Callidus Software Reports Record Fourth Quarter 2003 Results / Q4 Revenues Up 176%, Year over Year

BRACKNELL (Great Britain) 28th January (ots/PROTEXT) -Callidus Software Inc. (Nasdaq: CALD), the leader in EnterpriseIncentive Management (EIM) software systems, announced onJanuary 22 financial results for the fourth quarter and fiscalyear ended December 31, 2003.

Total fourth quarter revenues grew 176% to $22.3 millioncompared to $8.1 million in the fourth quarter of 2002 andincreased 13% sequentially from the preceding third quarter.This represents Callidus Software's eighth consecutive quarterof revenue growth. Fourth quarter net income was $0.7 million, or$0.03 per share, compared to a net loss of $4.9 million, or$3.50 per share, for the fourth quarter of 2002 and break-evenin the third quarter of 2003.

Non-GAAP net income for the fourth quarter was $2.0 million,or $0.08 per share, as compared to a non-GAAP net loss of $4.8million in the fourth quarter of 2002 and non-GAAP net income of$0.9 million in the third quarter of 2003. A reconciliationbetween GAAP and non-GAAP information, which excludes stock-basedcompensation and applies an effective tax rate of 26%, iscontained in the attached tables.

For 2003, total revenues were $71.7 million, an increase of170% over total revenues of $26.6 million in 2002. Net incomewas $0.8 million, or $0.04 per share, compared to a net loss of$19.1 million, or $13.98 per share, in 2002. Excluding stock-based compensation and applying an effective tax rate of 26%,non-GAAP net income was $4.2 million, or $0.20 per share, for2003 compared to a non-GAAP net loss of $18.7 million, or $13.67per share, in 2002.

"Callidus achieved record revenues in 2003, finishing theyear with a strong fourth quarter," said Reed Taussig, presidentand CEO of Callidus Software. "Our products are helpingcustomers turn incentive compensation into a competitiveadvantage by truly influencing employee and channel partnerbehaviors. We continued to demonstrate our market leadershipposition in the fourth quarter by selling to top qualitycustomers across a number of vertical markets, including AmericaOnline, Auto Club Insurance Association, BMC Software, SBCCommunications and Wachovia Securities."

Q4 Financial Highlights

- License revenues were a record $10.9 million, a growth rateof 261% year- over-year and 9% sequentially.

- Callidus Software sold 5,750,000 shares of common stock inan initial public offering priced at $14.00 per share inNovember 2003. Net proceeds to the company totaledapproximately $72.2 million.

- Net cash provided by operating activities for the fiscalyear was $0.9 million. Cash and investments totaled $80.3million at December 31, 2003 and includes the net proceeds fromthe company's initial public offering.

- Days Sales Outstanding (DSO) in accounts receivable at theend of the fourth quarter of 2003 was 51 days, compared to 51days at the end of the third quarter of 2003.

Q4 Business Highlights

- IBM and Callidus Software formed a global strategicalliance to deliver comprehensive incentive compensationmanagement solutions.

- Callidus' TruePerformance(r) product won the prestigiousindustry award "HR Product of The Year," as featured in theDecember 2003 issue of Human Resource Executive magazine.

- Callidus exercised its option to purchase a perpetuallicense to the TruePerformance software code originallydeveloped by Cézanne Software. Callidus will no longer payroyalties to Cézanne and will own and control future developmentof the award winning TruePerformance product.

- John R. Eickhoff, Executive Vice President and ChiefFinancial Officer of Ceridian Corporation, joined Callidus'Board of Directors in November 2003.

Guidance

- Calendar year 2004 total revenues are projected to bebetween $95 million and $100 million.

- Calendar year 2004 earnings per share is projected to bebetween $0.08 and $0.16 on a GAAP basis and non-GAAP earningsper share is projected to be between $0.22 and $0.28. Dilutedweighted average shares outstanding for 2004 is estimated to be29.3 million shares.

- First quarter 2004 total revenues are projected to bebetween $20 million and $22 million.

- First quarter 2004 earnings per share, on a GAAP basis, isprojected to be between a loss of ($0.05) and ($0.02) and non-GAAP earnings per share, excluding stock-based compensationcharges, but giving effect to an effective tax rate of 26%, isprojected to be between $0.01 and $0.03. Diluted weighted averageshares outstanding for the first quarter of 2004 is estimated tobe 28.9 million shares.

Conference Call

Callidus Software's fourth quarter 2003 conference call isscheduled for 1:30 p.m. Pacific Standard Time (PST), Thursday,January 22, 2004. The conference call is available via webcastand can be accessed live, and for one week after the call, atthe Investor Relations section of Callidus Software's website atwww.callidussoftware.com. To participate in the call viatelephone, the dial in number is 800-299-9086 (international617-786-2903), passcode 42034077. A replay of the conferencecall can be accessed after 4:00 p.m. PST, by calling 888-286-8010 (international 617-801-6888), passcode 59785976.

About Callidus Software

Founded in 1996, Callidus Software(http://www.callidussoftware.com) is the leading provider ofenterprise incentive management (EIM) systems to globalcompanies across multiple industries. Callidus' EIM systemsallow enterprises to develop and manage competitive incentivecompensation linked to the achievement of strategic businessobjectives. Through its TrueComp GridT architecture, Callidusdelivers the industry's only EIM solution that combines thepower and scalability of grid computing with the flexibility ofrules-based interface. Customers/Partners include AirborneExpress, Inc., Allstate, Apple Computer, AOL Time WarnerCorporation, AT&T Wireless, BMC Software, Citizens Bank, CUNAMutual, DIRECTV, Dun & Bradstreet, IBM, Intuit, JP Morgan Chase &Co., Pennzoil-Quaker State Company, SBC Communications and SunMicrosystems.

Non-GAAP Financial Measures

The non-GAAP information provided in this press release is asupplement to, and not a substitute for, our financial resultspresented in accordance with generally accepted accountingprinciples (GAAP) in the United States. The non- GAAP financialresults exclude stock-based compensation expense and apply anestimated effective tax rate of 26% in order to provide what webelieve is an additional tool for investors to use inunderstanding our operational results and trends. These non-GAAP financial results are used internally by management toevaluate our operations, plan and forecast for future periods andto allocate resources within the organization. A reconciliationbetween GAAP and non-GAAP financial measures is included in theaccompanying tables.

Note on Forward-Looking Statements

The forward looking statements included in this pressrelease, including guidance for the first quarter of 2004 andthe 2004 fiscal year, reflect management's best judgment basedon factors currently known and involve risks and uncertainties.These risks and uncertainties include, but are not limited to,potential material fluctuations in financial results and futuregrowth rates, risk associated with development and marketacceptance of new products and product enhancements, decreasesin customer spending, increased competition or new entrants inthe marketplace and other risks detailed in the company's SECreports, including its registration statement on Form S-1, copiesof which may be obtained by contacting Callidus Software'sInvestor Relations department at 408-808-6577, or the InvestorRelations section of Callidus Software's website(www.callidussoftware.com). Actual results may differ materiallyfrom those presently reported. We assume no obligation to updatethe information contained in this release.

(c) 1998-2004 by Callidus Software Inc.

Callidus Software, the Callidus Software logo, TrueComp, andTruePerformance are registered trademarks and TrueAnalytics,TrueComp Grid, TrueComp Manager, TrueComp Viewer,TrueDiagnostics, TrueInformation, TrueIntegration, TruePortal,TrueReferral, TrueResolution, TrueService, TrueSuccess,TrueSupport, Solutions for the Strategic Enterprise and EveryoneProfits are trademarks of Callidus Software Inc. in the UnitedStates and other countries. Other trademarks are the propertyof their respective holders.

ots Original Text Service: Callidus Software Internet:http://www.presseportal.de

Investor Relations Contact: Jon Pexton 408-808-6577ir@callidussoftware.com

Press Contact: Wendy Marshall WMPR Consultancy +44 (0) 208560 1437 wendy@wmpr.com

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