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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 16, 2005

CHORDIANT SOFTWARE, INC.

(Exact name of Registrant as specified in its charter)

Delaware	93-1051328
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

Commission file number:

000-29357

20400 Stevens Creek Boulevard, Suite 400
Cupertino, CA    95014
(Address of principal executive offices and zip code)

Registrant's telephone number, including area code: (408) 517-6100

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02   Results of Operations and Financial Condition.

On May 16, 2005, Chordiant Software, Inc. issued a press release announcing results for the quarter ended March 31, 2005. A copy of the press release is attached as Exhibit 99.1 to this current report on Form 8-K and is incorporated by reference herein.
 

Item 9.01 Financial Statements and Exhibits.

(c) Exhibits

99.1 Press release issued by Chordiant Software, Inc. dated May 16, 2005.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Chordiant Software, Inc.

Date: May 17, 2005 By: /s/ George de Urioste George de Urioste Chief Operating Officer and Chief Financial Officer

EX-99.1

CHORDIANT ANNOUNCES RESULTS

FOR THE SECOND QUARTER FISCAL YEAR 2005 ENDED MARCH 31, 2005

CUPERTINO, California - May 16, 2005 -- Chordiant Software, Inc. (Nasdaq: CHRDE) today announced financial results for the second quarter of fiscal year (FY) 2005 ended March 31, 2005, and filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (SEC).

Second Quarter FY 2005 Results
Total revenues for the second quarter of FY 2005 were $19.2 million, which compares to revenues of $20.2 million reported for the three months ended March 31, 2004. For the first six months of FY 2005, revenues were $40.8 million, compared to $39.8 million for the same period of the prior year. License revenues for the second quarter of FY 2005 were approximately $7.0 million, compared to $9.3 million reported for the three months ended March 31, 2004. Not included in license revenue for the second quarter of FY 2005 were transactions with three customers which Chordiant expects will be recognized in subsequent quarters. For the first six months of FY 2005, license revenues were $15.8 million, compared to the $18.6 million reported for the same period of 2004. Service revenues for the second quarter of FY 2005 were $12.2 million, compared to $10.9 million reported for the three months ended March 31, 2004. For the six months ended March 31, 2005, service revenues were $25.0 million, compared to $21.3 million for the same period of 2004. Deferred revenue totaled $18.0 million as of March 31, 2005. Chordiant had $41.7 million in cash and cash equivalents, restricted cash, and short-term investments at March 31, 2005. 

Chordiant posted a U.S. GAAP (Generally Accepted Accounting Principles) net loss of $5.6 million, or $0.08 per share loss for the second quarter of FY 2005 ended March 31, 2005, compared to a GAAP net loss of $0.4 million, or $0.01 per share loss for the three months ended March 31, 2004. Chordiant reported a second quarter FY 2005 non-GAAP financial measure loss of $5.0 million (which excludes stock-based compensation, amortization of intangible assets and restructuring expense), or a non-GAAP loss of $0.07 per share, compared to non-GAAP net income (which excludes, stock-based compensation and amortization of intangible assets) of $1.1 million, or $0.01 non-GAAP net income per share for the three months ended March 31, 2004.

Non-GAAP Financial Measurements
Chordiant believes that its non-GAAP financial measure results provide useful information to investors because they reveal results excluding non-recurring expenses that Chordiant believes are not indicative of its on-going operations. The non-GAAP financial measure information is provided as a complement to results provided in accordance with GAAP and should not be considered superior to or as a substitute for GAAP measures.

Operating Expenses
General and administrative expenses increased to $5.0 million for the three months ended March 31, 2005 from $1.9 million for the same period of 2004. The increase in these expenses was mainly attributable to an increase in professional services fees and expenses associated with efforts to comply with the Sarbanes-Oxley Act of 2002 (SOX), integration expenses related to the KiQ acquisition, additional procedures required as a result of material weaknesses that were identified in June and September 2004, as well as additional fees and expenses related to the restatement of the prior year's results, the filing of Chordiant's Form 10-K/T for the period January 1 to September 30, 2004. Personnel costs also increased in conjunction with new hires in the accounting and finance areas.

Sales and marketing expense increased to $6.9 million for the three months ended March 31, 2005 from $6.0 million for the same period of 2004. The increase is attributable to personnel related expenses such as commissions and travel expenses due to a higher number of sales representatives.

Research and development expenses increased to $5.0 million for the three months ended March 31, 2005 from $4.5 million for the same period of 2004. This increase is attributable to an increase in consulting expenses and the addition of the employees as a result of the KiQ acquisition completed in late December 2004.

Customer Success
"The second quarter of FY 2005 was a tough quarter for Chordiant. However, I am pleased to announce new customers such as The Boston Globe, Achmea Holdings NV, Cellcom, and Capital One (Europe). The third quarter is off to a good start and in April, our North American momentum continued with a significant transaction with ING Canada Ltd., a leading insurance company in Canada," said Stephen Kelly, Chordiant CEO. "In addition, four customers, The Boston Globe, Time Warner Cable, O2 and Achmea Holdings, selected our Decision Management Suite of products," Kelly added. The Decision Management Suite of products was added to Chordiant's product line through the acquisition of KiQ in December 2004.

"Our customer success came in spite of a challenging period in Company history. Nonetheless, Chordiant maintained forward progress on major customer opportunities. No transactions were unexpectedly lost to competitors in the quarter," Kelly said.

Operational Success
The Company is now current with its SEC related filings, having successfully filed Forms 10-Q for December 31, 2004 and March 31, 2005 in the last two-plus weeks. As a result of efforts during the last several months, the Company has completed an internal assessment of Finance organizational needs for personnel and system enhancements. "We now embark on a path leading to operational excellence," commented George de Urioste, Chief Operating Officer and CFO. "The vision is established for re-architecting our finance function. Implementation will take us to 'A-level' operational performance by the completion of the calendar year."

Teleconference Webcast Tuesday - May 17, 2005 at 2:00 P.M. (Pacific)

Chordiant management has scheduled a teleconference for Tuesday, May 17, 2005, at 2:00 P.M. (Pacific), 5:00 P.M. (Eastern) and 22:00 (London) to discuss financial results and business events for the Company. This teleconference will be webcast live for the public from Chordiant's website at http://www.chordiant.com. The public, industry analysts and media are invited to attend the conference on a listen-only basis. For more information, including this press release and Chordiant's Current Report on Form 8-K, any non-GAAP financial measures that may be discussed on the webcast as well as the most directly comparable GAAP financial measures and a reconciliation of the difference between the GAAP and any non-GAAP financial measures discussed on the webcast (other than non-GAAP financial measures discussed and reconciled in this news release), and any other material financial and other statistical information contained in the webcast, please visit the Investor Relations section of Chordiant's web site at http://www.chordiant.com. From this site, you can listen to the teleconference, assuming that your computer system is configured properly. A phone replay will also be available for seven days after the live call at 303-590-3000, Passcode: 11030675.

About Chordiant Software, Inc.
Chordiant solutions automate and manage operational business processes for leading service-driven global organizations with a focus on retail finance and telecommunications.

Chordiant orchestrates the unique processes of an organization from the point of customer interaction, through the front and back offices to multiple transactional systems, corporate applications and data stores. Our solutions integrate existing infrastructure to orchestrate the assembly, enhancement and delivery of optimal role based business processes to the appropriate channels. Business value is realized through improved employee productivity, savings in operational costs, and increased business adaptability.

Headquartered in Cupertino, California, Chordiant maintains offices in Boston, MA; Mahwah, N.J.; Manchester, N.H.; New York City; London; Paris; Amsterdam; and Munich.

Chordiant and the Chordiant logo are registered trademarks of Chordiant Software, Inc. All other trademarks and registered trademarks are the properties of their respective owners.
 

Chordiant Investor Relations Contact:

Steve Polcyn

Chordiant Software, Inc.

(408) 517-6282

steve.polcyn@chordiant.com

CHORDIANT SOFTWARE,  INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 

			Three Months Ended						Six Months Ended
			March 31, 2005			March 3, 2004			March 31, 2005			March 31, 2004
Revenues:
	License	$	6,959		$	9,305		$	15,801		$	18,553
	Service		12,212			10,944			25,047			21,296
	Total revenues		19,171			20,249			40,848			39,849
Cost of revenues:
	License		198			342			364			916
	Service		7,348			6,285			14,851			12,522
	Stock-based compensation		48			209			(8	)		885
	Amortization of intangible assets		331			686			462			1,480
	Total cost of revenues		7,925			7,522			15,669			15,803
Gross profit			11,246			12,727			25,179			24,046
Operating expenses:
	Sales and marketing		6,878			6,014			14,093			11,709
	Research and development		4,981			4,455			9,846			8,631
	General and administrative		5,030			1,878			8,942			3,169
	Stock-based compensation		140			500			35			3,171
	Amortization of intangible assets		93			94			117			190
	Purchased in-process research and development		--			--			1,940			--
	Restructuring expense		26			(32	)		(97	)		996
	Total operating expenses		17,148			12,909			34,876			27,866
Loss from operations			(5,902	)		(182	)		(9,697	)		(3,820)
Interest income, net			182			210			392			227
Other income (expense), net			166			(174	)		(231	)		(33)
Net loss before income taxes			(5,554	)		(146	)		(9,536	)		(3,626)
Provision for income taxes			75			208			155			665
Net loss		$	(5,629	)	$	(354	)	$	(9,691	)	$	(4,291)
Other comprehensive income:
	Foreign currency translation gain (loss)		(564	)	$	(23	)	$	(74	)	$	1,112
Comprehensive loss		$	(6,193)			(377)			(9,617	)		(3,179)
Net loss per share:
	Basic and diluted	$	(0.08	)	$	(0.01	)	$	(0.13	)	$	(0.07)
	Shares used in per share calculation:		74,745			67,655			73,464			64,303
Supplemental information [1]:
Non-GAAP financial measures and reconciliation
	Net loss		(5,629	)		(354	)		(9,691	)		(4,291)
	Less: Stock-based compensation		188			709			27			4,056
	Less: Amortization of intangible assets		424			780			579			1,670
	Less: Purchased in-process research and development		--			--			1,940			--
	Less: Restructuring expense		26			(32	)		(97	)		996
Pro forma net income (loss):		$	(4,991	)	$	1,103		$	(7,242	)	$	2,431
Basic pro forma net income (loss) per share:		$	(0.07	)	$	0.02		$	(0.10	)	$	0.04
Diluted pro forma net income (loss) per share:		$	(0.07	)	$	0.01		$	(0.10	)	$	0.04
		Basic	74,745			67,655			73,464			64,303
	Shares used in per share calculation [2]:	Diluted	74,745			75,002			73,464			72,649

[1] The accompanying supplemental pro forma financial information represents a non-GAAP financial measure. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance, financial position or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the company's financial statements. Non-GAAP financial measures of net income or net loss is used by investors and analysts of Chordiant Software, Inc. (the "Company") as an alternative to GAAP measures when evaluating the Company's performance in comparison to other companies. The Company's management believes that the presentation of a non-GAAP financial measure of net income or net loss, excluding purchased in-process research and development, amortization of deferred stock-based compensation, amortization of intangible assets and restructuring expenses, provide useful information regarding the Company's financial performance and earnings potential by calculating and quantifying the effect of certain charges of net income or net loss per share calculated in accordance with GAAP and gives investors and analysts insight into profitability of the Company's operating business. Management also believes that the presentation of the non-GAAP financial measures is consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare current non-GAAP measures with non-GAAP measures presented in prior periods. The above non-GAAP financial information may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

[2] Diluted net loss per share for the three and six months ended March 31, 2005, is computed excluding total potential outstanding common shares of 13,466 and 13,466 as their effect is anti-dilutive.

 CHORDIANT SOFTWARE,  INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
 

			March 31, 2005			September 30, 2004
ASSETS
Current assets:
	Cash and cash equivalents		$	35,325		$	55,748
	Marketable securities			4,000			4,000
	Restricted cash			1,782			279
	Accounts receivable, net			15,849			20,161
	Prepaid expenses and other current assets			3,578			3,097
		Total current assets		60,534			83,285
Restricted cash				558			2,057
Property and equipment, net				2,867			3,237
Goodwill				32,028			24,874
Intangible assets, net				5,754			244
Other assets				3,093			1,643
		Total assets	$	104,834		$	115,340
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	4,899		$	6,394
	Accrued expenses			9,656			11,681
	Deferred revenue			17,040			18,459
	Current portion of capital lease obligations			205			191
		Total current liabilities		31,800			36,725
Deferred revenue, long-term				947			2,122
Long-term portion of capital lease obligations				204			317
		Total liabilities		32,951			39,164
	Common stock			77			72
	Additional paid-in capital			271,587			262,703
	Deferred stock-based compensation			(3,904	)		(339	)
	Accumulated deficit			(199,040	)		(189,349	)
	Accumulated other comprehensive income			3,163			3,089
		Total stockholders' equity		71,833			76,176
		Total liabilities and stockholders' equity	$	104,834		$	115,340