Chordiant Software, Inc. (Nasdaq: CHRD), the leading provider of
Customer Experience (Cx(TM)) software and services, today announced
its financial results for the third quarter of fiscal 2007 ended
June 30, 2007, and filed its Quarterly Report on Form 10-Q with the
Securities and Exchange Commission (SEC). Third Quarter Fiscal 2007
Financial Highlights Record bookings of $45.8 million; Record
revenue of $36.8 million, up 36% year over year; Record deferred
revenue of $76.6 million, up 160% since the end of fiscal 2006;
Record backlog of $87.6 million; Record fully diluted GAAP EPS of
$0.19; Positive cash flow from operations in fiscal Q3; and Record
cash, cash equivalents, restricted cash and marketable securities
of $85.4 million. Business Highlights Signed three transactions
greater than $1 million with new and existing customers; Announced
the general availability of the Chordiant Collections module which
empowers financial institutions to differentiate themselves and
build customer loyalty through their collections efforts by
utilizing real-time predictive decisioning enabling agents to
resolve delinquencies while optimizing customer service; Based on
the availability of the Chordiant Collections module, began
recognizing revenue from the Citibank transaction; and Chordiant
and First Data International (FDI) announced a partnership whereby
FDI will deliver a cards servicing contact center solution as a
service (SaaS) powered by Chordiant technology to FDI�s global
customers. The SaaS offering utilizes Chordiant�s Enterprise
Platform, Decision Management Suite and Contact Center Advisor as
the basis for this highly scalable, multi-tenant system. "This was
another record quarter for Chordiant and we are extremely pleased
with the overall performance of the company,� said Steven R.
Springsteel, Chairman and Chief Executive Officer. �Market demand
for our products remains strong and our customers are continuing to
make sizable, long term investments in our solutions. This quarter
is another proof point that we have a great team in place as well
as the operational processes to continue to grow a profitable
business." Customer Wins Chordiant entered into three $1 million
plus transactions with new and existing customers including a
transaction with FDI, a leading provider of electronic commerce and
payment solutions, one with Touring SA, Belgium�s leading motorist
association for breakdown, travel and medical assistance, and one
with a leading health insurance benefits company. �We entered into
several large transactions during the quarter as enterprises
continue to rely on our platform to provide better customer
experiences,� said Steve Springsteel. �Our open architecture,
proven implementation methodologies and unmatched application
functionality are differentiating us from our competitors.�
Bookings For the third quarter of fiscal 2007, Chordiant reported
bookings of $45.8 million, compared to the $23.4 million reported
for the third quarter of fiscal 2006. Third Quarter Fiscal Year
2007 Financial Results Total revenues for the third quarter of
fiscal 2007 were a record $36.8 million, an increase of 36% from
the $27.0 million reported for the three months ended June 30,
2006. For the nine month period ended June 30, 2007, total revenues
were $92.5 million, an increase of 22% from the $75.9 million
reported for the nine month period of fiscal 2006. License revenues
for the third quarter of fiscal 2007 were $14.1 million, compared
to $10.3 million reported for the three months ended June 30, 2006.
For the nine month period ended June 30, 2007, license revenues
were $40.1 million, compared to $32.6 million reported for the same
period of fiscal 2006. Service revenues for the third quarter of
fiscal 2007 were $22.7 million, compared to $16.8 million reported
for the same period of fiscal 2006. For the nine month period ended
June 30, 2007, service revenues were $52.3 million, compared to
$43.3 million for the same period of fiscal 2006. Chordiant posted
a record GAAP net income of $6.5 million, or a fully diluted GAAP
net income of $0.19 per share for the third quarter of fiscal 2007
ended June 30, compared to a GAAP net loss of $3.7 million, or a
basic and fully diluted $0.12 per share net loss for the three
months ended June 30, 2006. Chordiant reported record third quarter
fiscal 2007 non-GAAP net income of $7.1 million, or a fully diluted
non-GAAP net income of $0.21 per share, compared to a non-GAAP net
loss of $1.9 million, or a non-GAAP net loss of $0.06 per share for
the three months ended June 30, 2006. Non-GAAP net income excludes
stock-based compensation, amortization of purchased intangible
assets, restructuring expense and infrequent charges. Deferred
Revenue The record deferred revenue balance of $76.6 million for
the third quarter of fiscal 2007 ended June 30 increased 160% as
compared to the ending balance of $29.5 million at September 30,
2006. Backlog of Business At June 30, 2007, Chordiant's backlog,
which includes deferred revenue, increased 141% to $87.6 million,
as compared to $36.4 million at the end of September 30, 2006. This
marks the highest amount of backlog in Chordiant�s history. The
year to date change in backlog is primarily related to the
continued signing of new license agreements and several large
maintenance renewals including a three year renewal with Lloyds
signed this quarter. Cash Position Chordiant increased its cash,
cash equivalents, restricted cash and marketable securities
position by $39.6 million to $85.4 million at June 30, 2007, as
compared to $45.8 million at the end of September 30, 2006.
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 Generally Accepted
Accounting Principles, please see the section of the accompanying
tables titled "non-GAAP Financial Measures" as well as the related
Table C which follows it. Updates Fiscal Year 2007 Financial
Guidance Chordiant expects to be in the upper half of our
previously published guidance for revenue, GAAP and non-GAAP
operating margins and GAAP and non-GAAP earnings per share.
Chordiant expects to slightly exceed the upper end of our
previously published bookings guidance of $170 million. Chordiant
expects deferred revenue to remain relatively flat for the
remainder of fiscal 2007 as compared to our June 30, 2007 balance.
Chordiant expects to exit fiscal 2007 with ending cash, restricted
cash and marketable securities balances that slightly exceeds the
upper end of our previously published guidance of $85 million.
Reiterates Fiscal Year 2008 Financial Guidance Chordiant is
reiterating its previous financial guidance for fiscal year 2008
that was issued on April 30, 2007. Conference Call and Webcast
Scheduled for July 31, 2007 Chordiant Software will host a
conference call and webcast to discuss its final financial results
for the third quarter of fiscal 2007 ended June 30, and also its
fiscal 2007 and fiscal 2008 financial guidance on July 31, 2007 at
2:00 p.m. (PT), 5:00 p.m. (ET) and 22:00 (GMT). The live audio
webcast will be available to investors and the general public from
the following website:
http://www.veracast.com/webcasts/chordiant2/11113125.cfm
Alternatively, you may 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
Tuesday, July 31, 2007, beginning at approximately 5:00 p.m. (PT),
8:00 p.m. (ET), 06:00 (GMT) for seven days after the live call. The
replay can be accessed by dialing (800) 405-2236, access code
11093418#. About Chordiant Software, Inc. Chordiant helps leading
global brands such as HSBC, Barclay's, CIBC and Capital One deliver
the best possible customer experience. Unlike traditional business
applications, Chordiant Customer Experience (Cx) solutions blend
insight with predictive desktop decisioning to uniquely understand
the customer's behavior. 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
http://www.chordiant.com. Chordiant is headquartered in Cupertino,
California. 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,"
"anticipates," "plans," "expects," "will," "would," "guidance,"
"projects" and similar expressions which are intended to identify
forward-looking statements. There are a number of important factors
that could cause the results or outcomes discussed herein to differ
materially from those indicated by these forward-looking
statements, including, among others, whether Chordiant's customers
will honor their contractual commitments, whether the Company will
be able to achieve its revenue targets and market acceptance of its
products. Further information on potential factors that could
affect Chordiant are included in risks detailed from time to time
in Chordiant's Securities and Exchange Commission filings,
including, without limitation, Chordiant's Annual Report on Form
10-K for the period ended September 30, 2006, and Chordiant's most
recent quarterly report on Form 10-Q. These filings are 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. Chordiant Software, Inc. NON-GAAP FINANCIAL MEASURES The
accompanying press release dated July 31, 2007 contains non-GAAP
financial measures. Table C reconciles the non-GAAP financial
measures contained in the press release to the most directly
comparable financial measures prepared in accordance with Generally
Accepted Accounting Principles (GAAP). These non-GAAP financial
measures include non-GAAP total cost of revenue, non-GAAP gross
profit and related gross profit as a percentage of revenue,
non-GAAP profit (loss) from operations and related non-GAAP profit
(loss) as a percentage of revenue, 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 the Company 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 share-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 share-based compensation
expenses, which consist of expenses for stock options and
restricted stock. Additionally, recent comparative periods also
include 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 share-based compensation expenses impacting their
function�s income (loss) and, accordingly, we exclude share-based
compensation expenses from our measures of functional or geographic
performance. While share-based compensation is a significant
expense affecting our results of operations, management excludes
share-based compensation from our budget and planning process. We
exclude share-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 SFAS 123R 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
idle facilities and expenses for severance charges related to
reductions in our workforce. Infrequent charges primarily relate to
severance expense associated with 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. Table A CHORDIANT SOFTWARE, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per
share data) (unaudited) � Three Months Ended June 30, Nine Months
Ended June 30, 2007 � 2006 � � 2007 � � 2006 � � Revenues: License
$ 14,094 $ 10,257 $ 40,137 $ 32,588 Service � 22,667 � 16,769 � �
52,328 � � 43,268 � Total revenues 36,761 27,026 92,465 75,856 Cost
of revenues: License 419 398 1,456 1,360 Service 9,264 8,965 22,353
23,217 Amortization of intangible assets � 303 � 303 � � 908 � �
908 � Total cost of revenues � 9,986 � 9,666 � � 24,717 � � 25,485
� Gross profit � 26,775 � 17,360 � � 67,748 � � 50,371 � Operating
expenses: Sales and marketing 9,065 7,976 24,643 24,876 Research
and development 7,328 7,780 20,919 18,159 General and
administrative 4,584 4,842 15,490 14,806 Restructuring expense � -
� - � � 6,727 � � - � Total operating expenses � 20,977 � 20,598 �
� 67,779 � � 57,841 � Income (loss) from operations 5,798 (3,238 )
(31 ) (7,470 ) Interest income, net 682 329 1,478 809 Other income
(expense), net � 213 � (623 ) � 377 � � (536 ) Income (loss) before
income taxes 6,693 (3,532 ) 1,824 (7,197 ) Provision for income
taxes � 240 � 150 � � 1,146 � � 441 � Net income (loss) $ 6,453 $
(3,682 ) $ 678 � $ (7,638 ) � � Net income (loss) per share: Basic
$ 0.20 $ (0.12 ) $ 0.02 � $ (0.25 ) Diluted $ 0.19 $ (0.12 ) $ 0.02
� $ (0.25 ) � Weighted average shares used in computing net income
(loss) per share: Basic � 32,743 � 31,214 � � 32,208 � � 30,943 �
Diluted � 34,384 � 31,214 � � 33,431 � � 30,943 � � Table B
CHORDIANT SOFTWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands, except per share data) (unaudited) � June 30, September
30, � 2007 � 2006 ASSETS Current assets: Cash and cash equivalents
$ 73,459 $ 45,278 Marketable securities 11,587 - Restricted cash 44
185 Accounts receivable 30,187 19,025 Prepaid expenses and other
current assets � 6,235 � � 5,210 � Total current assets 121,512
69,698 Restricted cash - long-term 260 334 Property and equipment,
net 2,710 2,630 Goodwill 32,044 32,044 Intangible assets, net 3,028
3,937 Other assets � 3,184 � � 2,860 � Total assets $ 162,738 � $
111,503 � � LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 4,140 $ 7,665 Accrued expenses
14,168 15,706 Deferred revenue 50,166 23,909 Current portion of
capital lease obligations � - � � 95 � Total current liabilities
68,474 47,375 Deferred revenue - long-term 26,457 5,596
Restructuring costs, net of current portion 3,021 1,239 Other
long-term liabilities � 400 � � 68 � Total liabilities � 98,352 � �
54,278 � � Stockholders' equity: Common stock, $0.01 par value;
32,858 and 32,030 shares issued and outstanding at June 30, 2007
and September 30, 2006 respectively 33 32 Additional paid-in
capital 292,501 286,440 Accumulated deficit (232,265 ) (232,943 )
Accumulated other comprehensive income � 4,117 � � 3,696 � Total
stockholders' equity � 64,386 � � 57,225 � Total liabilities and
stockholders' equity $ 162,738 � $ 111,503 � � Table C Chordiant
Software, Inc. Reconciliation of Non-GAAP Financial Measures to
Most Directly Comparable GAAP Financial Measures (In thousands,
except per share amounts) (Unaudited) � � Three Months Ended Nine
Months Ended � June 30, June 30, June 30, June 30, � 2007 � � 2006
� � 2007 � � 2006 � � GAAP total cost of revenue $ 9,986 $ 9,666 $
24,717 $ 25,485 Amortization of purchased intangible assets (303 )
(303 ) (908 ) (908 ) Stock based compensation expense � (63 ) � (92
) � (224 ) � (176 ) Non-GAAP total cost of revenue $ 9,620 � $
9,271 � $ 23,585 � $ 24,401 � � � GAAP gross profit $ 26,775 $
17,360 $ 67,748 $ 50,371 Amortization of purchased intangible
assets 303 303 908 908 Stock based compensation expense � 63 � � 92
� � 224 � � 176 � Non-GAAP gross profit $ 27,141 � $ 17,755 � $
68,880 � $ 51,455 � � � GAAP income (loss) from operations $ 5,798
$ (3,238 ) $ (31 ) $ (7,470 ) Amortization of purchased intangible
assets 303 303 908 908 Restructuring expenses and non-recurring
charges - - 6,727 - Stock based compensation expense � 365 � �
1,456 � � 2,234 � � 3,694 � Non-GAAP income (loss) from operations
$ 6,466 � $ (1,479 ) $ 9,838 � $ (2,868 ) � � GAAP net income
(loss) $ 6,453 $ (3,682 ) $ 678 $ (7,638 ) Amortization of
purchased intangible assets 303 303 908 908 Restructuring expenses
and non-recurring charges - - 6,727 - Stock based compensation
expense � 365 � � 1,456 � � 2,234 � � 3,694 � Non-GAAP net income
(loss) $ 7,121 � $ (1,923 ) $ 10,547 � $ (3,036 ) � � GAAP net
income (loss) per basic share $ 0.20 $ (0.12 ) $ 0.02 $ (0.25 )
Amortization of purchased intangible assets $ 0.01 $ 0.01 $ 0.03 $
0.03 Restructuring expenses and non-recurring charges $ - $ - $
0.21 $ - Stock based compensation expense $ 0.01 � $ 0.05 � $ 0.07
� $ 0.12 � Non-GAAP net income (loss) per basic share $ 0.22 � $
(0.06 ) $ 0.33 � $ (0.10 ) � Shares used in basic per share amounts
� 32,743 � � 31,214 � � 32,208 � � 30,943 � � GAAP net income
(loss) per fully diluted share $ 0.19 $ (0.12 ) $ 0.02 $ (0.25 )
Amortization of purchased intangible assets $ 0.01 $ 0.01 $ 0.03 $
0.03 Restructuring expenses and non-recurring charges $ - $ - $
0.20 $ - Stock based compensation expense $ 0.01 � $ 0.05 � $ 0.07
� $ 0.12 � Non-GAAP net income (loss) per fully diluted share $
0.21 � $ (0.06 ) $ 0.32 � $ (0.10 ) � Shares used in fully diluted
per share amounts � 34,384 � � 31,214 � � 33,431 � � 30,943 � �
Table C Chordiant Software, Inc. Reconciliation of Non-GAAP
Financial Measures to Most Directly Comparable GAAP Financial
Measures (In Thousands, except per share amounts) (Unaudited) � �
Three months ended June 30, 2007 Total Operating Expenses General
Research Sales and Total and and Adminis- Restructuring Operating
Development Marketing � trative � Expense � Expenses � GAAP
operating expenses $ 7,328 $ 9,065 $ 4,584 $ - $ 20,977 Stock based
compensation expense (134 ) 1 (169 ) - (302 ) Restructuring and
non-recurring expense � - � � - � � - � � - � � - � Non-GAAP
operating expenses $ 7,194 � $ 9,066 � $ 4,415 � $ - � $ 20,675 � �
� Three months ended June 30, 2006 Total Operating Expenses General
Research Sales and Total and and Adminis- Restructuring Operating
Development marketing � trative � Expense � Expenses � GAAP
operating expenses $ 7,780 $ 7,976 $ 4,842 $ - $ 20,598 Stock based
compensation expense (124 ) (571 ) (669 ) - (1,364 ) Restructuring
and non-recurring expense � - � � - � � - � � - � � - � Non-GAAP
operating expenses $ 7,656 � $ 7,405 � $ 4,173 � $ - � $ 19,234 � �
� � Nine months ended June 30, 2007 Total Operating Expenses
General Research Sales and Total and and Adminis- Restructuring
Operating Development Marketing � trative � Expense � Expenses �
GAAP operating expenses $ 20,919 $ 24,643 $ 15,490 $ 6,727 $ 67,779
Stock based compensation expense (396 ) (565 ) (1,049 ) - (2,010 )
Restructuring and non-recurring expense � - � � - � � - � � (6,727
) � (6,727 ) Non-GAAP operating expenses $ 20,523 � $ 24,078 � $
14,441 � $ - � $ 59,042 � � � Nine months ended June 30, 2006 Total
Operating Expenses General Research Sales and Total and and
Adminis- Restructuring Operating Development marketing � trative �
Expense � Expenses � GAAP operating expenses $ 18,159 $ 24,876 $
14,806 $ - $ 57,841 Stock based compensation expense (252 ) (1,907
) (1,359 ) - (3,518 ) Restructuring and non-recurring expense � - �
� - � � � - � � - � Non-GAAP operating expenses $ 17,907 � $ 22,969
� $ 13,447 � $ - � $ 54,323 �
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