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Achieves 151% Revenue Growth Year over Year, More than 150% Growth Last Two Quarters;Reaffirms 2001 Outlook


CUPERTINO, Calif., July 24, 2001-Chordiant Software, Inc. (Nasdaq: CHRD), a leader in Unifying Customer Relationship Management (CRM) Solutions, today announced its financial results for the second quarter ended June 30, 2001.

Total net revenues for the second quarter of 2001 were $18.5 million, up 151 percent from the $7.4 million reported for the second quarter of 2000 and up 42 percent sequentially. Second-quarter license revenues were $9.6 million, up 191 percent from $3.3 million year over year. Service revenues were $9.0 million, up 118 percent from $4.1 million a year earlier. Second-quarter gross margin was 55 percent, up from 44 percent a year ago.

Second-quarter net loss on operations was $7.5 million, or a loss of $0.14 per share on a pro forma basis, excluding non-cash charges for the amortisation of deferred stock-based compensation and the write-off of purchased in-process research and development, the amortisation of acquired intangible assets, and integration-related costs associated with the acquisition of Prime Response, Inc. This compares with a net loss on operations of $6.0 million, or a loss of $0.16 per share pro forma, for the same quarter of 2000, excluding the amortisation of deferred stock-based compensation. Second-quarter net loss as reported was $12.7 million, or a loss of $0.25 per share, compared with a net loss as reported of $7.9 million, or a loss of $0.21 per share, for the year-ago quarter. Weighted average shares outstanding for the second quarter increased 40 percent to 51.5 million from 36.8 million a year earlier, due to the issuance of new shares of common stock for acquisitions.

"The second quarter of 2001 was our sixth consecutive quarter of solid revenue growth as a public company," said Sam Spadafora, chairman and chief executive officer of Chordiant. "We were hitting on all cylinders and grew 151 percent in spite of economic and market challenges-testimony to our ability to integrate technologies, products and people and deliver enterprise-class CRM platforms and applications to Global 1000-class customers. Once again, we exceeded our targets at both the top line and the bottom line, while completing two new acquisitions and integrating the operations of Prime Response. At the same time, we maintained prudent cost and expense controls in managing our business conservatively on the path to profitability. During the quarter, we signed million-dollar license agreements in the U.S. and internationally, adding top-tier customers such as VoiceStream Wireless and Bank of Ireland, and began a total of 12 new customer engagements. We now have approximately 135 customers and partners worldwide, most of which are in the Global 1000."

Spadafora continued, "Today, we reaffirmed our previously stated outlook: we anticipate total net revenues ranging from $70 million to $75 million for full-year 2001 and expect operating and cash break-even in the first half of 2002. Furthermore, we are comfortable with the higher end of the revenue range, based on the continued strength of our pipeline in Europe and the growth of our pipeline in the U.S. Our second-quarter momentum reinforces our expectations of achieving these estimates."

At June 30, 2001, Chordiant's cash, cash equivalents and short-term investments were $62.5 million, and total deferred revenue was $29.8 million.

For the six months ended June 30, 2001, total net revenues were $31.6 million, up 155 percent from $12.4 million for the same period of the prior year. First-half net loss on operations was $13.9 million, or a loss of $0.26 per share on a pro forma basis, excluding non-cash charges for the amortisation of deferred stock-based compensation, the write-off of purchased in-process research and development, the amortisation of acquired intangible assets, and integration-related costs associated with the acquisition of Prime Response, and currency translation adjustments related to foreign subsidiaries. The six-month 2001 net loss as reported was $22.4 million, or a loss of $0.49 per share.


BUSINESS HIGHLIGHTS

During the second quarter of 2001, Chordiant:

- Commenced 12 engagements with customers, including VoiceStream Wireless, Bank of Ireland, AEON Credit, BPN-Banco Popolare de Novaro, Les Trois Suisse, Thomson Travel Group, and the Financial Services Authority;

- Continued integrating the operations of Prime Response, following the close of the acquisition on March 27, 2001;

- Acquired Java server technology, development resources and customers from ActionPoint, Inc. (Nasdaq:ACTP) in an asset purchase valued at approximately $7.2 million in cash and common stock

- Released Chordiant Selling Director, based on Java server technology acquired from ActionPoint, as the e-selling product in its ICIM platform for unified e-marketing, e-selling, e-service, knowledge management, and fulfillment, and signed two new customers for this product;

- Acquired certain intellectual property assets and technology of the AoNet Java 2 Enterprise Edition (J2EE) Workflow Server from ASP Outfitters, Inc., a venture capital-funded start-up;

- Introduced the JX ArchitectureT, based on the J2EE Workflow Server and XML data connectivity standards, to support the development and implementation of the next generation of real-time CRM applications on the Chordiant Intelligent Customer Interaction Management (ICIM) platform;

- Launched Chordiant Marketing Director Suite 3, an expanded version of the marketing automation applications within the ICIM platform;

- Licensed Marketing Director Suite 3 to ING, a leading financial services group in Australia, as the backbone of its relationship marketing strategy and to RAC Motoring Services for the development and implementation of its Customer Data Warehouse;

- Introduced Dialog Interaction Server, a dynamic web interaction solution based on the JX Architecture;

- Announced OEM relationship agreements with Marketswitch Corporation and Hipbone, Inc. for the application of marketing optimisation and collaborative web browsing technologies; and

- Made Software Magazine's 19th Annual Software 500 list of the world's leading software and services providers in the June/July 2001 issue.


TELECONFERENCE WEBCAST

A teleconference held by Chordiant management discussing second-quarter financial results and business events, as well as the current outlook for the third quarter and full-year 2001 is available in archive format via the Chordiant website. For more information, visit the Investor Relations section of Chordiant's website at http://investor.chordiant.com/medialist/cfm. A telephonic replay will be available at 001 703-326-3020, code #5363411, for one week.


ABOUT CHORDIANT SOFTWARE, INC.

Chordiant (www.chordiant.com) delivers a Unifying Customer Relationship Management (CRM) solution based on Chordiant's branded platform strategy, the Intelligent Customer Interaction Management (ICIM) platform. Chordiant's ICIM platform provides highly scaleable building blocks for developing and integrating flexible CRM solutions into customers' existing enterprise-wide systems.

No matter how consumers choose to communicate with the enterprise-through branch locations, Web, e-mail, telephone, or wireless access-the Chordiant Unified CRM Solution provides a real-time, single view of each customer and a consistent, personalised process for every interaction. It includes a comprehensive business process engine, which allows companies to implement best business practices across multiple touchpoints. As a result of Chordiant's sophisticated Marketing Automation Business Services, marketers can maximise their ROI through the creation, execution and refinement of sophisticated direct marketing initiatives that span both traditional and online channels. Chordiant empowers high-value contacts designed to retain customers, grow revenues and drive profits during every contact.

Headquartered in Cupertino, California, Chordiant maintains offices in Boston; Chicago; Dallas; Manchester, New Hampshire; New York; London and Brentford, U.K.; Amsterdam; Paris; Munich; and Sydney and Melbourne, Australia.


SAFE HARBOR

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," "anticipates," "plans," "expects," "will," "would," 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, potential difficulties in the assimilation of operations, strategies, technologies, personnel and products of acquired companies and technologies, the impact of perceived or actual weakening of economic conditions on customers' and prospective customers' spending on Chordiant software and services; quarterly fluctuations in Chordiant's revenues or other operating results; failure by Chordiant to meet financial expectations of analysts and investors, including failure resulting from significant reductions in demand from earlier anticipated levels; risks related to market acceptance of Chordiant's products; customisation and deployment delays or errors associated with Chordiant products; impact of long sales and implementation cycles for certain Chordiant products; reliance by Chordiant on a limited number of customers for a majority of its revenues; Chordiant's need to retain and enhance business relationships with systems integrators and other parties; Chordiant's use in its products of third-party software; activities by Chordiant and others regarding protection of intellectual property; and competitors' release of competitive products and other actions. Further information on potential factors that could affect the financial results of Chordiant are included in risks detailed from time to time in Chordiant's Securities and Exchange Commission filings, including with
report on Form 10-Q for the quarterly period ended March 31, 2001, as filed on May 15, 2001 and the Annual Report on Form 10-K filed on March 27, 2001. These filings are available on a website 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 and Chordiant Unified CRM for Extreme Demands and JX Architecture are trademarks of Chordiant Software, Inc. All other trademarks and registered trademarks are the properties of their respective owners.

For a breakdown of the financial results please contact the team at Brodeur Worldwide


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