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CallidusCloud Reports Record Q1 Revenue of $31.0 Million, a 21% Year-Over-Year Increase

Generates $5.5 Million in Cash From Operations in First Quarter

PLEASANTON, CA -- (Marketwired) -- 05/01/14 -- Callidus Software Inc. (NASDAQ: CALD), a leading provider of Cloud sales and marketing effectiveness software, today announced financial results for the first quarter ended March 31, 2014.

"Q1 was a great start to 2014. We had record all time revenue, our margins expanded and we saw another consecutive quarter of Non-GAAP net income," said Leslie Stretch, President and CEO of CallidusCloud. "We had strong new business wins driven by customers calling time on expensive point solutions. The Lead to Money cloud is proving to be a compelling option for companies who want integrated marketing and sales automation."

Financial Highlights for the First Quarter 2014

Total revenue was $31.0 million for the first quarter, an increase of 21%. Total recurring revenue was $22.3 million, which includes SaaS revenue of $18.2 million and maintenance revenue of $4.1 million. SaaS revenue increased 15% over the same quarter in the prior year. Services and other revenue of $8.7 million increased 47% compared to the same quarter in the prior year.

GAAP Performance

  • Recurring revenue gross margin was 67% compared to 62% in the same quarter in the prior year.

  • Operating loss was $2.1 million compared to $5.6 million in the same quarter in the prior year.

  • Net loss was $2.5 million, or ($0.05) per share, compared to a net loss of $6.6 million, or ($0.18) per share, for the same quarter in the prior year.

  • Cash generated from operations was $5.5 million in the current quarter compared to $2.8 million cash used in operating activities in the same quarter in the prior year.

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

  • Recurring revenue gross margin was 71% compared to 66% for the same quarter in the prior year.

  • Operating income was $1.5 million compared to an operating loss of $0.7 million for the same quarter in the prior year.

  • Net income was $1.3 million, or $0.03 per fully diluted share, compared to a net loss of $0.8 million, or ($0.02) per fully diluted share for the same quarter in the prior year.

Business Highlights for the First Quarter 2014

  • CallidusCloud acquired LeadRocket, Inc., a digital marketing and social engagement platform. This technology acquisition puts the power of marketing automation in the pocket of every sales professional. LeadRocket® will allow users to access campaigns from CallidusCloud's marketing automation for one to one conversations with their prospects across multiple channels.

  • CallidusCloud's partner ecosystem expanded with 25 new alliance partners and resellers including Docusign, Protiviti, and WalkMe.

  • CallidusCloud sponsored key events including the Docusign Momentum in San Francisco, RevTalks in San Francisco, The Big Rethink hosted by The Economist in New York, Forrester's Sales Enablement Forum in Phoenix, Learning Solutions Conference in Orlando and the Technology for Marketing and Advertising in London.

Financial Outlook for 2014 - Second Quarter and Full Year

For the second quarter of 2014, the Company expects total revenue to be between $30.4 million and $31.4 million. GAAP operating loss is expected to be between $2.7 million and $3.4 million with ($0.05) to ($0.08) GAAP loss per share. Non-GAAP operating income is expected to be between $1.0 million and $1.5 million with non-GAAP fully diluted earnings per share between $0.01 and $0.03.

For the full year of 2014, the Company expects total revenue to be between $127.5 million and $132.5 million, an increase to previous guidance of $126.0 million to $131.0 million. GAAP operating loss is expected to be between $8.3 million and $11.3 million with ($0.23) to ($0.28) GAAP loss per share. Non-GAAP operating income is expected to be between $7.0 million and $9.0 million with non-GAAP fully diluted earnings per share between $0.12 and $0.16.

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 2014 results and outlook for the second quarter 2014 and full year 2014. 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: 866-318-8614 (International callers: 617-399-5133)
Passcode:73684933
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®, the leading provider of sales and marketing effectiveness software. 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 2500 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.

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 expense, amortization of acquired intangibles, restructuring, and patent litigation 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, 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.

Non-GAAP Financial Measures

In this release, CallidusCloud has provided 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 loss, non-GAAP net loss, and 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 CallidusCloud's industry, many of which present non-GAAP financial measures that may resemble our non-GAAP financial measures. Our non-GAAP financial measures exclude stock-based compensation expense, restructuring 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.

©2014. 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 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
                 (In thousands, except for per share data)
                                (unaudited)

                                              Three Months Ended March 31,
                                             ------------------------------
                                                  2014            2013
                                             --------------  --------------
Revenues:
  Recurring                                  $       22,250  $       19,624
  Services and other                                  8,727           5,918
                                             --------------  --------------
    Total revenues                                   30,977          25,542
Cost of revenues:
  Recurring                                           7,288           7,453
  Services and other                                  5,110           5,222
                                             --------------  --------------
    Total cost of revenues                           12,398          12,675
                                             --------------  --------------
Gross profit                                         18,579          12,867

Operating expenses:
  Sales and marketing                                10,727           7,644
  Research and development                            4,873           4,429
  General and administrative                          5,086           5,186
  Restructuring                                           -           1,243
                                             --------------  --------------
    Total operating expenses                         20,686          18,502
                                             --------------  --------------

Operating loss                                       (2,107)         (5,635)
Interest income and other income (expense)             (210)           (844)
                                             --------------  --------------

Loss before provision for income taxes               (2,317)         (6,479)
Provision for income taxes                              150             124
                                             --------------  --------------

Net loss                                     $       (2,467) $       (6,603)
                                             ==============  ==============

Net loss per share - basic and diluted
  Net loss per share                         $        (0.05) $        (0.18)

Shares used in basic and diluted per share
 computation                                         45,944          37,139

The following line items include stock-based compensation, amortization of
 acquired intangible assets, patent litigation costs, interest expense on
 convertible notes, amortization of convertible note issuance costs and
 restructuring as follows:

                                              Three Months Ended March 31,
                                             ------------------------------
                                                  2014            2013
                                             --------------  --------------
Cost of revenues:
  Recurring                                  $          729  $          686
  Services and other                                    226             418
Operating expenses:
  Sales and marketing                                   829             801
  Research and development                              438             466
  General and administrative                          1,382           1,344
  Restructuring                                           -           1,243
Interest income and other (income) expense              201             837
                                             --------------  --------------
    Total                                    $        3,805  $        5,795
                                             ==============  ==============




                           CALLIDUS SOFTWARE INC.
                        CONSOLIDATED BALANCE SHEETS

                    (In thousands except per share data)

                                                March 31,     December 31,
                                                  2014            2013
                                             --------------  --------------
                                   ASSETS
Current assets:
  Cash and cash equivalents                  $       29,022  $       28,295
  Short-term investments                              5,315           7,866
  Restricted cash                                     2,996               -
  Accounts receivable, net                           26,509          29,216
  Deferred income taxes                                 210               -
  Prepaid and other current assets                    6,695           6,232
                                             --------------  --------------
    Total current assets                             70,747          71,609

Property and equipment, net                          14,545          11,351
Goodwill                                             32,791          31,207
Intangible assets, net                               18,514          16,995
Deferred income taxes, noncurrent                       556             405
Deposits and noncurrent assets                        2,700           2,626
                                             --------------  --------------
    Total assets                             $      139,853  $      134,193
                                             ==============  ==============


                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                           $        3,228  $        2,987
  Accrued payroll and related expenses                5,992           7,377
  Accrued expenses                                   10,055           5,395
  Deferred income taxes                               1,159           1,159
  Deferred revenue                                   46,769          46,222
  Capital lease obligations                           1,318           1,308
                                             --------------  --------------
    Total current liabilities                        68,521          64,448

Deferred revenue, noncurrent                         12,679          10,432
Deferred income taxes, noncurrent                       205             155
Capital lease obligations, noncurrent                   668             987
Convertible notes                                    14,197          14,197
Other noncurrent liabilities                          1,829           1,921
                                             --------------  --------------
    Total liabilities                                98,099          92,140
                                             --------------  --------------

Stockholders' equity:
  Common stock                                           46              45
  Additional paid-in capital                        317,564         315,430
  Treasury stock                                    (14,430)        (14,430)
  Accumulated other comprehensive income                198             165
  Accumulated deficit                              (261,624)       (259,157)
                                             --------------  --------------
    Total stockholders' equity                       41,754          42,053
                                             --------------  --------------
    Total liabilities and stockholders'
     equity                                  $      139,853  $      134,193
                                             ==============  ==============







                           CALLIDUS SOFTWARE INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (In thousands)

                                              Three Months Ended March 31,
                                                  2014            2013
                                             --------------  --------------
Cash flows from operating activities:
  Net loss                                   $       (2,467) $       (6,603)
  Adjustments to reconcile net loss to net
   cash used in operating activities:
    Depreciation expense                              1,152             987
    Amortization of intangible assets                 1,233           1,228
    Provision for doubtful accounts and
     service remediation reserves                       253             157
    Stock-based compensation                          2,292           2,591
    Release of valuation allowance                     (149)              -
    Amortization of convertible notes
     issuance cost                                       32             134
    Net amortization on investments                       8              26
    Changes in operating assets and
     liabilities:
      Accounts receivable                             2,841          (4,354)
      Prepaid and other current assets                 (463)           (503)
      Other assets                                     (107)           (289)
      Accounts payable                                  332          (2,712)
      Accrued expenses                                  245           1,673
      Accrued payroll and related expenses           (1,369)           (510)
      Accrued restructuring                            (167)            284
      Deferred revenue                                2,114           5,067
      Deferred income taxes                            (311)             39
                                             --------------  --------------
Net cash provided by (used in) operating
 activities                                           5,469          (2,785)
                                             --------------  --------------

Cash flows from investing activities:
  Purchases of investments                           (1,209)         (3,319)
  Proceeds from maturities and sale of
   investments                                        3,750           7,700
  Purchases of property and equipment                (3,597)           (604)
  Purchases of intangible assets                       (112)           (126)
  Acquisitions, net of cash acquired                 (2,363)              -
                                             --------------  --------------
Net cash (used in) provided by investing
 activities                                          (3,531)          3,651
                                             --------------  --------------

Cash flows from financing activities:
  Proceeds from issuance of common stock              1,190           1,002
  Repurchase of common stock from employees
   for payment of taxes on vesting of
   restricted stock units                            (1,347)           (341)
  Payment of consideration related to
   acquisitions                                        (630)         (3,078)
  Proceeds from term note financing, net of
   payment                                            2,996               -
  Change in restricted cash                          (2,996)              -
  Repayment of debt                                    (150)              -
  Payment of principal under capital leases            (309)           (311)
                                             --------------  --------------
Net cash used in financing activities                (1,246)         (2,728)
                                             --------------  --------------
Effect of exchange rates on cash and cash
 equivalents                                             35             (40)
                                             --------------  --------------
Net increase (decrease) in cash and cash
 equivalents                                            727          (1,902)
Cash and cash equivalents at beginning of
 period                                              28,295          16,400
                                             --------------  --------------
Cash and cash equivalents at end of period   $       29,022  $       14,498
                                             ==============  ==============





           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
         (In thousands, except for percentages and per share data)
                                (unaudited)

                                                   Three months ended
                                                        March 31,
                                             ------------------------------
                                                  2014            2013
                                             --------------  --------------

Non-GAAP gross profit reconciliation

Gross profit                                 $       18,579  $       12,867

  Gross margin                                           60%             50%
Add back:
  Non-cash stock-based compensation                     396             580
  Non-cash amortization of acquired
   intangible assets                                    559             524
                                             --------------  --------------
Non-GAAP gross profit                        $       19,534  $       13,971
                                             --------------  --------------

  Gross margin                                           63%             55%


Non-GAAP recurring revenue gross profit
 reconciliation

Recurring revenue gross profit               $       14,962  $       12,171

  Recurring revenue gross margin                         67%             62%
Add back:
  Non-cash stock-based compensation                     182             174
  Non-cash amortization of acquired
   intangible assets                                    547             512
                                             --------------  --------------
Non-GAAP Recurring revenue gross profit      $       15,691  $       12,857
                                             --------------  --------------

  Recurring revenue gross margin                         71%             66%


Non-GAAP operating expense reconciliation:

Operating expenses                           $       20,686  $       18,502
Add back:
  Non-cash stock-based compensation                  (1,896)         (2,011)
  Non-cash amortization of acquired
   intangible assets                                   (310)           (286)
  Patent litigation costs                              (443)           (314)
  Restructuring                                           -          (1,243)
                                             --------------  --------------
Non-GAAP Operating Expenses                  $       18,037  $       14,648
                                             --------------  --------------


Non-GAAP operating income (loss)
 reconciliation:

Operating loss                               $       (2,107) $       (5,635)
Add back:
  Non-cash stock-based compensation                   2,292           2,591
  Non-cash amortization of acquired
   intangible assets                                    869             810
  Patent litigation costs                               443             314
  Restructuring                                           -           1,243
                                             --------------  --------------
Non-GAAP Operating income (loss)             $        1,497  $         (677)
                                             --------------  --------------




                           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,
                                             ------------------------------
                                                  2014            2013
                                             --------------  --------------

Non-GAAP net loss reconciliation:

Net loss                                     $       (2,467) $       (6,603)
Add back:
  Non-cash stock-based compensation                   2,292           2,591
  Non-cash amortization of acquired
   intangible assets                                    869             810
  Patent litigation costs                               443             314
  Restructuring                                           -           1,243
  Interest expense on convertible notes                 169             703
  Amortization of convertible note issuance
   cost                                                  32             134
                                             --------------  --------------
Non-GAAP Net income (loss)                   $        1,338  $         (808)
                                             --------------  --------------


Non-GAAP net income (loss) per share
 reconciliation:

Net loss per basic and diluted share         $        (0.05) $        (0.18)
Add back:
  Non-cash stock-based compensation                    0.05            0.07
  Non-cash amortization of acquired
   intangible assets                                   0.02            0.02
  Patent litigation costs                              0.01            0.01
  Restructuring                                           -            0.03
  Interest expense on convertible notes                   -            0.02
  Amorization of convertible note issuance
   cost                                                   -            0.01
                                             --------------  --------------
Non-GAAP net income (loss) per diluted share $         0.03  $        (0.02)
                                             --------------  --------------


Basic and fully diluted shares
 reconciliation:

Basic shares                                         45,944          37,139
                                             --------------  --------------
Add back:
  Weighted average effect of dilutive
   securities                                         3,751               -
                                             --------------  --------------
Diluted shares                                       49,695          37,139
                                             --------------  --------------




                           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 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, 2014
                                   -----------------------------------------
                                           GAAP               Non-GAAP
                                   -------------------- --------------------

Total revenue                        $30,400 - $31,400    $30,400 - $31,400
Operating income (a)                ($2,700) - ($3,400)    $1,000 - $1,500
Net income (loss) per diluted
 share (c)                           ($0.05) - ($0.08)      $0.01 - $0.03



                                              Twelve months ended
                                               December 31, 2014
                                   -----------------------------------------
                                           GAAP               Non-GAAP
                                   -------------------- --------------------

Total revenue                       $127,500 - $132,500  $127,500 - $132,500
Operating income (b)               ($8,300) - ($11,300)    $7,000 - $9,000
Net income (loss) per diluted
 share (c)                           ($0.23) - ($0.28)      $0.12 - $0.16

(a) Estimated non-GAAP amounts above for the three months ending June 30,
    2014 reflect adjustments that exclude the estimated amortization of
    acquired intangible assets of approximately $950 thousand - $1.0
    million, estimated stock-based compensation expense of approximately
    $2.8 - $3.0 million, and patent litigation costs of approximately $400 -
    $450 thousand.
(b) Estimated non-GAAP amounts above for the twelve months ending December
    31, 2014 reflect adjustments that exclude the estimated amortization of
    acquired intangible assets of approximately $3.2-$3.4 million, estimated
    stock-based compensation expense of approximately $12.2 - $13.2 million,
    and patent litigation costs of approximately $1.7 - $1.9 million.
(c) Non-GAAP fully diluted share count is between 49.0 million and 50.5
    million. GAAP share count is between 46.0 million to 49.0 million.


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