Chordiant Software, Inc. (Nasdaq:CHRD), the leading provider of
Customer Experience (Cx�) software and services, today announced
its financial results for the fourth quarter and fiscal year 2008
ended September 30, 2008, and filed its Annual Report on Form 10-K
with the Securities and Exchange Commission. Fourth Quarter Fiscal
Year 2008 Financial Highlights Total revenues of $28.4 million;
License revenues of $9.5 million; GAAP (Generally Accepted
Accounting Principles) net income of $1.3 million, or $0.04 per
fully diluted share; Non-GAAP net income of $1.7 million, or $0.05
per fully diluted share; Bookings of $14.4 million; Ending backlog
of $70.1 million; and Ending cash, cash equivalents and restricted
cash of $55.6 million. Fiscal Year 2008 Financial Highlights Total
revenues of $113.0 million; License revenues of $34.1 million; GAAP
net income of $1.1 million, or $0.03 per fully diluted share;
Non-GAAP net income of $5.9 million, or $0.18 per fully diluted
share; and Bookings of $111.0 million. Fiscal Year 2008 Business
Highlights Signed seven new transactions greater than $1 million;
Signed $26.1 million transaction with Vodafone, the largest in the
Company�s history; Reported non-GAAP profits in each quarter,
bringing its total to seven consecutive quarters of non-GAAP
profitability; Ended the year with over 1,300 Chordiant experienced
partner resources through its �Partner Enablement� model; Continued
technical leadership through new product releases of Collections
Manager, Decisioning, Enterprise Case Management, Marketing
Director, Recommendation Advisor, and Teller; Received industry
honors including: Intelligent Enterprise�s �2008 Editor�s Choice
Award;� IBM�s �2008 IMPACT Business Process Management Award;� �Fin
Tech 100;� Software Magazine�s �Software 500;� and O2�s �Vision
Award.� �Although our fourth quarter results fell short of our
original expectations, I am pleased that Chordiant was able to post
its seventh consecutive quarter of non-GAAP profitability,� said
Steve Springsteel, President and Chief Executive Officer. �While
overall market conditions remain challenging, what is paramount in
times like these is our customers� focus on reducing their customer
churn and in leveraging their customer base. This demand plays to
the strength of our broad suite of products.� Fourth Quarter Fiscal
Year 2008 Financial Results Total revenues for the fourth quarter
of fiscal year 2008 were $28.4 million, down 7.5% from the prior
quarter and down 11.5% from the $32.1 million for the fourth
quarter of fiscal year 2007. License revenues for the fourth
quarter of fiscal year 2008 were $9.5 million, down from the $11.0
million reported in the prior quarter and $13.9 million in the
fourth quarter of fiscal year 2007. Service revenues for the fourth
quarter of fiscal year 2008 were $18.9 million, compared to $19.8
million in the prior quarter and $18.2 million reported for the
same period of fiscal year 2007. Chordiant reported GAAP net income
of $1.3 million, or fully diluted GAAP earnings per share of $0.04,
for the fourth quarter of fiscal year 2008 compared to $5.3 million
and $0.16, respectively, for the same period of fiscal year 2007.
Chordiant reported fourth quarter fiscal year 2008 non-GAAP net
income of $1.7 million, or fully diluted non-GAAP earnings per
share of $0.05, compared to non-GAAP net income of $6.3 million, or
fully-diluted non-GAAP earnings per share of $0.18, for the fourth
quarter of fiscal year 2007. Non-GAAP net income excludes
stock-based compensation expense, the amortization of purchased
intangible assets and the non-cash tax benefit relating to net
operating loss carryforwards. Deferred Revenue Deferred revenue at
the end of the fourth quarter and fiscal year 2008 was $46.3
million, a decrease of $21.7 million as compared to the ending
balance of $68.0 million at September 30, 2007. Deferred revenue
does not include future amounts due under the Vodafone transaction
that was closed in the first quarter of fiscal year 2008. Bookings
Bookings were $14.4 million for the fourth quarter, compared to
$26.4 million in the prior quarter and $20.0 million in the same
period last year. Bookings for fiscal year 2008 totaled $111.0
million, compared to $163.8 million in the prior year. Backlog of
Business At September 30, 2008, Chordiant's backlog, which includes
deferred revenue, decreased to $70.1 million from $89.6 million at
the end of the prior quarter. The primary reasons for the decrease
during the period were 1) the adverse impact of foreign exchange
rates on our non-US dollar denominated backlog; 2) the recognition
of license revenues associated with Vodafone and through progress
on several percentage-of-completion transactions; 3) the
recognition of service revenue for hourly work completed; and 4)
support revenue that was recognized on pre-paid multi-year
agreements. Backlog includes $12.6 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 $34.9 million during the fiscal year to
$55.6 million at September 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 quarters of fiscal
year 2008 for the share repurchase program which concluded on April
30, 2008. Fiscal Year 2008 Financial Results Total revenues for
fiscal year 2008 were $113.0 million, compared to a record $124.5
million for fiscal year 2007. License revenues for fiscal year 2008
were $34.1 million, down from $54.1 million reported in the prior
year. Service revenues for fiscal year 2008 were $78.9 million
compared to $70.5 million for the prior year. Chordiant reported
GAAP net income of $1.1 million, or fully diluted GAAP earnings per
share of $0.03, for fiscal year 2008, compared to $6.0 million and
$0.18, respectively, for the same period of fiscal year 2007.
Chordiant reported fiscal year 2008 non-GAAP net income of $5.9
million, or fully diluted non-GAAP earnings per share of $0.18,
compared to non-GAAP net income of $17.1 million, or fully diluted
non-GAAP earnings per share of $0.51, for fiscal year 2007.
Non-GAAP net income excludes stock-based compensation expense, the
amortization of purchased intangible assets and the non-cash tax
benefit relating to net operating loss carryforwards. Q1 Fiscal
Year 2009 Restructuring As previously announced, on October 8, 2008
in its first quarter of fiscal year 2009, Chordiant initiated a
restructuring plan intended to align its resources and cost
structure with expected future revenues. The plan included a
reduction of approximately 13% of its permanent workforce, as well
as a reduction in third party consultants. Savings from the October
restructuring is expected to result in annual operating cost
savings of between $5 and $6 million as compared to fiscal year
2008. 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 Table C which follows it. Fiscal
Year 2009 Financial Guidance �Current market conditions make it
very challenging to forecast new bookings,� stated Mr. Springsteel.
�Therefore, today we will only be providing revenue guidance for
fiscal year 2009, since our current backlog and strong maintenance
renewal rates provide us solid visibility into these targets.�
Management currently expects the following revenue and earnings
performance in fiscal year 2009: Total revenues for fiscal year
2009 are expected to range from $95 million to $105 million;
Although the Company is not providing specific earnings targets, it
does expect to be profitable on a non-GAAP basis for fiscal year
2009. Conference Call and Webcast Information Chordiant will host a
conference call and webcast to discuss its financial results for
the fourth quarter and fiscal year 2008 ended September 30, 2008
today, Thursday, November 20, 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/chordiant2/78120198.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, November 20, 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 11122384#. 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. Cautionary Note
Regarding Forward Looking Statements This Press Release includes
"forward-looking statements" within the meaning of Section�27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements
regarding the Company�s expected cost savings as a result of its
recent restructuring; and the Company�s expected revenue and
non-GAAP profitability in fiscal year 2009. Forward-looking
statements are generally identified by words such as "believes,"
�expects," "guidance," and similar expressions. 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. Such risks and uncertainties include,
but are not limited to, whether the Company is able to close
license and services transactions with new and existing customers
and achieve its revenue targets; fluctuations in customer spending,
particularly in the banking and insurance industries, due to
consolidation, economic, geopolitical and other factors; and the
Company�s dependence on a small number of customers for a
substantial portion of its revenue. These and other risks are set
forth in the Company�s Annual Report on Form 10-K for the fiscal
year ended September 30, 2008. These filings are available on a
website maintained by the Securities and Exchange Commission at
http://www.sec.gov. The forward-looking statements and risks stated
in this Press Release are based on information available to the
Company today. The Company assumes no obligation to update them.
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 November 20, 2008 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 GAAP. These non-GAAP financial measures include
non-GAAP total cost of revenue, non-GAAP gross profit, non-GAAP
income from operations, non-GAAP net income and basic and diluted
non-GAAP net income 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, non-cash tax expense or benefit 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 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. 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. Non-cash tax expense or
benefit relating to Net Operating Loss carryforwards. Our non-GAAP
financial measures exclude non-cash tax expenses or benefits. These
amounts include (i) the income tax benefit in fiscal 2008
attributable to the release of the valuation allowance on certain
post-acquisition net operating losses and (ii) the impact of the
utilization of pre- and post-acquisition net operating losses to
offset certain income tax expenses expected to arise in future
periods directly as a result of the release of the valuation
allowance. We exclude these expenses or benefits because they are
non-cash expenses or benefits that we believe are not reflective of
how we view our operating performance. 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. CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share data) � �
� � (Unaudited) (Audited) Three Months Ended September 30, Years
Ended September 30, � 2008 � � 2007 � � 2008 � � 2007 � Revenues:
License $ 9,537 $ 13,915 $ 34,111 $ 54,052 Service � 18,861 � �
18,167 � � 78,853 � � 70,495 Total revenues 28,398 32,082 112,964
124,547 Cost of revenues: License 138 357 1,059 1,813 Service 8,290
7,976 34,012 30,329 Amortization of intangible assets � 303 � � 303
� � 1,211 � � 1,211 Total cost of revenues � 8,731 � � 8,636 � �
36,282 � � 33,353 Gross profit � 19,667 � � 23,446 � � 76,682 � �
91,194 Operating expenses: Sales and marketing 8,823 7,954 34,722
32,597 Research and development 5,787 6,627 25,598 27,546 General
and administrative 4,308 4,408 17,995 19,898 Restructuring expense
� - � � (185 ) � - � � 6,543 Total operating expenses � 18,918 � �
18,804 � � 78,315 � � 86,584 Income (loss) from operations 749
4,642 (1,633 ) 4,610 Interest income, net 549 719 2,383 2,198 Other
income (expense), net � (154 ) � 444 � � 417 � � 822 Income before
income taxes 1,144 5,805 1,167 7,630 Provision for (benefit from)
income taxes � (116 ) � 456 � � 102 � � 1,602 Net income $ 1,260 �
$ 5,349 � $ 1,065 � $ 6,028 � � Net income per share: Basic $ 0.04
� $ 0.16 � $ 0.03 � $ 0.19 Diluted $ 0.04 � $ 0.16 � $ 0.03 � $
0.18 � � Weighted average shares used in computing net income per
share: Basic � 29,995 � � 33,066 � � 31,658 � � 32,425 Diluted �
30,208 � � 34,217 � � 31,957 � � 33,261 Table B CHORDIANT SOFTWARE,
INC. CONSOLIDATED BALANCE SHEETS (in thousands) (Audited) � �
September 30, September 30, � 2008 � � 2007 � ASSETS Current
assets: Cash and cash equivalents $ 55,516 $ 77,987 Marketable
securities - 12,159 Accounts receivable, net 24,873 27,381 Prepaid
expenses and other current assets � 8,168 � � 5,352 � Total current
assets 88,557 122,879 Property and equipment, net 3,165 3,638
Goodwill 22,608 32,044 Intangible assets, net 1,514 2,725 Deferred
tax assets - non-current 6,849 - Other assets � 2,007 � � 3,529 �
Total assets $ 124,700 � $ 164,815 � � LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 7,711
$ 8,080 Accrued expenses 9,456 13,804 Deferred revenue � 33,503 � �
44,548 � Total current liabilities 50,670 66,432 Deferred revenue -
long-term 12,831 23,434 Other liabilities - non-current 818 646
Restructuring costs, net of current portion � 529 � � 942 � Total
liabilities � 64,848 � � 91,454 � � Stockholders' equity: Common
stock 30 33 Additional paid-in capital 281,910 295,650 Accumulated
deficit (225,850 ) (226,915 ) Accumulated other comprehensive
income � 3,762 � � 4,593 � Total stockholders' equity � 59,852 � �
73,361 � Total liabilities and stockholders' equity $ 124,700 � $
164,815 � Table C CHORDIANT SOFTWARE, INC. RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP
FINANCIAL MEASURES (in thousands, except per share data)
(Unaudited) � � � � � Three Months Ended Years Ended � Sept. 30,
Sept. 30, Sept. 30, Sept. 30, � 2008 � � 2007 � � 2008 � � 2007 � �
GAAP total cost of revenue $ 8,731 $ 8,636 $ 36,282 $ 33,353
Amortization of purchased intangible assets (303 ) (303 ) (1,211 )
(1,211 ) Stock-based compensation expense � (79 ) � (89 ) � (490 )
� (313 ) Non-GAAP total cost of revenue $ 8,349 � $ 8,244 � $
34,581 � $ 31,829 � � � GAAP gross profit $ 19,667 $ 23,446 $
76,682 $ 91,194 Amortization of purchased intangible assets 303 303
1,211 1,211 Stock-based compensation expense � 79 � � 89 � � 490 �
� 313 � Non-GAAP gross profit $ 20,049 � $ 23,838 � $ 78,383 � $
92,718 � � � GAAP income (loss) from operations $ 749 4,642 $
(1,633 ) $ 4,610 Amortization of purchased intangible assets 303
303 1,211 1,211 Restructuring expenses and infrequent charges -
(185 ) - 6,791 Stock-based compensation expense � 609 � � 786 � �
4,125 � � 3,020 � Non-GAAP income from operations $ 1,661 � $ 5,546
� $ 3,703 � $ 15,632 � � � GAAP net income $ 1,260 $ 5,349 $ 1,065
$ 6,028 Amortization of purchased intangible assets 303 303 1,211
1,211 Restructuring expenses and infrequent charges - (185 ) -
6,791 Stock-based compensation expense 609 786 4,125 3,020 Deferred
tax benefit � (511 ) � - � � (511 ) � - � Non-GAAP net income $
1,661 � $ 6,253 � $ 5,890 � $ 17,050 � � � GAAP net income per
basic share $ 0.04 $ 0.16 $ 0.03 $ 0.19 Amortization of purchased
intangible assets 0.01 0.01 0.04 0.04 Restructuring expenses and
infrequent charges - (0.01 ) - 0.21 Stock-based compensation
expense 0.02 0.03 0.13 0.09 Deferred tax benefit � (0.01 ) � - � �
(0.01 ) � - � Non-GAAP net income per basic share $ 0.06 � $ 0.19 �
$ 0.19 � $ 0.53 � � Shares used in basic per share amounts � 29,995
� � 33,066 � � 31,658 � � 32,425 � � GAAP net income per fully
diluted share $ 0.04 $ 0.16 $ 0.03 $ 0.18 Amortization of purchased
intangible assets 0.01 0.01 0.04 0.04 Restructuring expenses and
infrequent charges - (0.01 ) - 0.20 Stock-based compensation
expense 0.02 0.02 0.13 0.09 Deferred tax benefit � (0.02 ) � - � �
(0.02 ) � - � Non-GAAP net income per fully diluted share $ 0.05 �
$ 0.18 � $ 0.18 � $ 0.51 � � Shares used in fully diluted per share
amounts � 30,208 � � 34,217 � � 31,957 � � 33,261 � Table C
(Continued) CHORDIANT SOFTWARE, INC. RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL
MEASURES (in thousands, except per share data) (Unaudited) � � � �
� � Three Months Ended September 30, 2008 Total Operating Expenses
Research Sales General Total and and and Restructuring Operating
Development Marketing Administrative Expense Expenses � GAAP
operating expenses $ 5,787 $ 8,823 $ 4,308 $ - $ 18,918 Stock-based
compensation expense (59 ) (211 ) (260 ) - (530 ) Restructuring
expenses and infrequent charges � - � � - � � - � � - � � - �
Non-GAAP operating expenses $ 5,728 � $ 8,612 � $ 4,048 � $ - � $
18,388 � � � Three Months Ended September 30, 2007 Total Operating
Expenses Research Sales General Total and and and Restructuring
Operating Development Marketing Administrative Expense Expenses �
GAAP operating expenses $ 6,627 $ 7,954 $ 4,408 $ (185 ) $ 18,804
Stock-based compensation expense (150 ) (179 ) (369 ) - (698 )
Restructuring expenses and infrequent charges � - � � - � � - � �
185 � � 185 � Non-GAAP operating expenses $ 6,477 � $ 7,775 � $
4,039 � $ - � $ 18,291 � � � � � � � � � � � � � � Year Ended
September 30, 2008 Total Operating Expenses Research Sales General
Total and and and Restructuring Operating Development Marketing
Administrative Expense Expenses � GAAP operating expenses $ 25,598
$ 34,722 $ 17,995 $ - $ 78,315 Stock-based compensation expense
(586 ) (922 ) (2,127 ) - (3,635 ) Restructuring expenses and
infrequent charges � - � � - � � - � � - � � - � Non-GAAP operating
expenses $ 25,012 � $ 33,800 � $ 15,868 � $ - � $ 74,680 � � � Year
Ended September 30, 2007 Total Operating Expenses Research Sales
General Total and and and Restructuring Operating Development
Marketing Administrative Expense Expenses � GAAP operating expenses
$ 27,546 $ 32,597 $ 19,898 $ 6,543 $ 86,584 Stock-based
compensation expense (546 ) (744 ) (1,417 ) - (2,707 )
Restructuring expenses and infrequent charges � - � � - � � (248 )
� (6,543 ) � (6,791 ) Non-GAAP operating expenses $ 27,000 � $
31,853 � $ 18,233 � $ - � $ 77,086 �
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