PLEASANTON, CA--(Marketwire - Aug 2, 2012) -  CallidusCloud^® (NASDAQ: CALD), the leader in cloud based solutions for sales effectiveness, today announced financial results for the second quarter ended June 30, 2012.

"I am pleased with our performance in Q2. We had record recurring revenues, strong SaaS billings and a record number of new customers. Our Commissions business performed stronger than ever with deals signed in North America, Colombia, the UAE, and Russia. We saw demand across multiple industries with particular strength in insurance and telecommunications. The Learning, CPQ and Marketing Automation businesses all contributed to a great quarter," said Leslie Stretch, President and CEO of CallidusCloud.

Financial Highlights for the Second Quarter 2012

• Total revenue was $23.8 million for the second quarter, representing an increase of 17% compared to the same quarter last year. Total recurring revenues, which include SaaS revenues and maintenance and support, were $18.0 million, up 17% compared to the second quarter of 2011. SaaS revenues of $14.0 million were up 30%, benefitting by $740,000 from an early customer acceptance, while maintenance and support revenues of $4.0 million were down 13% as compared to the second quarter of 2011. Service and other revenues of $5.8 million were up 15% as compared to the same quarter of 2011.
• Total GAAP gross margin was 47% for the second quarter up from 39% in the same quarter in 2011.
• Non-GAAP gross margin continued at its quarterly record level of 53% for the second quarter of 2012, up from 46% for the second quarter of 2011. Non-GAAP gross margin for the second quarter of 2012 excludes $1.0 million of stock-based compensation expense and $526,000 of amortization of acquired intangibles.
• Second quarter 2012 GAAP recurring revenue gross margin was 56% up from 44% for the second quarter of 2011. Second quarter non-GAAP recurring revenue gross margin, which excludes $383,000 of stock-based compensation and $488,000 of amortization of acquired intangibles, was 61%, up from 52% for the second quarter of 2011.
• GAAP net loss was $5.4 million, or ($0.15) per share, for the second quarter of 2012, which included $4.3 million of stock-based compensation expense, a benefit of $1.8 million for an acquisition-related purchase adjustment, $837,000 of convertible note related interest and amortization expense, $785,000 of amortization of acquired intangible assets, $267,000 of acquisition-related expense and $179,000 of restructuring expense and other. This compares to a GAAP net loss of $4.7 million, or ($0.14) per share, for the second quarter of 2011, which included $3.7 million of stock-based compensation expense, $452,000 of convertible note related expense items, $278,000 of patent litigation cost, $255,000 of amortization of acquired intangible assets, and $237,000 of acquisition related expense.
• Non-GAAP net loss was ($909,000), or ($0.03) per fully diluted share, for the quarter, compared to non-GAAP net income of $165,000, for the same period last year excluding the items identified above.

Business Highlights for the Second Quarter 2012

• Acquired 6FigureJobs, a premier executive career community and job board. The acquisition extends CallidusCloud's Hiring Cloud suite into a comprehensive sales and executive focused talent recruitment solution.
  
  
• Alliances development including joining Salesforce.com's ISV Force program. This program incentivizes Salesforce.com's end users to partner with CallidusCloud apps across their business beginning with CallidusCloud CPQ from the Selling Cloud and CallidusCloud Litmos Mobile Learning from the Learning Cloud.
  
  
• The CallidusCloud® Sales Effectiveness suite was selected as a finalist for the prestigious International Business Awards -- The Stevies in the "Best Cloud Application/Service", "Best Human Capital Management Solution", and "Best Financial Management Solution" categories.
  
  
• CallidusCloud hosted C3 -- the largest Sales Performance and Effectiveness conference of its kind in May 2012 -- where it announced the launch of its gamification solution. This sales engagement solution uses a reward and scoring system to drive performance-improving behaviors and represents a significant initiative in the SPM space.
  
  

Financial Outlook
Total revenue for the third quarter of 2012 is expected to be between $22.6 million and $23.6 million. For the full year 2012 we expect total revenues to be between $94.0 million and $95.5 million. GAAP operating expenses are expected to be between $18.6 million and $19.6 million in the third quarter of 2012, which includes stock-based compensation expense of approximately $3.7 million, amortization of acquired intangibles of $800,000 and $500,000 of acquisition related costs and legal costs to defend our intellectual property.

Conference Call

A conference call to discuss the second quarter results and outlook is scheduled for 1:30 p.m. Pacific Daylight Time (PDT) today. The conference call will be available via live webcast at the Investor Relations section of CallidusCloud's website.

Webcast site: http://www.media-server.com/m/acs/899ec808f0b545f52b65d9970fd999be 
Dial-in number: 800-573-4842 (International callers: 617-224-4327)
Passcode: 53540559

Replay: A webcast replay will be available after 6:30 p.m. PT on August 2, 2012 through August 10, 2012. The webcast replay will be available at the Investor Relations section of our website under Calendar of Events.

Note: (1) Billings is defined as revenue plus the change in quarterly deferred revenue.

About Callidus Software
Callidus Software Inc. (NASDAQ: CALD) is the market and technology leader in sales effectiveness cloud computing. Our customers gain a competitive advantage by maximizing sales cost efficiencies and driving improvements in sales effectiveness. CallidusCloud's award-winning multi-tenant SaaS applications set the standard for performance management of a company's sales force and channel partners. Over 2.5 million users rely on our solutions to power their performance. 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 third quarter and full year 2012 revenues, operating expenses, stock-based compensation expense and amortization of acquired intangibles expenses reflect management's best judgment based on factors currently known and involve risks and uncertainties. These risks and uncertainties include, but are not limited to, potential disruption of customer purchase decisions resulting from global economic conditions, timing and size of orders, potential material fluctuations in financial results and future growth rates, decreases in customer spending, uncertainty regarding purchasing trends in the SPM market, customer cancellations or non-renewal of maintenance contracts or on-demand services, our potential inability to manage effectively any growth we experience, uncertainty regarding the demand for and profitability of our on-demand services, increased competition or new entrants in the marketplace, and other risks detailed in Callidus' reports filed with the Securities and Exchange Commission (SEC), including its Form 10-K for 2011 and its first quarter 2012 Form 10-Q 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

Callidus 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 and non-GAAP net loss per share. Callidus uses non-GAAP measures internally in analyzing its financial results and believes that they are useful to investors, as a supplement to GAAP measures, in evaluating Callidus' operating performance. Callidus believes that the use of these non-GAAP measures provides additional insight for investors to use in evaluation of ongoing operating results and trends and in comparing its financial measures with other companies in Callidus' industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial measures exclude stock-based compensation expense, a benefit from a purchase acquisition-related adjustment, restructuring expense, acquisition related expense, patent litigation 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.

©2012. 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, LeadFormix, Litmos, the Litmos logo, 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								Six months ended
				June 30,								June 30,
				2012				2011				2012				2011
Revenues:
	Recurring			$	18,027			$	15,350			$	34,913			$	30,052
	Services and other				5,754				5,005				10,881				10,114
		Total revenues			23,781				20,355				45,794				40,166
Cost of revenues:
	Recurring (1) (2)				7,902				8,537				15,460				16,497
	Services and other (1) (2)				4,815				3,978				9,213				8,015
		Total cost of revenues			12,717				12,515				24,673				24,512
Gross profit					11,064				7,840				21,121				15,654
Operating expenses:
	Sales and marketing (1) (2)				8,285				4,856				15,196				9,050
	Research and development (1)				4,067				2,756				8,076				5,270
	General and administrative (1) (2) (3) (4)				4,849				4,353				9,854				7,827
	Acquisition-related adjustment				(1,837	)			-				(1,837	)			-
	Restructuring				172				(2	)			614				37
		Total operating expenses			15,536				11,963				31,903				22,184
Operating loss					(4,472	)			(4,123	)			(10,782	)			(6,530	)
Interest and other income (expense), net (5) (6)					(944	)			(491	)			(1,739	)			(442	)
Loss before provision (benefit) for income taxes					(5,416	)			(4,614	)			(12,521	)			(6,972	)
Provision (benefit) for income taxes (7)					17				119				(105	)			199
Net loss				$	(5,433	)		$	(4,733	)		$	(12,416	)		$	(7,171	)
Basic and diluted net loss per share				$	(0.15	)		$	(0.14	)		$	(0.36	)		$	(0.22	)
Shares used in basic and diluted per share computation					35,235				33,048				34,674				33,079
(1) Stock-based compensation included in amounts above by category:
	Cost of recurring			$	383			$	1,037			$	929			$	1,791
	Cost of services and other				573				362				1,050				685
	Sales and marketing				1,165				452				1,940				820
	Research and development				485				363				899				724
	General and administrative				1,687				1,464				2,677				2,063
		Total stock-based compensation			4,293				3,678				7,495				6,083
(2) Acquisition, acquired and settlement related asset amortization
	Cost of recurring				488				86				974				124
	Cost of services and other				38				-				44				-
	Sales and marketing				202				154				413				297
	General and administrative				57				15				120				24
		Total acquisition related asset amortization			785				255				1,551				445
(3) Acquisition-related expense					267				237				637				383
(4) Patent litigation cost					7				278				620				578
(5) Interest expense on convertible notes					703				392				1,406				392
(6) Amortization of convertible note issuance cost					134				60				268				60
(7) Tax benefit from release of valuation allowance					-				-				(224	)			-

CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
				June 30,				December 31,
Assets				2012				2011
Current assets:
	Cash and cash equivalents			$	5,922			$	17,383
	Short-term investments				25,613				35,406
	Accounts receivable, net				28,710				21,778
	Deferred income taxes				110				110
	Prepaid and other current assets				7,168				5,831
		Total current assets			67,523				80,508
Property and equipment, net					6,962				6,772
Goodwill					30,916				24,245
Intangible assets, net					23,403				17,769
Deferred income taxes, noncurrent					206				206
Deposits and other assets					3,388				3,936
		Total assets		$	132,398			$	133,436
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable			$	4,553			$	3,515
	Accrued payroll and related expenses				3,899				4,278
	Accrued expenses				12,542				12,272
	Deferred income taxes				596				596
	Deferred revenue				32,663				30,211
	Capital lease obligations				1,229				1,196
		Total current liabilities			55,482				52,068
Deferred revenue, noncurrent					3,216				4,257
Deferred income taxes, noncurrent					269				197
Other liabilities					1,976				2,413
Capital lease obligations, noncurrent					306				915
Convertible notes					59,215				59,215
		Total liabilities			120,464				119,065
Stockholders' equity:
	Common stock				34				33
	Additional paid-in capital				248,758				238,798
	Treasury stock				(14,430	)			(14,430	)
	Accumulated other comprehensive income				207				189
	Accumulated deficit				(222,635	)			(210,219	)
		Total stockholders' equity			11,934				14,371
		Total liabilities and stockholders' equity		$	132,398			$	133,436

CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
					Six months ended, June 30,
					2012				2011
Cash flows from operating activities:
	Net loss				$	(12,416	)		$	(7,171	)
	Adjustments to reconcile net loss to net cash provided by (used in)
		operating activities:
		Depreciation expense				1,490				1,587
		Amortization of intangible assets				2,558				1,394
		Provision for doubtful accounts and service remediation reserves				52				47
		Stock-based compensation				7,495				6,040
		Stock-based compensation related to acquisition				-				42
		Release of valuation allowance				(224	)			-
		Gain on disposal of property				(5	)			-
		Amortization of convertible note issuance cost				268				60
		Net amortization on investments				231				173
		Acquisition-related adjustment				(1,837	)			-
			Changes in operating assets and liabilities:
			Accounts receivable			(6,712	)			1,623
			Prepaid and other current assets			(637	)			2,064
			Other assets			548				(3,172	)
			Accounts payable			118				(1,161	)
			Accrued expenses			(374	)			931
			Accrued payroll and related expenses			(379	)			81
			Accrued restructuring			230				(209	)
			Deferred revenue			1,270				(848	)
			Deferred income taxes			72				77
Net cash provided by (used in) operating activities						(8,252	)			1,558
	Cash flows from investing activities:
	Purchases of investments					(16,536	)			(33,569	)
	Proceeds from maturities and sale of investments					26,111				10,063
	Purchases of property and equipment					(1,714	)			(982	)
	Proceeds from disposal of property and equipment					5				-
	Purchases of intangible assets					(4,485	)			(1,128	)
	Acquisitions, net of cash acquired					(7,721	)			(5,860	)
Net cash used in investing activities						(4,340	)			(31,476	)
	Cash flows from financing activities:
	Proceeds from issuance of common stock					4,295				4,516
	Repurchase of stock					-				(14,430	)
	Repurchase of common stock from employees for payment of taxes onvesting of restricted stock units					(1,829	)			(681	)
	Payment of consideration related to acquisition					(723	)			(600	)
	Proceeds from issuance of convertible notes, net of issuance costs					-				77,369
	Repayment of debt assumed through acquisition					(30	)			-
	Payment of principal under capital lease					(587	)			(601	)
Net cash provided by financing activities						1,126				65,573
Effect of exchange rates on cash and cash equivalents						5				37
Net increase (decrease) in cash and cash equivalents						(11,461	)			35,692
Cash and cash equivalents at beginning of period						17,383				12,830
Cash and cash equivalents at end of period					$	5,922			$	48,522

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,
				2012				2011				2012				2011
Non-GAAP gross profit reconciliation
Gross profit				$	11,064			$	7,840			$	21,121			$	15,654
		Profit margin, as a % of total revenues			47	%			39	%			46	%			39	%
Add back:
		Non-cash stock-based compensation			956				1,399				1,979				2,476
		Non-cash amortization of acquired intangible assets			526				86				1,018				124
Non-GAAP gross profit				$	12,546			$	9,325			$	24,118			$	18,254
		Profit margin, as a % of total revenues			53	%			46	%			53	%			45	%
Non-GAAP recurring revenue gross profit reconciliation
Recurring revenue gross profit				$	10,125			$	6,813			$	19,453			$	13,555
		Recurring revenue profit margin, as a % of recurring revenues			56	%			44	%			56	%			45	%
Add back:
		Non-cash stock-based compensation			383				1,037				929				1,791
		Non-cash amortization of acquired intangible assets			488				86				974				124
Non-GAAP Recurring revenue gross profit				$	10,996			$	7,936			$	21,356			$	15,470
		Recurring revenue profit margin, as a % of recurring revenues			61	%			52	%			61	%			51	%
Non-GAAP operating expense reconciliation:
Operating expenses				$	15,536			$	11,963			$	31,903			$	22,184
		Operating expenses, as a % of total revenues			65	%			59	%			70	%			55	%
Add back:
		Non-cash stock-based compensation			(3,337	)			(2,279	)			(5,516	)			(3,607	)
		Non-cash amortization of acquired intangible assets			(259	)			(169	)			(533	)			(321	)
		Acquisition-related expense			(267	)			(237	)			(637	)			(383	)
		Patent litigation cost			(7	)			(278	)			(620	)			(578	)
		Acquisition-related adjustment			1,837				-				1,837				-
		Restructuring			(172	)			2				(614	)			(37	)
Non-GAAP Operating Expenses				$	13,331			$	9,002			$	25,820			$	17,258
		Non-GAAP Operating expenses, as a % of total revenues			56	%			44	%			56	%			43	%
Non-GAAP operating income (loss) reconciliation:
Operating loss				$	(4,472	)		$	(4,123	)		$	(10,782	)		$	(6,530	)
		Operating loss, as a % of total revenues			-19	%			-20	%			-24	%			-16	%
Add back:
		Non-cash stock-based compensation			4,293				3,678				7,495				6,083
		Non-cash amortization of acquired intangible assets			785				255				1,551				445
		Acquisition-related expense			267				237				637				383
		Patent litigation cost			7				278				620				578
		Acquisition-related adjustment			(1,837	)			-				(1,837	)			-
		Restructuring			172				(2	)			614				37
Non-GAAP Operating income (loss)				$	(785	)		$	323			$	(1,702	)		$	996
		Non-GAAP Operating income (loss), as a % of total revenues			-3	%			2	%			-4	%			2	%

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,
				2012				2011				2012				2011
Non-GAAP net loss reconciliation:
Net loss				$	(5,433	)		$	(4,733	)		$	(12,416	)		$	(7,171	)
		Net loss, as a % of total revenues			-23	%			-23	%			-27	%			-18	%
Add back:
		Non-cash stock-based compensation			4,293				3,678				7,495				6,083
		Non-cash amortization of acquired intangible assets			785				255				1,551				445
		Acquisition related expenses			267				237				637				383
		Patent litigation costs			7				278				620				578
		Acquisition-related adjustment			(1,837	)			-				(1,837	)			-
		Restructuring			172				(2	)			614				37
		Interest expense on convertible notes			703				392				1,406				392
		Amortization of convertible note issuance cost			134				60				268				60
		Tax benefit from release of valuation allowance			-				-				(224	)			-
Non-GAAP Net income (loss)				$	(909	)		$	165			$	(1,886	)		$	807
		Non-GAAP Net income (loss), as a % of total revenues			-4	%			1	%			-4	%			2	%
Non-GAAP net income (loss) per share reconciliation:
Net loss per basic and diluted share				$	(0.15	)		$	(0.14	)		$	(0.36	)		$	(0.22	)
Add back:
		Non-cash stock-based compensation			0.12				0.11				0.22				0.18
		Non-cash amortization of acquired intangible assets			0.02				0.01				0.04				0.01
		Acquisition related expenses			0.01				-				0.02				0.01
		Patent litigation costs			-				0.01				0.02				0.02
		Acquisition-related adjustment			(0.05	)			-				(0.05	)			-
		Restructuring			-				-				0.02				-
		Interest expense on convertible notes			0.02				0.01				0.04				0.02
		Amortization of convertible note issuance cost			-				-				0.01				-
		Tax benefit from release of valuation allowance			-				-				(0.01	)			-
Non-GAAP net income (loss) per basic share				$	(0.03	)		$	-			$	(0.05	)		$	0.02
Non-GAAP net income (loss) per diluted share				$	(0.03	)		$	-			$	(0.05	)		$	0.02
Basic and fully diluted shares reconciliation:
Basic shares					35,235				33,048				34,674				33,079
Add back:
		Weighted average effect of dilutive securities			-				15,797				-				15,508
Diluted shares					35,235				48,845				34,674				48,587