SOURCE: Callidus Software Inc.

Callidus Software Inc.

May 03, 2016 16:05 ET

CallidusCloud Announces First Quarter Total Revenue of $48.4 Million

DUBLIN, CA--(Marketwired - May 3, 2016) - Callidus Software Inc. (NASDAQ: CALD)

  • Q1 SaaS Revenue Increases 38% to $34.5 Million
  • Q1 Non-GAAP Earnings per Share Increases 50% to $0.06
  • Operating Cash Flow of $6.1 Million

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, 2016.

"Our SaaS revenue growth accelerated in the first quarter off a higher base and was ahead of expectations. Our Non-GAAP EPS was also nicely ahead of expectations. We had strong cash collections taking our cash balance to an all-time record, and we had strong cash flow from operations. For the remainder of 2016, we will continue to focus on our perennial mantra of profitable growth," said Leslie Stretch, president and CEO of CallidusCloud.

Financial Highlights for the First Quarter 2016
Total reported revenue was $48.4 million for the first quarter, an increase of 22% and includes $1.0 million of revenue from the BridgeFront acquisition. Total recurring revenue was $37.6 million, which includes SaaS revenue of $34.5 million and maintenance revenue of $3.1 million. SaaS revenue increased 38% over the same quarter in the prior year, benefiting from the continued success in our Lead to Money suite and revenue from BridgeFront. Excluding the BridgeFront revenue, SaaS revenue increased 34% over the same quarter last year. Services and license revenue was $10.8 million, consisting of $10.6 million in services revenue, a 3% increase over prior year, and $0.2 million in license revenue. Normalized billings growth was 36% over last year. Cash and short-term investments were $101.9 million. Cash flow from operations for the quarter was $6.1 million, compared to cash flow from operations of $8.0 million in the same quarter of the prior year.

GAAP Performance

  • Recurring revenue gross margin was 74%, compared to 71% for the same quarter in the prior year.
  • Overall gross margin was 62%, compared to 60% for the same quarter in the prior year.
  • Operating loss was $4.6 million compared to $3.6 million for the same quarter in the prior year.
  • Net loss was $4.5 million, or ($0.08) on a per share basis, compared to net loss of $4.0 million, or ($0.08) on a per share basis 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 77%, compared to 74% for the same quarter in the prior year.
  • Overall gross margin was 66%, compared to 63% for the same quarter in the prior year.
  • Operating income was $3.3 million, compared to $2.5 million for the same quarter in the prior year.
  • Net income was $3.3 million, or $0.06 per fully diluted share, compared to $2.0 million, or $0.04 per fully diluted share, for the same quarter in the prior year.

Business Highlights for the First Quarter 2016

  • CallidusCloud announced a new Internet of Things platform at the company's London and Frankfurt stops of its C3 user conference in front of packed houses. The new platform will provide customers with an innovative way to connect millions of devices to their Lead to Money applications to sell faster and transform customer experience.
  • CallidusCloud also announced at its European C3 conferences a brand-new solution to optimize the onboarding and management of channel sales professionals, enabling businesses to grow channel revenues faster while reducing operating costs.
  • Leading research analyst, Gartner Inc., published its Magic Quadrant review of the Sales Performance Management market. For the third successive report CallidusCloud was positioned in the 'Leaders' quadrant.
  • CallidusCloud was selected as a finalist in three categories in the prestigious SIIA CODIE awards. The company's Litmos mobile learning solution is a finalist in the 'Best Education Cloud-based Solution', 'Best Health & Medical Information Solution' and 'Corporate/Workforce Learning Solution' categories.
  • CallidusCloud was again awarded a coveted spot on the CRM Watchlist. The 2016 CRM Watchlist was drawn from submissions by over 130 leading companies. The prestigious awards, compiled by 56 Group President Paul Greenberg, are reserved for only the companies making the biggest impact on the CRM market.

Financial Outlook for 2016 - Second Quarter and Full Year

For the second quarter of 2016, the company expects total revenue to be between $49.6 million and $50.6 million. GAAP operating loss is expected to be between $6.0 million and $7.1 million, with GAAP net loss per share between $0.11 and $0.13. Non-GAAP operating income is expected to be between $2.7 million and $3.7 million, with non-GAAP income per diluted share between $0.04 and $0.06.

For the full year of 2016, the company has revised revenue guidance to $206.0 million to $210.0 million. The revision reflects a decrease in professional services and license revenue. We are maintaining full-year SaaS revenue growth guidance. GAAP operating loss is expected to be between $15.0 million and $18.0 million, with GAAP net loss per share between $0.29 and $0.33. Non-GAAP operating income is expected to be between $17.0 million and $19.0 million, with non-GAAP income per diluted share between $0.25 and $0.29. 

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 first quarter results and outlook for the second quarter 2016 and full year 2016. 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: 866-324-2828 (International callers: 678-509-7525)
Passcode: 89383596
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. Approximately 4,700 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, impairment of intangible assets 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 litigation 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 these costs during our evaluation of our business performance.

Amortization of acquired intangible assets: We have excluded the effect of amortization 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 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 as well as expense related to earnouts 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 and other expenses, and patent litigation and settlement 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 Quarterly Report on Form 10-Q 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.

© 2016 Callidus Software Inc. All rights reserved. Callidus, Callidus Software, the Callidus Software logo, CallidusCloud, the CallidusCloud logo, 6FigureJobs, BridgeFront, Clicktools, iCentera, Lead to Money, LeadFormix, LeadRocket, Learnpass, Litmos, the Litmos logo, Love Your LMS, Portals for Mortals, Producer Pro, SalesGenius, Surve, Syncfrog, Thunderbridge, TrueComp, and ViewCentral 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 per share data)  
(unaudited)  
             
             
    Three Months Ended March 31,  
    2016     2015  
Revenue:                
  Recurring   $ 37,606     $ 28,893  
  Services and license     10,772       10,852  
    Total revenue     48,378       39,745  
Cost of revenue:                
  Recurring     9,962       8,358  
  Services and license     8,261       7,661  
    Total cost of revenue     18,223       16,019  
Gross profit     30,155       23,726  
                 
Operating expenses:                
  Sales and marketing     18,903       13,726  
  Research and development     7,242       6,038  
  General and administrative     8,255       7,418  
  Restructuring and other     316       116  
    Total operating expenses     34,716       27,298  
Operating loss     (4,561 )     (3,572 )
Interest income and other income (expense), net     225       (190 )
Interest expense     (43 )     (67 )
Loss before provision for income taxes     (4,379 )     (3,829 )
Provision for income taxes     156       214  
Net loss   $ (4,535 )   $ (4,043 )
Net loss per share                
  Basic and Diluted   $ (0.08 )   $ (0.08 )
                 
Weighted average shares used in computing net loss per share:                
  Basic and Diluted     56,690       50,709  
                   
                   
                   
CALLIDUS SOFTWARE INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
(unaudited)  
         
  March 31,   December 31,  
  2016   2015  
ASSETS  
Current assets:            
  Cash and cash equivalents $ 81,830   $ 77,232  
  Short-term investments   20,074     19,977  
  Accounts receivable, net   42,737     43,461  
  Prepaid and other current assets   10,888     11,385  
    Total current assets   155,529     152,055  
             
Property and equipment, net   23,921     20,540  
Goodwill   49,825     50,146  
Intangible assets, net   13,852     14,885  
Deposits and other assets   3,993     4,016  
    Total assets $ 247,120   $ 241,642  
             
   
LIABILITIES AND STOCKHOLDERS' EQUITY  
Current liabilities:            
  Accounts payable $ 3,442   $ 3,636  
  Accrued payroll and related expenses   9,322     12,510  
  Accrued expenses   13,392     11,017  
  Deferred revenue   78,301     74,644  
    Total current liabilities   104,457     101,807  
             
Deferred revenue, noncurrent   4,373     5,186  
Deferred income taxes, noncurrent   1,441     1,477  
Other noncurrent liabilities   6,074     4,371  
    Total liabilities   116,345     112,841  
             
Stockholders' equity:            
  Common stock   57     56  
  Additional paid-in capital   435,631     428,776  
  Treasury stock   (14,430 )   (14,430 )
  Accumulated other comprehensive loss   (2,082 )   (1,735 )
  Accumulated deficit   (288,401 )   (283,866 )
    Total stockholders' equity   130,775     128,801  
    Total liabilities and stockholders' equity $ 247,120   $ 241,642  
                 
                 
             
CALLIDUS SOFTWARE INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
(uanudited)  
             
    Three Months Ended March 31,  
    2016     2015  
Cash flows from operating activities:                
  Net loss   $ (4,535 )   $ (4,043 )
  Adjustments to reconcile net loss to net cash used in operating activities:                
    Depreciation expense     1,688       1,387  
    Amortization of intangible assets     1,360       1,288  
    Provision for doubtful accounts     529       94  
    Stock-based compensation     6,453       4,817  
    Deferred income taxes     71       (59 )
    Loss on foreign currency from marked-to-market derivative     78       -  
    Excess tax benefits from stock-based compensation     (21 )     -  
    Loss on disposal of property and equipment     -       6  
    Net amortization on investments     (45 )     5  
    Changes in operating assets and liabilities:                
      Accounts receivable     195       3,350  
      Prepaid and other current assets     437       (230 )
      Other noncurrent assets     (3 )     247  
      Accounts payable     (558 )     2,089  
      Accrued expenses and other liabilities     1,073       (781 )
      Accrued payroll and related expenses     (3,188 )     (939 )
      Accrued restructuring and other expenses     (266 )     -  
      Deferred revenue     2,844       772  
Net cash provided by operating activities     6,112       8,003  
                 
Cash flows from investing activities:                
  Purchases of investments     (3,700 )     -  
  Proceeds from maturities and sale of investments     3,600       -  
  Purchases of property and equipment (net)     (1,521 )     (7,063 )
  Purchases of intangible assets     (267 )     (234 )
Net cash (used in) investing activities     (1,888 )     (7,297 )
                 
Cash flows from financing activities:                
  Proceeds from follow-on offering, net of issuance costs     -       64,370  
  Proceeds from issuance of common stock     1,467       1,581  
  Restricted stock units acquired to settle employee withholding liability     (1,085 )     (1,959 )
  Excess tax benefits from stock-based compensation     21       -  
  Payment of consideration related to acquisitions     (104 )     (226 )
  Payment of principal under capital leases     -       (112 )
Net cash provided by financing activities     299       63,654  
Effect of exchange rates on cash and cash equivalents     75       (35 )
Net increase in cash and cash equivalents     4,598       64,325  
Cash and cash equivalents at beginning of period     77,232       34,200  
Cash and cash equivalents at end of period   $ 81,830     $ 98,525  
                 
                 
                 
CALLIDUS SOFTWARE INC.
GAAP TO NON-GAAP ADJUSTMENT SUMMARY
(In thousands)
(unaudited)
         
GAAP to Non-GAAP adjustments include stock-based compensation, amortization of acquired intangible assets, patent litigation and settlement costs and estimates, acquisition-related costs and restructuring and other expenses as follows:
 
    Three Months Ended
March 31,
    2016   2015
Cost of revenues:            
  Recurring   $ 1,164   $ 919
  Services and license     512     352
Operating expenses:            
  Sales and marketing     2,450     1,783
  Research and development     1,170     797
  General and administrative     2,230     2,062
  Restructuring and other     316     116
    Total   $ 7,842   $ 6,029
             
             
             
CALLIDUS SOFTWARE INC.  
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES  
(unaudited)  
(In thousands, except for percentages)  
             
    Three Months Ended  
    March 31,  
    2016     2015  
                 
Non-GAAP gross profit reconciliation                
                 
Gross profit   $ 30,155     $ 23,726  
                 
  Gross margin     62 %     60 %
Add back:                
  Non-cash stock-based compensation     1,021       630  
  Non-cash amortization of acquired intangible assets     654       641  
Non-GAAP gross profit   $ 31,830     $ 24,997  
                 
  Gross margin     66 %     63 %
                 
                 
Non-GAAP recurring revenue gross profit reconciliation                
                 
Recurring revenue gross profit   $ 27,644     $ 20,535  
                 
  Recurring revenue gross margin     74 %     71 %
Add back:                
  Non-cash stock-based compensation     509       288  
  Non-cash amortization of acquired intangible assets     654       631  
Non-GAAP recurring revenue gross profit   $ 28,807     $ 21,454  
                 
  Recurring revenue gross margin     77 %     74 %
                 
                 
Non-GAAP operating expense reconciliation:                
                 
Operating expenses   $ 34,716     $ 27,298  
  Operating expenses, as a % of total revenues     72 %     69 %
Subtract:                
  Non-cash stock-based compensation     (5,431 )     (4,187 )
  Non-cash amortization of acquired intangible assets     (378 )     (418 )
  Patent litigation and settlement costs     (28 )     (37 )
  Acquisition costs     (13 )     -  
  Restructuring     (316 )     (116 )
Non-GAAP operating expenses   $ 28,550     $ 22,540  
  Non-GAAP Operating expenses, as a % of total revenues     59 %     57 %
                   
                   
                   
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,  
    2016     2015  
Non-GAAP operating income (loss) reconciliation:                
                 
Operating loss   $ (4,561 )   $ (3,572 )
  Operating loss, as a % of total revenues     (9 )%     (9 )%
Add back:                
  Non-cash stock-based compensation     6,452       4,817  
  Non-cash amortization of acquired intangible assets     1,032       1,059  
  Patent litigation and settlement costs     28       37  
  Acquisition costs     13       -  
  Restructuring     316       116  
Non-GAAP operating income   $ 3,280     $ 2,457  
  Non-GAAP Operating income (loss), as a % of total revenues     7 %     6 %
                 
                 
Non-GAAP net income (loss) reconciliation:                
                 
Net loss   $ (4,535 )   $ (4,043 )
  Net loss, as a % of total revenues     (9 )%     (10 )%
Add back:                
  Non-cash stock-based compensation     6,452       4,817  
  Non-cash amortization of acquired intangible assets     1,032       1,059  
  Patent litigation and settlement costs     28       37  
  Acquisition costs     13       -  
  Restructuring     316       116  
Non-GAAP net income   $ 3,306     $ 1,986  
  Non-GAAP Net income (loss), as a % of total revenues     7 %     5 %
                 
                 
Non-GAAP net income (loss) per share reconciliation:                
                 
Net loss per basic and diluted share   $ (0.08 )   $ (0.08 )
Add back:                
  Non-cash stock-based compensation     0.11       0.10  
  Non-cash amortization of acquired intangible assets     0.02       0.02  
  Patent litigation and settlement costs     -       -  
  Acquisition costs     -       -  
  Restructuring     0.01       -  
Non-GAAP net income per diluted share   $ 0.06     $ 0.04  
                 
                 
Basic and fully diluted shares reconciliation:                
                 
Basic shares     56,690       50,709  
Add back:                
  Weighted average effect of dilutive securities     1,401       1,746  
Diluted shares     58,091       52,455  
                 
                 
                 
CALLIDUS SOFTWARE INC.
FINANCIAL OUTLOOK
(unaudited)
(In thousands, except 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, 2016
    GAAP   Non-GAAP
         
Total revenue   $49,600 - $50,600   $49,600 - $50,600
Operating income (loss) (a)   ($6,020) - ($7,100)   $2,700 - $3,700
Net income (loss) per diluted share (c)   ($0.11) - ($0.13)   $0.04 - $0.06
         
         
         
    Twelve Months Ended
    December 31, 2016
    GAAP   Non-GAAP
         
Total revenue   $206,000 - $210,000   $206,000 - $210,000
Operating income (loss) (b)   ($15,000) - ($18,000)   $17,000 - $19,000
Net income (loss) per diluted share (c)   ($0.29) - ($0.33)   $0.25 - $0.29
         
(a)   Estimated non-GAAP amounts above for the three months ending June 30, 2016 reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $1.4 - $1.6 million, estimated stock-based compensation expense of approximately $7.6 - $7.9 million, patent litigation costs and restructuring and other expenses of approximately $0.2 - $0.6 million, and approximately $0.1 million in expense related to BridgeFront acquisition earnout.
     
(b)   Estimated non-GAAP amounts above for the twelve months ending December 31, 2016 reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $5.0 - $5.5 million, estimated stock-based compensation expense of approximately $27.0 - $28.0 million, patent litigation costs, restructuring and other expenses of approximately $1.0 - $1.5 million, and approximately $0.3 million in expense related to BridgeFront acquisition earnout.
     
(c)   Non-GAAP fully diluted share count is between 58.5 million and 60.0 million. GAAP share count is between 57.0 million and 58.5 million.
     

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