Exhibit 99.1
Callidus Software Reports Third Quarter 2004 Results
Q3 Revenues $13.9 Million
SAN JOSE, Calif., Oct. 27 /PRNewswire-FirstCall/ -- Callidus Software Inc.
(Nasdaq: CALD), a leader in Enterprise Incentive Management (EIM), today
announced financial results for the third quarter ended September 30, 2004.
Total third quarter revenues were $13.9 million, an increase of 5%
compared to prior quarter revenues of $13.2 million, and a decrease of 29%
compared to third quarter 2003 revenues of $19.7 million. Third quarter net
loss was $4.3 million, or ($0.18) per share, compared to a net loss of $13.7
million, or ($0.57) per share for the prior quarter and break-even for the
third quarter of 2003.
Non-GAAP net loss for the third quarter was $2.4 million, or ($0.10) per
share, as compared to non-GAAP net loss of $5.7 million, or ($0.24) per share
in the prior quarter and non-GAAP net income of $1.4 million, or $0.06 per
share in the third quarter of 2003. A reconciliation between GAAP and
non-GAAP information is contained in the attached tables.
"Maintenance and service revenues and associated gross margin amounts
exceeded our targets for the third quarter. Operating expenses, excluding
restructuring charges and stock-based compensation, were also better than we
had targeted for the quarter. While third quarter license revenues improved
incrementally from the prior quarter, the Company's focus in the near term
continues to be on sales execution efforts and achieving continued incremental
growth in license revenues," said David Pratt, president and CEO of Callidus
Software.
In the third quarter, Callidus recorded restructuring expenses of
$1.5 million and substantially completed the cost savings actions announced
earlier in the quarter. The restructuring expenses comprised workforce
reduction costs and charges for asset impairments. None of the restructuring
actions impacted the development or customer support areas of the TrueComp
product suite.
During the third quarter Callidus held its largest annual users'
conference, with representatives from 82 companies and eight partner
organizations. Customers and partners presenting at the conference included
Accenture, IBM, Deloitte Consulting, CUNA Mutual, Novell, AT&T Wireless,
Citizens Bank and DIRECTV.
Also in the third quarter, Callidus announced that Steve Apfelberg joined
Callidus as vice president of product marketing. Prior to joining Callidus,
Apfelberg was a senior director of product marketing at Siebel, where he
managed all aspects of the company's EIM initiatives, including the
development, marketing, and sales of Siebel's Incentive Compensation
Management solution.
Q3 2004 Financial Summary
-- License revenues were $2.3 million; increasing 23% sequentially from
the prior quarter, but declining 77% year-over-year.
-- Maintenance and service revenues were $11.6 million; increasing
2% sequentially from the prior quarter and 20% year-over-year.
-- Maintenance and service gross margin was 33% up from 26% in Q2 2004.
License gross margin was 96% up from 85% in Q2 2004.
-- Operating expenses were $10.7 million. On a non-GAAP basis, operating
expenses were $9.0 million, a decrease of $2.4 million from Q2 2004.
The decrease is the result of Q3 restructuring actions, attrition and
lower discretionary spending.
-- Cash and investments totaled $62.6 million on September 30, 2004 as
compared to $70.0 million on June 30, 2004.
-- Days Sales Outstanding (DSO) in accounts receivable at the end of the
quarter was 65 days, down from 66 days at the end of the second quarter
of 2004.
Q4 2004 Guidance
-- Maintenance and services revenue is expected to be between
$10.5 million and $11.0 million with a corresponding gross margin
between 29% and 31%.
-- Operating expenses, excluding stock-based compensation, are expected to
be between $9.0 million and $10.0 million. Stock-based compensation is
expected to be $0.6 million.
-- No guidance is being given on license revenues or earnings.
Conference Call
Callidus Software's third quarter 2004 conference call is scheduled for
1:30 p.m. Pacific Daylight Time (PDT), Wednesday, October 27, 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 800-299-7098 (international 617-801-9715),
passcode 77964064. 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
66024521.
About Callidus Software
Founded in 1996, Callidus Software (www.CallidusSoftware.com) is an
enterprise incentive management (EIM) provider to global companies across
multiple industries. Callidus' EIM systems allow enterprises to develop and
manage incentive compensation linked to the achievement of strategic business
objectives. Through its TrueComp(R) Grid architecture, Callidus delivers the
industry's only EIM solution that combines the power and scalability of grid
computing with the flexibility of a rules-based interface. Customers/Partners
include AOL Time Warner Corporation, AT&T Wireless, BMC Software, CUNA Mutual,
DIRECTV, Dun & Bradstreet, IBM, JP Morgan Chase & Co., Pennzoil-Quaker State
Company, SBC Communications and Sun Microsystems. Callidus is publicly traded
on the NASDAQ under the symbol CALD.
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,
restructuring expenses, legal settlements, insurance reimbursements, and
amortization and impairment of intangible assets. 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 and
associated gross margin for the fourth 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, TrueComp Grid, TrueInformation, TruePerformance,
TrueReferral, and TrueResolution are trademarks of Callidus Software Inc. All
other trademarks are the property of their respective owners.
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except for per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------------- ------------------------
2004 2003 2004 2003
------- -------- ------- ------
Revenues:
License revenues $ 2,317 $ 10,014 $ 8,745 $26,617
Maintenance and service revenues 11,621 9,657 34,889 22,832
------- -------- -------- -------
Total revenues 13,938 19,671 43,634 49,449
Cost of revenues:
License revenues 88 443 637 1,454
Maintenance and service revenues 7,760 7,669 24,754 17,939
Impairment of purchased technology - - 1,800 -
------- -------- -------- -------
Total cost of revenues 7,848 8,112 27,191 19,393
------- -------- -------- -------
Gross profit 6,090 11,559 16,443 30,056
Operating expenses:
Sales and marketing 4,339 5,451 16,084 14,215
Research and development 3,020 2,760 10,606 8,026
General and administrative 1,231 2,022 5,977 4,547
Impairment of intangible asset - - 1,994 -
Restructuring expenses 1,488 - 1,488 -
Stock-based compensation 620 1,177 5,085 2,569
------- -------- -------- -------
Total operating expenses 10,698 11,410 41,234 29,357
------- -------- -------- -------
Operating income (loss) (4,608) 149 (24,791) 699
Interest expense (14) (146) (109) (403)
Interest and other income, net 324 3 868 50
------- -------- -------- -------
Income (loss) before provision
for income taxes (4,298) 6 (24,032) 346
Provision for income taxes 25 3 75 175
------- -------- -------- -------
Net income (loss) $(4,323) $ 3 $(24,107) $ 171
======= ======== ======== =======
Basic income (loss) per sare
attributable to common stockholders $ (0.18) $ 0.00 $ (1.00) $ 0.12
Diluted income (loss) per share $ (0.18) $ 0.00 $ (1.00) $ 0.01
======= ======== ======== =======
Shares used in basic per share
computation 24,489 1,514 24,228 1,453
======= ======== ======== =======
Shares used in diluted per share
computation 24,489 21,282 24,228 20,713
======= ======== ======== =======
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
September 30, December 31,
Assets 2004 2003
------------- ------------
Current assets:
Cash and cash equivalents $ 22,625 $ 56,330
Short-term investments 39,979 23,936
Accounts receivable, net 9,898 14,850
Prepaid and other current assets 1,779 1,511
--------- ---------
Total current assets 74,281 96,627
Property and equipment, net 3,494 2,721
Intangible asset -- 2,000
Deposits and other assets 1,442 851
--------- ---------
Total assets $ 79,217 $ 102,199
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 596 $ 694
Accounts payable 1,066 3,504
Accrued payroll and related expenses 3,738 3,638
Accrued expenses 2,864 3,542
Deferred revenue 7,352 7,930
--------- ---------
Total current liabilities 15,616 19,308
Long-term debt, less current portion 72 520
Deferred rent 230 180
Long-term deferred revenue 195 693
--------- ---------
Total liabilities 16,113 20,701
--------- ---------
Stockholders' equity
Common stock 25 24
Additional paid-in capital 183,888 184,343
Deferred stock-based compensation (3,008) (9,328)
Notes receivable from stockholders (48) (83)
Accumulated other comprehensive income 100 288
Accumulated deficit (117,853) (93,746)
--------- ---------
Total stockholders' equity 63,104 81,498
--------- ---------
Total liabilities and stockholders' equity $ 79,217 $ 102,199
========= =========
CALLIDUS SOFTWARE INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
YEAR OVER YEAR COMPARISON
(In thousands, except for per share data)
(unaudited)
Three months ended Three months ended
September 30, 2004 September 30, 2003
-------------------------------- --------------------------------
Non-GAAP Non-GAAP
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
-------- ----------- --------- -------- ----------- --------
Revenues:
License revenues $ 2,317(a) $ 150 $ 2,467 $ 10,014 $ 10,014
Maintenance and service revenues 11,621 11,621 9,657 9,657
-------- ------- -------- --------
Total revenues 13,938 14,088 19,671 19,671
Cost of revenues:
License revenues 88 88 443 443
Maintenance and service revenues 7,760 7,760 7,669 7,669
-------- ------- -------- --------
Total cost of revenues 7,848 7,848 8,112 8,112
-------- ------- -------- --------
Gross profit 6,090 6,240 11,559 11,559
Operating expenses:
Sales and marketing 4,339 4,339 5,451 5,451
Research and development 3,020 3,020 2,760 2,760
General and administrative 1,231(b) 375 1,606 2,022(e) (200) 1,822
Restructuring expenses 1,488(c) (1,488) -- --
Stock-based compensation 620(d) (620) -- 1,177(d) (1,177) --
-------- ------- -------- --------
Total operating expenses 10,698 8,965 11,410 10,033
-------- ------- -------- --------
Operating income (loss) (4,608) (2,725) 149 1,526
Interest expense (14) (14) (146) (146)
Interest and other income, net 324 324 3 3
-------- ------- -------- --------
Income (loss) before provision for income taxes (4,298) (2,415) 6 1,383
Provision for income taxes 25 25 3 3
-------- ------- -------- --------
Net income (loss) $ (4,323) $ (2,440) $ 3 $ 1,380
======== ======== ======== ========
Diluted income (loss) per share $ (0.18) $ (0.10) $ 0.00 $ 0.06
======== ======== ======== ========
Shares used in diluted per share computation 24,489 24,489 21,282 21,282
======== ======== ======== ========
- ----------
(a) Customer settlement for discontinuance of TruePerformance product
(b) Insurance proceeds from TruePerformance related claim
(c) Reduction in force and discontinuance of TruePerformance product
(d) Non-cash stock based compensation
(e) Legal accrual for Gordon Food Service
CALLIDUS SOFTWARE INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
QUARTER OVER QUARTER COMPARISON
(In thousands, except for per share data)
(unaudited)
Three months ended Three months ended
September 30, 2004 June 30, 2004
------------------------------------- -----------------------------------
Non-GAAP Non-GAAP
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
Revenues:
License revenues $ 2,317(a) $ 150 $ 2,467 $ 1,889 $ 1,889
Maintenance and service revenues 11,621 11,621 11,345(e) 775 12,120
-------- -------- -------- --------
Total revenues 13,938 14,088 13,234 14,009
Cost of revenues:
License revenues 88 88 286(f) (100) 186
Maintenance and service revenues 7,760 7,760 8,384 8,384
Impairment of purchased technology -- -- 1,800(g) (1,800) --
-------- -------- -------- --------
Total cost of revenues 7,848 7,848 10,470 8,570
-------- -------- -------- --------
Gross profit 6,090 6,240 2,764 5,439
Operating expenses:
Sales and marketing 4,339 4,339 5,345 5,345
Research and development 3,020 3,020 3,876(f) (158) 3,718
General and administrative 1,231(b) 375 1,606 2,774(h) (450) 2,324
Impairment of intangible asset -- -- 1,994(g) (1,994) --
Restructuring expenses 1,488(c) (1,488) -- -- --
Stock-based compensation 620(d) (620) -- 2,721(d) (2,721) --
-------- -------- -------- --------
Total operating expenses 10,698 8,965 16,710 11,387
-------- -------- -------- --------
Operating income (loss) (4,608) (2,725) (13,946) (5,948)
Interest expense (14) (14) (16) (16)
Interest and other income, net 324 324 272 272
-------- -------- -------- --------
Income (loss) before provision for income taxes (4,298) (2,415) (13,690) (5,692)
Provision for income taxes 25 25 25 25
-------- -------- -------- --------
Net income (loss) $ (4,323) $ (2,440) $(13,715) $ (5,717)
======== ======== ======== ========
Diluted income (loss) per share $ (0.18) $ (0.10) $ (0.57) $ (0.24)
======== ======== ======== ========
Shares used in diluted per share computation 24,489 24,489 24,204 24,204
======== ======== ======== ========
- ----------
(a) Customer settlement for discontinuance of TruePerformance product
(b) Insurance proceeds from TruePerformance related claim
(c) Reduction in force and discontinuance of TruePerformance product
(d) Non-cash stock based compensation
(e) Legal settlement for a TruePerformance related claim
(f) Amortization of purchased intangible assets
(g) Impairment of purchased intangible assets
(h) Legal settlement with Gordon Food Service
SOURCE Callidus Software Inc.
-0- 10/27/2004
/CONTACT: investor, Jon Pexton, +1-408-808-6577, or
ir@callidussoftware.com, or 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