CallidusCloud Announces Third Quarter SaaS Revenue Increases 26% to $38.7 Million

November 1, 2016 4:06 PM

DUBLIN, CA -- (Marketwired) -- 11/01/16 -- Callidus Software Inc. (NASDAQ: CALD)

Callidus Software Inc. (NASDAQ: CALD), a global leader in cloud-based sales, marketing, learning and customer experience solutions, today announced financial results for the third quarter ended September 30, 2016.

"Q3 was a great quarter with solid sales execution, strong financial performance, and a successful follow-on offering," said Leslie Stretch, president and CEO of CallidusCloud. "We anticipate our sales momentum will continue in 2017."

Financial Highlights for the Third Quarter 2016 SaaS revenue was $38.7 million, an increase of 26% over the same quarter in the prior year, while maintenance revenue was $2.8 million, resulting in total recurring revenue of $41.5 million. SaaS revenue growth continues to benefit from success in our Lead to Money suite. Professional services revenue was $11.0 million. Total reported revenue was $52.5 million for the third quarter, an increase of 17%. SaaS billings growth rate was 31% and normalized billings growth was 26% over last year. Cash and short-term investments were $186.2 million, including $87.1 million in net proceeds from our September 2016 follow-on stock offering. Cash flow from operations for the quarter was $7.8 million, compared to cash flow from operations of $9.9 million in the same quarter of the prior year.

GAAP Performance

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.

Business Highlights for the Third Quarter 2016

Financial Outlook for 2016 - Fourth Quarter and Full Year

For the fourth quarter of 2016, the Company expects SaaS revenue to be between $41.0 million and $42.0 million. Maintenance revenue is expected to be between $2.0 million and $2.2 million. The Company expects total revenue to be between $54.0 million and $55.0 million. GAAP operating loss is expected to be between $3.6 million and $4.1 million, with GAAP net loss per share between $0.06 and $0.07. Non-GAAP operating income is expected to be between $4.7 million and $5.7 million, with non-GAAP income per diluted share between $0.06 and $0.08. We expect normalized billings for the fourth quarter to be between 25 and 30%.

For the full year of 2016, the Company is updating SaaS revenue guidance to be between $150.4 million and $151.4 million, or a 30 to 31% growth rate. Maintenance revenue is expected to be between $10.9 million and $11.1 million. The Company expects total revenue to be between $204.6 million and $205.6 million. GAAP operating loss is expected to be between $16.8 million and $17.3 million, with GAAP net loss per share between $0.31 and $0.32. The Company is updating non-GAAP operating income to be between $17.0 million and $18.0 million, with non-GAAP income per diluted share between $0.25 and $0.27.

Preliminary Outlook for 2017

For the full year of 2017, the Company expects SaaS revenue to be between $189.0 million and $196.0 million, representing 25 to 30% growth, and maintenance revenue between $5.0 million and $6.0 million. Total revenue is expected to be between $240.0 million and $246.0 million.

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 third quarter and outlook for the fourth 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: 94533428 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, 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. Approximately 5,000 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 and gain on sale 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.

Taxes: We have excluded the tax expense related to the acquisitions from our non-GAAP operating net income and net income per diluted share. These costs include the tax expense relating to the difference between book and tax goodwill that we would not have otherwise incurred in presenting taxes on our normal operating activities.

Additionally, the Company 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."

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 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, acquisition-related costs, 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, ViewCentral and Badgeville 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.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share data)
                                (unaudited)

                               Three Months Ended       Nine Months Ended
                                  September 30,           September 30,
                             ----------------------  ----------------------
                                2016        2015        2016        2015
                             ----------  ----------  ----------  ----------
Revenue:
  Recurring                  $   41,465  $   34,301  $  118,361  $   93,907
  Services and license           11,042      10,643      32,275      32,396
                             ----------  ----------  ----------  ----------
    Total revenue                52,507      44,944     150,636     126,303
Cost of revenue:
  Recurring                      10,948       9,034      31,047      25,233
  Services and license            9,229       8,318      25,822      24,041
                             ----------  ----------  ----------  ----------
    Total cost of revenue        20,177      17,352      56,869      49,274
                             ----------  ----------  ----------  ----------
Gross profit                     32,330      27,592      93,767      77,029
                             ----------  ----------  ----------  ----------

Operating expenses:
  Sales and marketing            18,357      14,855      56,942      43,377
  Research and development        8,637       6,846      23,127      18,886
  General and administrative      8,894       7,883      26,445      24,413
  Restructuring and other            80           -         482         234
                             ----------  ----------  ----------  ----------
    Total operating expenses     35,968      29,584     106,996      86,910
                             ----------  ----------  ----------  ----------
Operating loss                   (3,638)     (1,992)    (13,229)     (9,881)
Interest income and other
 income (expense), net               (3)        (38)        (55)       (414)
Interest expense                    (48)        (26)       (130)       (149)
                             ----------  ----------  ----------  ----------
Loss before provision for
 income taxes                    (3,689)     (2,056)    (13,414)    (10,444)
Provision for income taxes          258         187         755         566
                             ----------  ----------  ----------  ----------
Net loss                     $   (3,947) $   (2,243) $  (14,169) $  (11,010)
                             ==========  ==========  ==========  ==========
Net loss per share
  Basic and Diluted          $    (0.07) $    (0.04) $    (0.25) $    (0.20)
                             ==========  ==========  ==========  ==========

Weighted average shares used
 in computing net loss per
 share:
  Basic and Diluted              58,009      56,104      57,237      54,156
                             ==========  ==========  ==========  ==========



                           CALLIDUS SOFTWARE INC.
                        CONSOLIDATED BALANCE SHEETS
                               (In thousands)
                                (unaudited)

                                               September 30,   December 31,
                                                    2016           2015
                                               -------------  -------------
                                   ASSETS
Current assets:
  Cash and cash equivalents                    $     167,116  $      77,232
  Short-term investments                              19,123         19,977
  Accounts receivable, net                            48,444         43,461
  Prepaid and other current assets                    14,699         11,385
                                               -------------  -------------
    Total current assets                             249,382        152,055

Property and equipment, net                           31,566         20,540
Goodwill                                              56,682         50,146
Intangible assets, net                                17,684         14,885
Deposits and other non current assets                  3,947          4,016
                                               -------------  -------------
    Total assets                               $     359,261  $     241,642
                                               =============  =============


                    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                             $       3,572  $       3,636
  Accrued payroll and related expenses                13,983         12,510
  Accrued expenses                                    18,627         11,017
  Deferred revenue                                    88,690         74,644
                                               -------------  -------------
    Total current liabilities                        124,872        101,807

Deferred revenue, noncurrent                           4,308          5,186
Deferred income taxes, noncurrent                      1,455          1,477
Other noncurrent liabilities                           6,401          4,371
                                               -------------  -------------
    Total liabilities                                137,036        112,841
                                               -------------  -------------

Stockholders' equity:
  Common stock                                            63             56
  Additional paid-in capital                         538,225        428,776
  Treasury stock                                     (14,430)       (14,430)
  Accumulated other comprehensive loss                (3,597)        (1,735)
  Accumulated deficit                               (298,036)      (283,866)
                                               -------------  -------------
    Total stockholders' equity                       222,225        128,801
                                               -------------  -------------
    Total liabilities and stockholders' equity $     359,261  $     241,642
                                               =============  =============



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

                                                        Nine Months Ended
                                                          September 30,
                                                        2016        2015
                                                     ----------  ----------
Cash flows from operating activities:
  Net loss                                           $  (14,169) $  (11,010)
  Adjustments to reconcile net loss to net cash used
   provided by activities:
    Depreciation expense                                  5,656       4,501
    Amortization of intangible assets                     4,616       3,985
    Provision for doubtful accounts                       1,227       1,097
    Stock-based compensation                             20,910      13,924
    Loss on foreign currency from market-to-market
     derivative                                              (1)          -
    Excess tax benefits from stock-based
     compensation                                           (26)        (29)
    Deferred income taxes                                    13        (381)
    Loss on disposal of property and equipment               22          10
    Net amortization on investments                         132          78
    Changes in operating assets and liabilities:
      Accounts receivable                                (6,037)      3,373
      Prepaid and other current assets                   (3,374)        487
      Other noncurrent assets                               118         104
      Accounts payable                                       19           3
      Accrued expenses                                     (225)         17
      Accrued payroll and related expenses                1,473          14
      Accrued restructuring and other expenses              314         (99)
      Deferred revenue                                   10,101       4,448
                                                     ----------  ----------
Net cash provided by operating activities                20,769      20,522
                                                     ----------  ----------

Cash flows from investing activities:
  Purchases of investments                              (12,113)    (19,444)
  Proceeds from maturities and sale of investments       12,876       3,554
  Purchases of property and equipment                    (7,091)     (9,548)
  Purchases of intangible assets                           (687)       (524)
  Acquisitions, net of cash acquired                    (11,500)     (4,365)
                                                     ----------  ----------
Net cash used in investing activities                   (18,515)    (30,327)
                                                     ----------  ----------

Cash flows from financing activities:
  Proceeds from follow-on offering, net of issuance
   costs                                                 87,144      64,372
  Proceeds from issuance of common stock                  4,082       4,236
  Restricted stock units acquired to settle employee
   withholding liability                                 (2,705)     (2,656)
  Excess tax benefits from stock-based compensation          26          29
  Repayment of line of credit                                 -     (10,482)
  Payment of consideration related to acquisitions         (510)     (1,802)
  Payment of principal under capital leases                   -        (778)
                                                     ----------  ----------
Net cash provided by financing activities                88,037      52,919
                                                     ----------  ----------
Effect of exchange rates on cash and cash
 equivalents                                               (407)       (197)
                                                     ----------  ----------
Net increase in cash and cash equivalents                89,884      42,917
Cash and cash equivalents at beginning of period         77,232      34,200
                                                     ----------  ----------
Cash and cash equivalents at end of period           $  167,116  $   77,117
                                                     ==========  ==========



                           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, tax impact from acquisitions and
restructuring and other expenses as follows:

                               Three Months Ended       Nine Months Ended
                                  September 30,           September 30,
                             ----------------------  ----------------------
                                2016        2015        2016        2015
                             ----------  ----------  ----------  ----------
Cost of revenues:
  Recurring                  $    1,334  $      984  $    3,656  $    2,789
  Services and license              530         287       1,567         886
Operating expenses:
  Sales and marketing             2,675       1,657       7,616       4,926
  Research and development        1,251         745       3,592       2,192
  General and administrative      2,782       1,533       8,614       6,517
  Restructuring and other            80         244         482         478
  Taxes                              82           -         142           -
                             ----------  ----------  ----------  ----------
    Total                    $    8,734  $    5,450  $   25,669  $   17,788
                             ==========  ==========  ==========  ==========



                           CALLIDUS SOFTWARE INC.
           RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
                                (unaudited)
                   (In thousands, except for percentages)

                                     Three Months Ended   Nine Months Ended
                                        September 30,       September 30,
                                     ------------------  ------------------
                                       2016      2015      2016      2015
                                     --------  --------  --------  --------

Non-GAAP gross profit
 reconciliation:

Gross profit                         $ 32,330  $ 27,592  $ 93,767  $ 77,029

  Gross margin                             62%       61%       62%       61%
Add back:
  Non-cash stock-based compensation       918       546     2,916     1,661
  Non-cash amortization of acquired
   intangible assets                      946       725     2,306     2,015
Non-GAAP gross profit                $ 34,194  $ 28,863  $ 98,989  $ 80,705

  Gross margin                             65%       64%       66%       64%

Non-GAAP recurring revenue gross
 profit reconciliation:

Recurring revenue gross profit       $ 30,517  $ 25,267  $ 87,314  $ 68,674

  Recurring revenue gross margin           74%       74%       74%       73%
Add back:
  Non-cash stock-based compensation       388       269     1,350       806
  Non-cash amortization of acquired
   intangible assets                      946       715     2,306     1,984
Non-GAAP recurring revenue gross
 profit                              $ 31,851  $ 26,251  $ 90,970  $ 71,464

  Recurring revenue gross margin           77%       77%       77%       76%

Non-GAAP operating expense
 reconciliation:

Operating expenses                   $ 35,968  $ 29,584  $106,996  $ 86,910
  Operating expenses, as a % of
   total revenues                          69%       66%       71%       69%
Subtract:
  Non-cash stock-based compensation    (5,928)   (3,469)  (17,993)  (12,262)
  Non-cash amortization of acquired
   intangible assets                     (501)     (437)   (1,308)   (1,278)
  Patent litigation and settlement
   costs                                  (29)      (29)      (86)      (94)
  Acquisition-related costs              (250)     (244)     (435)     (244)
  Restructuring and other                 (80)        -      (482)     (234)
Non-GAAP operating expenses          $ 29,180  $ 25,405  $ 86,692  $ 72,798
  Non-GAAP operating expenses, as a
   % of total revenues                     56%       57%       58%       58%



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


                                  Three Months Ended    Nine Months Ended
                                    September 30,         September 30,
                                 -------------------   -------------------
                                   2016       2015       2016       2015
                                 --------   --------   --------   --------
Non-GAAP operating income (loss)
 reconciliation:

Operating loss                   $ (3,638)  $ (1,992)  $(13,229)  $ (9,881)
  Operating loss, as a % of
   total revenues                      (7)%       (4)%       (9)%       (8)%
Add back:
  Non-cash stock-based
   compensation                     6,846      4,015     20,910     13,924
  Non-cash amortization of
   acquired intangible assets       1,447      1,162      3,614      3,293
  Patent litigation and
   settlement costs                    29         29         86         94
  Acquisition-related costs           250        244        435        244
  Restructuring and other              80          -        482        234
                                 --------   --------   --------   --------
Non-GAAP operating income        $  5,014   $  3,458   $ 12,298   $  7,908
                                 --------   --------   --------   --------
  Non-GAAP operating income, as
   a % of total revenues               10%         8%         8%         6%

Non-GAAP net income (loss)
 reconciliation:

Net loss                         $ (3,947)  $ (2,243)  $(14,169)  $(11,010)
  Net loss, as a % of total
   revenues                            (8)%       (5)%       (9)%       (9)%
Add back:
  Non-cash stock-based
   compensation                     6,846      4,015     20,910     13,924
  Non-cash amortization of
   acquired intangible assets       1,447      1,162      3,614      3,293
  Patent litigation and
   settlement costs                    29         29         86         94
  Acquisition-related costs           250        244        435        244
  Restructuring and other              80          -        482        234
  Taxes                                82          -        142          -
                                 --------   --------   --------   --------
Non-GAAP net income              $  4,787   $  3,207   $ 11,500   $  6,779
                                 --------   --------   --------   --------
  Non-GAAP net income, as a % of
   total revenues                       9%         7%         8%         5%

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

Net loss per basic and diluted
 share                           $  (0.07)  $  (0.04)  $  (0.25)  $  (0.20)
Add back:
  Non-cash stock-based
   compensation                      0.11       0.07       0.35       0.25
  Non-cash amortization of
   acquired
  intangible assets                  0.02       0.02       0.06       0.06
  Patent litigation and
   settlement costs                     -          -          -          -
  Acquisition-related costs          0.01       0.01       0.01       0.01
  Restructuring and other               -          -       0.01          -
  Taxes                                 -          -          -          -
  Diluted share impact on GAAP
   loss                              0.01          -       0.01          -
                                 --------   --------   --------   --------
Non-GAAP net income per diluted
 share                           $   0.08   $   0.06   $   0.19   $   0.12
                                 --------   --------   --------   --------

Basic and fully diluted shares
 reconciliation:

Basic shares                       58,009     56,104     57,237     54,156
                                 --------   --------   --------   --------
Add back:
  Weighted average effect of
   dilutive securities              2,212      1,386      2,008      1,551
                                 --------   --------   --------   --------
Diluted shares                     60,221     57,490     59,245     55,707
                                 --------   --------   --------   --------



                           CALLIDUS SOFTWARE INC.
                 Non-GAAP Supplemental Financial Information
                                 (unaudited)
                   (In thousands, except for percentages)


                                                     Three Months Ended
                                                        September 30,
                                                ----------------------------
SaaS Billings                                        2016           2015
                                                -------------  -------------
SaaS revenue                                    $      38,723  $      30,795

Add back:
Increase in SaaS deferred revenue                       6,503          3,690
                                                -------------  -------------
SaaS billings                                   $      45,226  $      34,485
                                                -------------  -------------

SaaS billings growth rate                                  31%

Normalized Billings
SaaS billings                                   $      45,226  $      34,485
Multi-year billings impact                             (1,181)           539
                                                -------------  -------------
Normalized SaaS billings                        $      44,045  $      35,024
                                                -------------  -------------

Normalized SaaS billings growth rate                       26%



                            CALLIDUS SOFTWARE INC.
                              FINANCIAL OUTLOOK

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.

                              REVENUE GUIDANCE
                               (In thousands)
                                 (unaudited)

                                  Three Months Ended     Twelve Months Ended
                                  December 31, 2016       December 31, 2016
                                 -------------------     -------------------

SaaS revenue                      $41,000 - $42,000      $150,400 - $151,400
Maintenance revenue                $2,000 - $2,200        $10,900 - $11,100
Total revenue                     $54,000 - $55,000      $204,600 - $205,600

    RECONCILIATION OF GAAP TO NON-GAAP FORWARD LOOKING GUIDANCE MEASURES
                 (In thousands, except for per share data)
                                (unaudited)


                                  Three Months Ended    Twelve Months Ended
                                   December 31, 2016     December 31, 2016
                                 --------------------  --------------------
                                    From        To        From        To
                                 ---------  ---------  ---------  ---------
Non-GAAP operating income (loss)
 reconciliation:

GAAP operating loss              $  (3,600) $  (4,100) $ (16,800) $ (17,300)
                                 ---------  ---------  ---------  ---------

Add back:
  Non-cash stock-based
   compensation                      6,600      7,100     27,500     28,000
  Non-cash amortization of
   acquired intangible assets        1,400      1,800      5,000      5,400
  Acquisition, patent litgation,
   restructuring and other             300        900      1,300      1,900
                                 ---------  ---------  ---------  ---------
Non-GAAP operating income        $   4,700  $   5,700  $  17,000  $  18,000
                                 ---------  ---------  ---------  ---------


                                  Three Months Ended    Twelve Months Ended
                                   December 31, 2016     December 31, 2016
                                 --------------------  --------------------
Non-GAAP net income (loss) per
 share reconciliation:              From        To        From        To
                                 ---------  ---------  ---------  ---------

GAAP net loss per basic share    $   (0.06) $   (0.07) $   (0.31) $   (0.32)
                                 ---------  ---------  ---------  ---------

Add back:
  Non-cash stock-based
   compensation                       0.10       0.11       0.45       0.46
  Non-cash amortization of
   acquired intangible assets         0.02       0.03       0.08       0.09
  Acquisition, patent litgation,
   restructuring and other               -       0.01       0.02       0.03
  Taxes                                  -          -          -          -
  Diluted share impact on GAAP
   earnings                              -          -       0.01       0.01
                                 ---------  ---------  ---------  ---------
Non-GAAP net income per diluted
 share                           $    0.06  $    0.08  $    0.25  $    0.27
                                 ---------  ---------  ---------  ---------

Shares used to calculate
 guidance:
  Basic shares                      63,500     64,000     58,500     59,000
                                 ---------  ---------  ---------  ---------
  Diluted shares                    66,000     66,500     61,000     61,500
                                 ---------  ---------  ---------  ---------

Investor Relations Contact
Ed Keaney
Market Street Partners
(415) 445-3238
cald@marketstreetpartners.com

Source: Callidus Software Inc.

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