Callidus Software Losses Mount

Callidus Software: Losses Mount on Higher Q1 Revenues

Shares of Callidus Software, Inc. (CALD - Snapshot Report, Hold) are off over 6% in trading today following the company’s Q1 earnings release yesterday. Q1 revenues of $25.9 million was higher than our estimate of $25.2 million and consensus of $24.9 million, while non-GAAP EPS came in lower than expected. Q1 loss of $(0.05) per share was significantly lower than our and consensus estimate of a loss of $(0.02) per share.

Callidus is one of the major providers of Enterprise Incentive Management (EIM) software systems. EIM software helps large enterprises across many industries determine and automate total compensation packages. Q1 revenue upside came mainly from the Services & Other segment, while recurring revenues came in line with expectation.

The earning loss for the quarter, on the other hand, was mostly a result of the company’s increased use of third-party vendors, which impacted gross margins negatively during the quarter.

The company guided Q2 revenue of $22 - $24 million and did not provide any specific EPS guidance. Q2 projected revenue at the mid-point is lower than our current expectation of $25.1 million. The company guided operating expense between $12.8 million and  $13.8 million, which includes share-based compensation of $1.3 million. The company exited the quarter with $33.9 million in cash & equivalents and short-term investments in its balance sheet.

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