SOURCE: Callidus Software Inc.

Callidus Software Inc.

August 01, 2013 16:01 ET

CallidusCloud Reports 31% SaaS Billings Growth

Generates $5.2 Million in Cash From Operations During Q2 2013 on $25.9 Million in Total Revenue

PLEASANTON, CA--(Marketwired - Aug 1, 2013) - Callidus Software Inc. (NASDAQ: CALD), a leading provider of sales and marketing effectiveness software, today announced financial results for the second quarter ended June 30, 2013.

"I was pleased with our performance in Q2, with revenue and billings results outperforming expectations and the continued expansion of our gross margin," said Leslie Stretch, President and CEO, CallidusCloud. "In the quarter we added 183 net new subscription logos, up 25% year over year, and generated $5.2 million of cash from operations. We expect this momentum in the business to continue through 2013 and beyond."

Financial Highlights for the Second Quarter 2013

  • Total revenue was $25.9 million for the second quarter, an increase of 9% over the same quarter in the prior year. Total recurring revenues were $19.6 million, which includes SaaS revenues of $15.8 million and maintenance revenues of $3.8 million, an increase of 9% compared to the same quarter in the prior year. Service and other revenues of $6.3 million increased 10% as compared to the same quarter in the prior year.

Non-GAAP Performance

  • Non-GAAP total gross margin (reconciled later in this press release) was 59% compared to 53% for the same quarter in the prior year. Non-GAAP recurring revenue gross margin (reconciled later in this press release) was 68% compared to 61% for the same quarter in the prior year.
  • Non-GAAP operating income (reconciled later in this press release) was $0.4 million compared to non-GAAP operating loss of $0.8 million for the same quarter in the prior year.
  • Non-GAAP net loss was $0.8 million, or ($0.02) per fully diluted share, compared to non-GAAP net loss of $0.8 million, or ($0.02) per fully diluted share for the same quarter in the prior year. Non-GAAP net loss is reconciled later in this press release.

GAAP Performance

  • GAAP total gross margin was 55% compared to 47% in the same quarter prior year. GAAP recurring revenue gross margin was 65% compared to 56% in the same quarter prior year.
  • GAAP net loss was $6.2 million, or ($0.16) per share, compared to a net loss of $5.3 million, or ($0.15) per share, for the same period prior year.
  • Days Sales Outstanding (DSO) on a gross basis improved to 85 days from 87 days in the prior quarter. Adjusting for a $3.1 million increase in total deferred revenue, DSO on a net basis was 71 days compared to 73 days in the first quarter of 2013.
  • Cash and short term investments ended the quarter at $27.2 million, compared to $22.9 million in first quarter of 2013.
  • Cash generated from operations was $5.2 million and $2.4 million for the current quarter and year to date 2013, respectively.
  • Deferred revenue increased to a record $47.4 million which represents a 45% year over year increase in SaaS deferred revenue.

Business Highlights for the Second Quarter 2013

  • There was record attendance at C3, CallidusCloud's annual user conference that was held in May 2013. Over 750 attendees registered, representing a 70% increase over 2012. Leading analysts from Gartner, Forrester Research, and Aberdeen joined customer speakers as the conference hosted 7 keynotes and 32 breakout sessions on sales and marketing effectiveness.
  • CallidusCloud sponsored key industry events including: Gartner 360 Summit; Accord Loma; Sirius Decisions Summit; SuiteWorld; mLearnCon
  • CallidusCloud further expanded its partner ecosystem with 10 new resellers and consulting partners including PWC as global consulting partner.

Financial Outlook for 2013 - Third Quarter and Full Year
For the third quarter of 2013, the Company expects total revenue to be in the range of $26 to $27 million. GAAP operating expenses are expected to be in the range of $16.6 to $17.6 million. Non-GAAP operating expenses are expected to be in the range of $13.6 to $14.6 million.

For the full year of 2013 the company expects revenue to be in the range of $106 to $109 million, representing a narrowing of previous guidance of $105 to $110 million. GAAP operating loss is expected to be in the range of $13 to $14 million. Non-GAAP operating income is expected to be in the range of $3.5 to $4.5 million, representing a reduction from the prior guidance range of $4.0 to $5.0 million.

Conference Call
In conjunction with this announcement CallidusCloud will host a conference call at 1:30 p.m. Pacific Daylight Time (PDT) today to discuss the second quarter 2013 results and outlook for the third quarter 2013 and full year 2013. The conference call will be available via live webcast at the Investor Relations section of CallidusCloud's website.

Webcast site: http://www.calliduscloud.com/about-us/investor-relations/
Dial-in: 866-318-8611 (International callers: 617-399-5130)
Passcode: 61743110
Replay information: A webcast replay will be available on the Investor Relations section of our website under Calendar of Events.

For more information, please visit: http://www.calliduscloud.com/about-us/investor-relations/

About CallidusCloud
Callidus Software Inc. (NASDAQ: CALD), doing business as CallidusCloud®, is a leading provider of cloud software. CallidusCloud enables organizations to accelerate and maximize their lead to money process with sales and marketing effectiveness cloud software. CallidusCloud maximizes and accelerates sales and marketing processes for over 2,000 leading organizations. Small, medium and large enterprises across multiple industries and geographies rely on CallidusCloud for better marketing, and smarter selling.

For more information, please visit www.calliduscloud.com.

Note on Forward-Looking Statements

The forward-looking statements included in this press release, including discussion of our commercial prospects, estimates of revenues, operating expenses, stock-based compensation expense, amortization of acquired intangibles, restructuring, and patent litigation defense costs 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, relative growth of our recurring revenue, potential decreases in customer spending, uncertainty regarding purchasing trends in the cloud software market, customer cancellations or non-renewal of maintenance contracts or on-demand services, our potential inability to manage effectively any growth we experience, our ability to develop new products and services, increased competition or new entrants in the marketplace, potential impact of acquisitions and investments, and other risks detailed in reports we file with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K which may be obtained by contacting CallidusCloud's Investor Relations department at 925-251-2248, or from the Investor Relations section of CallidusCloud's website (CallidusCloud Investor Relations). 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

CallidusCloud has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP gross margin, non-GAAP recurring revenue gross margin, non-GAAP net loss, non-GAAP net loss per share. CallidusCloud 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 CallidusClouds' operating performance. CallidusCloud 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 CallidusClouds' industry, many of which present non-GAAP financial measures that may resemble our non-GAAP financial measures. As noted, our non-GAAP financial measures exclude stock-based compensation expense, a benefit from a purchase acquisition-related adjustment, restructuring expense, acquisition related expense, patent litigation defense cost, convertible note interest expense, amortization of convertible note issuance cost 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.

©2013. Callidus Software Inc. All rights reserved. Callidus, Callidus Software, the Callidus Software logo, CallidusCloud, the CallidusCloud logo, TrueComp Manager, ActekSoft, ACom3, ForceLogix, Salesforce Assessments, iCentera, Webcom, Litmos, the Litmos logo, LeadFormix, Rapid Intake, and 6FigureJobs are trademarks, service marks, or registered trademarks of Callidus Software Inc. and its affiliates in the United States and other countries. All other brand, service or product names are trademarks or registered trademarks of their respective companies or owners.

   
CALLIDUS SOFTWARE INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except for per share data)  
(unaudited)  
                         
    Three Months Ended June 30,     Six Months Ended June 30,  
    2013     2012     2013     2012  
Revenues:                                
  Recurring   $ 19,616     $ 18,027     $ 39,240     $ 34,913  
  Services and other     6,314       5,754       12,232       10,881  
    Total revenues     25,930       23,781       51,472       45,794  
Cost of revenues:                                
  Recurring (1) (2)     6,931       7,896       14,384       15,445  
  Services and other (1) (2)     4,739       4,808       9,961       9,188  
    Total cost of revenues     11,670       12,704       24,345       24,633  
Gross profit     14,260       11,077       27,127       21,161  
                                 
Operating expenses:                                
  Sales and marketing (1) (2)     7,891       8,293       15,535       15,222  
  Research and development (1) (2)     4,409       4,072       8,838       8,090  
  General and administrative (1) (2) (3) (4)     5,852       4,849       11,038       9,854  
  Acquisition related contingent consideration     -       (1,837 )     -       (1,837 )
  Restructuring     315       172       1,558       614  
    Total operating expenses     18,467       15,549       36,969       31,943  
                                 
Operating loss     (4,207 )     (4,472 )     (9,842 )     (10,782 )
Interest income and other income (expense) (5) (6)     (995 )     (944 )     (1,839 )     (1,739 )
                                 
Loss before provision (benefit) for income taxes     (5,202 )     (5,416 )     (11,681 )     (12,521 )
Provision (benefit) for income taxes (7)     980       (109 )     1,104       (231 )
                                 
Net loss   $ (6,182 )   $ (5,307 )   $ (12,785 )   $ (12,290 )
                                 
Net loss per share - basic and diluted                                
  Net loss per share   $ (0.16 )   $ (0.15 )   $ (0.34 )   $ (0.35 )
                                 
Shares used in basic and diluted per share computation     37,813       35,235       37,478       34,674  
                                 
(1) Stock-based compensation included in amounts above by category:                          
  Cost of recurring     204       383       378       929  
  Cost of services     236       573       642       1,050  
  Sales and marketing     581       1,165       1,154       1,940  
  Research and development     467       485       933       899  
  General and administrative     1,628       1,688       2,600       2,677  
    Total stock-based compensation     3,116       4,294       5,707       7,495  
                                 
(2) Acquisition, acquired and settlement related asset amortization                          
  Cost of recurring     515       488       1,027       974  
  Cost of services     13       38       25       44  
  Sales and marketing     231       202       459       413  
  General and administrative     59       57       117       120  
    Total acquisition related asset amortization     818       785       1,628       1,551  
                                 
(3) Acquisition related expense     -       267       -       637  
(4) Patent litigation costs     347       7       661       620  
(5) Interest expense on convertible notes     703       703       1,406       1,406  
(6) Amortization of convertible note issuance costs     134       134       268       268  
(7) Tax benefit from release of valuation allowance     -       -       -       (224 )
                                 
   
   
CALLIDUS SOFTWARE INC.  
CONSOLIDATED BALANCE SHEETS  
             
(In thousands except per share data)  
             
    June 30,     December 31,  
    2013     2012  
ASSETS  
Current assets:                
  Cash and cash equivalents   $ 18,299     $ 16,400  
  Short-term investments     8,898       12,771  
  Accounts receivable, net     22,167       22,567  
  Deferred income taxes     40       40  
  Prepaid and other current assets     6,990       6,718  
    Total current assets     56,394       58,496  
                 
Property and equipment, net     13,018       10,580  
Goodwill     31,207       31,207  
Intangible assets, net     19,020       21,196  
Deferred income taxes, noncurrent     392       392  
Deposits and other assets     3,076       2,872  
  Total assets   $ 123,107     $ 124,743  
                 
   
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:                
  Accounts payable   $ 1,280     $ 4,705  
  Accrued payroll and related expenses     4,864       5,854  
  Accrued expenses     5,896       8,164  
  Deferred income taxes     944       944  
  Deferred revenue     38,996       35,483  
  Capital lease obligations     1,470       921  
    Total current liabilities     53,450       56,071  
                 
Deferred revenue, noncurrent     8,392       3,702  
Deferred income taxes, noncurrent     278       160  
Other liabilities     1,997       2,159  
Capital lease obligations, noncurrent     1,884       8  
Convertible notes     59,215       59,215  
    Total liabilities     125,216       121,315  
                 
Stockholders' equity:                
  Common stock     34       34  
  Additional paid-in capital     262,716       255,331  
  Treasury stock     (14,430 )     (14,430 )
  Accumulated other comprehensive income     102       239  
  Accumulated deficit     (250,531 )     (237,746 )
    Total stockholders' equity     (2,109 )     3,428  
    Total liabilities and stockholders' equity   $ 123,107     $ 124,743  
                 
                 
   
CALLIDUS SOFTWARE INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
             
    Six Months Ended June 30,  
    2013     2012  
Cash flows from operating activities:                
  Net loss   $ (12,785 )   $ (12,290 )
  Adjustments to reconcile net loss to net cash used in operating activities:                
    Depreciation expense     2,109       1,490  
    Amortization of intangible assets     2,414       2,558  
    Provision for doubtful accounts and service remediation reserves     314       52  
    Stock-based compensation     5,707       7,495  
    Release of valuation allowance     -       (224 )
    Gain on disposal of property and equipment     3       (5 )
    Amortization of convertible notes issuance cost     268       268  
    Net amortization on investments     46       231  
    Acquisition-related contingent consideration     -       (1,837 )
    Changes in operating assets and liabilities:                
      Accounts receivable     86       (6,712 )
      Prepaid and other current assets     (272 )     (637 )
      Other assets     (472 )     548  
      Accounts payable     (3,201 )     118  
      Accrued expenses     847       (374 )
      Accrued payroll and related expenses     (431 )     (379 )
      Accrued restructuring     (578 )     230  
      Deferred revenue     8,203       1,270  
      Deferred income taxes     118       (54 )
Net cash provided by (used in) operating activities     2,376       (8,252 )
                 
Cash flows from investing activities:                
  Purchases of investments     (5,634 )     (16,536 )
  Proceeds from maturities and sale of investments     9,450       26,111  
  Purchases of property and equipment     (1,353 )     (1,714 )
  Proceeds from disposal of property and equipment     (3 )     5  
  Purchases of intangible assets     (364 )     (4,485 )
  Acquisitions, net of cash acquired     -       (7,721 )
Net cash provided by (used in) investing activities     2,096       (4,340 )
                 
Cash flows from financing activities:                
  Proceeds from issuance of common stock     2,168       4,295  
  Repurchase of common stock from employees for payment                
  of taxes on vesting of restricted stock units     (490 )     (1,829 )
  Payment of consideration related to acquisitions     (3,078 )     (723 )
  Proceeds from issuance of convertible notes, net of issuance costs     -       (30 )
  Payment of principal under capital leases     (1,047 )     (587 )
Net cash (used in) provided by financing activities     (2,447 )     1,126  
Effect of exchange rates on cash and cash equivalents     (126 )     5  
Net increase (decrease) in cash and cash equivalents     1,899       (11,461 )
Cash and cash equivalents at beginning of period     16,400       17,383  
Cash and cash equivalents at end of period   $ 18,299     $ 5,922  
                 
   
   
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES  
(In thousands, except for percentages and per share data)  
(unaudited)  
             
    Three months ended     Six months ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
                                 
Non-GAAP gross profit reconciliation                                
                                 
Gross profit   $ 14,260     $ 11,077     $ 27,127     $ 21,161  
                                 
    Profit margin, as a % of total revenues     55 %     47 %     53 %     46 %
Add back:                                
    Non-cash stock-based compensation     440       956       1,020       1,979  
    Non-cash amortization of acquired intangible assets     528       526       1,052       1,018  
Non-GAAP gross profit   $ 15,228     $ 12,559     $ 29,199     $ 24,158  
                                 
    Profit margin, as a % of total revenues     59 %     53 %     57 %     53 %
                                 
                                 
Non-GAAP recurring revenue gross profit reconciliation                                
                                 
Recurring revenue gross profit   $ 12,685     $ 10,131     $ 24,856       19,468  
    Recurring revenue profit margin, as a % of recurring revenues     65 %     56 %     63 %     56 %
Add back:                                
    Non-cash stock-based compensation     204       383       378       929  
    Non-cash amortization of acquired intangible assets     515       488       1,027       974  
Non-GAAP Recurring revenue gross profit   $ 13,404     $ 11,002     $ 26,261     $ 21,371  
    Recurring revenue profit margin, as a % of recurring revenues     68 %     61 %     67 %     61 %
                                 
                                 
Non-GAAP operating expense reconciliation:                                
                                 
Operating expenses   $ 18,467       15,549     $ 36,969       31,943  
    Operating expenses, as a % of total revenues     71 %     65 %     72 %     70 %
Add back:                                
    Non-cash stock-based compensation     (2,676 )     (3,338 )     (4,687 )     (5,516 )
    Non-cash amortization of acquired intangible assets     (290 )     (259 )     (576 )     (533 )
    Acquisition-related expense     -       (267 )     -       (637 )
    Patent litigation and settlement costs     (347 )     (7 )     (661 )     (620 )
    Acquisition-related adjustment     -       1,837       -       1,837  
    Restructuring     (315 )     (172 )     (1,558 )     (614 )
Non-GAAP Operating Expenses   $ 14,839     $ 13,343     $ 29,487     $ 25,860  
    Non-GAAP Operating expenses, as a % of total revenues     57 %     56 %     57 %     56 %
                                 
                                 
Non-GAAP operating income (loss) reconciliation:                                
                                 
Operating loss   $ (4,207 )     (4,472 )   $ (9,842 )     (10,782 )
    Operating loss, as a % of total revenues     -16 %     -19 %     -19 %     -24 %
Add back:                                
    Non-cash stock-based compensation     3,116       4,294       5,707       7,495  
    Non-cash amortization of acquired intangible assets     818       785       1,628       1,551  
    Acquisition-related expense     -       267       -       637  
    Patent litigation and settlement costs     347       7       661       620  
    Acquisition-related adjustment     -       (1,837 )     -       (1,837 )
    Restructuring     315       172       1,558       614  
Non-GAAP Operating income (loss)   $ 389     $ (784 )   $ (288 )   $ (1,702 )
    Non-GAAP Operating income (loss), as a % of total revenues     2 %     -3 %     -1 %     -4 %
   
   
   
CALLIDUS SOFTWARE INC.  
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES  
(In thousands, except for percentages and per share data)  
(unaudited)  
                         
    Three months ended     Six months ended  
    June 30,     June 30,  
    2013     2012     2013     2012  
                                 
Non-GAAP net loss reconciliation:                                
                                 
Net loss   $ (6,182 )   $ (5,307 )   $ (12,785 )     (12,290 )
    Net loss, as a % of total revenues     -24 %     -22 %     -25 %     -27 %
Add back:                                
    Non-cash stock-based compensation     3,116       4,294       5,707       7,495  
    Non-cash amortization of acquired intangible assets     818       785       1,628       1,551  
    Acquisition related expenses     -       267       -       637  
    Patent litigation and settlement costs     347       7       661       620  
    Acquisition-related adjustment     -       (1,837 )     -       (1,837 )
    Restructuring     315       172       1,558       614  
    Interest expense on convertible notes     703       703       1,406       1,406  
    Amortization of convertible note issuance cost     134       134       268       268  
    Tax benefit from release of valuation allowance     -       -       -       (224 )
Non-GAAP Net income (loss)   $ (749 )   $ (782 )   $ (1,557 )   $ (1,760 )
    Non-GAAP Net income (loss), as a % of total revenues     -3 %     -3 %     -3 %     -4 %
                                 
                                 
Non-GAAP net income (loss) per share reconciliation:                                
                                 
Net loss per basic and diluted share   $ (0.16 )     (0.15 )   $ (0.34 )   $ (0.35 )
Add back:                                
    Non-cash stock-based compensation     0.08       0.12       0.16       0.21  
    Non-cash amortization of acquired intangible assets     0.02       0.02       0.04       0.04  
    Acquisition related expenses     -       0.01       -       0.02  
    Patent litigation and settlement costs     0.01       -       0.02       0.02  
    Acquisition-related adjustment     -       (0.05 )     -       (0.05 )
    Restructuring     0.01       0.01       0.04       0.02  
    Interest expense on convertible notes     0.02       0.02       0.04       0.04  
    Amortization of convertible note issuance cost     -       -       -       -  
    Tax benefit from release of valuation allowance     -       -       -       -  
Non-GAAP net income (loss) per basic share   $ (0.02 )   $ (0.02 )   $ (0.04 )   $ (0.05 )
                                 
Non-GAAP net income (loss) per diluted share   $ (0.02 )   $ (0.02 )   $ (0.04 )   $ (0.05 )
                                 
                                 
Basic and fully diluted shares reconciliation:                                
                                 
Basic shares     37,813       35,235       37,478       34,674  
Add back:                                
    Weighted average effect of dilutive securities     -       -       -       -  
Diluted shares     37,813       35,235       37,478       34,674  
                                 
 
 
CALLIDUS SOFTWARE INC.
FINANCIAL OUTLOOK
(In thousands)
(unaudited)
 

The guidance figures provided below and elsewhere in this press release are forward-looking statements, reflect a number of estimates, assumptions and other uncertainties, and are approximate in nature because of the company's future performance is difficult to predict. Such guidance is based on information available on the date of this press release, and the company assumes no obligation to update it.

     
    Three months ended
    September 30, 2013
    GAAP   Non-GAAP (a)
         
Total Revenue   $26,000 - $27,000   $26,000 - $27,000
Operating Expenses   $16,600 - $17,600   $13,600 - $14,600
         
         
         
     
    Twelve months ended
    December 31, 2013
    GAAP   Non-GAAP (b)
         
Total Revenue   $106,000 - $109,000   $106,000 - $109,000
Operating Income (Loss)   ($13,000) - ($14,000)   $3,500 - $4,500
         
(a) Estimated non-GAAP amounts above for the three months ending September 30, 2013, reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $290 - $320 thousand, estimated stock-based compensation expense of approximately $2.2 - $2.4 million, patent litigation and settlement costs of approximately $350 - $375 thousand, and restructuring expense of approximately $125 - $150 thousand.
   
(b) Estimated non-GAAP amounts above for the twelve months ending December 31, 2013, reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $3.3 - 3.4 million, estimated stock-based compensation expense of approximately $11.0 - $11.5 million, patent litigation and settlement costs of approximately $1.35 - $1.45 million, and restructuring expense of approximately $1.7 - $1.9 million.
   

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