1035748--3/9/2010--CALLIDUS_SOFTWARE

related topics

{product, market, service}

{customer, product, revenue}

{system, service, information}

{condition, economic, financial}

{personnel, key, retain}

{property, intellectual, protect}

{stock, price, operating}

{acquisition, growth, future}

{control, financial, internal}

{operation, international, foreign}

{stock, price, share}

{product, liability, claim}

Disruptions in the financial and insurance industries or the global economic crisis may materially and adversely affect our revenues, operating results and financial condition. If we are unable to consistently offer our on-demand offering on a profitable basis, our operating results could be adversely affected. We cannot accurately predict customer subscription and maintenance renewal rates and the impact these renewal rates will have on our future revenues or operating results. Because we recognize revenue from subscriptions for our on-demand service and maintenance support over the terms of the subscription and maintenance support agreements, downturns or upturns in sales may not be immediately reflected in our operating results. Our success depends upon our ability to develop new products and enhance our existing products rapidly and cost-effectively. Failure to successfully introduce new or enhanced products may adversely affect our operating results. Our use of third-party international product development and support services may prove difficult to manage or of inadequate quality to allow us to realize our cost reduction goals and produce new products to drive growth. The market for sales performance management software is still new and rapidly evolving and may not develop as we expect. Our failure to effectively implement and manage the offering of our on-premise product on a time-based term license basis or the restructuring of our organizations in connection with our transition to a recurring revenue business model may harm our business and financial results. Our quarterly revenues and operating results are unpredictable and are likely to continue to fluctuate substantially, which may harm our results of operations. Our professional services revenues declined materially in recent periods as a result of changes to our business model, and we do not expect them to recover to previous historical levels. We might not be able to manage our operations efficiently or profitably. Our service revenues produce substantially lower gross margins than our license and recurring revenues, and periodic variations in the proportional relationship between services revenues and higher margin license and recurring revenues have harmed, and may continue to harm, our overall gross margins. The loss of key personnel, higher than normal employee attrition in key departments, or the inability of replacements to quickly and successfully perform in their new roles could adversely affect our business. Our products have long sales cycles, which makes it difficult to plan our expenses and forecast our results. Professional services revenues comprise a substantial portion of our revenues and, to the extent our customers choose to use other services providers, our revenues and operating results may decline. Deployment of our products frequently requires substantial technical implementation and support by us or third-party service providers. Failure to meet these requirements could cause a decline or delay in recognition of our revenues and an increase in our expenses. Acquisitions and investments present many risks, and we may not realize the anticipated financial and strategic goals for any such transactions. If we are unable to hire or subcontract for and retain qualified employees, including sales, professional services, and engineering personnel, our growth may be impaired. Our latest product features and functionality may require existing customers to migrate to more recent versions of our software. Moreover, we may choose to or be compelled to discontinue maintenance support for older versions of our software products, forcing customers to upgrade their software in order to continue receiving maintenance support. If existing customers fail to migrate or delay migration to newer versions of our software, our revenues may be harmed. If we do not compete effectively, our revenues may not grow and could decline. A substantial majority of our product revenues are derived from our TrueComp software application and related products and services, and a decline in sales of these products and services could adversely affect our operating results and financial condition. If we reduce prices, alter our payment terms or modify our products or services in order to compete successfully, our margins and operating results may be adversely affected. Our products depend on the technology of third parties licensed to us that are necessary for our applications to operate and the loss or inability to maintain these licenses, errors in such software, or discontinuation or updates to such software could result in increased costs or delayed sales of our products. Errors in our products could be costly to correct, adversely affect our reputation and impair our ability to sell our products. Our revenues might be harmed by resistance to adoption of our software by information technology departments. We may lose sales opportunities and our business may be harmed if we do not successfully develop and maintain strategic relationships to implement and sell our products. Breaches of security or failure to safeguard customer data could create the perception that our services are not secure, causing customers to discontinue or reject the use of our services and potentially subject us to significant liability. Implementing, monitoring and maintaining adequate security safeguards may be costly. If we fail to adequately protect our proprietary rights and intellectual property, we may lose valuable assets, experience reduced revenues and incur costly litigation to protect our rights. Our results of operations may be adversely affected if we are subject to a protracted infringement claim or one that results in a significant damage award. Our inclusion of open source software in our products may expose us to liability or require release of our source code. Uncertain economic conditions may adversely impact our business. If we do not adequately manage and evolve our financial reporting and managerial systems and processes, our ability to manage and grow our business may be harmed. We expect to continue expanding our international operations but we do not have substantial experience in international markets, and may not achieve the expected results. RISKS RELATED TO OUR STOCK Our stock price is likely to remain volatile.

Full 10-K form ▸

1035748--3/9/2010--CALLIDUS_SOFTWARE_INC