Tag: Callidus

Callidus learns to love Litmos

Brenon Daly

Contact: Brenon Daly

Continuing to broaden its portfolio beyond its core commission-calculation offering, Callidus Software recently reached across the Pacific Ocean to snag early-stage learning management system (LMS) vendor Litmos. Based in New Zealand, Litmos had yet to raise any outside capital but had nonetheless drawn in more than 150 customers, which likely put revenue in the mid-single digits of millions of dollars. The acquisition should help Callidus in two main areas: in-application training and mobile learning.

In that way, Callidus’ move is unlike many of the other noteworthy deals over the past year in the LMS market, which has been dominated by talent management providers buying their way into the training and education space. Last September, for instance, Taleo picked up longtime partner Learn.com for $125m, while in April rival SuccessFactors paid $290m for Plateau Systems. Over the past year, we’ve tallied more than $1.8bn worth of spending on LMS deals.

Undoubtedly, the acquisition of Litmos won’t add much to the total spending in the sector. But the transaction is nonetheless significant for Callidus, particularly as more and more sales activity is done in the field. (Litmos can be used not only to update sales records and provide onsite sales coaching, but also to give training courses.) And Callidus may not be done buying. The company recently netted about $60m through a convertible offering, and we understand that it may well put some of those proceeds to work on another purchase in the next month or so

A SaaS-y deal

Brenon Daly

Contact: Brenon Daly

Given the rich premium that Wall Street awards to on-demand software companies, it’s no wonder that vendors still hawking software licenses are looking to get into the business of selling software as a service (Saas). Of course, there are many obstacles in making that transition, ranging from internal (how to compensate sales staff) to external (how to communicate to investors). As a result, most old-line software companies offer only a tiny bit of their products on-demand, if they do at all.

The few vendors that have seriously tried to transition to the on-demand model have used both organic and inorganic approaches. Concur Technologies largely stayed in-house to create a ‘for rent’ version of its expense account software. (Wall Street has rewarded the company with an eye-popping valuation of 5.5x trailing 12-month revenue.) Meanwhile, Ariba more than doubled the on-demand portion of its business when it spent $101m for SaaS supply chain vendor Procuri in September 2007.

We mention all this as a (long-winded) way of saying that we don’t understand why Callidus Software didn’t take home on-demand vendor Centive, which had been on the block for some months. Callidus has been selling its sales compensation management products as a service for about three years, with on-demand shoppers accounting for one-third of its 180 total customers. A year ago, it acquired a small SaaS vendor, Compensation Technologies, for $8.3m to bolster its transition efforts. One source indicated that publicly traded Callidus was initially interested in smaller rival Centive, but didn’t follow through. Instead, last week Centive and its estimated $10m in revenue went to fellow startup Xactly Corp in an all-equity consolidation play. Callidus making a run at Xactly probably won’t happen, for reasons both personal and financial.

For starters, Xactly is too expensive for Callidus, a money-losing company that holds some $39m in cash. An equity deal is probably off the table, given Callidus’ paltry valuation. Its enterprise value is just $46m, less than half the $105m in sales it likely recorded in 2008. (Callidus reports fourth-quarter earnings on Tuesday.) Beyond the money, there’s also the complicating factor that most of Xactly’s executives used to work at Callidus before setting off on their own with an eye to knocking out their former employer with their on-demand model. If indeed the two sides do ever start talking, we might suggest that a family therapist be on hand, in addition to the bankers and lawyers.