CallidusCloud Announces Fourth Quarter and Full Year 2012 Results

PLEASANTON, CA--(Marketwire - Feb 7, 2013) - Callidus Software Inc. (NASDAQ: CALD)

• Record Q4 SaaS Bookings

• 2012 SaaS Revenues of $55 Million; up 23% Year-over-Year

• Full Year 2012 Gross Annual Contract Value (ACV) Bookings up 73% over full year 2011

• Full year 2012 Billings up 24% Year-over-Year

• Full year 2012 Total Revenues Reach $95 Million

• Cash Balance Increased to $29.2 Million

Callidus Software Inc. (NASDAQ: CALD), a leading provider of hiring, learning, marketing and selling cloud software today announced financial results for the fourth quarter ended December 31, 2012.

"In Q4 we hit the $100 million run rate as a SaaS company. Our Selling, Marketing, Learning and Hiring Clouds all contributed to our ninth consecutive double-digit revenue growth quarter," said Leslie Stretch, President and CEO, CallidusCloud. "We signed a record 180 net new subscription customers including our largest ever SaaS conversion deal for the commissions platform. We had our strongest SaaS bookings since we started our SaaS business. I was particularly pleased that we made good progress on our cash balance and DSO's in the quarter."

Financial Highlights for the Fourth Quarter 2012

• Total revenue was $25.2 million for the fourth quarter, representing an increase of 12% compared to the same quarter last year. Total recurring revenues, which include SaaS revenues and maintenance and support, were $18.5 million, up approximately 9% compared to the fourth quarter of 2011. SaaS revenues of $14.6 million were up 15%, while maintenance and support revenues of $3.9 million were down 9% as compared to the fourth quarter of 2011. Service and other revenues of $6.8 million were up 21% as compared to the same quarter of 2011 driven by the release of $1.2 million in deferred service revenue upon project acceptance.

• Total GAAP gross margin was 46% for the fourth quarter up from 41% in the same quarter in 2011.

• Non-GAAP gross margin was 53% for the fourth quarter of 2012 up from 52% for the fourth quarter of 2011. Non-GAAP gross margin for the fourth quarter of 2012 excludes $717,000 of stock-based compensation expense, $535,000 in expenses to transfer India operations, and $535,000 of amortization of acquired intangibles.

• Fourth quarter 2012 GAAP recurring revenue gross margin was 59% up from 53% for the fourth quarter of 2011. Fourth quarter non-GAAP recurring revenue gross margin, which excludes $270,000 of stock-based compensation, $387,000 in expenses to transfer India operations, and $533,000 of amortization of acquired intangibles was 65%, up from 60% for the fourth quarter of 2011.

• GAAP net loss was $9.1 million, or ($0.25) per share, for the fourth quarter of 2012, which included $2.7 million of stock-based compensation expense, $837,000 of convertible note related interest and amortization expense, $827,000 of amortization of acquired intangible assets, $45,000 of acquisition-related expense, $859,000 in fees to transfer India operations, and $871,000 of patent litigation defense and restructuring costs. This compares to a GAAP net loss of $4.3 million, or ($0.13) per share, for the fourth quarter of 2011, which included $3.4 million of stock-based compensation expense, $821,000 of convertible note related expense items, gain on extinguishment of debt of $11,000, $516,000 of acquisition related expense, a tax benefit from release of valuation allowance of $2.4 million, $1.1 million of patent litigation and settlement costs, $717,000 of amortization of acquired intangible assets and $513,000 of restructuring expense.

• Non-GAAP net loss was $2.9 million, or ($0.08) per fully diluted share, for the quarter, compared to non-GAAP net income of $278,000, for the same period last year excluding the items identified above.

Financial Highlights for the Full Fiscal 2012

• Total revenue for the full fiscal year was $95.0 million, up 13% compared to $83.8 million in 2011. Total recurring revenues, which include SaaS revenues and maintenance and support, were $70.9 million, an increase of 13% from $63.0 million in 2011. SaaS revenues of $55.1 million were up 23%, while maintenance and support revenues of $15.8 million were down 12% as compared to 2011. Service and other revenues of $24.0 million were up 16% as compared to $20.8 million in 2011.

• Total GAAP gross margin was 47% for the full fiscal year, up from 40% in 2011.

• Non-GAAP gross margin was 54% for 2012, up from 48% in 2011. Non-GAAP gross margin for the full fiscal year excludes $3.6 million of stock-based compensation expense, $535,000 in expenses to transfer India operations, and $2.0 million of amortization of acquired intangibles.

• GAAP recurring revenue gross margin was 58% for the full year, up from 48% during 2011. Non-GAAP recurring revenue gross margin, which excludes $1.6 million of stock-based compensation, $387,000 in expenses to transfer India operations, and $2.0 million of amortization of acquired intangibles, was 63% for the full year, up from 54% for previous period.

• GAAP net loss was $27.7 million, or ($0.78) per share for the full year, which included $13.7 million of stock-based compensation expense, $3.3 million of convertible note related interest and amortization expense, $3.2 million of amortization of acquired intangible assets, $865,000 of acquisition-related expense, $859,000 in fees to transfer India operations, $1.8 million in acquisition related adjustment, $224,000 tax benefit from release of valuation allowance, and $2.2 million of patent litigation defense and restructuring costs. This compares to a GAAP net loss of $16.1 million, or ($0.49) per share, for 2011, which included $12.3 million of stock-based compensation expense, $2.3 million of convertible note related expense items, gain on extinguishment of debt of $915,000, $1.6 million of acquisition related expense, a tax benefit from release of valuation allowance of $3.0 million, $2.1 million of patent litigation and settlement costs, $1.6 million of amortization of acquired intangible assets, $375,000 impairment of investment expense, and $649,000 of restructuring expense.

• Non-GAAP net loss was $5.6 million, or ($0.16) per share, for the full year, compared to non-GAAP net income of $950,000, for the previous year excluding the items identified above.

Business Highlights for the Fourth Quarter 2012

• CallidusCloud received the highest "Strong Positive" rating in the 2012 MarketScope for Insurance ICM Software by Gartner, the world's leading information technology research and advisory company. The report revealed CallidusCloud as the vendor with the most new customers in a market that grew 23% in 2012.

• Launched strategic incentives module "MySalesGame" that directly addresses the limitations of traditional SPM tools by tapping into the inherent competitiveness in people. MySalesGame employs gamification techniques to engage sales professionals to adopt the tools, technology and training necessary to ensure consistent high performance.

• CallidusCloud sponsored key industry events including Cloudforce, Oracle Open World, Aberdeen Revenue-Driven Marketing Summit, Sales 2.0, the Sales Force Productivity Conference and Dev-Learn.

Business Highlights for the Full Year 2012

• Acquired a leader in next-generation marketing automation and leads management, LeadFormix. By uniting sales and marketing, LeadFormix award-winning Cloud solutions produce richer, targeted leads for sales along with easier access to qualified decision makers.

• Acquired 6FigureJobs, a premier executive career community and job board. The acquisition extends CallidusCloud's Hiring Cloud suite into a comprehensive sales and executive focused talent recruitment solution.

• Awarded the highest "Strong Positive" in both the 2012 MarketScope for Sales Performance Management and the 2012 MarketScope for Incentive Compensation Management in the Insurance industry.

• Added two significant new go-to-market channels by joining the salesforce.com ISV Force reseller program in Q2 and Oracle's ISV reseller program in Q3.

• CallidusCloud hosted over 400 customers and partners at its C3 conference in May, the largest Sales Performance and Effectiveness conference of its kind. Customers, prospects, industry analysts and partners gathered in Las Vegas to share best practice and industry insight.

• CallidusCloud collected 10 awards at the American Business Awards and International Business Awards including favorite company, best website, best new product and best new financial management cloud app for CallidusCloud's Commissions solution.

• The CallidusCloud™ Sales Effectiveness suite was selected as a finalist for the prestigious CODiE™ Awards in the "Best Cloud Application/Service", "Best Human Capital Management Solution", and "Best Financial Management Solution" categories.

Financial Outlook
Total revenue for the first quarter of 2013 is expected to be between $25 million and $26 million. GAAP operating expenses are expected to be between $17.6 million and $18.6 million in the first quarter of 2013, which includes stock-based compensation expense of approximately $2.7 million, amortization of acquired intangibles of $830,000, restructuring costs of $500,000, $840,000 of convertible note related interest and amortization expense, and $380,000 of patent litigation defense costs. At the midpoint of our range we would expect to be non-GAAP profitable by up to half a million dollars. Full year total revenue is expected to be between $105 million and $110 million. Non-GAAP operating income for the full year is expected to be between $4 million and $5 million. While we will need to use some cash in Q1 for our previous acquisitions we do expect to generate GAAP positive cash flow from operations throughout 2013.

Conference Call

A conference call to discuss the fourth quarter results and outlook is scheduled for 1:30 p.m. Pacific Daylight Time (PDT) today. The conference call will be available via live webcast at the Investor Relations section of Callidus Software's website.

Webcast site: http://www.media-server.com/m/p/g27krh84
Dial-in: 866-383-8119 (International callers: 617-597-5344)
Passcode: 90618271
Replay information: A webcast replay will be available on the Investor Relations section of our website under Calendar of Events.

For more information, please visit: http://www.calliduscloud.com/about-us/investor-relations/

About CallidusCloud
Callidus Software Inc. (NASDAQ: CALD), doing business as CallidusCloud, is a leading provider of cloud software. CallidusCloud enables organizations to drive performance and productivity across their business with our hiring, learning, marketing and selling clouds. From back office to the field, from desktop to mobile, we ensure organizations have the right tools to be more effective and perform better. The combined power of our clouds, our people, and our partners fuels growth, empowers the work force and delivers real value. CallidusCloud drives performance and productivity for over 1,700 leading organizations. Small, medium and large enterprises across multiple industries and geographies rely on CallidusCloud for quicker hiring, simpler learning, better marketing, and smarter selling.

For more information, please visit www.calliduscloud.com.

Note on Forward-Looking Statements

The forward-looking statements included in this press release, including discussion of our commercial prospects, estimates of first quarter and full year 2013 revenues, operating expenses, non-GAAP EPS, stock-based compensation expense and amortization of acquired intangibles expenses reflect management's best judgment based on factors currently known and involve risks and uncertainties. These risks and uncertainties include, but are not limited to, potential disruption of customer purchase decisions resulting from global economic conditions, timing and size of orders, potential material fluctuations in financial results and future growth rates, decreases in customer spending, uncertainty regarding purchasing trends in the SPM market, customer cancellations or non-renewal of maintenance contracts or on-demand services, our potential inability to manage effectively any growth we experience, uncertainty regarding the demand for and profitability of our on-demand services, increased competition or new entrants in the marketplace, and other risks detailed in Callidus' reports filed with the Securities and Exchange Commission (SEC), including its Form 10-K for 2011 and its third quarter 2012 Form 10-Q which may be obtained by contacting Callidus Software's Investor Relations department at 925-251-2248, or from the Investor Relations section of Callidus Software's website (CallidusCloud Investor Relations). Actual results may differ materially from those presently reported. We assume no obligation to update the information contained in this release.

Non-GAAP Financial Measures

Callidus has provided in this release financial information that has not been prepared in accordance with GAAP. This information includes non-GAAP gross margin, non-GAAP recurring revenue gross margin, non-GAAP net loss, non-GAAP net loss per share. Callidus uses non-GAAP measures internally in analyzing its financial results and believes that they are useful to investors, as a supplement to GAAP measures, in evaluating Callidus' operating performance. Callidus believes that the use of these non-GAAP measures provides additional insight for investors to use in evaluation of ongoing operating results and trends and in comparing its financial measures with other companies in Callidus' industry, many of which present similar non-GAAP financial measures to investors. As noted, the non-GAAP financial measures exclude stock-based compensation expense, a benefit from a purchase acquisition-related adjustment, restructuring expense, acquisition related expense, patent litigation defense cost, convertible note interest expense, amortization of convertible note issuance cost and amortization of acquired intangibles. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.

©2013. Callidus Software Inc. All rights reserved. Callidus, Callidus Software, the Callidus Software logo, CallidusCloud, the CallidusCloud logo, TrueComp Manager, ActekSoft, ACom3, ForceLogix, Salesforce Assessments, iCentera, Webcom, LeadFormix, Litmos, the Litmos logo, Rapid Intake, and 6FigureJobs are trademarks, service marks, or registered trademarks of Callidus Software Inc. and its affiliates in the United States and other countries. All other brand, service or product names are trademarks or registered trademarks of their respective companies or owners.

CALLIDUS SOFTWARE INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except for per share data)
(unaudited)
				Three Months Ended December 31,								Year Ended December 31,
				2012				2011				2012				2011
Revenues:
	Recurring			$	18,457			$	16,935			$	70,919			$	63,002
	Services and other				6,776				5,611				24,032				20,769
		Total revenues			25,233				22,546				94,952				83,771
Cost of revenues:
	Recurring (1) (2) (10)				7,605				7,960				30,039				32,820
	Services and other (1) (2) (10)				6,035				4,535				20,301				16,487
	Patent settlement				-				701				-				701
		Total cost of revenues			13,640				13,196				50,340				50,008
Gross profit					11,593				9,350				44,612				33,763
Operating expenses:
	Sales and marketing (1) (2) (10)				8,898				5,900				32,442				20,203
	Research and development (1) (2) (10)				4,606				3,609				16,643				12,025
	General and administrative (1) (2) (3) (4) (10)				5,314				5,226				19,952				17,726
	Acquisition related contingent consideration				-								(1,787	)
	Restructuring				554				513				1,115				649
		Total operating expenses			19,372				15,248				68,365				50,603
Operating loss					(7,779	)			(5,898	)			(23,754	)			(16,840	)
Interest income and other income (expense) (5) (6) (8) (9)					(1,096	)			(834	)			(3,556	)			(1,913	)
Loss before provision (benefit) for income taxes (7)					(8,875	)			(6,732	)			(27,310	)			(18,753	)
Provision (benefit) for income taxes					175				(2,398	)			388				(2,677	)
Net loss				$	(9,050	)		$	(4,334	)		$	(27,698	)		$	(16,076	)
Net loss per share - basic and diluted
	Net loss per share			$	(0.25	)		$	(0.13	)		$	(0.78	)		$	(0.49	)
Shares used in basic and diluted per share computation					36,359				32,760				35,393				32,809
(1) Stock-based compensation included in amounts above by category:
	Cost of recurring				270				816				1,550				3,339
	Cost of services				447				441				2,070				1,495
	Sales and marketing				841				667				3,778				1,987
	Research and development				406				458				1,782				1,548
	General and administrative				774				1,007				4,475				3,914
		Total stock-based compensation			2,738				3,389				13,655				12,283
(2) Acquisition, acquired and settlement related asset amortization
	Cost of recurring				533				383				2,036				669
	Cost of services				2				2				-				2
	Sales and marketing				233				293				880				812
	Research and development				-				-				-				-
	General and administrative				59				39				239				86
		Total acquisition related asset amortization			827				717				3,155				1,569
(3) Acqisition related expense					45				516				865				1,596
(4) Patent litigation costs					317				1,070				1,103				2,142
(5) Interest expense on convertible notes					703				682				2,813				1,947
(6) Amortization of convertible note issuance costs					134				139				536				355
(7) Tax benefit from release of valuation allowance					-				(2,403	)			(224	)			(2,975	)
(8) Gain on extinguishment of convertible note					-				(11	)			-				(915	)
(9) Impairment of asset					-				-				-				375
(10) India operations transfer fee					859				-				859				-

CALLIDUS SOFTWARE INC.
CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
				December 31,				December 31,
				2012				2011
ASSETS
Current assets:
	Cash and cash equivalents			$	16,400			$	17,383
	Short-term investments				12,771				35,406
	Accounts receivable, net				22,567				21,778
	Deferred income taxes				41				110
	Prepaid and other current assets				6,660				5,831
		Total current assets			58,439				80,508
Property and equipment, net					10,580				6,772
Goodwill					31,207				24,416
Intangible assets, net					21,196				17,769
Deferred income taxes, noncurrent					708				206
Deposits and other assets					2,872				3,936
		Total assets		$	125,002			$	133,607
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	4,706			$	3,515
	Accrued payroll and related expenses				5,854				4,278
	Accrued expenses				8,472				12,272
	Deferred income taxes				1,259				596
	Deferred revenue				35,483				30,211
	Capital lease obligations				921				1,196
		Total current liabilities			56,695				52,068
Deferred revenue, noncurrent					3,702				4,257
Deferred income taxes, noncurrent					160				197
Other liabilities					1,794				2,413
Capital lease obligations, noncurrent					8				915
Convertible notes					59,215				59,215
		Total liabilities			121,574				119,065
Stockholders' equity:
	Common stock				34				33
	Additional paid-in capital				255,331				238,798
	Treasury stock				(14,430	)			(14,430	)
	Accumulated other comprehensive income				239				189
	Accumulated deficit				(237,746	)			(210,048	)
		Total stockholders' equity			3,428				14,542
		Total liabilities and stockholders' equity		$	125,002			$	133,607

CALLIDUS SOFTWARE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
					Year Ended December 31,
					2012				2011
Cash flows from operating activities:
	Net loss				$	(27,698	)		$	(16,076	)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation expense				3,114				3,098
		Amortization of intangible assets				5,094				3,485
		Provision for doubtful accounts and service remediation reserves				595				48
		Stock-based compensation				13,655				12,241
		Stock-based compensation related to acquisition				-				42
		Patent settlement expense				-				701
		Release of valuation allowance				(350	)			(2,975	)
		Gain on disposal of property and equipment				(2	)			(6	)
		Impairment of investments				-				375
		Amortization of convertible notes issuance cost				402				355
		Gain on extinguishment of convertible notes				-				(915	)
		Net amortization on investments				358				510
		Acquisition-related contingent consideration				(1,962	)			-
		Changes in operating assets and liabilities:
			Accounts receivable			(1,112	)			(36	)
			Prepaid and other current assets			(762	)			1,775
			Other assets			662				(2,667	)
			Accounts payable			1,046				1,300
			Accrued expenses			(813	)			(2,763	)
			Accrued payroll and related expenses			987				1,422
			Accrued restructuring			443				146
			Deferred revenue			4,576				62
			Deferred income taxes			193				24
Net cash used in operating activities						(1,574	)			146
Cash flows from investing activities:
	Purchases of investments					(16,536	)			(52,886	)
	Proceeds from maturities and sale of investments					38,841				35,511
	Purchases of property and equipment					(6,823	)			(2,002	)
	Proceeds from disposal of property and equipment					2				6
	Purchases of intangible assets					(6,196	)			(1,522	)
	Acquisitions, net of cash acquired					(7,715	)			(19,482	)
Net cash used in investing activities						1,573				(40,375	)
Cash flows from financing activities:
	Proceeds from issuance of common stock					5,225				5,556
	Repurchases of common stock					-				(14,430	)
	Repurchase of common stock from employees for payment of taxes on vesting of restricted stock units					(2,346	)			(1,402	)
	Payment of consideration related to acquisitions					(2,660	)			(1,210	)
	Proceeds from issuance of convertible notes, net of issuance costs					-				76,854
	Repurchase of convertible notes					-				(19,448	)
	Repayment of debt assumed through acquisition					(30	)			-
	Payment of principal under capital leases					(1,193	)			(1,170	)
Net cash provided by financing activities						(1,004	)			44,750
Effect of exchange rates on cash and cash equivalents						22				32
Net increase (decrease) in cash and cash equivalents						(983	)			4,553
Cash and cash equivalents at beginning of period						17,383				12,830
Cash and cash equivalents at end of period					$	16,400			$	17,383

CALLIDUS SOFTWARE INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except for percentages and per share data)
(unaudited)
			Three months ended								Twelve months ended
			December 31,								December 31,
			2012				2011				2012				2011
Non-GAAP gross profit reconciliation
Gross profit			$	11,593			$	9,350			$	44,612			$	33,763
	Profit margin, as a % of total revenues			46	%			41	%			47	%			40	%
Add back:
	Non-cash stock-based compensation			717				1,257				3,620				4,834
	Non-cash amortization of acquired
	intangible assets			535				383				2,036				669
	Patent settlement			-				701				-				701
	India operations transfer fee			535				-				535				-
Non-GAAP gross profit			$	13,380			$	11,691			$	50,802			$	39,967
	Profit margin, as a % of total revenues			53	%			52	%			54	%			48	%
Non-GAAP recurring revenue gross profit reconciliation
Recurring revenue gross profit			$	10,852				8,975			$	40,880			$	30,182
	Recurring revenue profit margin, as a % of recurring revenues			59	%			53	%			58	%			48	%
Add back:
	Non-cash stock-based compensation			270				816				1,550				3,339
	Non-cash amortization of acquired
	intangible assets			533				383				2,036				669
	India operations transfer fee			387				-				387				-
Non-GAAP Recurring revenue gross profit			$	12,042			$	10,174			$	44,853			$	34,190
	Recurring revenue profit margin, as a % of recurring revenues			65	%			60	%			63	%			54	%
Non-GAAP operating expense reconciliation:
Operating expenses			$	19,372				15,248			$	68,365			$	50,603
	Operating expenses, as a % of total revenues			77	%			68	%			72	%			60	%
Add back:
	Non-cash stock-based compensation			(2,021	)			(2,132	)			(10,035	)			(7,449	)
	Non-cash amortization of acquired
	intangible assets			(292	)			(334	)			(1,119	)			(900	)
	Acquisition-related expense			(45	)			(516	)			(865	)			(1,596	)
	Patent litigation and settlement costs			(317	)			(369	)			(1,103	)			(1,441	)
	Acquisition-related adjustment			-				-				1,787				-
	India operations transfer fee			(324	)			-				(324	)			-
	Restructuring			(554	)			(513	)			(1,115	)			(649	)
Non-GAAP Operating Expenses			$	15,819			$	11,384			$	55,591			$	38,568
	Non-GAAP Operating expenses, as a % of total revenues			63	%			50	%			59	%			46	%
Non-GAAP operating income (loss) reconciliation:
Operating loss			$	(7,779	)			(5,898	)		$	(23,754	)		$	(16,840	)
	Operating loss, as a % of total revenues			-31	%			-26	%			-25	%			-20	%
Add back:
	Non-cash stock-based compensation			2,738				3,389				13,655				12,283
	Non-cash amortization of acquired
	intangible assets			827				717				3,155				1,569
	Acquisition-related expense			45				516				865				1,596
	Patent litigation and settlement costs			317				1,070				1,103				2,142
	Acquisition-related adjustment			-				-				(1,787	)			-
	India transfer operations fee			859				-				859				-
	Restructuring			554				513				1,115				649
Non-GAAP Operating income (loss)			$	(2,438	)		$	307			$	(4,788	)		$	1,399
	Non-GAAP Operating income (loss), as a % of total revenues			-10	%			1	%			-5	%			2	%

CALLIDUS SOFTWARE INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except for percentages and per share data)
(unaudited)
			Three months ended								Twelve months ended
			December 31,								December 31,
			2012				2011				2012				2011
Non-GAAP net loss reconciliation:
Net loss			$	(9,050	)			(4,334	)		$	(27,698	)		$	(16,076	)
	Net loss, as a % of total revenues			-36	%			-19	%			-29	%			-19	%
Add back:
	Non-cash stock-based compensation			2,738				3,389				13,655				12,283
	Non-cash amortization of acquired
	intangible assets			827				717				3,155				1,569
	Acquisition related expenses			45				516				865				1,596
	Patent litigation and settlement costs			317				1,070				1,103				2,142
	Acquisition-related adjustment			-				-				(1,787	)			-
	India transfer operations fee			859				-				859				-
	Restructuring			554				513				1,115				649
	Interest expense on convertible notes			703				682				2,813				1,947
	Amortization of convertible note issuance cost			134				139				536				355
	Tax benefit from release of valuation allowance			-				(2,403	)			(224	)			(2,975	)
	Gain on extinguishment of convertible note			-				(11	)			-				(915	)
	Impairment of asset			-				-				-				375
Non-GAAP Net income (loss)			$	(2,872	)		$	278			$	(5,607	)		$	950
	Non-GAAP Net income (loss), as a % of total revenues			-11	%			1	%			-6	%			1	%
Non-GAAP net income (loss) per share reconciliation:
Net loss per basic and diluted share			$	(0.25	)			(0.13	)		$	(0.78	)		$	(0.49	)
Add back:
	Non-cash stock-based compensation			0.08				0.10				0.39				0.37
	Non-cash amortization of acquired
	intangible assets			0.02				0.02				0.09				0.05
	Acquisition related expenses			-				0.02				0.02				0.05
	Patent litigation and settlement costs			0.01				0.04				0.03				0.07
	Acquisition-related adjustment			-				-				(0.05	)			-
	India transfer operations fee			0.02				-				0.02				-
	Restructuring			0.01				0.02				0.03				0.02
	Interest expense on convertible notes			0.02				0.02				0.08				0.06
	Amortization of convertible note issuance cost			0.01				-				0.02				0.01
	Tax benefit from release of valuation allowance			-				(0.07	)			(0.01	)			(0.09	)
	Gain on extinguishment of convertible note			-				-				-				(0.03	)
	Impairment of asset			-				-				-				0.01
Non-GAAP net income (loss) per basic share			$	(0.08	)		$	0.02			$	(0.16	)		$	0.03
Non-GAAP net income (loss) per diluted share			$	(0.08	)		$	0.01			$	(0.16	)		$	0.02
Basic and fully diluted shares reconciliation:
Basic shares				36,359				32,760				35,393				32,809
Add back:
	Weighted average effect of dilutive securities			-				9,803				-				7,692
Diluted shares				36,359				42,563				35,393				40,501