Several analysts have recently weighed in on Callidus Software Inc. (NASDAQ:CALD), Eric Martinuzzi of Lake Street Capital Market gives a Buy rating on the stock on July 31 st 2015 with a $19.00 price target, or 27.26% upside to the last closing price.
Growth Over Income – Callidus had a successful Q2, with normalized bookings up 46%. Rather than take the upside into earnings, the company is choosing to intensify its sales and marketing effort to grab share in a fastgrowing sales automation software market. We are in agreement this is the correct strategy. Callidus is likely to—at some point—become part of a larger technology company. We suspect it will command a premium revenue multiple if it is able to sustain SAAS recurring revenue growth in excess of 30%, as it has done the past three quarters
Investments Paying Off – Callidus has chosen an aggressive expansion strategy, which has already proven effective. In Q2 Callidus signed 3 sevenfigure deals, increased cloud bookings 100% y/y and maintained positive earnings despite ramping sales and marketing expenses. The company has recognized the potential in the current market and is using its product suite, sales force and alliances to capitalize on it.
Bridge front Acquisition – Callidus acquired Bridge front on July 22, 2015, as part of its ongoing expansion into learning content generation. Financial contribution will be addressed following Q3.
Margin Commentary – Recurring revenue gross margin was 77% for the quarter, on track with the company’s target of 75%-80%. Operating margin showed less leverage due to sales and marketing spend.
Suite Advantage – The Company noted its Lead to Money suite continues to help the company win versus competitors that only offer point products.
State Farm Win, Other Sales Commentary – Callidus had 21 multi-product deals during the quarter. These included many big name accounts, including State Farm, a brand-new account that signed a 3 year $5M+ services commitment. The company also saw a doubling of its pipeline and deals y/y while maintaining above 90% customer retention.
International Markets – This quarter the company had deals with telco companies in Europe and Australia. It is making India a priority and investing in sales and marketing in this region.
Callidus is already a significant force in SAAS-based productivity software, but the success has yet to show clearly in the P&L and this provides a compelling risk/reward trade-off. Additionally, space consolidation is a fact of life in technology investing and SAAS software is no exception. We believe the list of potential Callidus buyers includes Oracle, IBM, SAP, Salesforce.com and Adobe Software. Based on control multiples paid in the SAAS-based software market, we believe Callidus could command well in excess of our target on takeout.
Our $19 price target is a 5.0x EV/2016 revenue multiple, which is in line with median multiples in the high-growth SAAS space. The math works out to 5.0x $199 million revenue, plus $92 million net cash, divided by 56.5 million shares outstanding.
Callidus Software Inc. (NASDAQ:CALD), doing business as CallidusCloud(R), is the global leader in cloud based sales, marketing, learning and customer experience solutions. CallidusCloud enables organizations to accelerate and maximize their lead to money process with a complete suite of solutions that identify the right leads, ensure proper territory and quota distribution, enable sales forces, automate configure price quote, and streamline sales compensation — driving bigger deals, faster. More than 4,000 leading organizations, across all industries, rely on CallidusCloud to optimize the lead to money process to close more deals for more money in record time.
Oct 09, 2015 Callidus Software Inc. (NASDAQ:CALD) Callidus Software Inc. CALD, a global leader in cloud-based sales, marketing, customer experience and learning solutions, today announced that it will report financial results for the third quarter 2015 on Thursday, November 5, 2015 after the market closes, followed by a conference call at 1:30 p.m. Pacific Time (PT). The conference call can be accessed via telephone and live webcast.