Callidus Software Inc.: Initiation of Research Coverage

Wednesday, April 12, 2017

William Blair & Company initiated research coverage of Callidus Software Inc. (CALD $19.60), a leading vendor of cloud-based sales, marketing, learning, and customer experience solutions.

Analyst Justin Furby believes the company can maintain SaaS revenue growth of 25%-30% over the next three to five years, and estimates Callidus will generate non-GAAP earnings per share of $0.29 in 2017 and $0.43 in 2018.

“Callidus is just 2% penetrated in what we estimate to be a roughly $11 billion addressable market,” Furby said. “The company is the leading vendor in the sales performance management market, enabling organizations to better manage the performance of sales reps via incentives, coaching, and automation of various sales operations such as quotas and territories, configure price quote, and contract life cycle management. The company is best known for its enterprise-class sales commissions solution, which enables customers to design and manage commission structures, but its broad, integrated suite equips sales organizations through the entire sales cycle, from driving leads through closing the deal. Callidus’s best-in-class software, combined with its base of more than 5,200 customers and ecosystem of over 100 partners, positions it to lead the market for several years to come, in our view.”

Furby continued, “Callidus has built a powerful ecosystem that influences 40% to 50% of its bookings. The company recently signed selling partnerships with salesforce.com and SAP—both existing customers of Callidus—providing it with access to a collective installed base of roughly 500,000 customers to sell its SPM offerings into. We view both of these deals as sources of incremental growth looking ahead to 2018 and beyond, in addition to a validation of the company’s best-in-class technology. Moreover, we believe the company has the opportunity to expand its total addressable market through tuck-in acquisitions and organic development.”

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Current Ratings Distribution (as of 3/31/17)

Coverage Universe
Outperform (Buy): 59%
Market Perform (Hold): 35%
Underperform (Sell): 1% 

Inv. Banking Relationships*
Outperform (Buy): 10%
Market Perform (Hold): 3%
Underperform (Sell): 0%

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