Reports Continued Profitability and Positive Cash Flows from Operations
Cupertino, Calif. – July 31, 2008—Chordiant Software, Inc. (Nasdaq: CHRD), the leading provider of
Customer Experience (Cx™) software and
services, today announced its financial results for the third quarter of
fiscal year 2008 ended June 30, 2008, and filed its Quarterly Report on
Form 10-Q with the Securities and Exchange Commission.
Third Quarter Fiscal Year 2008 Financial Highlights
-
Total revenues of $30.7 million, up 24% from prior quarter;
-
License revenues of $11.0 million, up 128% sequentially;
-
Non-GAAP earnings per fully diluted share of $0.08, with Generally
Accepted Accounting Principles (“GAAP”)
earnings per fully diluted share of $0.02;
-
Bookings of $26.4 million, up 30% sequentially;
-
Ending backlog of $89.6 million; and
-
Generated cash flows from operations of $4.6 million.
Business Highlights
-
Signed two new transactions greater than $1 million;
-
Received an order greater than $1 million associated with an existing
customer commitment;
-
Received significant add-on license transactions at Citi totaling just
under $1 million;
-
Went live with Vodafone in their initial implementation;
-
Named as the winner of IBM’s 2008 IMPACT
Business Process Management Award;
-
Expanded product offering with two new product releases;
Recommendation Advisor 6.1 and Collections Manager 2.0; and
-
Chairman, President and CEO, Steven R. Springsteel captures Ernst &
Young Entrepreneur of the Year 2008 Northern California Award.
“The business environment continued to be
challenging in the third quarter,” stated
Steven R. Springsteel, Chairman, President and Chief Executive Officer. “However,
I am pleased with how our organization executed despite the weak
macroeconomic backdrop. We continue to see strong activity in emerging
markets and within our installed base, and believe that the investments
we have made are on track to pay future dividends.”
Third Quarter Fiscal Year 2008 Financial Results
Total revenues for the third quarter of fiscal year 2008 were $30.7
million, up 24% sequentially from the $24.7 million recorded in the
quarter ended March 31, 2008, but down 16% from the $36.8 million
reported for the third quarter of fiscal year 2007 ended June 30, 2007.
The third quarter of fiscal year 2007 included the recognition of $8.0
million in license revenues that had previously been deferred until a
new product offering was released.
License revenues for the third quarter of fiscal year 2008 were $11.0
million, up significantly from the $4.8 million reported in the prior
quarter, but down compared to the $14.1 million reported for the third
quarter of fiscal year 2007. Service revenues for the third quarter of
fiscal year 2008 were $19.8 million, compared to $22.7 million reported
for the same period of fiscal year 2007.
Chordiant reported GAAP net income of $0.8 million or fully diluted GAAP
earnings per share of $0.02 for the third quarter of fiscal year 2008,
compared to $6.5 million and $0.19 for the same period of fiscal year
2007.
Chordiant reported third quarter fiscal year 2008 non-GAAP net income of
$2.4 million, or fully diluted non-GAAP earnings per share of $0.08,
compared to non-GAAP net income of $7.1 million, or fully-diluted
non-GAAP earnings per share of $0.21 for the third quarter of fiscal
year 2007. Non-GAAP net income excludes stock-based compensation expense
and the amortization of purchased intangible assets.
Deferred Revenue
Deferred revenue at the end of the third quarter of fiscal year 2008 was
$51.8 million, a decrease of $16.2 million as compared to the ending
balance of $68.0 million at September 30, 2007. Deferred revenue does
not include future amounts due relating to the previously announced
Vodafone transaction.
Bookings
Bookings were $26.4 million for the third quarter, up 30% sequentially.
Bookings for the first three quarters of fiscal year 2008 totaled $96.6
million.
Backlog of Business
At June 30, 2008, Chordiant’s backlog, which includes deferred revenue,
decreased to $89.6 million from $93.5 million at the end of the prior
quarter. The primary reason for the decrease was the recognition of
license revenues during the period. Backlog includes $20.7 million of
remaining commitments related to the Vodafone transaction that was
closed in the first quarter of fiscal year 2008.
Cash Position
Chordiant’s cash, cash equivalents,
restricted cash and marketable securities position decreased by
approximately $25.9 million during the nine months of fiscal year 2008
to $64.6 million at June 30, 2008, as compared to $90.5 million at
September 30, 2007. The decrease in the cash balance includes the $18.6
million used in the second and third fiscal quarter for the share
repurchase program which concluded on April 30, 2008.
During the third quarter of fiscal year 2008, cash flows from operations
generated $4.6 million of cash.
Non-GAAP Financial Measurements
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with GAAP,
please see the section of the accompanying tables titled “Non-GAAP
Financial Measures” as well as the related Tables C and D which follow
it.
Fiscal Year 2008 Financial Guidance
“We remain committed to running a profitable
business and believe the recent reduction and reallocation of our
workforce enables us to do this even in today’s
challenging environment,” said Steven R.
Springsteel. “We continue to take a
conservative stance to our outlook, specifically as it relates to North
American and United Kingdom financial services markets but believe that
the investments we have been making in alliances and in geographic and
vertical diversification will positively impact our results over the
next several quarters.”
Management is updating fiscal year 2008 guidance as follows:
-
Total bookings for fiscal year 2008 are expected to range between $124
million and $128 million;
-
Total revenues for fiscal year 2008 are expected to range from $114
million to $117 million;
-
GAAP primary and fully diluted EPS is expected to range between $0.00
and $0.07 and non-GAAP fully diluted EPS is expected to range between
$0.18 and $0.25. These earnings estimates for fiscal year 2008 are
based on approximately 31.9 million diluted shares outstanding;
-
We expect the ending deferred revenue balances for fiscal year 2008 to
increase slightly from the June 30, 2008 balance; and
-
Finally, Chordiant expects to end the year with approximately $63
million in aggregate cash, cash equivalents, marketable securities and
restricted cash.
Conference Call and Webcast Information
Chordiant will host a conference call and webcast to discuss its
financial results for the third quarter of fiscal year 2008 ended June
30, 2008 today, Thursday, July 31, 2008 at 2:00 p.m. (PT), 5:00 p.m.
(ET) and 10:00 pm (GMT). A live audio webcast will be available to
investors and the public from the following website: http://www.veracast.com/webcasts/chordiant2/85118109.cfm
Alternatively, you may prefer to access Chordiant’s
website at http://www.chordiant.com,
where you will see the event listed on the homepage. Access is also
possible from Chordiant’s Investor Relations
website.
The webcast will be archived on the Chordiant website; in addition, a
telephone replay will be available on Thursday, July 31, 2008, beginning
at approximately 4:00 p.m. Pacific Time, 7:00 p.m. Eastern Time for
seven days after the live call. The replay can be accessed by dialing
(800) 405-2236, access code 11117143#.
About Chordiant Software, Inc.
Chordiant helps leading global brands with high-volume customer service
needs deliver the best possible customer experience. Unlike traditional
business applications, Chordiant Customer Experience (Cx) front-office
solutions blend multi-channel interaction management with predictive
desktop decisioning, enabling companies to capture and effectively
anticipate and respond to customer behavior in all channels, in
real-time. For global leaders in insurance/healthcare,
telecommunications and financial services, this deeper understanding
cultivates a lasting, one-to-one relationship that aligns the most
appropriate value proposition to each consumer. With Chordiant Cx
solutions, customer loyalty, operational productivity and profitability
reach new levels of return. For more information, visit Chordiant at www.chordiant.com
Safe Harbor Statement
This news release includes “forward-looking statements” that are subject
to risks, uncertainties and other factors that could cause actual
results or outcomes to differ materially from those contemplated by the
forward-looking statements. Forward-looking statements in this release
are generally identified by words, such as “believes,” “plans,”
“expects,” “will,” “guidance,” and similar expressions which are
intended to identify forward-looking statements. There are a number of
important factors that could cause the results of Chordiant to differ
materially from those indicated by these forward-looking statements,
including, among others, whether Chordiant will be able to attract and
close license transactions with new and existing customers and achieve
its revenue targets. Other risks relating to Chordiant’s products are
detailed under “Risk Factors” in Chordiant’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2008, as filed with the Securities
and Exchange Commission. This filing is available on a Web site
maintained by the Securities and Exchange Commission at
http://www.sec.gov. Chordiant does not undertake an obligation to update
forward-looking or other statements in this release.
Chordiant and the Chordiant logo are registered trademarks of
Chordiant Software, Inc. The Customer Experience Company and Cx are
trademarks of Chordiant Software, Inc. All other trademarks and
registered trademarks are the properties of their respective owners.
NON-GAAP FINANCIAL MEASURES
The accompanying press release dated July 31, 2008 contains non-GAAP
financial measures. Tables C and D reconcile the non-GAAP financial
measures contained in the press release to the most directly comparable
financial measures prepared in accordance with GAAP. These non-GAAP
financial measures include non-GAAP total cost of revenue, non-GAAP
gross profit, non-GAAP income (loss) from operations, non-GAAP net
income (loss) and basic and diluted non-GAAP net income (loss) per
share. Chordiant continues to provide all information required in
accordance with GAAP and does not suggest or believe non-GAAP financial
measures should be considered as a substitute for, or superior to,
measures of financial performance prepared in accordance with GAAP.
Chordiant believes that these non-GAAP financial measures provide
meaningful supplemental information regarding its operating results
primarily because they exclude amounts Chordiant does not consider part
of ongoing operating results when assessing the performance of certain
functions, certain geographies or certain members of senior management.
The operating budgets of functional managers do not include stock-based
compensation expenses, acquisition-related costs, restructuring costs
and certain other excluded items that may impact their functions’
profitability, and accordingly, we exclude these amounts from our
measures of functional performance. We also exclude these amounts from
our internal planning and forecasting process. We believe that our
non-GAAP financial measures also facilitate the comparison of results
for current periods and guidance for future periods with results for
past periods. We exclude the following items from our non-GAAP financial
measures:
Stock-based compensation expense. Our non-GAAP financial measures
exclude stock-based compensation expenses, which consist of expenses for
stock options, restricted stock and restricted stock units.
Additionally, recent comparative periods in certain prior years also
included stock-based compensation for certain stock options that were
subject to variable accounting. Under variable accounting, movements in
the market value of our stock caused significant unpredictable charges
or benefits from period to period. The operating budgets of functional
or geographic managers do not include stock-based compensation expenses
impacting their function’s income (loss) and,
accordingly, we exclude stock-based compensation expenses from our
measures of functional or geographic performance. While stock-based
compensation is a significant expense affecting our results of
operations, management excludes stock-based compensation from our budget
and planning process. We exclude stock-based compensation expenses from
our non-GAAP financial measures for these reasons and the other reasons
stated above. We compute weighted average dilutive shares using the
method required by Statement of Financial Accounting Standard No. 128
for both GAAP and non-GAAP diluted net income (loss) per share.
Amortization of purchased intangible assets. In accordance with
GAAP, amortization of purchased intangible assets in cost of revenue
includes amortization of software and other technology assets related to
acquisitions and acquisition-related charges and in operating expenses
includes amortization of other purchased intangible assets such as
customer lists and covenants not to compete. Acquisition activities are
managed on a corporate-wide basis and the operating budgets of
functional or geographic managers do not include acquisition-related
costs impacting their function’s income
(loss). We exclude these amounts from our measures of segment
performance and from our budget and planning process. We exclude
amortization of intangible assets from our non-GAAP financial measures
for these reasons and the other reasons stated above.
Restructuring expense and infrequent charges. Our non-GAAP
financial measures exclude restructuring expense and infrequent charges.
Restructuring expense consists of expenses for excess facilities, lease
termination costs, and expenses for severance charges related to
reductions in our workforce. Infrequent charges primarily relate to
severance expense associated with senior executive management. The
operating budgets of functional or geographic managers do not include
restructuring expenses and infrequent charges or the financial impact to
their functions or geographies income (loss). Accordingly, we exclude
restructuring expenses and infrequent charges from measures of
functional or geographic performance. We also exclude these expenses in
non-GAAP financial measures for these reasons and the other reasons
stated.
Chordiant refers to these non-GAAP financial measures in evaluating and
measuring the performance of our ongoing operations and for planning and
forecasting in future periods. These non-GAAP financial measures also
facilitate our internal comparisons to historical operating results.
Historically, we have reported similar non-GAAP financial measures and
believe that the inclusion of comparative numbers provides consistency
in our financial reporting. We compute non-GAAP financial measures using
the same consistent method from quarter-to-quarter and year-to-year.
Chordiant believes that non-GAAP measures have significant limitations
in that they do not reflect all of the amounts associated with
Chordiant’s financial results as determined in accordance with GAAP and
that these measures should only be used to evaluate Chordiant’s
financial results in conjunction with the corresponding GAAP measures.
Because of these limitations, Chordiant qualifies the use of non-GAAP
financial information in a statement when non-GAAP information is
presented. In addition, the exclusion of the charges and expenses
indicated above from the non-GAAP financial measures presented does not
indicate an expectation by Chordiant management that similar charges and
expenses will not be incurred in subsequent periods.
