Summary
This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully before making an investment decision, including the “Risk Factors” section and the consolidated financial statements and the notes to those statements. Unless otherwise indicated, references in this prospectus to “Callidus,” the “Company,” “we,” “our” or “us” refer to Callidus Software Inc. and its subsidiaries.
Callidus Software Inc.
We are a leading provider of Enterprise Incentive Management (EIM) software systems to global companies across multiple industries. Large enterprises use EIM systems to model, administer, analyze and report on pay-for-performance plans, which are designed to align employee, sales and channel tactics with targeted business objectives, and thereby increase productivity, improve profitability and achieve competitive advantage. Our product suite is based on our proprietary technology and extensive domain expertise and provides the flexibility and scalability required to meet the dynamic EIM requirements of large, complex businesses across multiple industries. Our installed base of over 75 active customers includes industry leaders in the insurance, retail banking, telecommunications, distribution, and manufacturing and technology industries, such as Allstate, JP Morgan Chase, AT&T Wireless, Airborne Express and Apple Computer. Our revenues were $26.6 million for the year ended December 31, 2002 and $29.8 million for the six months ended June 30, 2003.
In today’s competitive environment, pay-for-performance programs are increasingly recognized as important tools for companies to increase sales and productivity, gain market share and improve profitability. In 2001, AMR, a leading industry analysis firm, estimated that more than $1.5 trillion of pay-for-performance compensation is paid out annually by U.S. and European based companies. However, the management of pay-for-performance programs presents complex challenges due to the large numbers of potential payees, compensation transactions, incentive programs and corporate policies involved. Currently, the majority of large businesses administer these programs using manual methods or internally developed solutions that do not adequately address these challenges. Failure to effectively meet these challenges erodes the effectiveness of incentive compensation, impairs management’s ability to adapt pay-for-performance programs to changing corporate objectives and results in costly errors. We believe that large enterprises are increasingly seeking dedicated EIM solutions to manage their pay-for-performance programs and, as a result, that the EIM market represents a substantial and growing new market opportunity.
We develop, market, install and support a suite of rules-based EIM products to address the complex challenges of pay-for-performance programs for large enterprises. We provide a transparent and reliable data resource for enterprises to plan and manage pay-for-performance programs and accurately allocate credit among a wide range of payees. Our product suite allows management to accurately calculate and coordinate the payment of incentive compensation based on a highly flexible and scalable software architecture. In addition, our reporting product enables management to accurately and systematically report incentive compensation results to payees on a timely basis. Our solution is designed to enable large enterprises to achieve competitive advantages by ensuring that employees, agents and business partners are focused on targeted business objectives, thereby increasing productivity and driving bottom line results. We believe we provide the most advanced EIM solution available for three principal reasons:
We Solve Complex Pay-for-Performance Problems. By focusing exclusively on solving the challenges and complexities inherent in pay-for-performance programs, we have developed a suite of EIM solutions designed to enable timely and accurate planning, calculation and management of variable, salary and management-by-objective (MBO) compensation, as well as dispute resolution, referral tracking and reporting.
We Address Key Vertical Market Requirements. We believe domain expertise is critical to designing a successful EIM system. We apply our domain expertise to build specific functionality into our products to address the key requirements of the insurance, retail banking, telecommunications, distribution, and manufacturing and technology industries.
We Have Superior Technology. Our products are based on our proprietary rules-based software and grid computing architecture. We believe this technology differentiates our products and offers superior performance, scalability and flexibility in an easy-to-use and reliable system, resulting in a lower total cost of ownership than manual methods and internally developed solutions.
StrategyOur objective is to extend our leadership position in the EIM market for large businesses. To achieve this goal we are pursuing the following strategies:
Capitalize on Our Technological Leadership. We intend to leverage our early-mover advantage and our technological leadership in the EIM market by continuing to invest in research and development to expand our product line and increase our products’ functionality, and thereby to capitalize on the EIM market opportunity.
Continue Our Focus on Vertical Markets and Develop Additional Referenceable Accounts. Our domain expertise enables our products to offer industry-specific advantages in functionality, implementation and deployment and allows us to achieve greater efficiency and effectiveness in our sales, marketing and product development efforts. We intend to add marquee customers in each of our vertical markets and to leverage these referenceable accounts to increase penetration of our target markets.
Increase the Industry-Specific Modeling and Analytic Capabilities of Our Products. We are developing new products and product enhancements to provide customers with more extensive industry-specific modeling and analytic capabilities required in increasingly competitive marketplaces.
Continue to Build Loyalty Through Superior Customer Care. As we grow our installed base, we intend to increase our investment in customer care to further strengthen customer loyalty and referenceability.
Our principal executive offices are located at 160 West Santa Clara Street, Suite 1500, San Jose, California 95113 and our telephone number is (408) 808-6400. Our website address is http://www.callidussoftware.com. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part.
The number of shares to be outstanding after the offering is based on 17,420,414 shares outstanding on June 30, 2003 and excludes:
Unless otherwise noted, this prospectus:
(in thousands, except per share data) The following table sets forth a summary of our consolidated financial data for the periods presented. This summary consolidated financial data should be read together with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes contained elsewhere in this prospectus. The consolidated balance sheet data is set forth as of June 30, 2003 both on an actual basis and on an as adjusted basis to reflect our receipt of the estimated net proceeds from the sale of shares of common stock by us in this offering at an assumed initial public offering price of $ per share. See “Use of Proceeds” and “Capitalization.”