Exhibit 99.1
Callidus Software Reports Second Quarter 2004 Results
Q2 Revenues $13.2 Million; Reducing Cost Structure
SAN JOSE, Calif., July 21 /PRNewswire-FirstCall/ -- Callidus Software Inc.
(Nasdaq: CALD), a leader in Enterprise Incentive Management (EIM), today
announced financial results for the second quarter ended June 30, 2004.
Total second quarter revenues declined 20% to $13.2 million compared to
$16.6 million in the second quarter of 2003. Second quarter net loss was $13.6
million, or ($0.56) per share, compared to net income of $0.5 million, or
$0.03 per share, for the second quarter of 2003.
Non-GAAP net loss for the second quarter was $5.6 million, or ($0.23) per
share, as compared to non-GAAP net income of $0.8 million, or $0.04 per share
in the second quarter of 2003. A reconciliation between GAAP and non-GAAP
information is contained in the attached tables.
"Second quarter maintenance and service revenues met our expectations;
however, product revenues were substantially below our initial expectations
for the quarter. We continued to experience longer selling cycles and delays
in closing transactions during the quarter," said David Pratt, president and
CEO of Callidus Software.
"During my short tenure, I have worked closely with the executive team and
met with many of our employees, customers, prospective customers and partners.
My assessment is that Callidus has great products, happy customers, strong
partnerships and a good employee base. Our focus in the near term will be on
sales execution efforts and on reducing our cost structure to lower our break-
even point," continued Pratt.
Callidus also announced the discontinuance of its TruePerformance product.
In connection with this decision, Callidus recorded impairment charges
totaling $3.8 million on intangible assets in the second quarter.
"We believe the TrueComp(R) suite of products has greater return on
investment potential than the TruePerformance product. Accordingly, the
discontinued investment in TruePerformance will result in quarterly cost
savings of approximately $800,000, excluding related shut down costs, while
not negatively impacting anticipated 2004 revenues," said Pratt. The TrueComp
suite, including TrueResolution(TM), TrueReferral(TM), and
TrueInformation(TM), has constituted the vast majority of product revenues
since the inception of Callidus.
In addition to discontinuing TruePerformance, Callidus expects to
implement other cost savings actions and closely monitor discretionary
spending. These actions are anticipated to result in additional quarterly
cost savings of approximately $1.2 million. The impact of the combined cost
savings actions will be partially realized in the third quarter. Accordingly,
management anticipates operating expenses for the third quarter of 2004,
excluding stock-based compensation and charges related to the cost savings
actions, to be between $9.5 million and $10.5 million.
Maintenance and service revenues for the third quarter are expected to be
between $10.0 million and $11.0 million with a contributing margin of 28% to
30%.
Q2 2004 Financial Summary
* License revenues were $1.9 million, declining 79% year-over-year.
* Maintenance and service revenues were $11.3 million; increasing 46%
year-over-year. Excluding an accrual for a TruePerformance related
claim, maintenance and service revenues were $12.1 million;
increasing 56% year-over-year.
* Operating expenses were $16.7 million. Excluding stock-based
compensation, amortization and impairment of intangibles and legal
settlements, operating expenses were $11.4 million in Q2 2004, an
increase of $2.4 million from Q2 2003. The increase is the result
of added investments in all areas of the business and the costs of
being a public company.
* Cash and investments totaled $70.0 million on June 30, 2004.
* Days Sales Outstanding (DSO) in accounts receivable at the end of
the quarter was 66 days, unchanged from the end of the first quarter
of 2004.
Conference Call
Callidus Software's second quarter 2004 conference call is scheduled for
1:30 p.m. Pacific Daylight Time (PDT), Wednesday, July 21, 2004. The
conference call is available via webcast and can be accessed live, and for two
weeks after the call, at the Investor Relations section of Callidus Software's
website at www.callidussoftware.com. To participate in the call via
telephone, the dial in number is 866-800-8651 (international 617-614-2704),
passcode 89276832. A replay of the conference call can be accessed after 3:30
p.m. PDT, by calling 888-286-8010 (international 617-801-6888), passcode
88577469.
About Callidus Software
Founded in 1996, Callidus Software (www.CallidusSoftware.com) is a leading
provider of EIM systems to global companies across multiple industries.
Callidus' EIM systems allow enterprises to develop and manage competitive
incentive compensation linked to the achievement of strategic business
objectives. Through its TrueComp Grid(TM) architecture, Callidus delivers the
industry's only EIM solution that combines the power and scalability of grid
computing with the flexibility of rules-based interface. Customers/Partners
include Apple Computer, AT&T Wireless, BMC Software, CUNA Mutual Insurance,
DIRECTV, Dun & Bradstreet, IBM, JP Morgan Chase & Co., Pennzoil-Quaker State
Company, and SBC Communications.
Non-GAAP Financial Measures
The non-GAAP information provided in this press release is a supplement
to, and not a substitute for, our financial results presented in accordance
with generally accepted accounting principles (GAAP) in the United States.
The non-GAAP financial results exclude stock-based compensation expense, legal
settlements, amortization and impairment of intangible assets and an accrual
for claims related to TruePerformance. The non-GAAP financial measures
provide what we believe is an additional tool for investors to use in
understanding our operational results and trends. These non-GAAP financial
results are used internally by management to evaluate our operations, plan and
forecast for future periods and to allocate resources within the organization.
A reconciliation between GAAP and non-GAAP financial measures is included in
the accompanying tables.
Note on Forward-Looking Statements
The forward looking statements included in this press release, including
estimates of operating expenses and maintenance and service revenues for the
third quarter of 2004, 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, timing of software license
orders, potential material fluctuations in financial results and future growth
rates, decreases in customer spending, increased competition or new entrants
in the marketplace, litigation and other risks detailed in the company's SEC
reports, including its From 10-K and Form 10-Q, copies of which may be
obtained by contacting Callidus Software's Investor Relations department at
408-808-6577, or 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.
NOTE: Callidus Software, the Callidus Software logo, Everyone Profits,
TrueChannel, TrueComp, and TrueInformation, TruePerformance, True Referral,
and TrueResolution are trademarks of Callidus Software Inc. All other
trademarks are the property of their respective 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,
2004 2003 2004 2003
Revenues:
License revenues $1,889 $8,895 $6,428 $16,603
Maintenance and service revenues 11,345 7,748 23,268 13,175
Total revenues 13,234 16,643 29,696 29,778
Cost of revenues:
License revenues 189 513 452 1,011
Maintenance and service revenues 8,384 5,999 16,994 10,270
Impairment of intangible asset 1,800 -- 1,800 --
Total cost of revenues 10,373 6,512 19,246 11,281
Gross profit 2,861 10,131 10,450 18,497
Operating expenses:
Sales and marketing 5,345 5,210 11,745 8,764
Research and development 3,876 2,563 7,586 5,266
General and administrative 2,775 1,243 4,747 2,525
Impairment of intangible asset 1,994 -- 1,994 --
Stock-based compensation 2,721 272 4,465 1,392
Total operating expenses 16,711 9,288 30,537 17,947
Operating income (loss) (13,850) 843 (20,087) 550
Interest expense (16) (161) (95) (257)
Interest and other income, net 272 27 544 47
Income (loss) before provision for
income taxes (13,594) 709 (19,638) 340
Provision for income taxes 25 172 50 172
Net income (loss) $(13,619) $537 $(19,688) $168
Basic income (loss) per share
attributable to
common stockholders $(0.56) $0.03 $(0.82) $0.01
Diluted income (loss) per share $(0.56) $0.03 $(0.82) $0.01
Shares used in basic per share
computation 24,204 1,443 24,095 1,422
Shares used in diluted per share
computation 24,204 20,809 24,095 20,423
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
June 30, December 31,
Assets 2004 2003
Current assets:
Cash and cash equivalents $27,907 $56,330
Short-term investments 42,070 23,936
Accounts receivable, net 10,107 14,850
Prepaid and other current assets 1,750 1,511
Total current assets 81,834 96,627
Property and equipment, net 3,612 2,721
Intangible asset -- 2,000
Other assets 1,520 851
Total assets $86,966 $102,199
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $612 $694
Accounts payable 2,256 3,504
Accrued payroll and related expenses 5,066 3,638
Accrued expenses 5,248 3,542
Deferred revenue 6,805 7,930
Total current liabilities 19,987 19,308
Long-term debt, less current portion 221 520
Deferred rent 212 180
Long-term deferred revenue 297 693
Total liabilities 20,717 20,701
Stockholders' equity
Common stock 24 24
Additional paid-in capital 184,129 184,343
Deferred stock-based compensation (4,372) (9,328)
Notes receivable from stockholders (83) (83)
Other comprehensive income (15) 288
Accumulated deficit (113,434) (93,746)
Total stockholders' equity 66,249 81,498
Total liabilities and
stockholders' equity $86,966 $102,199
CALLIDUS SOFTWARE INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except for per share data)
(unaudited)
Three months ended Three months ended
June 30, 2004 June 30, 2003
Non-GAAP Non-GAAP
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Revenues:
License revenues $1,889 $1,889 $8,895 $8,895
Maintenance and
service
revenues 11,345(a) 775 12,120 7,748 7,748
Total revenues 13,234 14,009 16,643 16,643
Cost of revenues:
License revenues 189(b) (100) 89 513 513
Maintenance and
service
revenues 8,384 8,384 5,999 5,999
Impairment of
intangible
asset 1,800(c) (1,800) -- -- --
Total cost of
revenues 10,373 8,473 6,512 6,512
Gross profit 2,861 5,536 10,131 10,131
Operating
expenses:
Sales and
marketing 5,345 5,345 5,210 5,210
Research and
development 3,876(b) (158) 3,718 2,563 2,563
General and
administrative 2,775(d) (450) 2,325 1,243 1,243
Impairment of
intangible
asset 1,994(c) (1,994) -- -- --
Stock-based
compensation 2,721(e) (2,721) -- 272(e) (272) --
Total operating
expenses 16,711 11,388 9,288 9,016
Operating income
(loss) (13,850) (5,852) 843 1,115
Interest expense (16) (16) (161) (161)
Interest and
other income,
net 272 272 27 27
Income (loss)
before provision
for income taxes (13,594) (5,596) 709 981
Provision for
income taxes 25 25 172 172
Net income (loss) $(13,619) $(5,621) $537 $809
Diluted income
(loss) per share $(0.56) $(0.23) $0.03 $0.04
Shares used in
diluted per
share
computation 24,204 24,204 20,809 20,809
(a) Accrual for a claim related to TruePerformance
(b) Amortization of purchased intangible assets
(c) Impairment of purchased intangible assets
(d) Legal settlement with Gordon Food Service
(e) Non-cash stock based compensation
SOURCE Callidus Software Inc.
-0- 07/21/2004
/CONTACT: Investor Relations, Jon Pexton, +1-408-808-6577, or
ir@callidussoftware.com, or Press, Jane Le Fevre, +1-408-808-6511, or
pr@callidussoftware.com, both of Callidus Software Inc.
/Web site: http://www.callidussoftware.com /
(CALD)
CO: Callidus Software Inc.
ST: California
IN: CPR STW
SU: ERN CCA