Callidus Software Inc. (CALD)
Q2 2010 Earnings Call
July 29, 2010; 04:30 pm ET
Leslie Stretch - President & Chief Executive Officer
Ron Fior - Senior Vice President & Chief Financial Officer
Lorna Heynike - Senior Vice President - Marketing
Michael Nemeroff - Wedbush
Ian Kell - Northland Capital Market
Kevin Liu - B. Riley & Co.
John Zaro - Bourgeon Capital
Greg Speicher - Moss Creek
Ted Ketterer - TK Associates
Gene Weber - Weber Capital Management
Previous Statements by CALD
» Callidus Software Inc. Q1 2010 Earnings Call Transcript
» Callidus Software Inc. Q1 2009 Earnings Call Transcript
» Callidus Software Inc. Q4 2008 Earnings Call Transcript
Good day ladies and gentlemen and welcome to the second quarter 2010 Callidus Software Incorporated earnings conference call. My name is Dominic and I’ll be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions).
I would now like to turn the conference over to your host for today, Ms. Lorna Heynike, Senior Vice President at Callidus Software; please Proceed.
Thank you and welcome to Callidus Software’s second quarter 2010 conference call. With me on the call today is Leslie Stretch, President and Chief Executive Officer, and Ron Fior, Senior Vice President and Chief Financial Officer of Callidus software.
Shortly after the market closed today, Callidus issued financial results for the second quarter of 2010. The press release was posted on the wire and is available on our website at www.callidussoftware.com.
We would like to remind you that during the course of this conference call we will make forward-looking statements, including predictions and estimates. These statements involve a number of risks and uncertainties, including statements regarding our business strategy, our on-demand bookings and business, estimates of third quarter 2010 total revenue, recurring revenue, services revenue, perpetual license revenues, operating expenses, margins and profits, stock based compensation and restructuring charges, as well as sales and marketing expectations and strategies, product development and strategic partnerships and operating results in the second half of 2010.
Actual results may differ materially from any future performance suggested in our forward-looking statements. We refer you to the company’s Form 10-K for the year 2009, as well as the company’s Form 10-Q for the first quarter of 2010 on file with the SEC, for important risk factors that could cause actual results to differ materially, from those contained in any forward-looking statements. We expressly disclaim any obligation to update this forward-looking information.
On today’s call, Leslie will begin with comments about our overall business and financial results and then Ron will discuss the financials in greater detail. We will conclude with a Q-&-A session.
With that said, let me turn things over to Leslie.
Thanks Lorna. Good afternoon everyone and thank you for joining us. I will be speaking about the following topics on today’s call: Our Q2 performance, our services business, our retention rates and renewal rates, worldwide sales coverage, our product roadmap developments and finally our outlook for Q3 and for the rest of the year.
Let me start with Q2 performance. I am pleased with our progress in Q2. We grew overall revenues sequentially for the second quarter in a row, and we have now had three quarters of sequential growth in our recurring revenue base and the on-demand business. Our recurring revenues now account for over 75% of total revenues.
I’m especially pleased with the significant progress we have made in the bottom line. Recurring revenues have grown 12% year-over-year, while we have continued to reduce our operating costs significantly. From Q1 to Q2, we reduced our non-GAAP operating loss from $4.3 million to $1.1 million. These results move us close to profitability in the second half of the year.
Our cash position ended the quarter nicely ahead of forecast. Thanks to posted cash from operations, as well as solid working capital management. On the customer front, we signed contracts in North America and Latin America, in Europe and in Asia-Pacific, including contracts with brands such as MetroPCS, Comcast, AXA Apac, Isilon Systems, PINI Insurance, Horizon Blue Cross/Blue Shield of New Jersey, Vodafone, Vivo Brazil and Oppenheimer Financial, Tele2 in the Nordics and CoBiz Financial.
We also signed six multi-year contracts, including renewal of one of our largest on-demand lines, who made a three-year irrevocable commitment at a total contract value of approximately $16.5 million. Four other customers made multi-year commitments in excess of $1 million.
Our total deferred revenue increased once again to new a high of $29.2 million. We grew billings by 75% over Q2 of 2009. Billings are calculated as the change in the current portion of deferred revenue plus returning revenue.
Q2 was also a big quarter for customers going into production, as we went live with over 24 customers, including AXA Hungary, CareFirst of Maryland, Claro Brazil, JPMorgan Chase, Vivo Brazil, Vodafone Spain, Sanofi Aventis, Konica Minolta and Lenovo with Truquito [ph]. We’ve since taken another five company’s live in Q3, including Fujitsu and Veragie [ph] on the monitor platform.
Let me now talk about our services business. Whilst we faced challenges in growing a profitable business in consulting services, a large part of the challenge was due to the nature of our returning revenue business model. Revenue does not always flow consistently with bookings and is often dependent on customers’ production status with our solutions, a common situation for on-demand businesses.
Climbing up production stages may vary based on a number of factors, depending on the customers’ needs and their circumstances. We are carefully monitoring go-live dates, to ensure that we begin to recognize revenue as early as feasible. Even with these challenges, I am pleased to report that we had one of our best consulting bookings quarter in the recent times.