Callidus Software Inc. has a market cap of $115.35 million; its shares were traded at around $3.7 with and P/S ratio of 1.42. CALD is in the portfolios of Wilbur Ross of Invesco Private Capital, Inc., Jim Simons of Renaissance Technologies LLC.
This is the annual revenues and earnings per share of CALD over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of CALD.
Highlight of Business Operations:During the second quarter of 2010, our user base (e.g., payees) continued to grow. Our recurring revenues increased in the second quarter of 2010 by 8% to $13.3 million compared to $12.3 million in the first quarter of 2010; and by 12% from $11.8 million in the second quarter of 2009. Recurring revenue accounted for 77% of total revenues in the second quarter of 2010, as compared to 76% in the first quarter of 2010 and 53% in the same period of 2009, continuing to reflect the diminished significance of perpetual license and services in our Software-as-a-Service (SaaS) business model. We expect recurring revenues to continue to run at approximately 75% of revenues through 2010. Recurring revenue gross margin for the second quarter was 54%, equal to the same period last year and up from 48% in the prior quarter. The increase in margin from the prior quarter reflects the increase in recurring revenues while third-party royalty costs were down from the prior quarter. Customer attrition remains low as our retention rates for our core SaaS offering and our legacy on-premise customers continue to be above 90%.
We generally recognize revenue ratably over the non-cancelable term of the customer contract for our subscription and support revenues. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Primarily due to growth in our installed base for recurring subscriptions to our on-demand services and maintenance, total deferred revenue (including both short-term and long-term) increased by $1.9 million and $7.1 million to $29.2 million as of June 30, 2010 compared to $27.3 million as of March 31, 2010 and $22.1 million as of December 31, 2009, respectively. This represents an increase of 7% quarter over quarter and a 32% increase from the end of 2009.
During the quarter, we continued to make progress on reducing our operating expenses as we realized the benefits of our recent cost cutting actions to better align our cost base with our new business model. Excluding stock-based compensation, amortization of acquired intangible assets and restructuring expenses, our second quarter 2010 operating expenses of $8.3 million have been reduced by $1.6 million from the 2010 first quarters $9.9 million and by $2.5 million from the 2009 second quarters $10.8 million. This represents a decrease of 16% quarter over quarter and 23% year over year.
Services revenues for the quarter were $3.5 million, down 4% sequentially and 63% from the same period last year. The decrease from the prior quarter was driven by the fact that a number of customers signed in prior quarters delayed the start of their implementation projects negatively impacting both revenues and gross margin. The decrease in services revenues from the prior year was mostly as expected as we transition to shorter and less expensive on-demand implementations.
Services gross margin for the second quarter was negative 16%, up from negative 21% in the prior quarter and down from 18% in the prior year. The negative services margin reflects lower than planned utilization resulting from the delay in projects and a decrease in our average billing rate. With all the major deals we signed in prior quarters now underway and the improved utilization, we expect improvement in the margin for the next quarter. In the quarter, we saw some signs of recovery as we booked more dollars from services-related statements of work (SOW) in the quarter than we have had in any quarter in the last two years. These SOWs will generate revenues over the remainder of 2010 and into 2011. We expect to see the benefit of our second quarter Services Executive leadership change start to have a measureable impact in driving services revenues while improving our services margin in the coming quarters. Over the longer term, we expect to see margin improvement as we drive higher revenues and leverage less expensive third-party consulting resources. While we expect improvement in our services margin, we do expect services revenue to remain substantially below the level it was under our old perpetual license business model.
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