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Peter Norman - CFO

Steve Springsteel - Chairman, President and CEO

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Kevin Liu - B. Riley

Derrick Wood - Pacific Growth Equities

Patrick Walravens - JMP Securities

Chordiant Software, Inc. (CHRD) F3Q08 Earnings Call Transcript July 31, 2008 5:00 PM ET

Operator

Ladies and gentlemen, thank you for standing-by, and welcome to Chordiant Software’s Q3 2008 Teleconference. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). This conference is being recorded today, July 31st, 2008.

I’d now like to turn the conference over to Mr. Peter Norman, Chief Financial Officer.

Peter Norman

Good afternoon. I am Pete Norman, Vice President and Chief Financial Officer of Chordiant Software. Thank you for joining us today to review our final results for our third quarter of fiscal 2008. On the call with me today is Steve Springsteel, our Chairman, President, and CEO.

We’ll begin with prepared comments from management, and then we’ll open the call up for questions. By now, you should have a copy of the press release issued by the company this afternoon after the close of the market. You can find a copy of this release on our website at www.chordiant.com. A replay of this conference call can also be accessed through the Investor Relations section of the company’s website.

The information in today’s conference call will include historical information and forward-looking statements, including guidance about our business that involve risks and uncertainties that could cause actual results to differ materially from those contemplated by forward-looking statements. Chordiant’s actual results could differ materially from past results and forward projections.

Forward-looking statements are generally identified by words such as believe, may, expect, will, plan, ensure, would, guidance, projects, projection, and similar expressions. Further information on potential factors that could affect our financial results is included in Chordiant’s most recent SEC filings. We assume no obligation to update guidance or other forward-looking statements.

In addition, non-GAAP financial measures and the most directly comparable Generally Accepted Accounting Principles or GAAP financial measures may be discussed on this webcast. Chordiant continues to provide all information in accordance with GAAP and does not suggest or believe that non-GAAP financial measures should be considered as the substitute for, or superior to, measures of financial performance performed in accordance with GAAP.

Chordiant believes that these non-GAAP financial measures provide meaningful supplemental information regarding its operating results, primarily because they exclude amounts such as the amortization of purchase intangible assets and the expense non-cash equity-based compensation that the company does not consider part of ongoing operating results when assessing the performance of certain functions, geographies or members of management. We believe that our non-GAAP financial measures also facilitate the comparison results for current period and guidance for future period with the results for past periods. Please visit the Investor Relations section of our website at www.chordiant.com for information regarding the non-GAAP financial measures discussed on this webcast.

And now, I’ll turn the call over to our Chairman, President and CEO, Steve Springsteel. Steve?

Steve Springsteel

Thanks, Pete. Good afternoon, everyone and thank you for joining us today. First, I would like to spend some time updating you on the results from our third quarter, the high level financial metrics, our current thoughts on the economic environment what we are seeing in the field and why we believe the Chordiant is well-positioned to weather the current environment. Pete will then discus the financials in more detail, as well as provide our outlook for the remainder of fiscal 2008.

Bookings for the third quarter were approximately $26.4 million. This quarter we closed two transactions of $1 million or more, added Citi [seed] orders totaling just under $1 million and secured a Vodafone order for greater than $1 million in one of our targeted emerging geographic markets.

Revenue for the third quarter was $30.7 million, up 24% sequentially, but down 16% year-over-year. Included in this quarter’s results are the $3.9 million of license revenue that we recognized from Vodafone expanding our presence into three Vodafone countries.

GAAP net income for the third quarter was $759,000 or $0.02 per share and our non-GAAP net earnings were $2.4 million or $0.08 per share. We ended the quarter with cash balances of approximately $65 million. Adjusting for the $10.5 million we invested in our stock repurchase plan during the quarter, we were cash flow positive from operations in the amount of $4.6 million. At the end of the third quarter, deferred revenue was $51.8 million and backlog was approximately $90 million.

On last quarter’s call, we discussed how the microeconomic climate, patricianly in the North American and UK financial services markets were weak. But overall, this continues to be true, we have noticed select pockets of strength and we did have an increased level of activity within the vertical this quarter.

We closed two transactions over $1 million in the financial services sector, one with Raiffeisen Bank and the other with Barclays Bank, and we secured additional Citi seed orders totaling just under $1 million. Additionally, we did see a slight improvement this quarter in the form of increased pipeline activity. For the forecasting purposes, we have not factored in any meaningful short-term improvement in financial services spending into our outlook.

We believe that the challenges facing the U.S. and U.K. financial markets are likely to continue near term. However, offsetting the weakness in this area are promising trend within some of our newer investment areas, such as the emerging geographic markets. In addition, we also continue to see solid levels of activity outside of North America as well as within some of the verticals outside of financial services. Again, let me be clear. Financial services is and will continue to be an important part of our strategy, but we are not fully dependent on that one vertical.

Historically, we have not provided the details of our pipeline. I can say that at the end of our third quarter, our pipeline of potential transactions is the largest than it has been in both absolute dollars and in number of opportunities. Our system integration partners are bringing us into more opportunities than ever and those same partners are helping us to expand into new geographies such as Russia, China, India and others.

The buying patterns of these emerging market companies are different from those we have seen in North America and Europe. They are still in the earlier phases of building out their infrastructure. They are less sensitive to budgetary constrains and the weak microeconomic climate that exit elsewhere. We are learning how to navigate through the sudden [area] secrecies of these markets, and I feel comfortable that we are progressing well.

International opportunities represent approximately 50% of our total pipeline. Today I am pleased to report that we have made significant progress in our emerging markets pursuits while we continue to still plant fees for future growth.

The key metrics we use to track our success is pipeline growth by geographic region. For example, our Asia-Pacific pipeline has grown significantly in the past two quarters. We we’re seeing that early results of our efforts to expand in the emerging geographic markets we do not expect to see a material contribution in the very near-term. We are optimistic that these investors will begin to pay dividends in the not to different future.

In terms of the success that we’re having outside of financial services I would like to take a moment to discuss this quarter’s activity with Vodafone. We went live with our first Vodafone country and the project was both on-time and on-budget this quarter. We view this is an important milestone in our relationship it asses the stage for future Vodafone orders. This quarter we also secured an order for third Vodafone country and one of our target geographies.

As you know one of Chordiant’s strongest differentiator is a high degree of customer satisfaction in the install base. You also know we tend to large initial orders followed by many smaller ones as a customer’s usage of Chordiant’s technology expand. We are optimistic that as we secure large transactions with non-financial services customers we will continue to see the same pattern evolve.

As we look into our pipeline in our related booking and compare to a year ago our dependence on financial services has definitely lessened. Approximately half of our pipeline is in vertical outside of financial services and it's growing. One of the key internal milestones of our company is to make every customer successful and never let a customer fail.

To that point I want to take a moment to highlight the status of our few of our large customer implementations. Let me begin with FBI, our first implementation with the transaction based pricing went live this past quarter. This sets the stage for similar future staff like sales and implementations with other partners.

Citi continues to grow as evidenced by the additional [few] sales that we have this quarter adding to the thousands of Citi staff currently utilize their technology.

HSBC has been running for about one year now, it has seen tremendous savings in the part of reduce call handling time, reduce customer service training time, offsetting the standard for superior customer experience. Orange U.K. now has Korean technology integrated in all of their call centers.

A key driver behind our high customer satisfaction is our world class product. We continue to be focused on innovation to ensure that Chordiant’s products remain best of breed and there are customers turned up first when they are looking to expand their customer facing application. This is key to our future success.

During the quarter we released two significant upgrades for our products suite. Recommendation Advisor 6.1 and Collections Manager 2.0. The latest version of Recommendation Advisor includes an upgraded interface that has been updated to the latest web standard JSF. It also includes a new customer sensing functionality that gives agents [visual clues] to help them understand the mood of a customer and adopt the conversation accordingly. It also includes the product comparison feature which enabled agents to intelligently negotiate a compared product offering.

Collections Manager 2.0 adds the ability to present collection options based upon both the history of the particular customer and how they answered specific question. This provides the customer with the most personalized option to choose from and the options which will yield the highest potential for successful collection efforts. It drives improved customer experience by optimizing the accounts that are signed to specific agents or driving the next best action processes that leave both customer and organizational objective.

I would also like to briefly touch upon an 8-K that we filed recently. Chordiant's Board of Directors recently decide to implement a shareholder's right plan which limits the ability of the outsider to attempt to acquire Chordiant without input from our Board of Directors. This decision was not in reaction to any specific shareholder activity but rather something to the Board thought was prudent to have employees to protect shareholder well.

To summarize overall with a solid quarter for Chordiant. We executed well against our business strategy and continue to capitalize on our growth opportunity around the well and deliver world-class products to our customers. While the environment remains challenging we are confident in our outlook and believe that we are extremely well-positioned. We can't control what happened on the macroeconomic front, but we can ensure that Chordiant is making the right investment and executing on the strategy that we laid out for you.

We believe that Chordiant’s value proposition is compelling and that our investments today are beginning to pay dividend. I am confident that we will be successful on your objective.

With that, I will now turn the call over to Pete Norman our CFO for deeper dive into the financials as well as to provide an update on guidance. Pete?

Peter Norman

Thanks, Steve. Bookings for the quarter were $26.4 million included in this [tunnel] were two transactions over $1 million and the additional 30 [seed] orders aggregating just under $1 million. The year-to-date bookings for fiscal 2008 now aggregate $96.6 million. As we discussed in the past due to the size of our transaction and the timing of deal closing, customer orders can fluctuate significantly from quarter-to-quarter.

As Steve indicated revenues for the third quarter of 2008 fiscal year were $30.7 million, down 16% from the $36.8 million we reported for the same period last year. As you may recall last year the third quarter included $8 million and Citi Bank license revenue that it previously been deferred until our collections products was released.

Sequentially, revenues were up 24% from the $24.7 million was recorded for the March 31st quarter. During the quarter, we closed the significant order with Vodafone resulting in a $3.9 million increase in license revenue. This order was received earlier than the contractual commitment date specified in the agreement which is included as a part of our first quarter bookings.

As of June 30, 2008, backlog which includes our deferred revenue balances was $89.6 million compared to the $93.5 million at the end of last quarter. As a reminder, Chordiant defines backlog as contractual commitment received from customers to purchase orders or contract which is yet to be delivered. I have discussed we have recognized $3.9 million of license revenue from the Vodafone transaction which is a significant factor associated with the reduction in backlog.

To recap the remaining Vodafone commitment as adjusted for June 30 exchange rates there are now $20.7 million of remaining Vodafone commitment that’s become due and payable to Chordiant in the amount of $5.3 million during September 2008, $5.2 million in December of 2008 and approximately $10.2 million in April of 2009.

As discussed in our December 8-K filing, a portion of these amount will be allocated to support maintenance. Our aggregated $51.8 million deferred revenue balance at June 30, 2008 decreased approximately $3.3 million from the $55.1 million balance at the end of the prior quarter. The primary reason for the change in deferred revenue is related to the revenue we recognized on several percentage of completion transaction.

A significant portion of our deferred revenue balance continues to relate to license fees. As of June 30, 2008, we had five accounts with more than $1 million in deferred license revenue, which will be recognized in future period. One of these accounts is FBI. FBI’s initial implementation was completed in July 2008, and as a result, we will begin to recognize the fee paid by FBI over the remaining the 27-month term of the agreement. These fees will be recognized on straight line basis.

Of the $51.8 million in total deferred revenue, approximately $16.2 million or 31% of the balance relates to license fees and the remaining 59% is primarily associated with support maintenance agreement. The remaining $20.7 million in commitments from Vodafone are in addition to the deferred revenue amounts and are included in backlog.

Now, let’s take a more detailed look at the income statement. Looking at the geographic distribution of our revenue for the third quarter, North American revenues of $15.1 million represented approximately 49% of our total revenue with the remaining $15.6 million or 51% being international. License revenues for the third quarter of fiscal 2008 were $11 million or 36% of total revenues.

Our license revenue will fluctuate from quarter-to-quarter to the extent that we complete large book ship deals and account from prior transactions based on the percentage of completion transactions based on the percentage of completion method of accounting.

Service revenues were $19.8 million or 64% of total revenue. For the trailing 12-month period ending June 30, 2008, support and maintenance has represented 52% of the service revenue total. This equates to an average of approximately $10 million per quarter.

With respect to margins, our overall second quarter non-GAAP gross margin including licenses and services was 71%. This was below our targeted range of 74% to 76%, as an improvement from the 65% in the second quarter. The improvement in gross margin is due to the improved revenue mix given the higher percentage of high margin license revenue. For the third quarter, non-GAAP service margin, which includes support and maintenance were 56.7% within our targeted range of 55% to 60%.

Sales and marketing expenses, excluding stock-based compensation for the quarter ended June 30, 2008, were approximately $9.4 million, up from the $7.2 million we reported last quarter. The increase was primarily due to increased employee and consultant cost and higher sales commission associated with higher license revenues for the period.

Please note that we expect to continue to selectively invest in growth areas, such as emerging markets, alliances, and sales headcount in core verticals outside our financial services. We ended the quarter with 29 quarter carrying sales reps and [one] as manager.

Research and development expenses, excluding stock-based compensation were up slightly at $6.5 million for the quarter, compared to $6.2 million last quarter. General and administrative expenses excluding stock-based compensation were $3.9 million for the June 30, 2008 quarter, up from the $3.5 million reported last quarter. The increase is primarily due to higher employee-related costs.

The non-GAAP operating income for the quarter was 6.8%, up significantly from the 3.7% loss we reported last quarter. This increase was primarily due to the higher license revenue recognized this quarter.

Other income and expense combined with interest income was approximately $471,000 for the quarter, down from the $963,000 that we reported in the prior quarter. The decrease is primarily due to lower interest income given our lower cash balances, resulting from the share repurchase program that’s included at the end of April.

Foreign exchange gains also declined as the US dollars value did not fluctuate as significantly as in the recent past. Our income tax provision for the quarter was a $146,000. As a reminder, the majority of our taxable income will continue to be offset by our federal net operating loss carryforwards.

Our non-GAAP net income, excluding amortization and stock-based compensation for the quarter ended June 30, 2008 was $2.4 million or $0.08 per diluted share, compared to $125,000 or breakeven results per share per quarter.

Under generally accepted accounting principles or GAAP, the net income for the quarter ended June 30, 2008 was $759,000 or $0.02 per share.

Now, let’s turn to cash flows and the balance sheet. Cash flows from operations generated 4.6 million of cash, while financing activities for the quarter resulted in a $10.5 million usage of cash. The use of cash related to the final disbursement associated with our share repurchase program that concluded on April 30th. Accordingly, our net aggregate cash, cash equivalents, marketable securities and restricted cash on our balance sheet was $64.6 million, a decline of $5.4 million sequentially.

At the conclusion of that share repurchase plan, 3.4 million total shares were retired during our second and third quarters at an aggregate cost of $18.6 million. The average price paid for share was $5.55.

During the quarter, our day sales outstanding or DSOs relating to accounts receivable were 63 days, down from the 95 days we reported last quarter. The decease is due to improved cash collection, which included a portion of the Vodafone amount as mentioned earlier.

Now, let’s turn to our annual guidance. With regard to our fiscal year 2008 guidance, we are refining our previously discussed guidance as follow. We expected our total bookings for the fiscal year 2008 including Vodafone will be in the range of between $124 million and $128 million.

As you’re aware, this bookings guidance does not include any future amount above $10 million associated with what we refer to as mega-deals. We are also narrowing the range of our total revenue guidance, now expect it to be at the high-end at the previous range.

We now expect total revenues for the fiscal year 2008 to be between $114 million and $117 million. We will continue to invest to support our future growth particularly in emerging markets and expect to exit fiscal 2008 with non-GAAP operating margin of approximately 10%. Total operating expenses for our fourth quarter are expected to remain near Q3 level. We also announced we expect to report a GAAP, fully diluted EPS of between breakeven and income of $0.07 per share. And the non-GAAP fully diluted EPS is now expected to range between $0.18 and $0.25. These earning estimates for fiscal 2008 are based on approximately 31.9 million diluted shares outstanding.

Finally, due to the revised bookings expectation we expect to end the year with approximately $63 million in aggregate cash, cash equivalence, marketable securities and restricted cash.

With that let me turn the call back over to Steve for a brief summary. Steve?

Steve Springsteel

Thanks Pete. Overall we’re pleased with our third quarter results and believe we remain very well positioned and capitalize on the large market opportunity in front of us. despite difficult macroeconomic headwinds, we continue to make progress with our growth objective and heading into our fourth quarter and next fiscal year, we feel that Chordiant remains well positioned to meet the objectives we have laid out for you.

And with that, we would like to now open the call up for questions. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). Our first question comes from the line of Kevin Liu with

B. Riley. Please go ahead.

Kevin Liu - B. Riley

Hi, good afternoon guys.

Peter Norman

Hi Kevin.

Kevin Liu - B. Riley

This first question I know you mentioned you are not taking NOI in terms of the financial services or customer is improving, but just a curious if you could give us a sense of what's your conversation with those customers like today? Do you anticipate that if things would have start to improve in '09 the deals were coming pretty quickly or does it look like you might kind of be stepping away from some investments for a little while?

Peter Norman

Yes, our sense is what we are hearing our number one our projects are definitely in the queue because of the cost reducing aspect of what we are doing and they are all looking at avenues by which you save money. And it's really kind of in a case of when their kind of budgetary dollars start to open up and some instances when the smoke clears and other instances than will be in pretty good shape to quickly close down. So, we are doing a lot of upfront work in the form of group of concepts and so forth.

On the international side we are giving some traction outside of the U.K, because as we mentioned previously the U.K. is still having some tough times. But in the emerging geographies we are doing pretty well in those projects are moving along we expect to continue to close more of those.

Kevin Liu - B. Riley

Alright. And then looking at your bookings guidance for the full year, I mean it implies kind of number north of $27 million in Q4. If you back out the Vodafone deal in the first quarter I mean you guys haven’t been at that level on in ending quarter this year. So, just curious if you can talk a little bit about either the momentum you are seeing towards the end of the quarter or in the beginning of this quarter or any other things you could point it out to support why you guys are so confident you can hit this number?

Peter Norman

Yeah, as we have mentioned the pipeline is at the highest point it’s ever been and we are starting to see activity again both domestically, if you look at the transactions that we talked about the large transactions we talked about closing this quarter. Citi continues to buy more licenses from us in addition to services and we had a transaction with Barclay’s [Aquafirst]. So, into the really kind of toughest economic environments out there we were able to continue to do business. So, that’s what gives us some solace in bringing that number out there.

Kevin Liu - B. Riley

Alright. And then just a last question. In terms of your investments on the sales and marketing side, obviously you have made a lot on emerging markets. I am just curious given the progress you have seen in terms of building up the pipeline. Would you expect to continue investing further over the next few quarter or what are your plans as explained today?

Peter Norman

Yeah Kevin, we always look at where can we maximize our return on our dollars and right now the emerging markets looks to be pretty good. Having said that by no means are we going to open in kind of North America, particularly North American financial services or UK financial services because in both of those geographies, we still also have other verticals that we are in, in the form of insurance, health care and telecom.

Kevin Liu - B. Riley

Alright. Thank you.

Peter Norman

Great. Thank you, Kevin.

Operator

Thank you. Our next question comes from the line of Derrick Wood with Pacific Growth Equities. Please, go ahead.

Derrick Wood - Pacific Growth Equities

Hey, guys, how are you?

Peter Norman

Hi Derrick.

Derrick Wood - Pacific Growth Equities

I know it maybe hard to tell but you continue to see some push back in North America, obviously, but just curious do you have any insight as to, are these budgets getting cut or are they are getting pushed out. And could you possibly see a budget flush at the end of the calendar year that may have a positive impact for you guys?

Peter Norman

I’ll tell you, if I could predict that accurately, Derrick, I surely wouldn’t have thought for a living, but, the good news, where the transactions that are getting pushed out were not hearing that they are being cancelled. There maybe a project here, but for the most part, they are being pushed out due to kind of some budgetary issues or economic issues, but we are not hearing a full-scale cancellation or the budgets completely gone. I think the number of these companies are still trying to figure out where they are going to invest the money that they do invest, because at the end of the day, they still have to run their business.

Derrick Wood - Pacific Growth Equities

Okay. In terms of the emerging markets you guys seem pretty bullish about your pipeline, but you were a little bit cautious about when these orders actually come through. Is that just being conservative, or is it going to be a few quarters away before we see material revenues out of those markets? And just kind of curious if they have any different purchasing patterns then what is traditional out here in the US?

Peter Norman

Yes, well, a couple of things. We did have one of the big large orders that we received from Vodafone we’ve talked about this quarter was in India. So, that was a big plus for us to get a good foothold there. We have talked about a fair amount of activity that we have in the Asia-Pacific region, a lot of activity there actually, and then also in some other markets such as Russia, and we have closed some transactions in Poland. So, we haven’t seen a big mega deal out of those geographies yet and that’s why we are kind of hesitant.

With respect to your questions about the purchasing patterns, the good news is most of those opportunities are typically Greenfield opportunities which is where we are great at, but with that there are new geographies for us go to into, even though we are going into those geographies with our system integration partners. So, there are some subtle differences in, maybe process or things that we have to do in the form of training local folks for implementation and on the technology side. So it takes a little bit longer and so that’s why we want to make sure that we are prudent about our forecasting around them.

Derrick Wood - Pacific Growth Equities

Okay, any partners that you want to call out that are gaining particular traction?

Steve Springsteel

I think IBM is doing a great job for us. We have HCL taking us in some opportunities. But kind of into whole, I would say, probably IBM is our biggest partner into some of those major emerging geographies.

Derrick Wood - Pacific Growth Equities

Okay, and in terms of bookings, can you give us a breakdown what was international versus domestic?

Peter Norman

Off the top of my head, I can’t recall exactly what it was?

Steve Springsteel

If we have the spilt on the revenue side, which kind of lags the bookings, you know it has been 50-50 this quarter for the revenue side.

Derrick Wood - Pacific Growth Equities

And you did mention that I guess half of your pipeline going forward or less than half is in the U.S., how much of the U.S. is financial services?

Steve Springsteel

It's really diversed across the three different verticals. It’s not dependent on upon just one vertical.

Derrick Wood - Pacific Growth Equities

Okay, and then, I guess, I just like to ask you. You guys talked about your pipeline. Do you have any mega deals on the pipeline?

Steve Springsteel

Yeah, we always do and that’s the challenge -- is to keep them as a mega deal. As we have talked about before the challenges that due to the process they try to beat the price down or they, the customer decides to do a smaller implementation that maybe what was done, contemplated at the beginning and our challenge is to keep those deals at large side. So, yeah, we always have to have a pretty handful of mega deals in the pipeline.

Derrick Wood - Pacific Growth Equities

Alright.

Peter Norman

Alright, when we talk about our pipeline, just to be clear though Derrick, when we talk about the size of the pipeline, we don’t put in anything in that number in excess of $10 million.

Derrick Wood - Pacific Growth Equities

Sure, okay.

Steve Springsteel

Otherwise it could really skew things.

Derrick Wood - Pacific Growth Equities

Okay. Alright. Thanks guys.

Peter Norman

Okay. Thank you, Derrick.

Operator

Thank you. (Operator Instructions). Our next question comes from the line of Patrick Walravens from JMP Securities. Please go ahead.

Steve Springsteel

Hi, Pat.

Operator

Pardon me. The line of Pat is now open to ask a question.

Patrick Walravens - JMP Securities

Can you hear me now?

Steve Springsteel

I am hearing a commercial right now.

Patrick Walravens - JMP Securities

Sorry about that. That was the mute button. So, congratulations on the quarter. So, [were you read] previously bookings of 130 to 140 for this year, do I have that right?

Peter Norman

Yes.

Patrick Walravens - JMP Securities

So, can you just talk us through a little bit your thinking around taking that number down, because it seems like this quarter’s booking were actually better than what I was expecting?

Peter Norman

No, actually we were hoping for a little bit bigger number this current quarter. And so again, we just possibly evaluate what our forecast is and felt that the number that we put out there on the guidance and we have out there now is more respectful of what we’re at.

Patrick Walravens - JMP Securities

Okay, fair enough. And I know it’s early, but when you look into fiscal ‘09 I mean any sort of broad brushstroke you can give us or your thoughts in terms of what your objective might be?

Steve Springsteel

Yes, Pat I will tell you.

Patrick Walravens - JMP Securities

On the financial side.

Steve Springsteel

Yes, Pat, I will tell you. We are going to wait until the next call to provide guidance in the ‘09. And the reason for that we are not trying to be quiet just as you can fairly appreciate that the macroeconomic climate live in the localized economic climate is so volatile. I think we really need to wait until we get actual picture. And it’s a whole planning process as well.

Patrick Walravens - JMP Securities

Okay. And then I guess my question, if I back out and if I am doing this wrong let me know. But if I back out sort of the first three quarters from the annual guidance I come up with $0.05 to $0.12 for September. Am I doing that right?

Peter Norman

I think…

Patrick Walravens - JMP Securities

EPS guidance.

Peter Norman

I think that’s right.

Patrick Walravens - JMP Securities

So, that’s going from $0.08 is quite a sort of $0.05 to $0.12. And I think early in the year it sounded like you thought that you are going to have more of sort of an operating margin expansion as we got toward the end of the year, did something change there?

Steve Springsteel

We had a little bit of shift into this current quarter. But, yes, we are still projecting a good level of profitability next quarter.

Patrick Walravens - JMP Securities

Okay. You just had something coming in [even earlier] than you thought they are going to, is that right.

Steve Springsteel

Yes, right

Patrick Walravens - JMP Securities

Okay. All right. Thanks very much.

Steve Springsteel

Thanks Pat.

Operator

Thank you. (Operator Instructions). And there are no further questions. I’d like to turn the call back over to management for closing remarks.

Steve Springsteel

Great. Thank you everybody for joining us on our call today, and we looking forward to talk to you when we have our fourth quarter or fiscal year-end 2008 call. Thank you.

Operator

Thank you, ladies and gentlemen. That does conclude our Chordiant Software’s Q3 2008 earnings conference call. Thank you for your participation. You may now disconnect.

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Source: Chordiant Software, Inc. F3Q08 (Qtr End 06/30/08) Earnings Call Transcript

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