EXHIBIT 99.1
NEWS RELEASE
CALLIDUS SOFTWARE REPORTS THIRD QUARTER 2005 RESULTS
Q3 REVENUES $17.1 MILLION
SAN JOSE, Calif., October 27, 2005-- Callidus Software Inc. (NASDAQ: CALD), the
leader in Enterprise Incentive Management (EIM), today announced financial
results for the third quarter ended September 30, 2005.
Total third quarter revenues were $17.1 million, an increase of 36% compared to
prior quarter revenues of $12.6 million, and an increase of 23% compared to
third quarter 2004 revenues of $13.9 million. Third quarter net loss was $0.9
million, or ($0.03) per share, compared to a net loss of $3.7 million, or
($0.14) per share, for the prior quarter and a net loss of $4.4 million, or
($0.18) per share for the third quarter of 2004.
Non-GAAP net loss for the third quarter was also $0.9 million, or ($0.03) per
share, as compared to non-GAAP net loss of $3.3 million, or ($0.13) per share in
the prior quarter and non-GAAP net loss of $2.5 million, or ($0.10) per share in
the third quarter of 2004. A reconciliation between GAAP and non-GAAP
information is contained in the attached tables.
Cash and investments totaled $60.5 million at September 30, 2005, an increase of
$0.7 million since the beginning of 2005.
"We made encouraging progress during the third quarter. Quarterly license
revenues were at an eighteen month high and maintenance and service revenues
exceeded our target for the quarter. Operating expenses were higher than our
targeted range, primarily due to higher commission expense," said Robert
Youngjohns, president and CEO of Callidus Software. "These results reflect our
ability to meet the most complex EIM requirements and help our customers drive
revenue and profits through effective use of incentive compensation programs."
RECENT BUSINESS HIGHLIGHTS
o Callidus announced Hewlett-Packard selected its TrueComp(R) solution to
manage incentive compensation programs for its worldwide direct and
indirect sales channels. Other customers selecting Callidus solutions
included AutoNation, EBI Medical Systems and National City Corporation.
o Callidus held its fifth annual user conference, Callidus
TrueConnection(TM), which included 400 attendees from 90 companies and
nine partner organizations, including a record number of prospective
customers. Customers and partners who presented included Accenture,
Allstate Insurance, Blue Cross and Blue Shield of Florida, Compensation
Technologies, CUNA Mutual, Novell, Sprint, Sun Microsystems and Telus.
o Callidus announced two new products, TrueComp Enterprise(TM), its fifth
generation product, and Callidus TrueAnalytics(TM), a new product that
provides executives personalized insight to monitor and drive sales
performance.
o Callidus announced TrueSuccess(TM), a suite of service offerings that it
plans to deliver in conjunction with its partners to ensure that
customers can get value quickly from Callidus products through
accelerated implementation or a hosted offering.
o Callidus also announced its roadmap for future products including
Producer Administration, Quota Management and Service Oriented
Architecture offerings for connection to legacy systems of record.
o Callidus added two new executives, Shanker Trivedi as vice president,
Chief Marketing Officer and Andrew Armstrong, vice president, EMEA
Sales. Callidus also announced the appointment of Michele Patton to its
board of directors.
Q3 2005 FINANCIAL HIGHLIGHTS
o License revenues were $5.8 million, increasing 347% from $1.3 million in
the prior quarter and increasing 150% from $2.3 million in the third
quarter of 2004.
o Maintenance and service revenues were $11.3 million, equal to the prior
quarter and down 3% year-over-year. o Maintenance and service gross
margin was 31%, down from 32% in Q2 2005 and down from 34% in Q3 2004.
License gross margin was 99%, up from 93% in Q2 2005 and 96% in Q3 2004.
o Operating expenses were $10.5 million compared to $9.0 million in Q2
2005 and $10.8 million in Q3 2004. Non-GAAP operating expenses were also
$10.5 million, compared to non-GAAP operating expenses of $8.5 million
in Q2 2005 and $9.1 million in Q3 2004.
o Cash and investments totaled $60.5 million at September 30, 2005 as
compared to $59.4 million at June 30, 2005.
Q4 2005 FINANCIAL OUTLOOK
o The Home Depot, the second largest retailer in the U.S., purchased
Callidus' TrueComp and TrueInformation products earlier this month. We
are encouraged by this start to the fourth quarter; however, we are not
offering guidance on license revenues.
o Maintenance and service revenues are expected to be between $10.8
million and $11.3 million with a related gross margin between 30% and
32%. This outlook reflects underlying growth balanced by reduced billing
hours during the holiday season.
o Operating expenses are expected to be between $10.4 million and $10.9
million. Non-GAAP operating expenses, which exclude stock-based
compensation, are expected to be between $10.6 million and $11.1
million. Stock-based compensation is expected to be a negative $0.2
million resulting from the reversal of previously recognized expense on
pre-IPO stock options that will be canceled as a result of the departure
of the company's former vice president of marketing.
CONFERENCE CALL
Callidus Software's third quarter 2005 conference call is scheduled for 1:30
p.m. Pacific Daylight Time (PDT), on Thursday, October 27, 2005. The conference
call will be available via live webcast 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 800-798-2796 (international
+1-617-614-6204), passcode 29683830.
A telephone playback and webcast replay of the conference call will be available
after 3:30 p.m. PDT on October 27, 2005 through November 10, 2005. The telephone
replay will be available by calling 888-286-8010 (international:
+1-617-801-6888), passcode 84459039. The webcast replay will be available at the
Investor Relations section of Callidus' website under Calendar of Events.
ABOUT CALLIDUS SOFTWARE
Founded in 1996, Callidus Software Inc. (www.callidussoftware.com) is a leading
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 Grid architecture, Callidus Software delivers
an EIM solution that combines the power and scalability of grid computing with
the flexibility of rules-based interface. Customers/partners include AOL Time
Warner Corporation, AT&T Wireless, BMC Software, CUNA Mutual, Dun & Bradstreet,
IBM, SBC Communications and Sun Microsystems. Callidus Software 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 and 2004
financial results also exclude restructuring expenses and settlement costs and
insurance proceeds associated with the discontinuation of our TruePerformance
product. 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 with
respect to statements on the expected development and capabilities of service
and product offerings including TrueSuccess, Producer Administration, Quota
Management and Service Oriented Architecture offerings, fourth quarter
maintenance and service revenues and associated gross margin and estimates of
fourth quarter operating expenses and stock-based compensation, 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, changes in executive management, timing of software license orders,
management's ability to successfully implement its business plan, including the
initiatives stated in the press release above, 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 Callidus' reports filed with the Securities and Exchange
Commission (SEC), including its Form 10-K and Form 10-Qs, 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.
(C) 2005 by Callidus Software Inc. All rights reserved. Callidus Software, the
Callidus Software logo, Callidus TrueAnalytics, 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.
###
INVESTOR RELATIONS CONTACT: PRESS CONTACT:
Jon Pexton Jock Breitwieser
408-808-6577 408-975-6683
ir@callidussoftware.com pr@callidussoftware.com
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,
---------------------------- ----------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
REVENUES:
License revenues $ 5,787 $ 2,317 $ 10,582 $ 8,745
Maintenance and service revenues 11,311 11,621 33,632 34,889
------------ ------------ ------------ ------------
Total revenues 17,098 13,938 44,214 43,634
COST OF REVENUES:
License revenues 76 88 259 637
Maintenance and service revenues 7,750 7,680 22,614 24,674
Impairment of purchased technology - - - 1,800
------------ ------------ ------------ ------------
Total cost of revenues 7,826 7,768 22,873 27,111
------------ ------------ ------------ ------------
Gross profit 9,272 6,170 21,341 16,523
OPERATING EXPENSES:
Sales and marketing 5,153 4,455 13,114 16,200
Research and development 3,108 3,020 8,897 10,606
General and administrative 2,235 1,231 6,577 5,977
Impairment of intangible assets - - - 1,994
Restructuring expenses - 1,488 - 1,488
Stock-based compensation 51 620 914 5,085
------------ ------------ ------------ ------------
Total operating expenses 10,547 10,814 29,502 41,350
------------ ------------ ------------ ------------
Operating loss (1,275) (4,644) (8,161) (24,827)
Interest and other income, net 407 310 1,072 759
------------ ------------ ------------ ------------
Loss before provision for income taxes (868) (4,334) (7,089) (24,068)
Provision for income taxes 38 25 29 75
------------ ------------ ------------ ------------
Net loss $ (906) $ (4,359) $ (7,118) $ (24,143)
============ ============ ============ ============
Basic net loss per share $ (0.03) $ (0.18) $ (0.27) $ (1.00)
Diluted net loss per share $ (0.03) $ (0.18) $ (0.27) $ (1.00)
============ ============ ============ ============
Shares used in basic per share computation 26,425 24,489 26,636 24,228
============ ============ ============ ============
Shares used in diluted per share computation 26,425 24,489 26,636 24,228
============ ============ ============ ============
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
SEPTEMBER 30, DECEMBER 31,
2005 2004
-------------- --------------
ASSETS
Current assets:
Cash and cash equivalents $ 16,809 $ 7,651
Short-term investments 43,696 52,166
Accounts receivable, net 9,319 12,126
Prepaid and other current assets 1,610 1,868
-------------- --------------
Total current assets 71,434 73,811
Property and equipment, net 2,913 3,361
Deposits and other assets 1,540 1,317
-------------- --------------
Total assets $ 75,887 $ 78,489
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,059 $ 1,904
Current portion of long-term debt -- 471
Accrued payroll and related expenses 3,879 3,827
Accrued expenses 2,171 1,881
Deferred revenue 8,292 6,856
-------------- --------------
Total current liabilities 15,401 14,939
Long-term debt, less current portion -- 48
Deferred rent 354 292
Long-term deferred revenue 361 178
-------------- --------------
Total liabilities 16,116 15,457
-------------- --------------
Stockholders' equity
Common stock 27 26
Additional paid-in capital 186,845 184,443
Deferred stock-based compensation (862) (2,316)
Accumulated other comprehensive income 108 108
Accumulated deficit (126,347) (119,229)
-------------- --------------
Total stockholders' equity 59,771 63,032
-------------- --------------
Total liabilities and stockholders' equity $ 75,887 $ 78,489
============== ==============
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, 2005 JUNE 30, 2005
--------------------------------------- ---------------------------------------
NON-GAAP NON-GAAP
GAAP ADJUSTMENTS NON-GAAP GAAP ADJUSTMENTS NON-GAAP
----------- ----------- ----------- ----------- ----------- -----------
REVENUES:
License revenues $ 5,787 $ 5,787 $ 1,295 $ 1,295
Maintenance and service revenues 11,311 11,311 11,320 11,320
----------- ----------- ----------- -----------
Total revenues 17,098 17,098 12,615 12,615
Cost of revenues:
License revenues 76 76 86 86
Maintenance and service revenues 7,750 7,750 7,684 7,684
----------- ----------- ----------- -----------
Total cost of revenues 7,826 7,826 7,770 7,770
----------- ----------- ----------- -----------
Gross profit 9,272 9,272 4,845 4,845
OPERATING EXPENSES:
Sales and marketing 5,153 5,153 3,549 3,549
Research and development 3,108 3,108 2,838 2,838
General and administrative 2,235 2,235 2,140 2,140
Stock-based compensation 51(a) (51) - 423(a) (423) -
----------- ----------- ----------- -----------
Total operating expenses 10,547 10,496 8,950 8,527
----------- ----------- ----------- -----------
Operating loss (1,275) (1,224) (4,105) (3,682)
Interest and other income, net 407 407 353 353
----------- ----------- ----------- -----------
Loss before provision for income taxes (868) (817) (3,752) (3,329)
Provision (benefit) for income taxes 38 38 (34) (34)
----------- ----------- ----------- -----------
Net loss $ (906) $ (855) $ (3,718) $ (3,295)
=========== =========== =========== ===========
Diluted net loss per share $ (0.03) $ (0.03) $ (0.14) $ (0.13)
=========== =========== =========== ===========
Shares used in diluted per
share computation 26,425 26,425 26,144 26,144
=========== =========== =========== ===========
- ----------
(a) Non-cash stock based compensation
CALLIDUS SOFTWARE INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
YEAR OVER YEAR COMPARISON OF THE QUARTER
(In thousands, except for per share data)
(unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
--------------------------------------- ---------------------------------------
NON-GAAP NON-GAAP
GAAP ADJUSTMENTS NON-GAAP GAAP ADJUSTMENTS NON-GAAP
----------- ----------- ----------- ----------- ----------- -----------
REVENUES:
License revenues $ 5,787 $ 5,787 $ 2,317 (b) 150 $ 2,467
Maintenance and service revenues 11,311 11,311 11,621 11,621
----------- ----------- ----------- -----------
Total revenues 17,098 17,098 13,938 14,088
COST OF REVENUES:
License revenues 76 76 88 88
Maintenance and service revenues 7,750 7,750 7,680 7,680
----------- ----------- ----------- -----------
Total cost of revenues 7,826 7,826 7,768 7,768
----------- ----------- ----------- -----------
Gross profit 9,272 9,272 6,170 6,320
OPERATING EXPENSES:
Sales and marketing 5,153 5,153 4,455 4,455
Research and development 3,108 3,108 3,020 3,020
General and administrative 2,235 2,235 1,231(c) 375 1,606
Restructuring expenses - - 1,488(d) (1,488) -
Stock-based compensation 51(a) (51) - 620(a) (620) -
----------- ----------- ----------- -----------
Total operating expenses 10,547 10,496 10,814 9,081
----------- ----------- ----------- -----------
Operating loss (1,275) (1,224) (4,644) (2,761)
Interest and other income, net 407 407 310 310
----------- ----------- ----------- -----------
Loss before provision for income taxes (868) (817) (4,334) (2,451)
Provision for income taxes 38 38 25 25
----------- ----------- ----------- -----------
Net loss $ (906) $ (855) $ (4,359) $ (2,476)
=========== =========== =========== ===========
Diluted net loss per share $ (0.03) $ (0.03) $ (0.18) $ (0.10)
=========== =========== =========== ===========
Shares used in diluted per share
computation 26,425 26,425 24,489 24,489
=========== =========== =========== ===========
- ----------
(a) Non-cash stock based compensation
(b) Customer settlement for discontinuance of TruePerformance product
(c) Insurance proceeds from TruePerformance related claim
(d) Reduction in force and discontinuance of TruePerformance product