Callidus Software Inc. (CALD) filed Quarterly Report for the period ended 2010-09-30.

Callidus Software Inc. has a market cap of $150.9 million; its shares were traded at around $4.8 with and P/S ratio of 2. CALD is in the portfolios of Wilbur Ross of Invesco Private Capital, Inc., Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

During the third quarter of 2010, we grew total revenues sequentially for the third quarter in a row and we also grew total revenues year over year. Our revenues increased in the third quarter of 2010 by 8% to $18.5 million compared with $17.1 million in the second quarter of 2010; and by 6% from $17.4 million in the third quarter of 2009. Our sales force in North America, Europe, the Middle East and Africa (EMEA) stayed focused on driving recurring revenues streams. Recurring revenues accounted for 72% of total revenues in the third quarter of 2010, as compared to 77% in the second quarter of 2010 and 64% in the same period of 2009. The slight decrease of recurring revenues as a percentage of total revenues was a result of higher perpetual license revenues generated by sales to distributors in Asia Pacific and Latin America markets. We expect recurring revenues to run at approximately 75% of revenues through the remainder of 2010. Customer attrition remains low as our retention rates for our Software-as-a-Service (SaaS) offering and our legacy on-premise customers continue to be around 90%.

During the quarter, we continued to benefit from our prior quarter cost-cutting actions to better align our cost base with our new business model. Operating expenses in the third quarter of 2010 were $10.0 million, compared to $10.5 million in the second quarter of 2010 and $13.0 million in the third quarter of 2009. To supplement our operating results presented on a GAAP basis, we use non-GAAP measures of operating results to analyze our cost-cutting actions. We believe non-GAAP operating result is also useful as one of the bases for comparing the impact of our cost control measures between periods. The presentation of non-GAAP operating results is not meant to be considered in isolation or as an alternative to operating expenses as an indicator of our performance. Non-GAAP operating results exclude stock-based compensation, restructuring expenses and amortization of acquired intangible assets. For the three months ended September 30, 2010, June 30, 2010 and September 30, 2009, stock-based compensation expenses were $1.4 million, $1.9 million and $1.0 million (including operating related stock-based compensation expenses of $1.1 million, $1.6 million and $0.7 million for each period, respectively); restructuring expenses were $0.5 million, $0.5 million and $2.0 million, respectively; amortization of acquired intangible assets was $0.1 million in each of these periods. Our third quarter 2010 non-GAAP operating expenses were $8.3 million, consistent with the level of the second quarter of 2010 and down 18% from $10.2 million in the third quarter of 2009, respectively. The decrease from the same period last year reflected our discipline in managing costs and our drive to achieve value from all of our resources. Our cost control combined with higher gross margin helped us realize a non-GAAP operating profit of $0.4 million during the third quarter of 2010. This is in contrast to the non-GAAP net loss of $1.2 million in the prior quarter and non-GAAP net loss of $3.5 million in the same period of 2009. We expect to incur some additional operating costs in the fourth quarter of 2010 related to increased legal, audit and SOX compliance fees. The increase in legal fees is related to a certain pending patent suit, which we believe is without merit and intend to vigorously defend.

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