SOURCE: Callidus Software Inc.

Callidus Software Inc.

April 30, 2015 16:05 ET

CallidusCloud Reports Record Q1 Revenue of $39.7 Million; 37% Year-Over-Year Increase in SaaS Revenue

DUBLIN, CA--(Marketwired - Apr 30, 2015) - Callidus Software Inc. (NASDAQ: CALD), a global leader in cloud-based sales, marketing, learning and customer experience solutions, today announced financial results for the first quarter ended March 31, 2015.

"I was pleased with our focus on execution in Q1. In a busy quarter when we moved our headquarters and conducted a successful secondary offering we achieved record revenues and record recurring revenues. We beat both our cloud revenue growth percentage and total revenue guidance. Our priorities for the remainder of 2015 are to continue to grow the cloud business at 35% and to make money," said Leslie Stretch, president and CEO of CallidusCloud.

Financial Highlights for the First Quarter 2015
Total revenue was $39.7 million for the first quarter, an increase of 28%. Total recurring revenue was $28.9 million, which includes SaaS revenue of $25.0 million and maintenance revenue of $3.9 million. SaaS revenue increased 37% over the same quarter in the prior year, benefiting from the continued success in our Lead to-Money solution, and the Clicktools acquisition in the third quarter of 2014. Services and license revenue was $10.9 million, consisting of $10.3 million in services revenue and $0.6 million in license revenue. Services and license revenue increased 24% compared to the same quarter in the prior year. Cash and short-term investments were $101.3 million, including $64.4 million in net proceeds from the March 2015 secondary offering.

GAAP Performance

  • Recurring revenue gross margin was 71%, compared to 67% for the same quarter in the prior year.

  • Operating loss was $3.6 million compared to $2.1 million for the same quarter in the prior year.

  • Net loss was $4.0 million, or ($0.08) on a per share basis, compared to a net loss of $2.5 million, or ($0.05) per share, for the same quarter in the prior year.

  • Cash from operations was $8 million in the current quarter compared to $5.5 million cash from operations for the same quarter in the prior year.

Non-GAAP Performance
The following non-GAAP measures are described below and are reconciled to the corresponding GAAP measures at the end of this release.

  • Recurring revenue gross margin was 74%, compared to 71% for the same quarter in the prior year.

  • Operating income was $2.5 million compared to $1.5 million for the same quarter in the prior year.

  • Net income was $2.0 million, or $0.04 per fully diluted share, compared to $1.3 million, or $0.03 per fully diluted share for the same quarter in the prior year.

Business Highlights for the First Quarter 2015

  • Leading research analyst, Gartner Inc. published its Magic Quadrant review of the Sales Performance Management market. For the second year in a row CallidusCloud was positioned the furthest for completeness of vision and ability to execute in the 'Leaders' quadrant.

  • CallidusCloud was selected as a finalist in two categories in the prestigious SIIA CODIE awards. The Litmos mobile learning solution is a finalist in the 'Best K-12 Course or Learning Management Solution' and 'Best Corporate Learning/Workforce Development Solution' categories.

  • CallidusCloud completed a secondary public offering of 5.3 million shares significantly strengthening the balance sheet and bringing new investors into the stock.

  • CallidusCloud announced a star-studded lineup for its C3 customer conference at the Wynn Hotel, Las Vegas, May 11th - 13th. Celebrity keynotes including, 'Lone Survivor' Marcus Luttrell and author and data scientist David McCandless will be joined by thought leaders from the analyst, customers and partner communities. The conference will be focused on the role of the incentives, feedback and predictive analysis on the customer journey.

  • CallidusCloud moved to new headquarters in Dublin, California. The new office provides a state of the art environment to host customers and prospects as well creating an inspiring work environment for staff.

Financial Outlook for 2015 - Second Quarter and Full Year
For the second quarter of 2015, the Company expects total revenue to be between $40.4 million and $41.4 million. GAAP operating loss is expected to be between $3 million and $3.8 million with GAAP net loss per share between ($0.06) to ($0.08). Non-GAAP operating income is expected to be between $2.0 million and $3.0 million with non-GAAP income per diluted share between $0.03 and $0.05.

For the full year of 2015, the Company is increasing previous revenue guidance to the range of $162.0 million to $167.0 million. GAAP operating loss is expected to be between $5.5 million and $8 million with GAAP net loss per share between ($0.19) to ($0.23). Non-GAAP operating income is expected to be between $14.5 million and $16.5 million with non-GAAP income per diluted share between $0.21 and $0.25. The change in non-GAAP income per diluted share is due to the effect of the secondary offering of shares completed in March 2015.

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 first quarter and outlook for the second quarter 2015 and full year 2015. 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: 866-515-2913 (International callers: 617-399-5127)
Passcode: 84863198

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 the global leader in cloud based sales, marketing and learning solutions. CallidusCloud enables organizations to accelerate and maximize their lead to money process with a complete suite of solutions that identify the right leads, ensure proper territory and quota distribution, enable sales forces, automate configure price quote, and streamline sales compensation -- driving bigger deals, faster. Over 3,800 leading organizations, across all industries, rely on CallidusCloud to optimize the lead to money process to close more deals for more money in record time.

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

Non-GAAP Financial Measures
In this release, CallidusCloud has provided additional 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 operating expenses, non-GAAP operating income, non-GAAP net income, and non-GAAP net income per diluted 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 CallidusCloud's 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 CallidusCloud's industry, many of which present non-GAAP financial measures that may resemble our non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

Our non-GAAP measures reflect adjustments based on the following items:

Stock-based compensation expense: We have excluded the effect of stock-based compensation expense from our non-GAAP gross profit, recurring revenue gross profit, operating expenses, operating income, net income and net income per diluted share. We believe the exclusion of stock-based compensation expense provides a useful comparison of our operating results to our peers.

Restructuring and other expense: We have excluded the effect of restructuring and other expense from our non-GAAP operating expenses, operating income, net income and net income per diluted share. Restructuring and other expense consists of employee severance, facility exit costs and incremental depreciation expense as a result of the change in the estimated useful life of assets abandoned. We feel it is useful to investors to understand the effects of these items on our financial results.

Patent litigation and settlement costs and patent litigation estimates: We have excluded the effect of patent infringement and litigation defense costs, settlement costs and patent litigation estimates from our non-GAAP gross profit, recurring revenue gross profit, operating expenses, operating income, net income and net income per diluted share. We believe patent defense costs and settlement costs and patent litigation estimates are not indicative of our ongoing business operations, and are inconsistent in amount and frequency; as such we exclude patent litigation defense costs during our evaluation of our business performance.

Convertible note interest expense, conversion costs and amortization of convertible note issuance costs: We have excluded the costs of convertible note interest expense, redemption inducement and issuance costs from our non-GAAP net income and net income per diluted share. We believe that these costs are not indicative of our continuing operations or meaningful in evaluating current versus past business results.

Amortization and gain on sale of acquired intangible assets: We have excluded the effect of amortization and gain on sale of acquired intangibles which include developed technology, customer relationships, trade names, domain names, patents and licenses from our non-GAAP gross profit, recurring revenue gross profit, operating expenses, operating income, other income and expense, net income and net income per diluted share. Amortization and gain on sale of acquired intangibles are significantly affected by timing, and as such, can be inconsistent in amount and nature.

Acquisition-Related Costs: We have excluded the costs related to acquisitions from our non-GAAP operating expenses, operating income, net income and net income per diluted share. These costs include legal and transactional costs associated with acquisition activities that we would not have otherwise incurred in the periods presented as part of our continuing operations. We believe the exclusion of acquisition-related costs provides a useful comparison of our operating results to our peers.

Note on Forward-Looking Statements
The forward-looking statements included in this press release, including for example discussion of our commercial prospects, estimates of future revenues, operating income/loss and expenses, earnings per share, stock-based compensation expenses, amortization of acquired intangible assets, restructuring expenses, and patent litigation costs and estimates 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, changes in staffing levels, and other risks detailed in periodic 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 415-445-3238, or from the Investor Relations section of CallidusCloud's website (http://www.calliduscloud.com/about-us/investor-relations/). Actual results may differ materially from those presently reported. We assume no obligation to update the information contained in this release.

©2015. Callidus Software Inc. All rights reserved. Callidus, Callidus Software, the Callidus Software logo, CallidusCloud, the CallidusCloud logo, TrueComp Manager, ActekSoft, ACom3, iCentera, Webcom, Litmos, the Litmos logo, LeadFormix, Rapid Intake, 6FigureJobs, Clicktools, Surve and LeadRocket 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  
(unaudited)  
(In thousands, except for percentages and per share data)  
             
    Three Months Ended March 31,  
    2015     2014  
Revenue:                
  Recurring   $ 28,893     $ 22,250  
  Services and license     10,852       8,727  
    Total revenue     39,745       30,977  
Cost of revenue:                
  Recurring     8,358       7,288  
  Services and license     7,661       5,110  
    Total cost of revenue     16,019       12,398  
Gross profit     23,726       18,579  
                 
Operating expenses:                
  Sales and marketing     13,726       10,727  
  Research and development     6,038       4,873  
  General and administrative     7,418       5,086  
  Restructuring and other     116       -  
    Total operating expenses     27,298       20,686  
                 
Operating loss     (3,572 )     (2,107 )
Interest income and other income (expense), net     (257 )     (210 )
Loss before provision for income taxes     (3,829 )     (2,317 )
Provision for income taxes     214       150  
                 
Net loss   $ (4,043 )   $ (2,467 )
                 
Net loss per share - basic and diluted   $ (0.08 )   $ (0.05 )
                 
Shares used in basic and diluted per share computation     50,709       45,944  
                 
   
   
CALLIDUS SOFTWARE INC.  
CONSOLIDATED BALANCE SHEETS  
(unaudited)  
(In thousands, except for percentages and per share data)  
       
    March 31,     December 31,  
    2015     2014  
ASSETS  
Current assets:                
  Cash and cash equivalents   $ 98,525     $ 34,200  
  Short-term investments     2,766       2,766  
  Accounts receivable, net     38,178       41,623  
  Prepaid and other current assets     10,662       10,384  
    Total current assets     150,131       88,973  
                 
Property and equipment, net     20,645       18,755  
Goodwill     46,420       46,970  
Intangible assets, net     16,616       17,757  
Deferred income taxes, noncurrent     399       440  
Deposits and noncurrent assets     3,156       3,403  
    Total assets   $ 237,367     $ 176,298  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:                
  Accounts payable   $ 3,918     $ 2,056  
  Accrued payroll and related expenses     8,112       9,051  
  Accrued expenses     12,418       16,868  
  Deferred income taxes     1,475       1,475  
  Deferred revenue     63,702       61,427  
  Capital lease obligations     889       1,001  
    Total current liabilities     90,514       91,878  
                 
Deferred revenue, noncurrent     8,692       10,195  
Deferred income taxes, noncurrent     500       561  
Revolving line of credit     10,480       10,481  
Other noncurrent liabilities     4,618       4,709  
    Total liabilities     114,804       117,824  
                 
Stockholders' equity:                
  Common stock     54       49  
  Additional paid-in capital     413,132       344,312  
  Treasury stock     (14,430 )     (14,430 )
  Accumulated other comprehensive loss     (1,432 )     (739 )
  Accumulated deficit     (274,761 )     (270,718 )
    Total stockholders' equity     122,563       58,474  
    Total liabilities and stockholders' equity   $ 237,367     $ 176,298  
                 
   
   
CALLIDUS SOFTWARE INC.  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(unaudited)  
(In thousands, except for percentages and per share data)  
   
    Three Months Ended March 31,  
    2015     2014  
Cash flows from operating activities:                
  Net loss   $ (4,043 )   $ (2,467 )
  Adjustments to reconcile net loss to net cash used in operating activities:                
    Depreciation expense     1,387       1,152  
    Amortization of intangible assets     1,288       1,233  
    Provision for doubtful accounts     94       253  
    Stock-based compensation     4,817       2,292  
    Deferred income taxes     (59 )     (311 )
    Release of valuation allowance     -       (149 )
    Loss on disposal of property and equipment     6       -  
    Amortization of convertible notes issuance cost     -       32  
    Net amortization on investments     5       8  
    Changes in operating assets and liabilities:                
      Accounts receivable     3,350       2,841  
      Prepaid and other current assets     (230 )     (463 )
      Other noncurrent assets     247       (107 )
      Accounts payable     2,089       332  
      Accrued expenses     (781 )     245  
      Accrued payroll and related expenses     (939 )     (1,369 )
      Accrued restructuring and other expenses     -       (167 )
      Deferred revenue     772       2,114  
Net cash provided by operating activities     8,003       5,469  
                 
Cash flows from investing activities:                
  Purchases of investments     -       (1,209 )
  Proceeds from maturities and sale of investments     -       3,750  
  Purchases of property and equipment (net)     (7,063 )     (3,597 )
  Purchases of intangible assets     (234 )     (112 )
  Acquisitions, net of cash acquired     -       (2,363 )
Net cash (used in) investing activities     (7,297 )     (3,531 )
                 
Cash flows from financing activities:                
  Proceeds from stock offering     64,370       -  
  Proceeds from issuance of common stock     1,581       1,190  
  Restricted stock units acquired to settle employee withholding liability     (1,959 )     (1,347 )
  Payment of consideration related to acquisitions     (226 )     (630 )
  Repayment of debt     -       (150 )
  Payment of principal under capital leases     (112 )     (309 )
Net cash provided by (used in) financing activities     63,654       (1,246 )
Effect of exchange rates on cash and cash equivalents     (35 )     35  
Net increase in cash and cash equivalents     64,325       727  
Cash and cash equivalents at beginning of period     34,200       28,295  
Cash and cash equivalents at end of period   $ 98,525     $ 29,022  
                 
                 
                 
CALLIDUS SOFTWARE INC.  
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES  
(unaudited)  
(In thousands, except for percentages and per share data)  
   
    Three Months Ended  
    March 31,  
    2015     2014  
                 
Non-GAAP gross profit reconciliation                
                 
Gross profit   $ 23,726     $ 18,579  
                 
    Gross margin     60 %     60 %
Add back:                
    Non-cash stock-based compensation     630       396  
    Non-cash amortization of acquired intangible assets     641       559  
Non-GAAP gross profit   $ 24,997     $ 19,534  
                 
    Gross margin     63 %     63 %
                 
Non-GAAP recurring revenue gross profit reconciliation                
                 
Recurring revenue gross profit   $ 20,535     $ 14,962  
                 
    Recurring revenue gross margin     71 %     67 %
Add back:                
    Non-cash stock-based compensation     288       182  
    Non-cash amortization of acquired intangible assets     631       547  
Non-GAAP recurring revenue gross profit   $ 21,454     $ 15,691  
                 
    Recurring revenue gross margin     74 %     71 %
                 
Non-GAAP operating expense reconciliation:                
                 
Operating expenses   $ 27,298     $ 20,686  
Subtract:                
    Non-cash stock-based compensation     (4,187 )     (1,896 )
    Non-cash amortization of acquired intangible assets     (418 )     (310 )
    Patent litigation and settlement costs     (37 )     (443 )
    Restructuring     (116 )     -  
Non-GAAP operating expenses   $ 22,540     $ 18,037  
                 
Non-GAAP operating income (loss) reconciliation:                
                 
Operating loss   $ (3,572 )   $ (2,107 )
Add back:                
    Non-cash stock-based compensation     4,817       2,292  
    Non-cash amortization of acquired intangible assets     1,059       869  
    Patent litigation and settlement costs     37       443  
    Restructuring     116       -  
Non-GAAP operating income   $ 2,457     $ 1,497  
                 
   
   
CALLIDUS SOFTWARE INC.  
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES  
(In thousands, except for percentages and per share data)  
(unaudited)  
   
    Three Months Ended  
    March 31,  
    2015     2014  
                 
Non-GAAP net income (loss) reconciliation:                
                 
Net loss   $ (4,043 )   $ (2,467 )
Add back:                
    Non-cash stock-based compensation     4,817       2,292  
    Non-cash amortization of acquired intangible assets     1,059       869  
    Patent litigation and settlement costs     37       443  
    Restructuring     116       -  
    Interest expense on convertible notes     -       169  
    Amortization of convertible note issuance cost     -       32  
Non-GAAP net income   $ 1,986     $ 1,338  
                 
                 
Non-GAAP net income (loss) per share reconciliation:                
                 
Net loss per basic and diluted share   $ (0.08 )   $ (0.05 )
Add back:                
    Non-cash stock-based compensation     0.10       0.05  
    Non-cash amortization of acquired intangible assets     0.02       0.02  
    Patent litigation and settlement costs     -       0.01  
    Restructuring     -       -  
    Interest expense on convertible notes     -       -  
    Amorization of convertible note issuance cost     -       -  
Non-GAAP net income per diluted share   $ 0.04     $ 0.03  
                 
                 
Basic and fully diluted shares reconciliation:                
                 
Basic shares     50,709       45,944  
Add back:                
    Weighted average effect of dilutive securities     1,746       3,751  
Diluted shares     52,455       49,695  
                 
 
 
CALLIDUS SOFTWARE INC.
FINANCIAL OUTLOOK
(unaudited)
(In thousands, except for percentages and per share data)
 

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 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
    June 30, 2015
    GAAP   Non-GAAP
         
Total revenue   $40,400 - $41,400   $40,400 - $41,400
Operating income (loss) (a)   ($3,000) - ($3,800)   $2,000 - $3,000
Net income (loss) per diluted share (c)   ($0.06) - ($0.08)   $0.03 - $0.05
         
         
    Twelve Months Ended
    December 31, 2015
    GAAP   Non-GAAP
         
Total revenue   $162,000 - $167,000   $162,000 - $167,000
Operating income (loss) (b)   ($5,500) - ($8,000)   $14,500 - $16,500
Net income (loss) per diluted share (c)   ($0.19) - ($0.23)   $0.21 - $0.25
         
(a)   Estimated non-GAAP amounts above for the three months ending June 30, 2015 reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $1.0 - $1.2 million, estimated stock-based compensation expense of approximately $4.0 - $4.3 million, patent litigation costs and restructuring of approximately $100 - $300 thousand.
     
(b)   Estimated non-GAAP amounts above for the twelve months ending December 31, 2015 reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $3.7 -$4.4 million, estimated stock-based compensation expense of approximately $16.5- $18.5 million, patent litigation and restructuring costs of approximately $0.3 - $1.0 million.
     
(c)   Non-GAAP fully diluted share count is between 56.8 million and 58.3 million. GAAP share count is between 54.8 million to 56.3 million.
     

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