CHORDIANT ANNOUNCES RECORD FOURTH-QUARTER 2000 FINANCIAL RESULTS Wednesday 7 February 2001 PDF Print 117% Revenue Growth from 4Q99; Enterprise-Level Wins with MetLife and British Sky Broadcasting; Signing of Definitive Merger Agreement with PrimeResponse CUPERTINO, Calif., February 6, 2001-Chordiant Software, Inc. (Nasdaq:CHRD), leading developer of unified customer relationship management (CRM) solutions for companies with extreme customer demands, today announced its financial results for the fourth quarter and full year ended December 31, 2000. Total net revenues were $11.6 million, up 117% from the $5.3 million reported for the fourth quarter of 1999 and a 19% increase from $9.7 million for the third quarter of 2000. Fourth-quarter license revenues were $6.2 million, up from $2.7 million a year earlier. Service revenues were $5.4 million, up from $2.7 million a year ago. Fourth-quarter gross margin grew sequentially from 45 percent to 53 percent. Before the effect of non-cash charges related to the amortization of deferred stock-based compensation, the amortization of acquired intangible assets and unreconciled currency translation adjustments, fourth-quarter net loss was $5.0 million, or a loss of $0.13 per share on a pro forma basis, compared with a net loss of $5.8 million, or a loss of $0.19 per share pro forma, for the same quarter a year ago. After the effect of these charges-portions of which relate to the acquisition of White Spider Software, Inc. in July 2000 and the amortization of deferred stock-based compensation-fourth-quarter net loss was $6.5 million, or a loss of $0.17 per share, compared with a net loss of $7.7 million, or a loss of $1.38 per share, for the same quarter of 1999. Results for the year ended December 31, 2000 included a charge of $650,000 related to estimated unreconciled currency translation adjustments arising from inter-company transactions. Chordiant is reconciling the currency translation adjustments and expects to resolve these adjustments before the filing of its Annual Report on Form 10-K. On the balance sheet at December 31, 2000, total deferred revenue was $30.0 million, up 195% from $10.2 million at December 31, 1999. Short-term deferred revenue was $20.9 million, and long-term deferred revenue was $9.1 million. Cash, cash equivalents and short-term investments totaled $67.7 million, up $1.1 million from September 30, 2000. "In the fourth quarter, we continued to grow revenues and reduce operating net loss as planned," said Sam Spadafora, chairman and chief executive officer of Chordiant. "We also reached $30 million in deferred revenue, which reflects the strength of our pipeline going into the new year. During the quarter, we received enterprise-level orders from MetLife and British Sky Broadcasting (BskyB), and commenced seven new engagements with new and existing customers. For all four quarters of the year ended December 31, 2000, Chordiant exceeded its critical financial goals, including revenues, expense management, net loss per share, and cash management. The company has consistently demonstrated aggressive organic growth. Recently, we reached agreement to acquire PrimeResponse, which we believe will fortify Chordiant as a leader in customer acquisition, retention and relationship management for large B2C companies worldwide." For the full year ended December 31, 2000, Chordiant's total net revenues were $33.7 million, up 92 percent from $17.6 million for the prior year. Net loss was $23.6 million, or a loss of $0.64 per share pro forma, excluding non-cash charges of $6.3 million for stock-based compensation, one-time charges of $5.0 million for the write-off of purchased in-process research and development and the amortization of acquired intangible assets, and unreconciled currency translation adjustments of $650,000. This compared with a net loss of $20.5 million, or a loss of $0.83 per share pro forma, excluding non-cash charges of $2.7 million for stock-based compensation, for the previous year. Including the charges for stock-based compensation, write-offs and amortization of acquired intangible assets, net loss for 2000 was $34.9 million, or a loss of $0.97 per share pro forma. Planned Acquisition of PrimeResponse On January 8, 2001, Chordiant and PrimeResponse, Inc. (Nasdaq/Easdaq:PRME), a leader in business-to-consumer relationship marketing, announced the signing of a definitive merger agreement for Chordiant to acquire PrimeResponse in a stock transaction valued at approximately $38 million. The transaction is expected to close early in the second quarter of 2001, subject to customary closing conditions, including stockholder and regulatory approvals. As a result of the acquisition, Chordiant expects to enhance its position as a leading provider of unified CRM infrastructure software, service and relationship marketing applications across multiple markets-including financial services, communications, travel, and consumer-with a customer and partner base of more than 100 Global 1000 companies worldwide. Quarterly Business Highlights During the fourth quarter of 2000, Chordiant: · Received multi-million dollar, enterprise-level orders from MetLife and BskyB, which are expected to result in multiple new CRM engagements in 2001 and beyond; · Commenced seven new engagements with new and existing customers, including Royal Bank of Scotland, MetLife, Barclays, and Lloyds TSB; · Formed a global strategic partnership with BroadVision for the development of an integrated CRM solution for multi-channel sales and customer service; · Executed first customer shipments of product incorporating the Internet knowledge management and next-generation, XML-based technology of White Spider Software, Inc., which Chordiant acquired in July 2000; · Promoted Stephen Kelly, senior vice president of Worldwide Field Operations, to the position of president and chief operating officer, reporting to Sam Spadafora, chief executive officer, effective January 5, 2001. In addition, Thomas Cook Global & Financial Services, a long-standing Chordiant customer, won the European Call Centre of the Year Award for the second consecutive year at Call Centre Expo 2000 in London. This annual award recognizes best practices in the use of CRM technology and related areas of customer service across all industry segments. About Chordiant Software, Inc. Chordiant (NASDAQ: CHRD) delivers a unified CRM solution for companies with extreme customer demands. Chordiant's solution is designed to solve the needs of complex businesses serving millions of individual customers with the objectives of retaining, growing and building lifetime customer value. Whether communicating by email, Web, telephone, or wireless access, Chordiant Unified CRM Solution provides a real-time, single view of each customer and a consistent, personalized message for every interaction. It includes a comprehensive business process engine, which allows companies to implement best business practices across multiple touchpoints. Chordiant empowers high-value contacts designed to retain customers, grow revenue and drive profits during every contact. The Chordiant system has been selected by several of the world's leading consumer companies, including Barclays, BskyB, Direct Line, First USA Bank, OnStar, Halifax Card Services, Lloyds TSB, and MetLife. Headquartered in Cupertino, California, Chordiant maintains regional offices in Chicago, Dallas, New York, London, Amsterdam, and Munich. 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. For this purpose, any statements contained in this news release that are not statements of historical fact may be deemed to be forward-looking statements. Words such as "believes," "anticipates," "plans," "expects," "will," "would," "assume," and similar expressions 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, risks detailed from time to time in the company's respective Securities and Exchange Commission reports, including Chordiant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, and Chordiant's final prospectus for its initial public offering filed on February 14, 2000. Factors that could cause or contribute to such differences include, but are not limited to, risks related to customer and market acceptance of our products, deployment delays or errors associated with these products, risks related to the acquisition and integration of the technology and business operations of Prime Response, hardware platform incompatibilities, reliance on a limited number of customers for a majority of revenue, need to maintain and enhance certain business relationships with application integrators and other parties, ability to manage growth, activities by Chordiant and others regarding protection of proprietary information, release of competitive products and other actions by competitors, and economic downturns in either domestic or international markets. Chordiant undertakes no obligation to update forward-looking statements contained in this news release. 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