Science & Technology
Science and Technology
Science and Technology
Wed, July 29, 2009
Tue, July 28, 2009 Callidus Software Inc.: Callidus Software Announces Second Quarter 2009 Results
SAN JOSE, CA--(Marketwire - July 28, 2009) - Callidus Software Inc. (
Total second quarter revenues were $22.4 million, down 5%, compared to the same quarter last year, reflecting the impact of a challenging economy, a decrease in services revenues, and an expected decline in license revenues. Recurring revenues, which include subscription and support, were $11.8 million, an increase of 17% over the second quarter of 2008.
Second quarter services revenues were $9.4 million, down 18%, while second quarter license revenues were $1.2 million, down 38%, in each case, compared to the second quarter of 2008. The decline in services revenues reflects not only the shift to the on-demand business and the completion of certain implementations, but also delays in significant implementations due to customer budgetary constraints.
Second quarter GAAP net loss was $3.3 million or ($0.11) per share, which included $1.2 million of stock-based compensation expense, $0.6 million of restructuring expense and $0.1 million of amortization of acquired intangible assets. This compares to GAAP net loss of $5.1 million, or ($0.17) per share, for the second quarter of 2008, which included $2.2 million of stock-based compensation expense and $0.5 million of amortization of acquired intangible assets.
Second quarter non-GAAP net loss was $1.3 million, or ($0.04) per share, compared to a non-GAAP net loss of $2.5 million, or ($0.08) per share, for the same period last year. Non-GAAP net loss excludes stock-based compensation expense, restructuring expense and amortization of acquired intangible assets.
Cash and investments totaled $40.1 million at June 30, 2009, an increase of $2.2 million from March 31, 2009.
"We made real strides this past quarter toward transitioning more fully to a recurring revenue model. We closed significant on-demand business in the quarter with sixteen customers increasing their annual recurring commitments, which we believe speaks to the strategic value of our solutions. At the same time it was a challenging quarter, as certain customers and industries reduced sales headcount and corresponding spending. We experienced the impact of these reductions directly with a decline in cumulative annual contract value," said Leslie Stretch, president and CEO at Callidus Software. "Some recent and upcoming actions we are taking to better position us to capitalize on the SPM market opportunity include completion of the move to recurring revenues, significant restructuring actions in June and July to reduce annualized expenses by over $10 million and putting in place new leadership in the sales and marketing functions that will be 100% dedicated to growing our recurring revenue business. Our balance sheet remains strong, and we are driving toward our goal of achieving profitability in 2010."
Recent Business Highlights
-- New Products: Callidus launched the Monaco Suite, a SaaS, multi-tenant offering, that includes an intuitive Web 2.0 user experience and new products for objective management, quota management, and compensation plan distribution and approval. -- Partners: Callidus signed a 2 year exclusivity agreement with its reseller, CIS, for the Latin American market. The agreement provides Callidus with a guaranteed recurring revenue stream of $1 million per year recognized ratably. -- New Partners: Callidus expanded its geographic reach by signing reseller agreements with Advantech in Israel, Ultima in Turkey, Cognity in Greece, and Hyperintel in Indonesia. -- Industry Recognition: Callidus received the highest rating of any SPM vendor in Ventana Research's SPM index. The research evaluated the major vendors in the SPM market.
Financial Outlook
-- Total revenues for the third quarter of 2009 are expected to be between $17.5 million and $19.0 million, reflecting continuing declines in services revenues due to the shift to the on-demand business as well as ongoing delays in customer implementations, the expected decline in perpetual license revenues and a slight decrease in on-demand revenues due to the second quarter decline in cumulative Annual Contract Value. -- GAAP operating expenses, including stock-based compensation of approximately $1 million and $1.7M of restructuring charges, are expected to be between $12.2 million and $13.2 million in the third quarter of 2009.
Conference Call
A conference call to discuss the second quarter 2009 results and outlook is scheduled for 1:30 p.m. Pacific Daylight Time (PDT) today. 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 will be 866-578-5788 (international: +1 617-213-8057), passcode 24948720.
A webcast replay of the conference call will be available after 3:30 p.m. PDT today through August 4, 2009. The webcast replay will be available at the Investor Relations section of Callidus Software's website under Calendar of Events.
About Callidus Software®
Callidus Software ([ www.callidussoftware.com ]) (
Note on Forward-Looking Statements
The forward-looking statements included in this press release, including statements regarding our business strategy and on-demand business and estimates of third quarter 2009 total revenues, annual contract values, services revenues, perpetual license revenues, recurring revenues, operating expenses, stock-based compensation expense and restructuring charges, 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, potential disruption of customer purchase decisions resulting from global economic conditions, timing and size of orders, potential material fluctuations in financial results and future growth rates, decreases in customer spending, uncertainty regarding SPM market, customer cancellations or non-renewal of maintenance contracts or on-demand services, our potential inability to manage effectively any growth we experience, potential disruptions to our business due to restructuring activities and management changes, uncertainty regarding the demand for and profitability of our on-demand services, 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 for 2008 and its Form 10-Q for the first quarter ended March 31, 2009, 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.
Non-GAAP Financial Measures
Callidus has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP net income and earnings per share. Callidus uses non-GAAP measures internally in analyzing its financial results and believes that they are useful to investors, as a supplement to GAAP measures, in evaluating Callidus' operating performance. Callidus believes that the use of these non-GAAP measures provides additional insight for investors to use in evaluation of ongoing operating results and trends and in comparing its financial measures with other companies in Callidus' industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial measures exclude stock-based compensation expense pursuant to SFAS 123(R) and amortization of acquired intangibles. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
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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, ------------------ ------------------ 2009 2008 2009 2008 -------- -------- -------- -------- Revenues: Recurring $ 11,802 $ 10,051 $ 23,499 $ 18,335 Services 9,407 11,539 20,609 27,394 License 1,161 1,872 4,162 5,856 -------- -------- -------- -------- Total revenues 22,370 23,462 48,270 51,585 Cost of revenues: Recurring (1) 5,416 3,670 11,201 6,949 Services (1) (2) 7,671 10,956 16,980 23,644 License 251 108 442 350 -------- -------- -------- -------- Total cost of revenues 13,338 14,734 28,623 30,943 -------- -------- -------- -------- Gross profit 9,032 8,728 19,647 20,642 Operating expenses: Sales and marketing (1) (2) 5,444 7,213 11,306 14,589 Research and development (1) 3,673 3,465 7,474 7,150 General and administrative (1) 2,683 3,339 6,250 6,733 Restructuring 639 - 805 397 -------- -------- -------- -------- Total operating expenses 12,439 14,017 25,835 28,869 -------- -------- -------- -------- Operating loss (3,407) (5,289) (6,188) (8,227) Interest and other income, net 161 280 190 811 -------- -------- -------- -------- Income (loss) before provision for income taxes (3,246) (5,009) (5,998) (7,416) Provision (benefit) for income taxes 88 122 146 343 -------- -------- -------- -------- Net Income (loss) $ (3,334) $ (5,131) $ (6,144) $ (7,759) ======== ======== ======== ======== Basic net income (loss) per share $ (0.11) $ (0.17) $ (0.21) $ (0.26) ======== ======== ======== ======== Diluted net income (loss) per share $ (0.11) $ (0.17) $ (0.21) $ (0.26) ======== ======== ======== ======== Shares used in basic per share computation 29,942 29,989 29,747 29,873 ======== ======== ======== ======== Shares used in diluted per share computation 29,942 29,989 29,747 29,873 ======== ======== ======== ======== (1) Stock-based compensation included in amounts above by category: Cost of recurring 131 177 294 314 Cost of services 243 359 256 649 Sales and marketing 342 597 574 1,086 Research and development 267 331 409 621 General and administrative 252 701 679 1,226 -------- -------- -------- -------- Total stock-based compensation $ 1,235 $ 2,165 $ 2,212 $ 3,896 ======== ======== ======== ======== (2) Acquisition related asset amortization $ 125 $ 500 $ 313 $ 917 CALLIDUS SOFTWARE INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (unaudited) June 30, December 31, Assets 2009 2008 ------------ ------------ Current assets: Cash and cash equivalents $ 24,501 $ 35,390 Short-term investments 14,713 1,455 Accounts receivable, net 15,225 22,710 Deferred income taxes 360 360 Prepaid and other current assets 3,079 4,104 ------------ ------------ Total current assets 57,878 64,019 Long-term investments 877 3,828 Property and equipment, net 5,443 4,890 Goodwill 5,528 5,655 Intangible assets, net 3,747 3,208 Deferred income taxes, noncurrent 811 811 Deposits and other assets 871 1,468 ------------ ------------ Total assets $ 75,155 $ 83,879 ============ ============ Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 2,672 $ 2,447 Accrued payroll and related expenses 4,888 7,128 Accrued expenses 4,191 5,027 Deferred income taxes 816 816 Deferred revenue 20,159 21,881 ------------ ------------ Total current liabilities 32,726 37,299 Long-term deferred revenue 505 1,202 Deferred income taxes, noncurrent 72 - Other liabilities 1,621 1,412 ------------ ------------ Total liabilities 34,924 39,913 ------------ ------------ Stockholders' equity Common stock 30 29 Additional paid-in capital 209,629 207,493 Accumulated other comprehensive income 240 121 Accumulated deficit (169,668) (163,677) ------------ ------------ Total stockholders' equity 40,231 43,966 ------------ ------------ Total liabilities and stockholders' equity $ 75,155 $ 83,879 ============ ============ CALLIDUS SOFTWARE INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) Six months ended June 30, --------------------------- 2009 2008 ------------ ------------ Cash flows from operating activities: Net loss $ (6,144) $ (7,759) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation expense 1,433 1,141 Amortization of intangible assets 848 1,367 Provision for doubtful accounts and service remediation reserves (46) (55) Stock-based compensation 2,212 3,896 Loss on disposal of property 3 2 Deferred income taxes 72 - Net accretion on investments 15 (140) Put option (gain) loss 306 - (Gain) loss on investments classified as trading securities (373) - Changes in operating assets and liabilities: Accounts receivable 7,704 11,318 Prepaid and other current assets 935 (984) Other assets 189 559 Accounts payable 234 (1,518) Accrued expenses (2,270) (2,521) Accrued payroll and related expenses (1,814) (1,347) Accrued restructuring (488) (972) Deferred revenue (2,442) 4,366 ------------ ------------ Net cash provided by (used in) operating activities 374 7,353 ------------ ------------ Cash flows from investing activities: Purchases of investments (13,260) (13,919) Proceeds from maturities and sale of investments 3,450 23,600 Purchases of property and equipment (1,147) (1,258) Purchases of intangible assets (506) (100) Acquisition, net of cash acquired (14) (7,500) Change in restricted cash 202 - ------------ ------------ Net cash provided by (used in) investing activities (11,275) 823 ------------ ------------ Cash flows from financing activities: Net proceeds from issuance of common stock 990 3,497 Repurchases of stock (742) (3,721) Cash used to net share settle equity awards (319) - ------------ ------------ Net cash (used in) provided by financing activities (71) (224) ------------ ------------ Effect of exchange rates on cash and cash equivalents 83 (29) ------------ ------------ Net increase (decrease) in cash and cash equivalents (10,889) 7,923 Cash and cash equivalents at beginning of period 35,390 21,813 ------------ ------------ Cash and cash equivalents at end of period $ 24,501 $ 29,736 ============ ============ Supplemental disclosures of cash flow information: Cash paid for income taxes $ - $ 1 ============ ============ Non-cash investing and financing activities: Purchases of property and equipment not paid as of quarter-end $ 1,445 $ 1,082 ============ ============ Purchases of intangible assets not paid as of quarter-end $ 981 $ - ============ ============ Deferred direct stock-based compensation costs $ (3) $ - ============ ============ CALLIDUS SOFTWARE INC. UNAUDITED RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES (In thousands, except for percentages and per share data) Three months ended Six months ended June 30, June 30, -------------------- -------------------- 2009 2008 2009 2008 --------- --------- --------- --------- Non-GAAP operating expense reconciliation: Operating expenses $ 12,439 $ 14,017 $ 25,835 $ 28,869 Operating expenses, as a % of total revenues 56% 60% 54% 56% Add back: Non-cash stock-based compensation $ (861) $ (1,629) $ (1,662) $ (2,933) Non-cash amortization of acquired intangible assets (125) (125) (250) (229) Special Charges (639) - (805) (397) --------- --------- --------- --------- Non-GAAP Operating Expenses $ 10,814 $ 12,263 $ 23,118 $ 25,310 --------- --------- --------- --------- Non-GAAP Operating Expense as a % of total revenues 48% 52% 48% 49% Non-GAAP operating income (loss) reconciliation: Operating income (loss) $ (3,407) $ (5,289) $ (6,188) $ (8,227) Operating income (loss), as a % of total revenues -15% -23% -13% -16% Add back: Non-cash stock-based compensation $ 1,235 $ 2,165 $ 2,212 $ 3,896 Non-cash amortization of acquired intangible assets 125 500 313 917 Special Charges 639 - 805 397 --------- --------- --------- --------- Non-GAAP Operating income (loss) $ (1,408) $ (2,624) $ (2,858) $ (3,017) --------- --------- --------- --------- Non-GAAP Operating income (loss), as a % of total revenues -6% -11% -6% -6% Non-GAAP net income (loss) reconciliation: Net income (loss) $ (3,334) $ (5,131) $ (6,144) $ (7,759) Net income (loss), as a % of total revenues -15% -22% -13% -15% Add back: Non-cash stock-based compensation $ 1,235 $ 2,165 $ 2,212 $ 3,896 Non-cash amortization of acquired intangible assets 125 500 313 917 Special Charges 639 - 805 397 --------- --------- --------- --------- Non-GAAP Net income (loss) $ (1,335) $ (2,466) $ (2,814) $ (2,549) --------- --------- --------- --------- Non-GAAP Net income (loss), as a % of total revenues -6% -11% -6% -5% Non-GAAP net income (loss) per share reconciliation: Net income (loss) per basic and diluted share $ (0.11) $ (0.17) $ (0.21) $ (0.26) Add back: Non-cash stock-based compensation 0.04 0.07 0.08 0.13 Non-cash amortization of acquired intangible assets 0.01 0.02 0.01 0.03 Special Charges 0.02 - 0.03 0.01 --------- --------- --------- --------- Non-GAAP Net income (loss) per basic and diluted share $ (0.04) $ (0.08) $ (0.09) $ (0.09) --------- --------- --------- --------- Shares used in calculation of GAAP and Non-GAAP net income (loss) per share: --------- --------- --------- --------- Basic 29,942 29,989 29,747 29,873 --------- --------- --------- --------- Diluted 29,942 29,989 29,747 29,873 --------- --------- --------- ---------
