Callidus Partners with HAND Enterprises to Extend Footprint in China

| About: Callidus Software, (CALD)

Callidus Software Inc. (NASDAQ:CALD) recently announced a partnership with HAND Enterprise Solutions Company, a leading Chinese IT services company. Under the agreement, HAND will resell, implement and support Callidus Software’s sales performance management solutions in China.

Based in California , Callidus Software Inc. provides sales performance management (SPM) software and services in the United States and internationally. Its SPM systems are used to monitor and analyze sales performance and incentive compensation management programs. By partnering with HAND, Callidus will expand its footprint in the emerging market of China .

The partnership allows joint customers to rapidly implement and deploy Callidus Software's sales performance management solutions. As one of the fastest growing markets in the world, the demand for sales performance management solutions continues to rise in China due to the explosive growth of companies in sectors like telecommunications and financial services.

The company also announced that a leading provider of mobile services and communications solutions in Ireland has selected Callidus Software TrueComp software to manage sales performance and incentive compensation programs. The agreement was signed in the third quarter of 2009.

Under the agreement, the mobile carrier will use the software from Callidus for its direct and indirect channel sales representatives in Ireland , to manage the sales incentive process and maximize customer satisfaction. Earlier, management stated that the company has fully transitioned to a recurring revenue model and closed its on-demand business with sixteen customers increasing their annual recurring commitments.

Second quarter was challenging for the company as certain customers reduced sales headcount and corresponding spending. As a result of these reductions, the company experienced a decline in contract value from these customers. Nevertheless, the company is expecting that with the new business model and new leadership in sales and marketing functions, it is better positioned to capitalize on the SPM market opportunity.

The company earlier undertook significant restructuring actions in June and July which are expected to reduce annualized expenses by over $10 million. Sentiment overall remains weak for companies that are transiting to an on-demand model. Such companies usually are faced with difficulty in balancing license and subscription deals, which in turn substantially impacts near-term revenue and earnings growth expectations.