Exhibit 99.1
[LOGO OF CALLIDUS SOFTWARE]
NEWS RELEASE
CALLIDUS SOFTWARE REPORTS FOURTH QUARTER 2005 RESULTS
Q4 Revenues $17.2 million, Up 14% Year over Year
Driven by an 81% increase in License Revenues
SAN JOSE, Calif., January 26, 2006-- Callidus Software Inc. (NASDAQ: CALD), a
leader in Enterprise Incentive Management (EIM), today announced financial
results for the fourth quarter ended December 31, 2005.
Total fourth quarter revenues were $17.2 million, an increase of 1% from the
prior quarter and an increase of 14% compared to fourth quarter 2004. Fourth
quarter license revenues were $7.3 million, an increase of 25% compared to the
prior quarter, and an increase of 81% compared to fourth quarter 2004. Fourth
quarter net loss was $1.5 million, or ($0.06) per share, compared to a net loss
of $0.9 million, or ($0.03) per share, for the prior quarter and a net loss of
$1.3 million, or ($0.05) per share for the fourth quarter of 2004.
Non-GAAP net loss for the fourth quarter was $1.9 million, or ($0.07) per share,
as compared to non-GAAP net loss of $0.9 million, or ($0.03) per share in the
prior quarter and non-GAAP net loss of $0.8 million, or ($0.03) per share in the
fourth quarter of 2004. A reconciliation between GAAP and non-GAAP information
is contained in the attached tables.
For fiscal year 2005, total revenues were $61.5, an increase of 5% from 2004.
Fiscal 2005 license revenues were $17.8 million, an increase of 40% from 2004.
Net loss for fiscal year 2005 was $8.6 million, or ($0.33) per share, compared
to net loss of $25.5 million, or ($1.04) per share in fiscal year 2004. Non-GAAP
net loss for fiscal year 2005 was $8.1 million, or ($0.31) per share, compared
to non-GAAP net loss of $13.3 million, or ($0.54) per share, in fiscal year
2004.
Cash and investments totaled $63.7 million at December 31, 2005, an increase of
$3.9 million since December 31, 2004.
"We continued to make good progress in the fourth quarter, achieving our highest
level of license revenue in two years," said Robert Youngjohns, president and
CEO of Callidus Software. "Although maintenance and service revenues were below
our targeted range, we believe this is an operational issue and not reflective
of market demand. Accordingly, we expect our maintenance and service revenues to
grow sequentially next quarter. Additionally, during the quarter we continued to
strengthen our sales and marketing organizations which is reflected in higher
than planned operating expenses." Mr. Youngjohns concluded, "Our license revenue
performance reflects growing demand in the EIM marketplace and further
validation by our customers of our market leading products and our ability to
help customers turn incentive compensation into a driver of revenue and
profits."
RECENT BUSINESS HIGHLIGHTS
o New customers selecting Callidus solutions in the fourth quarter
included The Home Depot, Monster.com, Thrivent Financial for
Lutherans, Vodacom South Africa, and Vodafone Portugal. Existing
customers, Sprint Nextel and Hyperion Solutions, expanded their
licenses of Callidus products.
o Gartner gave Callidus TrueComp(R) Enterprise a "positive" rating in
its November 2005 report, MarketScope for North American Insurance
Incentive Compensation Management Applications. TrueComp Enterprise
for insurance companies is designed to meet the needs of today's
insurance distribution management, supporting complex distribution
hierarchies, flexible, effective-dated compensation plans; and
multi-tiered compensation plans including commission, incentives and
management/wholesaler overrides.
o Callidus TrueAnalytics(TM) was released on schedule at the end of
December 2005. The new product provides query, reporting and analytic
dashboards to monitor and analyze sales and incentive performance and
extends sales and incentive visibility throughout the organization, to
executives, managers and analysts.
o Leslie Stretch joined the company as vice president global sales in
October 2005. Mr. Stretch, a former managing director with Sun UK,
also held the senior global channel sales position while with Sun.
Additionally, he held senior sales management positions with Oracle in
Europe and Canada.
Q4 2005 FINANCIAL HIGHLIGHTS
o License revenues were $7.3 million, increasing 25% from $5.8 million
in the prior quarter and increasing 81% from $4.0 million in the
fourth quarter of 2004.
o Maintenance and service revenues were $10.0 million, down 12% from
$11.3 million in the prior quarter and down 10% from 11.0 million in
the fourth quarter of 2004.
o Maintenance and service gross margin was 24%, down from 31% in Q3 2005
and down from 33% in Q4 2004. License gross margin was 98%, down from
99% in Q3 2005 and up from 97% in Q4 2004.
o Operating expenses were $11.5 million compared to $10.5 million in Q3
2005 and $9.2 million in Q4 2004. Non-GAAP operating expenses were
$11.9 million, compared to non-GAAP operating expenses of $10.5
million in Q3 2005 and $8.7 million in Q4 2004.
o Cash and investments totaled $63.7 million at December 31, 2005, up
$3.2 million from $60.5 million at September 30, 2005.
Q1 2006 FINANCIAL OUTLOOK
o We are encouraged by our recent progress and intend to continue to
invest in our business to grow revenues and extend our market leading
position. License revenues remain difficult to predict on a quarterly
basis and therefore we will not be providing guidance.
o Maintenance and service revenues are expected to be between $11.5
million and $12.0 million with a related gross margin between 28% and
30%. This outlook reflects top line growth and increased investment in
broadening our service offerings to support on-demand/hosting
services, managed services and compensation consulting.
o Non-GAAP operating expenses, which exclude stock-based compensation,
are expected to be between $11.7 million and $12.2 million. We are not
providing an outlook for GAAP operating expenses because we are still
assessing the impact of the adoption of FAS 123R which requires
companies to make fair value estimates of stock-based compensation
awards and record that expense in its results of operations.
CONFERENCE CALL
Callidus Software's fourth quarter 2005 conference call is scheduled for 1:30
p.m. Pacific Time (PT), on Thursday, January 26, 2006. 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 866-700-7477 (international +1-617-213-8840),
passcode 35025007.
A telephone playback and webcast replay of the conference call will be available
after 3:30 p.m. PT on January 26, 2006 through February 9, 2006. The telephone
replay will be available by calling 888-286-8010 (international:
+1-617-801-6888), passcode 99550934. 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 an
industry 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(R) 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 7-Eleven, Accenture, CUNA Mutual, HP, IBM, Philips Medical Systems,
Sprint Nextel, Sun Microsystems, Time Warner Corporation and Wachovia. 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, customer and legal
settlements, insurance reimbursements, and amortization and impairment of
intangible assets 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 the intention to continue to invest in our business and that such
investment will grow revenues and extend our market leading position, first
quarter maintenance and service revenues, associated gross margin and planned
investment in broadened service offerings, estimates of first quarter non-GAAP
operating expenses and the impact of the adoption of FAS 123R on 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, timing and size of software license orders,
management's ability to successfully implement its business plan, changes in
executive management, 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) 2006 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 YEAR ENDED
DECEMBER 31, DECEMBER 31,
----------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
REVENUES:
License revenues $ 7,261 $ 4,013 $ 17,843 $ 12,758
Maintenance and service revenues 9,978 11,047 43,610 45,936
---------- ---------- ---------- ----------
Total revenues 17,239 15,060 61,453 58,694
COST OF REVENUES:
License revenues 118 137 377 774
Maintenance and service revenues 7,561 7,396 30,175 32,070
Impairment of purchased technology - - - 1,800
---------- ---------- ---------- ----------
Total cost of revenues 7,679 7,533 30,552 34,644
---------- ---------- ---------- ----------
Gross profit 9,560 7,527 30,901 24,050
OPERATING EXPENSES:
Sales and marketing 5,664 4,377 18,778 20,577
Research and development 3,483 2,809 12,380 13,415
General and administrative 2,732 1,516 9,309 7,493
Impairment of intangible assets - - - 1,994
Restructuring expenses - - - 1,488
Stock-based compensation (370) 500 544 5,585
---------- ---------- ---------- ----------
Total operating expenses 11,509 9,202 41,011 50,552
---------- ---------- ---------- ----------
Operating loss (1,949) (1,675) (10,110) (26,502)
Interest and other income, net 419 335 1,491 1,094
---------- ---------- ---------- ----------
Loss before provision for income taxes (1,530) (1,340) (8,619) (25,408)
Provision for income taxes (43) - (14) 75
---------- ---------- ---------- ----------
Net loss $ (1,487) $ (1,340) $ (8,605) $ (25,483)
========== ========== ========== ==========
Basic net loss per share $ (0.06) $ (0.05) $ (0.33) $ (1.04)
========== ========== ========== ==========
Diluted net loss per share $ (0.06) $ (0.05) $ (0.33) $ (1.04)
========== ========== ========== ==========
Shares used in basic per share computation 26,752 24,989 26,268 24,419
========== ========== ========== ==========
Shares used in diluted per share computation 26,752 24,989 26,268 24,419
========== ========== ========== ==========
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
DECEMBER 31, DECEMBER 31,
2005 2004
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 23,705 $ 7,651
Short-term investments 40,000 52,166
Accounts receivable, net 11,063 12,126
Prepaid and other current assets 1,581 1,868
------------ ------------
Total current assets 76,349 73,811
Property and equipment, net 2,801 3,361
Deposits and other assets 1,494 1,317
------------ ------------
Total assets $ 80,644 $ 78,489
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 756 $ 1,904
Current portion of long-term debt -- 471
Accrued payroll and related expenses 6,383 3,827
Accrued expenses 2,043 1,881
Deferred revenue 12,205 6,856
------------ ------------
Total current liabilities 21,387 14,939
Long-term debt, less current portion -- 48
Deferred rent 377 292
Long-term deferred revenue 729 178
------------ ------------
Total liabilities 22,493 15,457
------------ ------------
Stockholders' equity
Common stock 27 26
Additional paid-in capital 186,232 184,443
Deferred stock-based compensation (445) (2,316)
Accumulated other comprehensive income 171 108
Accumulated deficit (127,834) (119,229)
------------ ------------
Total stockholders' equity 58,151 63,032
------------ ------------
Total liabilities and stockholders' equity $ 80,644 $ 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
DECEMBER 31, 2005 SEPTEMBER 30, 2005
------------------------------------------ ----------------------------------------
NON-GAAP NON-GAAP
GAAP ADJUSTMENTS NON-GAAP GAAP ADJUSTMENTS NON-GAAP
---------- -------------- ---------- ---------- -------------- ----------
REVENUES:
License revenues $ 7,261 $ 7,261 $ 5,787 $ 5,787
Maintenance and service revenues 9,978 9,978 11,311 11,311
---------- ---------- ---------- ----------
Total revenues 17,239 17,239 17,098 17,098
COST OF REVENUES:
License revenues 118 118 76 76
Maintenance and service revenues 7,561 7,561 7,750 7,750
---------- ---------- ---------- ----------
Total cost of revenues 7,679 7,679 7,826 7,826
---------- ---------- ---------- ----------
Gross profit 9,560 9,560 9,272 9,272
OPERATING EXPENSES:
Sales and marketing 5,664 5,664 5,153 5,153
Research and development 3,483 3,483 3,108 3,108
General and administrative 2,732 2,732 2,235 2,235
Stock-based compensation (370)(a) 370 - 51(a) (51) -
---------- ---------- ---------- ----------
Total operating expenses 11,509 11,879 10,547 10,496
---------- ---------- ---------- ----------
Operating loss (1,949) (2,319) (1,275) (1,224)
Interest and other income, net 419 419 407 407
---------- ---------- ---------- ----------
Loss before provision for income taxes (1,530) (1,900) (868) (817)
Provision (benefit) for income taxes (43) (43) 38 38
---------- ---------- ---------- ----------
Net loss $ (1,487) $ (1,857) $ (906) $ (855)
========== ========== ========== ==========
Diluted net loss per share $ (0.06) $ (0.07) $ (0.03) $ (0.03)
========== ========== ========== ==========
Shares used in diluted per
share computation 26,752 26,752 26,425 26,425
========== ========== ========== ==========
- ---------------
(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
DECEMBER 31, 2005 DECEMBERR 31, 2004
------------------------------------------ ----------------------------------------
NON-GAAP NON-GAAP
GAAP ADJUSTMENTS NON-GAAP GAAP ADJUSTMENTS NON-GAAP
---------- -------------- ---------- ---------- -------------- ----------
REVENUES:
License revenues $ 7,261 $ 7,261 $ 4,013 $ 4,013
Maintenance and service revenues 9,978 9,978 11,047 11,047
---------- ---------- ---------- ----------
Total revenues 17,239 17,239 15,060 15,060
COST OF REVENUES:
License revenues 118 118 137 137
Maintenance and service revenues 7,561 7,561 7,396 7,396
---------- ---------- ---------- ----------
Total cost of revenues 7,679 7,679 7,533 7,533
---------- ---------- ---------- ----------
Gross profit 9,560 9,560 7,527 7,527
OPERATING EXPENSES:
Sales and marketing 5,664 5,664 4,377 4,377
Research and development 3,483 3,483 2,809 2,809
General and administrative 2,732 2,732 1,516 1,516
Stock-based compensation (370)(a) 370 - 500(a) (500) -
---------- ---------- ---------- ----------
Total operating expenses 11,509 11,879 9,202 8,702
---------- ---------- ---------- ----------
Operating loss (1,949) (2,319) (1,675) (1,175)
Interest and other income, net 419 419 335 335
---------- ---------- ---------- ----------
Loss before provision for income taxes (1,530) (1,900) (1,340) (840)
Provision for income taxes (43) (43) - -
---------- ---------- ---------- ----------
Net loss $ (1,487) $ (1,857) $ (1,340) $ (840)
========== ========== ========== ==========
Diluted net loss per share $ (0.06) $ (0.07) $ (0.05) $ (0.03)
========== ========== ========== ==========
Shares used in diluted per
share computation 26,752 26,752 24,989 24,989
========== ========== ========== ==========
- ---------------
(a) Non-cash stock based compensation
CALLIDUS SOFTWARE INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
FISCAL YEAR OVER YEAR COMPARISON
(In thousands, except for per share data)
(unaudited)
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
------------------------------------------ ------------------------------------------
NON-GAAP NON-GAAP
GAAP ADJUSTMENTS NON-GAAP GAAP ADJUSTMENTS NON-GAAP
---------- -------------- ---------- ---------- -------------- ----------
REVENUES:
License revenues $ 17,843 $ 17,843 $ 12,758(b) $ 150 $ 12,908
Maintenance and service revenues 43,610 43,610 45,936(b) 775 46,711
---------- ---------- ---------- ----------
Total revenues 61,453 61,453 58,694 59,619
COST OF REVENUES:
License revenues 377 377 774(c) (200) 574
Maintenance and service revenues 30,175 30,175 32,070 32,070
Impairment of purchased technology - - 1,800(c) (1,800) -
---------- ---------- ---------- ----------
Total cost of revenues 30,552 30,552 34,644 32,644
---------- ---------- ---------- ----------
Gross profit 30,901 30,901 24,050 26,975
OPERATING EXPENSES:
Sales and marketing 18,778 18,778 20,577 20,577
Research and development 12,380 12,380 13,415(c) (158) 13,257
General and administrative 9,309 9,309 7,493(d) (75) 7,418
Impairment of intangible assets - - 1,994(c) (1,994) -
Restructuring expenses - - 1,488(e) (1,488) -
Stock-based compensation 544(a) (544) - 5,585(a) (5,585) -
---------- ---------- ---------- ----------
Total operating expenses 41,011 40,467 50,552 41,252
---------- ---------- ---------- ----------
Operating loss (10,110) (9,566) (26,502) (14,277)
Interest and other income, net 1,491 1,491 1,094 1,094
---------- ---------- ---------- ----------
Loss before provision for income taxes (8,619) (8,075) (25,408) (13,183)
Provision for income taxes (14) (14) 75 75
---------- ---------- ---------- ----------
Net loss $ (8,605) $ (8,061) $ (25,483) $ (13,258)
========== ========== ========== ==========
Diluted net loss per share $ (0.33) $ (0.31) $ (1.04) $ (0.54)
========== ========== ========== ==========
Shares used in diluted per
share computation 26,268 26,268 24,419 24,419
========== ========== ========== ==========
- ------------------
(a) Non-cash stock based compensation
(b) Customer settlements for discontinuance of TruePerformance product
(c) Amortization or impairment of purchased intangible assets
(d) Customer legal settlement offset by insurance proceeds from
TruePerformance related claim
(e) Reduction in force and discontinuance of TruePerformance product