive.
CHORDIANT SOFTWARE, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| June 30, 2005 | September 30, 2004 | |||||||
---|---|---|---|---|---|---|---|---|---|
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 32,739 | $ | 55,748 | |||||
Marketable securities | 4,100 | 4,000 | |||||||
Restricted cash | 1,785 | 279 | |||||||
Accounts receivable, net | 23,719 | 20,161 | |||||||
Prepaid expenses and other current assets | 4,463 | 3,097 | |||||||
Total current assets | 66,806 | 83,285 | |||||||
Restricted cash | 559 | 2,057 | |||||||
Property and equipment, net | 2,790 | 3,237 | |||||||
Goodwill | 31,978 | 24,874 | |||||||
Intangible assets, net | 5,451 | 244 | |||||||
Other assets | 3,525 | 1,643 | |||||||
Total assets | $ | 111,109 | $ | 115,340 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 5,000 | $ | 6,394 | |||||
Accrued expenses | 9,277 | 11,681 | |||||||
Deferred revenue | 25,166 | 18,459 | |||||||
Current portion of capital lease obligations | 209 | 191 | |||||||
Total current liabilities | 39,652 | 36,725 | |||||||
Deferred revenue, long-term | 301 | 2,122 | |||||||
Restructuring costs, net of current portion | 2,316 | -- | |||||||
Long-term portion of capital lease obligations | 150 | 317 | |||||||
Total liabilities | 42,419 | 39,164 | |||||||
Common stock | 77 | 72 | |||||||
Additional paid-in capital | 272,117 | 262,703 | |||||||
Deferred stock-based compensation | (3,915 | ) | (339 | ) | |||||
Accumulated deficit | (202,164 | ) | (189,349 | ) | |||||
Accumulated other comprehensive income | 2,575 | 3,089 | |||||||
Total stockholders' equity | 68,690 | 76,176 | |||||||
Total liabilities and stockholders' equity | $ | 111,109 | $ | 115,340 | |||||