Cash from Operations of $13.0 Million, up 45% Year over Year
2017 SaaS Revenue of $198.2 Million, up 31% Year over Year
SaaS Deferred Revenue of $129.3 Million, up 31% Year over Year
DUBLIN, Calif., Feb. 08, 2018 (GLOBE NEWSWIRE) -- Callidus Software Inc. (NASDAQ:CALD), a global leader in cloud-based sales, marketing, learning and customer experience solutions, today announced financial results for the year ended December 31, 2017.
Recent Acquisition Announcement On January 29, 2018, CallidusCloud entered into a merger agreement with SAP America, Inc. (“SAP”) under which SAP will acquire CallidusCloud for $36.00 per share in an all-cash transaction valued at approximately $2.5 billion, inclusive of CallidusCloud’s net cash.
In light of this, CallidusCloud will not hold a conference call to discuss these financial results.
Financial Highlights for the Fourth Quarter 2017 SaaS revenue was $54.6 million, an increase of 30% over the same quarter in the prior year. Maintenance revenue was $450,000, resulting in total recurring revenue of $55.0 million. SaaS revenue growth continued to benefit from success in our Lead to Money suite. Professional services revenue was $14.1 million. Total revenue was $69.5 million for the fourth quarter, an increase of 24% year-over-year. Normalized SaaS billings growth was 28% for the trailing twelve-month period. Normalized billings growth for the quarter was 38%. Cash and short-term investments were $150.5 million. Cash flow from operations for the quarter was $13.0 million, compared to $9.0 million in the same quarter of the prior year.
GAAP Performance
Recurring revenue gross margin was 73%, compared to 74% for the same quarter in the prior year.
Overall gross margin was 62%, consistent with the corresponding period in the prior year.
Operating loss was $3.8 million, compared to $4.2 million for the same quarter in the prior year.
Pre-tax loss was $3.4 million, compared to $4.4 million 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 press release.
Recurring revenue gross margin was 77%, consistent with the corresponding period in the prior year.
Overall gross margin was 67%, compared to 66% for the same quarter in the prior year.
Operating income was $8.6 million, compared to $5.8 million for the same quarter in the prior year.
Pre-tax income was $9.0 million, compared to $5.6 million for the same quarter in the prior year.
Financial Highlights for the Full Year 2017 SaaS revenue was $198.2 million, an increase of 31% over the prior year, while maintenance revenue was $2.8 million, resulting in total recurring revenue of $201.0 million. Professional services revenue was $51.7 million. Total reported revenue was $253.1 million for the year, an increase of 22%. Cash flow from operations for the full year was $43.0 million, reflecting a 44% increase over last year.
GAAP Performance
Recurring revenue gross margin was 72%, compared to 74% in the prior year.
Overall gross margin was 61%, compared to 62% in the prior year.
Operating loss was $21.4 million, compared to $17.4 million in the prior year.
Pre-tax loss was $20.5 million, compared to $17.8 million 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 press release.
Recurring revenue gross margin was 76%, compared to 77% in the prior year.
Overall gross margin was 65%, compared to 66% in the prior year.
Operating income was $24.1 million, compared to $18.1 million in the prior year.
Pre-tax income was $25.1 million, compared to $17.7 million in the prior year.
Financial Outlook
Following the announcement made on January 29, 2018, regarding CallidusCloud’s entry into a definitive agreement to be acquired by SAP, the Company will not provide outlook for its 2018 financial results. Furthermore, the Company is withdrawing all previously issued financial guidance for the full year 2018.
About CallidusCloud Callidus Software Inc. (NASDAQ:CALD), doing business as CallidusCloud®, is the global leader in cloud-based sales, marketing, learning and customer experience solutions. CallidusCloud enables organizations to accelerate and maximize their Lead to Money process with a complete suite of solutions that identify the right leads, ensure proper territory and quota distribution, enable sales forces, automate configure price quote, and streamline sales compensation – driving bigger deals, faster. Over 6,400 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.
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, and non-GAAP net income before provision for income taxes. 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, and net income before provision for income taxes. 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 and net income before provision for income taxes. Restructuring and other expense consists of employee severance and facility exit costs. We feel it is useful to investors to understand the effects of these items on our financial results.
Patent litigation and settlement costs: We have excluded patent litigation and settlement costs from our non-GAAP gross profit, recurring revenue gross profit, operating expenses, operating income, and net income before provision for income taxes. We believe patent litigation and settlement costs 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.
Non-cash 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, and order backlog from our non-GAAP gross profit, recurring revenue gross profit, operating expenses, operating income, other income and expense, and net income before provision for income taxes. 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 before provision for income taxes. 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.
Cash taxes: Cash taxes are defined as GAAP current income tax expense excluding the related tax amount for non-cash and non-GAAP items.
Additionally, CallidusCloud believes the following supplemental non-GAAP financial information is useful to investors and others in assessing its operating performance. A calculation of the supplemental non-GAAP financial information is provided in the table titled “Non-GAAP Supplemental Financial Information.”
SaaS billings is calculated as SaaS revenue plus the sequential change in SaaS deferred revenue in a period.
Normalized SaaS billings is calculated as SaaS revenue plus the sequential change in SaaS deferred revenue, reduced by the remaining deferred revenue acquired during the period, plus or minus the effect of multiple year SaaS billings in that period.
We believe that normalized SaaS billings provide valuable insight into the sales of our solutions and the performance of our business. We do not consider normalized SaaS billings as a substitute for revenue recognition or revenue measurement.
Note on Forward-Looking Statements The forward-looking statements included in this press release, including for example statements regarding the proposed merger with SAP and estimates of future revenues, 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, the risk that parties may be unable to consummate the proposed merger with SAP due to failure to satisfy conditions to the completion of the merger, including the receipt of stockholder approval or regulatory approval, which might not be obtained on the terms expected, on the anticipated schedule or at all, 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 415-445-3232, 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.
Weighted average shares used in computing net loss per share:
Basic and Diluted
65,995
63,663
65,272
58,852
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
December 31,
December 31,
2017
2016
ASSETS
Current assets:
Cash and cash equivalents
$
75,251
$
148,008
Short-term investments
75,248
39,266
Accounts receivable, net
76,750
55,464
Prepaid and other current assets
24,007
18,275
Total current assets
251,256
261,013
Property and equipment, net
57,058
35,456
Goodwill
96,092
63,957
Intangible assets, net
36,641
21,659
Deposits and other non-current assets
6,400
4,416
Total assets
$
447,447
$
386,501
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
3,973
$
3,573
Accrued payroll and related expenses
21,079
17,831
Accrued expenses
26,190
15,126
Deferred revenue
133,313
99,758
Total current liabilities
184,555
136,288
Deferred revenue, non-current
506
3,209
Deferred income taxes, non-current
2,252
1,541
Other non-current liabilities
15,175
8,602
Total liabilities
202,488
149,640
Stockholders’ equity:
Common stock
66
64
Additional paid-in capital
583,490
559,200
Treasury stock
(14,430
)
(14,430
)
Accumulated other comprehensive loss
(1,062
)
(5,141
)
Accumulated deficit
(323,105
)
(302,832
)
Total stockholders’ equity
244,959
236,861
Total liabilities and stockholders’ equity
$
447,447
$
386,501
CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(unaudited)
Twelve Months Ended December 31,
2017
2016
Cash flows from operating activities:
Net loss
$
(20,273
)
$
(18,966
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation expense
11,738
8,041
Amortization of intangible assets
8,677
6,431
Provision for doubtful accounts
1,602
1,548
Stock-based compensation
33,420
29,123
Excess tax benefits from stock-based compensation
-
(59
)
Deferred income taxes
(1,660
)
210
Loss on disposal of property and equipment
5
23
Loss on foreign currency from mark-to-market derivatives
180
23
Net amortization on investments
125
170
Changes in operating assets and liabilities:
Accounts receivable
(19,517
)
(12,439
)
Prepaid and other current assets
(2,091
)
(6,118
)
Other non-current assets
(1,877
)
(426
)
Accounts payable
622
(1,088
)
Accrued expenses
707
(1,237
)
Accrued payroll and related expenses
2,766
5,321
Accrued restructuring and other expenses
56
252
Deferred revenue
28,480
18,970
Net cash provided by operating activities
42,960
29,779
Cash flows from investing activities:
Purchases of investments
(80,738
)
(37,409
)
Proceeds from maturities of investments
37,009
16,715
Proceeds from sale of investments
5,644
726
Purchases of property and equipment
(19,519
)
(15,599
)
Purchases of intangible assets
(458
)
(962
)
Acquisitions, net of cash acquired
(44,790
)
(22,574
)
Change in restricted cash
(1,355
)
-
Net cash used in investing activities
(104,207
)
(59,103
)
Cash flows from financing activities:
Proceeds from follow-on offering, net of issuance costs
-
100,345
Proceeds from issuance of common stock
5,951
4,384
Restricted stock units acquired to settle employee withholding liability
(15,184
)
(3,479
)
Excess tax benefits from stock-based compensation
-
59
Payment of consideration related to acquisitions
(2,400
)
(510
)
Net cash (used in) provided by financing activities
(11,633
)
100,799
Effect of foreign currency exchange rates on cash and cash equivalents
123
(699
)
Net (decrease) increase in cash and cash equivalents
(72,757
)
70,776
Cash and cash equivalents at beginning of period
148,008
77,232
Cash and cash equivalents at end of period
$
75,251
$
148,008
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, acquisition-related costs, restructuring and other expenses as follows:
Three Months Ended December 31,
Twelve Months Ended December 31,
2017
2016
2017
2016
Cost of revenue:
Recurring
$
2,334
$
1,410
$
7,661
$
5,067
Services and license
571
530
2,340
2,097
Operating expenses:
Sales and marketing
2,949
3,091
11,026
10,707
Research and development
2,041
1,556
7,157
5,147
General and administrative
4,476
3,396
16,170
12,010
Restructuring and other
61
-
1,189
482
Total
$
12,432
$
9,983
$
45,543
$
35,510
CALLIDUS SOFTWARE INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except for percentages)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2017
2016
2017
2016
Non-GAAP gross profit reconciliation:
Gross profit
$
43,349
$
34,874
$
154,599
$
128,641
Gross margin
62%
62%
61%
62%
Add back:
Stock-based compensation
1,037
819
4,087
3,736
Non-cash amortization of acquired intangible assets