Callidus Software Reports Record Second Quarter 2007 Results

Callidus Software Inc. (NASDAQ: CALD), a leading provider of Sales Performance Management (SPM) software and services, today announced financial results for the second quarter ended June 30, 2007.

Total second quarter revenues were the highest in the Company's history, up 50% to $26.5 million, compared to the same quarter last year. Second quarter license revenues were up 23% to $7.3 million and second quarter maintenance, service and on-demand revenues were up 64% to $19.2 million, in each case, compared to the second quarter of 2006.

Second quarter net loss narrowed to $2.8 million, or ($0.10) per share, and included $1.5 million of stock-based compensation expense. This compares to a net loss of $3.2 million, or ($0.12) per share, for the second quarter of 2006, which included $1.4 million of stock-based compensation expense.

Cash and investments totaled $53.5 million at June 30, 2007, an increase of $0.6 million from December 31, 2006.

"This is our third consecutive quarter of record revenues and with year-over-year growth of 40% or more. We are pleased with the number of companies that are realizing the importance of Sales Performance Management software and services to drive their business forward. Our operating expenses were lower than in the first quarter as planned, and we intend to continue to invest wisely as we maintain our focus on growth," said Robert Youngjohns, president and CEO. "Our ability to offer our market leading solutions on-premise, on-demand, or as a managed service sets us apart and is an important differentiator in serving customers. We continue to believe there is substantial opportunity for growth in the rapidly evolving SPM space," Mr. Youngjohns concluded.

Recent Business Highlights

--  Callidus added over 2,700 payees to its hosted on-demand service in
    the second quarter, up 36% compared to the same quarter in the prior year.
    Callidus now has over 11,000 payees signed-up for its hosted on-demand
    service.
--  Callidus announced the general release of TrueProducer(TM) and shipped
    the first customer order in the quarter.  TrueProducer is a web-based
    application for insurance carriers with large independent distribution
    channels or a large number of captive agents. It provides a 360-degree view
    of every producer in an organization including demographics, credentials
    (licensing, appointments and education), contracts, and payment schedules.
    It is a stand-alone application that integrates with the Callidus SPM suite
    of applications.
--  Callidus announced the availability of TrueComp® Suite for
    AppExchange. Customers now can get a single view of their Callidus sales
    incentive and performance management applications through the
    salesforce.com user interface. TrueComp® Suite for AppExchange is the
    first and only SPM solution available both on-demand and on-premise that
    integrates with salesforce.com.
--  Callidus and SAP continue to jointly sell Callidus' TrueComp® and
    TrueInformation® products in North America.  A joint sale was made in the
    quarter to one of the largest suppliers of networking solutions.
--  Callidus announced the results of a new Callidus-commissioned market
    study conducted by Evalueserve, a global research and analytics company.
    Results show that companies are increasingly adopting Enterprise Incentive
    Management (EIM) solutions to address their incentive compensation needs,
    with the number of companies using home-grown solutions decreasing to 85%
    in 2006, compared to 90% in 2005.  Evalueserve also found that as a result
    of this increasing adoption, demand for EIM solutions is expected to grow
    at a 30% CAGR through 2010.
    

Q3 2007 Financial Outlook

--  Total revenues for the third quarter of 2007 are expected to be
    between $25.0 million and $26.5 million.  This would represent a 44% to 52%
    increase compared to third quarter 2006 revenues of $17.4 million.
--  Operating expenses, including stock-based compensation of
    approximately $1.0 million, are expected to be between $15.5 million and
    $16.5 million as compared to $15.0 million in Q2 of 2007.
    

Conference Call

A conference call to discuss the second quarter results and outlook is scheduled for today at 1:30 p.m. Pacific Daylight Time (PDT). The conference call will be available via live-webcast at the Investor Relations section of Callidus' website at www.callidussoftware.com . To participate in the call by telephone, the dial-in number is 866-362-4829 (international +1-617-597-5346), passcode 88491067.

A webcast replay and telephone playback of the conference call will be available after 3:30 p.m. PDT today through July 26, 2007. The webcast replay will be available at the Investor Relations section of Callidus' website under Calendar of Events. The telephone replay will be available by calling 888-286-8010 (international: +1-617-801-6888), passcode 84299956.