Chordiant Software Announces Financial Results for the Third Quarter of Fiscal Year...

Chordiant Software Announces Financial Results for the Third Quarter of Fiscal Year 2008 Ended June 30, 2008

Reports Continued Profitability and Positive Cash Flows from
Operations
CUPERTINO, Calif.--(Business Wire)--
Chordiant Software, Inc. (Nasdaq: CHRD), the leading provider of
Customer Experience (Cx(TM)) software and services, today announced
its financial results for the third quarter of fiscal year 2008 ended
June 30, 2008, and filed its Quarterly Report on Form 10-Q with the
Securities and Exchange Commission.

Third Quarter Fiscal Year 2008 Financial Highlights

-- Total revenues of $30.7 million, up 24% from prior quarter;

-- License revenues of $11.0 million, up 128% sequentially;

-- Non-GAAP earnings per fully diluted share of $0.08, with
Generally Accepted Accounting Principles ("GAAP") earnings per
fully diluted share of $0.02;

-- Bookings of $26.4 million, up 30% sequentially;

-- Ending backlog of $89.6 million; and

-- Generated cash flows from operations of $4.6 million.

Business Highlights

-- Signed two new transactions greater than $1 million;

-- Received an order greater than $1 million associated with an
existing customer commitment;

-- Received significant add-on license transactions at Citi
totaling just under $1 million;

-- Went live with Vodafone in their initial implementation;

-- Named as the winner of IBM's 2008 IMPACT Business Process
Management Award;

-- Expanded product offering with two new product releases;
Recommendation Advisor 6.1 and Collections Manager 2.0; and

-- Chairman, President and CEO, Steven R. Springsteel captures
Ernst & Young Entrepreneur of the Year 2008 Northern
California Award.

"The business environment continued to be challenging in the third
quarter," stated Steven R. Springsteel, Chairman, President and Chief
Executive Officer. "However, I am pleased with how our organization
executed despite the weak macroeconomic backdrop. We continue to see
strong activity in emerging markets and within our installed base, and
believe that the investments we have made are on track to pay future
dividends."

Third Quarter Fiscal Year 2008 Financial Results

Total revenues for the third quarter of fiscal year 2008 were
$30.7 million, up 24% sequentially from the $24.7 million recorded in
the quarter ended March 31, 2008, but down 16% from the $36.8 million
reported for the third quarter of fiscal year 2007 ended June 30,
2007. The third quarter of fiscal year 2007 included the recognition
of $8.0 million in license revenues that had previously been deferred
until a new product offering was released.

License revenues for the third quarter of fiscal year 2008 were
$11.0 million, up significantly from the $4.8 million reported in the
prior quarter, but down compared to the $14.1 million reported for the
third quarter of fiscal year 2007. Service revenues for the third
quarter of fiscal year 2008 were $19.8 million, compared to $22.7
million reported for the same period of fiscal year 2007.

Chordiant reported GAAP net income of $0.8 million or fully
diluted GAAP earnings per share of $0.02 for the third quarter of
fiscal year 2008, compared to $6.5 million and $0.19 for the same
period of fiscal year 2007.

Chordiant reported third quarter fiscal year 2008 non-GAAP net
income of $2.4 million, or fully diluted non-GAAP earnings per share
of $0.08, compared to non-GAAP net income of $7.1 million, or
fully-diluted non-GAAP earnings per share of $0.21 for the third
quarter of fiscal year 2007. Non-GAAP net income excludes stock-based
compensation expense and the amortization of purchased intangible
assets.

Deferred Revenue

Deferred revenue at the end of the third quarter of fiscal year
2008 was $51.8 million, a decrease of $16.2 million as compared to the
ending balance of $68.0 million at September 30, 2007. Deferred
revenue does not include future amounts due relating to the previously
announced Vodafone transaction.

Bookings

Bookings were $26.4 million for the third quarter, up 30%
sequentially. Bookings for the first three quarters of fiscal year
2008 totaled $96.6 million.

Backlog of Business

At June 30, 2008, Chordiant's backlog, which includes deferred
revenue, decreased to $89.6 million from $93.5 million at the end of
the prior quarter. The primary reason for the decrease was the
recognition of license revenues during the period. Backlog includes
$20.7 million of remaining commitments related to the Vodafone
transaction that was closed in the first quarter of fiscal year 2008.

Cash Position

Chordiant's cash, cash equivalents, restricted cash and marketable
securities position decreased by approximately $25.9 million during
the nine months of fiscal year 2008 to $64.6 million at June 30, 2008,
as compared to $90.5 million at September 30, 2007. The decrease in
the cash balance includes the $18.6 million used in the second and
third fiscal quarter for the share repurchase program which concluded
on April 30, 2008.

During the third quarter of fiscal year 2008, cash flows from
operations generated $4.6 million of cash.

Non-GAAP Financial Measurements

This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with
GAAP, please see the section of the accompanying tables titled
"Non-GAAP Financial Measures" as well as the related Tables C and D
which follow it.

Fiscal Year 2008 Financial Guidance

"We remain committed to running a profitable business and believe
the recent reduction and reallocation of our workforce enables us to
do this even in today's challenging environment," said Steven R.
Springsteel. "We continue to take a conservative stance to our
outlook, specifically as it relates to North American and United
Kingdom financial services markets but believe that the investments we
have been making in alliances and in geographic and vertical
diversification will positively impact our results over the next
several quarters."

Management is updating fiscal year 2008 guidance as follows:

-- Total bookings for fiscal year 2008 are expected to range
between $124 million and $128 million;

-- Total revenues for fiscal year 2008 are expected to range from
$114 million to $117 million;

-- GAAP primary and fully diluted EPS is expected to range
between $0.00 and $0.07 and non-GAAP fully diluted EPS is
expected to range between $0.18 and $0.25. These earnings
estimates for fiscal year 2008 are based on approximately 31.9
million diluted shares outstanding;

-- We expect the ending deferred revenue balances for fiscal year
2008 to increase slightly from the June 30, 2008 balance; and

-- Finally, Chordiant expects to end the year with approximately
$63 million in aggregate cash, cash equivalents, marketable
securities and restricted cash.

Conference Call and Webcast Information

Chordiant will host a conference call and webcast to discuss its
financial results for the third quarter of fiscal year 2008 ended June
30, 2008 today, Thursday, July 31, 2008 at 2:00 p.m. (PT), 5:00 p.m.
(ET) and 10:00 pm (GMT). A live audio webcast will be available to
investors and the public from the following website:
http://www.veracast.com/webcasts/chordiant2/85118109.cfm

Alternatively, you may prefer to access Chordiant's website at
http://www.chordiant.com, where you will see the event listed on the
homepage. Access is also possible from Chordiant's Investor Relations
website.

The webcast will be archived on the Chordiant website; in
addition, a telephone replay will be available on Thursday, July 31,
2008, beginning at approximately 4:00 p.m. Pacific Time, 7:00 p.m.
Eastern Time for seven days after the live call. The replay can be
accessed by dialing (800) 405-2236, access code 11117143#.

About Chordiant Software, Inc.

Chordiant helps leading global brands with high-volume customer
service needs deliver the best possible customer experience. Unlike
traditional business applications, Chordiant Customer Experience (Cx)
front-office solutions blend multi-channel interaction management with
predictive desktop decisioning, enabling companies to capture and
effectively anticipate and respond to customer behavior in all
channels, in real-time. For global leaders in insurance/healthcare,
telecommunications and financial services, this deeper understanding
cultivates a lasting, one-to-one relationship that aligns the most
appropriate value proposition to each consumer. With Chordiant Cx
solutions, customer loyalty, operational productivity and
profitability reach new levels of return. For more information, visit
Chordiant at www.chordiant.com

Safe Harbor Statement

This news release includes "forward-looking statements" that are
subject to risks, uncertainties and other factors that could cause
actual results or outcomes to differ materially from those
contemplated by the forward-looking statements. Forward-looking
statements in this release are generally identified by words, such as
"believes," "plans," "expects," "will," "guidance," and similar
expressions which are intended to identify forward-looking statements.
There are a number of important factors that could cause the results
of Chordiant to differ materially from those indicated by these
forward-looking statements, including, among others, whether Chordiant
will be able to attract and close license transactions with new and
existing customers and achieve its revenue targets. Other risks
relating to Chordiant's products are detailed under "Risk Factors" in
Chordiant's Quarterly Report on Form 10-Q for the quarter ended June
30, 2008, as filed with the Securities and Exchange Commission. This
filing is available on a Web site maintained by the Securities and
Exchange Commission at http://www.sec.gov. Chordiant does not
undertake an obligation to update forward-looking or other statements
in this release.

Chordiant and the Chordiant logo are registered trademarks of
Chordiant Software, Inc. The Customer Experience Company and Cx are
trademarks of Chordiant Software, Inc. All other trademarks and
registered trademarks are the properties of their respective owners.

NON-GAAP FINANCIAL MEASURES

The accompanying press release dated July 31, 2008 contains
non-GAAP financial measures. Tables C and D reconcile the non-GAAP
financial measures contained in the press release to the most directly
comparable financial measures prepared in accordance with GAAP. These
non-GAAP financial measures include non-GAAP total cost of revenue,
non-GAAP gross profit, non-GAAP income (loss) from operations,
non-GAAP net income (loss) and basic and diluted non-GAAP net income
(loss) per share. Chordiant continues to provide all information
required in accordance with GAAP and does not suggest or believe
non-GAAP financial measures should be considered as a substitute for,
or superior to, measures of financial performance prepared in
accordance with GAAP. Chordiant believes that these non-GAAP financial
measures provide meaningful supplemental information regarding its
operating results primarily because they exclude amounts Chordiant
does not consider part of ongoing operating results when assessing the
performance of certain functions, certain geographies or certain
members of senior management.

The operating budgets of functional managers do not include
stock-based compensation expenses, acquisition-related costs,
restructuring costs and certain other excluded items that may impact
their functions' profitability, and accordingly, we exclude these
amounts from our measures of functional performance. We also exclude
these amounts from our internal planning and forecasting process. We
believe that our non-GAAP financial measures also facilitate the
comparison of results for current periods and guidance for future
periods with results for past periods. We exclude the following items
from our non-GAAP financial measures:

Stock-based compensation expense. Our non-GAAP financial measures
exclude stock-based compensation expenses, which consist of expenses
for stock options, restricted stock and restricted stock units.
Additionally, recent comparative periods in certain prior years also
included stock-based compensation for certain stock options that were
subject to variable accounting. Under variable accounting, movements
in the market value of our stock caused significant unpredictable
charges or benefits from period to period. The operating budgets of
functional or geographic managers do not include stock-based
compensation expenses impacting their function's income (loss) and,
accordingly, we exclude stock-based compensation expenses from our
measures of functional or geographic performance. While stock-based
compensation is a significant expense affecting our results of
operations, management excludes stock-based compensation from our
budget and planning process. We exclude stock-based compensation
expenses from our non-GAAP financial measures for these reasons and
the other reasons stated above. We compute weighted average dilutive
shares using the method required by Statement of Financial Accounting
Standard No. 128 for both GAAP and non-GAAP diluted net income (loss)
per share.

Amortization of purchased intangible assets. In accordance with
GAAP, amortization of purchased intangible assets in cost of revenue
includes amortization of software and other technology assets related
to acquisitions and acquisition-related charges and in operating
expenses includes amortization of other purchased intangible assets
such as customer lists and covenants not to compete. Acquisition
activities are managed on a corporate-wide basis and the operating
budgets of functional or geographic managers do not include
acquisition-related costs impacting their function's income (loss). We
exclude these amounts from our measures of segment performance and
from our budget and planning process. We exclude amortization of
intangible assets from our non-GAAP financial measures for these
reasons and the other reasons stated above.

Restructuring expense and infrequent charges. Our non-GAAP
financial measures exclude restructuring expense and infrequent
charges. Restructuring expense consists of expenses for excess
facilities, lease termination costs, and expenses for severance
charges related to reductions in our workforce. Infrequent charges
primarily relate to severance expense associated with senior executive
management. The operating budgets of functional or geographic managers
do not include restructuring expenses and infrequent charges or the
financial impact to their functions or geographies income (loss).
Accordingly, we exclude restructuring expenses and infrequent charges
from measures of functional or geographic performance. We also exclude
these expenses in non-GAAP financial measures for these reasons and
the other reasons stated.

Chordiant refers to these non-GAAP financial measures in
evaluating and measuring the performance of our ongoing operations and
for planning and forecasting in future periods. These non-GAAP
financial measures also facilitate our internal comparisons to
historical operating results. Historically, we have reported similar
non-GAAP financial measures and believe that the inclusion of
comparative numbers provides consistency in our financial reporting.
We compute non-GAAP financial measures using the same consistent
method from quarter-to-quarter and year-to-year.

Chordiant believes that non-GAAP measures have significant
limitations in that they do not reflect all of the amounts associated
with Chordiant's financial results as determined in accordance with
GAAP and that these measures should only be used to evaluate
Chordiant's financial results in conjunction with the corresponding
GAAP measures. Because of these limitations, Chordiant qualifies the
use of non-GAAP financial information in a statement when non-GAAP
information is presented. In addition, the exclusion of the charges
and expenses indicated above from the non-GAAP financial measures
presented does not indicate an expectation by Chordiant management
that similar charges and expenses will not be incurred in subsequent
periods.

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*T
Table A
CHORDIANT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)

Three Months Nine Months Ended
Ended June 30,
June 30,
--------------- -----------------
2008 2007 2008 2007
------- ------- -------- --------

Revenues:
License $10,960 $14,094 $24,574 $40,137
Service 19,756 22,667 59,992 52,328
------- ------- -------- --------
Total revenues 30,716 36,761 84,566 92,465
Cost of revenues:
License 304 419 920 1,456
Service 8,711 9,264 25,722 22,353
Amortization of intangible
assets 303 303 908 908
------- ------- -------- --------
Total cost of revenues 9,318 9,986 27,550 24,717
------- ------- -------- --------
Gross profit 21,398 26,775 57,016 67,748
------- ------- -------- --------
Operating expenses:
Sales and marketing 9,595 9,065 25,898 24,643
Research and development 6,704 7,328 19,811 20,919
General and administrative 4,665 4,584 13,687 15,490
Restructuring expense - - - 6,727
------- ------- -------- --------
Total operating expenses 20,964 20,977 59,396 67,779
------- ------- -------- --------
Income (loss) from operations 434 5,798 (2,380) (31)
Interest income, net 385 682 1,833 1,478
Other income, net 86 213 571 377
------- ------- -------- --------
Income before income taxes 905 6,693 24 1,824
Provision for income taxes 146 240 219 1,146
------- ------- -------- --------
Net income (loss) $ 759 $ 6,453 $ (195) $ 678
======= ======= ======== ========

Net income (loss) per share:
Basic $ 0.03 $ 0.20 $ (0.01) $ 0.02
======= ======= ======== ========
Diluted $ 0.02 $ 0.19 $ (0.01) $ 0.02
======= ======= ======== ========

Weighted average shares used in
computing net income (loss) per
share:
Basic 30,262 32,743 32,217 32,208
======= ======= ======== ========
Diluted 30,474 34,384 32,217 33,431
======= ======= ======== ========
*T

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*T
Table B
CHORDIANT SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

June 30, Sept. 30,
2008 2007
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 64,332 $ 77,987
Marketable securities - 12,159
Accounts receivable, net 21,346 27,381
Prepaid expenses and other current assets 6,787 5,352
---------- ----------
Total current assets 92,465 122,879
Property and equipment, net 3,341 3,638
Goodwill 32,044 32,044
Intangible assets, net 1,817 2,725
Other assets 2,304 3,529
---------- ----------
Total assets $ 131,971 $ 164,815
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,848 $ 8,080
Accrued expenses 11,383 13,804
Deferred revenue 36,850 44,548
---------- ----------
Total current liabilities 56,081 66,432
Deferred revenue - long-term 14,998 23,434
Restructuring costs, net of current portion 630 942
Other long-term liabilities 862 646
---------- ----------
Total liabilities 72,571 91,454
---------- ----------

Stockholders' equity:
Common stock 30 33
Additional paid-in capital 281,217 295,650
Accumulated deficit (227,110) (226,915)
Accumulated other comprehensive income 5,263 4,593
---------- ----------
Total stockholders' equity 59,400 73,361
---------- ----------
Total liabilities and stockholders'
equity $ 131,971 $ 164,815
========== ==========
*T

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Table C
CHORDIANT SOFTWARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)

Three Months Nine Months Ended
Ended
----------------- -----------------

June 30, June 30, June 30, June 30,
2008 2007 2008 2007
-------- -------- -------- --------

GAAP total cost of revenue $ 9,318 $ 9,986 $27,550 $24,717
Amortization of purchased
intangible assets (303) (303) (908) (908)
Stock-based compensation expense (148) (63) (411) (224)
-------- -------- -------- --------
Non-GAAP total cost of revenue $ 8,867 $ 9,620 $26,231 $23,585
======== ======== ======== ========

GAAP gross profit $21,398 $26,775 $57,016 $67,748
Amortization of purchased
intangible assets 303 303 908 908
Stock-based compensation expense 148 63 411 224
-------- -------- -------- --------
Non-GAAP gross profit $21,849 $27,141 $58,335 $68,880
======== ======== ======== ========

GAAP income (loss) from operations $ 434 5,798 $(2,380) $ (31)
Amortization of purchased
intangible assets 303 303 908 908
Restructuring expenses and
infrequent charges - - - 6,976
Stock-based compensation expense 1,358 365 3,516 2,234
-------- -------- -------- --------
Non-GAAP income from operations $ 2,095 $ 6,466 $ 2,044 $10,087
======== ======== ======== ========

GAAP net income (loss) $ 759 $ 6,453 $ (195) $ 678
Amortization of purchased
intangible assets 303 303 908 908
Restructuring expenses and
infrequent charges - - - 6,976
Stock-based compensation expense 1,358 365 3,516 2,234
-------- -------- -------- --------
Non-GAAP net income $ 2,420 $ 7,121 $ 4,229 $10,796
======== ======== ======== ========

GAAP net income (loss) per basic
share $ 0.03 $ 0.20 $ (0.01) $ 0.02
Amortization of purchased
intangible assets 0.01 0.01 0.03 0.03
Restructuring expenses and
infrequent charges - - - 0.22
Stock-based compensation expense 0.04 0.01 0.11 0.07
-------- -------- -------- --------
Non-GAAP net income per basic
share $ 0.08 $ 0.22 $ 0.13 $ 0.34
======== ======== ======== ========

Shares used in basic per share
amounts 30,262 32,743 32,217 32,208
======== ======== ======== ========

GAAP net income (loss) per fully
diluted share $ 0.02 $ 0.19 $ (0.01) $ 0.02
Amortization of purchased
intangible assets 0.01 0.01 0.03 0.03
Restructuring expenses and
infrequent charges - - - 0.20
Stock-based compensation expense 0.05 0.01 0.11 0.07
-------- -------- -------- --------
Non-GAAP net income per fully
diluted share $ 0.08 $ 0.21 0.13 $ 0.32
======== ======== ======== ========

Shares used in fully diluted per
share amounts 30,474 34,384 32,550 33,431
======== ======== ======== ========
*T

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*T
Table C (Continued)
CHORDIANT SOFTWARE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)

Three Months Ended June 30, 2008
Total Operating Expenses
-----------------------------------------------------
Research Sales General Total
and and and Restructuring Operating
Development Marketing Admin. Expense Expenses
-----------------------------------------------------

GAAP operating
expenses $ 6,704 $ 9,595 $ 4,665 $ - $20,964
Stock-based
compensation
expense (183) (240) (787) - (1,210)
Restructuring
expenses and
infrequent
charges - - - - -
---------- -------- -------- ------------ ---------
Non-GAAP
operating
expenses $ 6,521 $ 9,355 $ 3,878 $ - $19,754
========== ======== ======== ============ =========

Three Months Ended June 30, 2007
Total Operating Expenses
-----------------------------------------------------
Research Sales General Total
and and and Restructuring Operating
Development Marketing Admin. Expense Expenses
-----------------------------------------------------

GAAP operating
expenses $ 7,328 $ 9,065 $ 4,584 $ - $20,977
Stock-based
compensation
expense (134) 1 (169) - (302)
Restructuring
expenses and
infrequent
charges - - - - -
---------- -------- -------- ------------ ---------
Non-GAAP
operating
expenses $ 7,194 $ 9,066 $ 4,415 $ - $20,675
========== ======== ======== ============ =========

----------------------------------------------------------------------

Nine Months Ended June 30, 2008
Total Operating Expenses
-----------------------------------------------------
Research Sales General Total
and and and Restructuring Operating
Development Marketing Admin. Expense Expenses
-----------------------------------------------------

GAAP operating
expenses $19,811 $25,898 $13,687 $ - $59,396
Stock-based
compensation
expense (527) (711) (1,867) - (3,105)
Restructuring
expenses and
infrequent
charges - - - - -
---------- -------- -------- ------------ ---------
Non-GAAP
operating
expenses $19,284 $25,187 $11,820 $ - $56,291
========== ======== ======== ============ =========

Nine Months Ended June 30, 2007
Total Operating Expenses
-----------------------------------------------------
Research Sales General Total
and and and Restructuring Operating
Development Marketing Admin. Expense Expenses
-----------------------------------------------------

GAAP operating
expenses $20,919 $24,643 $15,490 $ 6,727 $67,779
Stock-based
compensation
expense (396) (565) (1,049) - (2,010)
Restructuring
expenses and
infrequent
charges - - (249) (6,727) (6,976)
---------- -------- -------- ------------ ---------
Non-GAAP
operating
expenses $20,523 $24,078 $14,192 $ - $58,793
========== ======== ======== ============ =========
*T

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Table D
Chordiant Software, Inc.
Forward Looking Guidance
(in thousands, except per share data)
------------------------------------------------
FY 2008 GAAP FY 2008 Non -
GAAP
Range of Estimates Adjustments Range of
Estimates
------------------ ----------- -----------------

From To From To
-------- -------- -------- --------

Bookings $124,000 $128,000 $124,000 $128,000

Revenue $114,000 $117,000 $114,000 $117,000
Gross profit 77,000 79,900 1,700(A) 78,700 81,600
Income (loss) from (B)
operations (2,015) (300) 5,725 3,710 5,425
Net income 85 2,100 5,725(B) 5,810 7,825

Net income per share $0.00 $0.07 $0.18 $0.25
Shares used 31,900 31,900 31,900 31,900

(A) Reflects estimated adjustments for $1.2 million of amortization of
purchased intangibles and $0.5 million of stock-based compensation.
(B) Reflects estimated adjustments for $1.2 million of amortization of
purchased intangibles and $4.5 million of stock-based compensation.
*T

Chordiant Media Relations Contacts
Eastwick Communications
Mo Mahmoud, +1-650-480-4058
Chordiant@eastwick.com
or
Hotwire
Emma Smyth, +44 (0)20 7608 4698
Chordiant@hotwire.com
or
Chordiant Investor Relations Contact:
Market Street Partners
Karen Haus or Daniel Wood, +1-415-445-3238
chrd@marketstreetpartners.com

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