SOURCE: Chordiant Software, Inc.

April 29, 2005 19:00 ET

Chordiant Software Announces Results for the First Quarter of Fiscal Year 2005 Ended December 31, 2004

CUPERTINO, CA -- (MARKET WIRE) -- April 29, 2005 -- Chordiant Software, Inc. (NASDAQ: CHRDE) today announced financial results for the first quarter of fiscal year (FY) 2005 ended December 31, 2004, and filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (SEC).

First Quarter FY 2005 Results

Total revenues for the first quarter of FY 2005 were $21.7 million, which compares to revenues of $19.6 million reported for the three months ended December 31, 2003. License revenues for the first quarter of FY 2005 were $8.8 million, compared to $9.2 million reported for the three months ended December 31, 2003. Service revenues for the first quarter of FY 2005 were $12.8 million, compared to $10.4 million reported for the three months ended December 31, 2003. In a press release dated February 15, 2005, Chordiant commented that it expected its revenue for the first quarter to be within its previously announced guidance range of $22 million to $24 million. In April 2005, a customer increased the scope of an implementation project. As a result, the percentage-of-completion method for recognizing revenue required a deferral of certain revenues that the Company had previously anticipated. The deferral became necessary as the Company had not yet filed its Form 10-Q for the first quarter of fiscal year 2005. Deferred revenue totaled $20.2 million as of December 31, 2004. Chordiant had $53.1 million in cash and cash equivalents, short-term restricted cash, and short-term investments at December 31, 2004.

Chordiant posted a U.S. GAAP (Generally Accepted Accounting Principles) net loss of $4.1 million, or $0.06 per share loss for the first quarter of FY 2005 ended December 31, 2004, compared to a GAAP net loss of $3.9 million, or $0.06 per share loss for the three months ended December 31, 2003. Chordiant reported a first quarter FY 2005 non-GAAP financial measure loss of $2.3 million (which excludes stock-based compensation, amortization of intangible assets, purchased in-process research and development and restructuring expense), or a non-GAAP loss of $0.03 per share, compared to a non-GAAP net income (which excludes, stock-based compensation and amortization of intangible assets) of $1.3 million, or $0.02 non-GAAP net income per share for the three months ended December 31, 2003.

Non-GAAP Financial Measurements

Chordiant believes that its non-GAAP financial measure results provide useful information to investors because they reveal results excluding non-recurring expenses that Chordiant believes are not indicative of its on-going operations. The non-GAAP financial measure information is provided as a complement to results provided in accordance with GAAP and should not be considered superior to or as a substitute for GAAP measures.

Customer Success

The Company indicated that during the first quarter of FY 2005 ended December 31, 2004, it had completed significant transactions with Barclays Group; Capital One Services, Inc.; a leading retail organization in the United Kingdom; and one of Germany's largest insurance companies.

KiQ Limited Acquisition

In late December, 2004, Chordiant completed its strategic acquisition of KiQ Limited, a privately held United Kingdom company. KiQ provided Chordiant with a decision management system that advances the state of analytics by exploiting the power of predictive data mining, analytical modeling, strategy formulation into real-time decision management and execution. The acquisition resulted in a "purchased in-process research and development" charge of approximately $1.9 million in the first quarter of FY 2005 ended December 31, 2004.

About Chordiant Software, Inc.

Chordiant solutions automate and manage operational business processes for leading service-driven global organizations with a focus on retail finance and telecommunications.

Chordiant orchestrates the unique processes of an organization from the point of customer interaction, through the front and back offices to multiple transactional systems, corporate applications and data stores. Our solutions integrate existing infrastructure to orchestrate the assembly, enhancement and delivery of optimal role based business processes to the appropriate channels. Business value is realized through improved employee productivity, savings in operational costs, and increased business adaptability.

Headquartered in Cupertino, California, Chordiant maintains offices in Boston; Chicago; Mahwah, N.J.; Manchester, N.H.; New York City; London; Paris; Amsterdam; and Munich.

Chordiant and the Chordiant logo are registered trademarks of Chordiant Software, Inc. All other trademarks and registered trademarks are the properties of their respective owners.

                        Chordiant Software, Inc.
       Unaudited Condensed Consolidated Statements of Operations
                (in thousands, except per share amounts)

                                                     Three months ended
                                                        December 31,
                                                     2004          2003
                                                  ----------    ----------
Revenues:
  License                                         $    8,842    $    9,248
  Service                                             12,835        10,352
                                                  ----------    ----------
       Total revenues                                 21,677        19,600

Cost of revenues:
  License                                                166           574
  Service                                              7,503         6,237
  Stock-based compensation                               (56)          676
  Amortization of intangible assets                      131           794
                                                  ----------    ----------
       Total cost of revenues                          7,744         8,281

Gross profit                                          13,933        11,319
                                                  ----------    ----------

Operating expenses:
  Sales and marketing                                  7,215         5,695
  Research and development                             4,865         4,176
  General and administrative                           3,912         1,291
  Stock-based compensation                              (105)        2,671
  Amortization of intangible assets                       24            96
  Purchased in-process research and development        1,940             -
  Restructuring expense                                 (123)        1,028
                                                  ----------    ----------
       Total operating expenses                       17,728        14,957
                                                  ----------    ----------

Loss from operations                                  (3,795)       (3,638)
Interest income, net                                     210            17
Other income (expense), net                             (397)          141
                                                  ----------    ----------
Net loss before income taxes                          (3,982)       (3,480)

Provision for income taxes                                80           457

                                                  ----------    ----------
Net loss                                          $   (4,062)   $   (3,937)
                                                  ==========    ==========
Other comprehensive income:
  Foreign currency translation gain                      638         1,135
                                                  ----------    ----------
Comprehensive loss                                $   (3,424)   $   (2,802)
                                                  ==========    ==========
Net loss per share:
  Basic and diluted                               $    (0.06)   $    (0.06)
                                                  ==========    ==========
  Shares used in per share calculation:               72,223        61,560
                                                  ==========    ==========

Supplemental information[1]:

Non-GAAP financial measures and reconciliation:
  Net loss                                          $ (4,062)   $   (3,937)
  Less: Stock-based compensation                        (161)        3,347
  Less: Amortization of intangible assets                155           890
  Less: Purchased in-process research and
   development                                         1,940             -
  Less: Restructuring expense                           (123)        1,028
                                                  ----------    ----------
Pro forma net income (loss):                      $   (2,251)   $    1,328
                                                  ==========    ==========

Basic and diluted pro forma net income (loss)
 per share:                                       $    (0.03)   $     0.02
                                                  ==========    ==========
  Shares used in per share calculation [2]:
                                         Basic        72,223        61,560
                                                  ==========    ==========
                                         Diluted      72,223        69,442
                                                  ==========    ==========

[1] The accompanying supplemental pro forma financial information
    represents a non-GAAP financial measure.  A "non-GAAP financial
    measure" is defined as a numerical measure of a company's financial
    performance, financial position or cash flows that excludes (or
    includes) amounts that are included in (or excluded from) the most
    directly comparable measure calculated and presented in accordance
    with GAAP in the company's financial statements.  Non-GAAP financial
    measures of net income or net loss is used by investors and analysts
    of Chordiant Software, Inc. the "Company") as an alternative to GAAP
    measures when evaluating the Company's performance in comparison to
    other companies.  The Company's management believes that the
    presentation of a non-GAAP financial measure of net income or net
    loss, excluding purchased in-process research and development,
    amortization of deferred stock-based compensation, amortization of
    intangible assets and restructuring expenses, provide useful
    information regarding the Company's financial performance and earnings
    potential by calculating and quantifying the effect of certain charges
    of net income or net loss per share calculated in accordance with GAAP
    and gives investors and analysts insight into profitability of the
    Company's operating business.  Management also believes that the
    presentation of the non-GAAP financial measures is consistent with its
    past practice, as well as industry practice in general, and will enable
    investors and analysts to compare current non-GAAP measures with
    non-GAAP measures presented in prior periods.  The above non-GAAP
    financial information may not be comparable to similarly titled
    measures used by other companies and should not be considered in
    isolation or as a substitute for measures of performance prepared in
    accordance with GAAP.

[2] Diluted net loss per share for the three months ended December 31,
    2004, is computed excluding total potential outstanding common shares
    of 14,199 as their effect is anti-dilutive.


                          Chordiant Software, Inc.
                 Unaudited Condensed Consolidated Balance Sheets
                                (in thousands)

                                                 December 31, September 30,
                                                     2004        2004
                                                   ---------   ---------
ASSETS
Current Assets:
     Cash and cash equivalents                     $  47,287   $  55,748
     Marketable securities                             4,000       4,000
     Restricted cash                                   1,780         279
     Accounts receivable, net                         17,928      20,161
     Prepaid expenses and other current assets         3,841       3,097
                                                   ---------   ---------
        Total current assets                          74,836      83,285

Restricted cash                                          558       2,057
Property and equipment, net                            3,172       3,237
Goodwill                                              32,028      24,874
Intangible assets, net                                 6,178         244
Other assets                                           2,419       1,643
                                                   ---------   ---------
        Total assets                               $ 119,191   $ 115,340
                                                   =========   =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Accounts payable                              $   6,656   $   6,394
     Accrued expenses                                 13,981      11,681
     Deferred revenue                                 18,582      18,459
     Current portion of capital lease
      obligations                                        201         191
                                                   ---------   ---------
        Total current liabilities                     39,420      36,725

Deferred revenue, long-term                            1,622       2,122
Long-term portion of capital lease obligations           257         317
                                                   ---------   ---------
        Total liabilities                             41,299      39,164
                                                   ---------   ---------

     Common stock                                         77          72
     Additional paid-in capital                      271,890     262,703
     Deferred stock-based compensation                (4,391)       (339)
     Accumulated deficit                            (193,411)   (189,349)
     Accumulated other comprehensive income            3,727       3,089
                                                   ---------   ---------
        Total stockholders' equity                    77,892      76,176
                                                   ---------   ---------
      Total liabilities and stockholders' equity   $ 119,191   $ 115,340
                                                   =========   =========

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