8-K

OMB APPROVAL

OMB Number:3235-0060

Expires: March 31, 2006

Estimated average burden

hours per response... 28.0

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): August 9, 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 August 9, 2005, Chordiant Software, Inc. issued a press release announcing results for the three and nine months ended ended June 30, 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 August 9, 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: August 9, 2005 By: /s/ George de Urioste George de Urioste Chief Operating Officer and Chief Financial Officer

EX-99.1

CHORDIANT SOFTWARE ANNOUNCES RESULTS

FOR THE THIRD QUARTER OF FISCAL YEAR 2005

ENDED JUNE 30, 2005

Quarterly License Revenue up 71% Year-over-Year

Announces Significant Enterprise License Transactions with Wachovia and ING

CUPERTINO, California - August 9, 2005 -- Chordiant Software, Inc. (Nasdaq: CHRD) today announced financial results for the third quarter of fiscal year (FY) 2005 ended June 30, 2005, and filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (SEC).

Third Quarter FY 2005 Results
Total revenues for the third quarter of FY 2005 were $21.6 million, which compares to revenues of $16.8 million reported for the three months ended June 30, 2004. For the first nine months of FY 2005, revenues were $62.5 million, compared to $56.7 million for the same period of the prior year. License revenues for the third quarter of FY 2005 were $9.2 million, compared to $5.4 million reported for the three months ended June 30, 2004. For the first nine months of FY 2005, license revenues were $25.0 million, compared to $23.9 million reported for the same period of 2004. Service revenues for the third quarter of FY 2005 were $12.4 million, compared to $11.4 million reported for the three months ended June 30, 2004. For the nine months ended June 30, 2005, service revenues were $37.4 million, compared to $32.7 million for the same period of 2004. Deferred revenue increased to $25.5 million as of June 30, 2005, as compared to a balance of $18.0 million at March 31, 2005 and a balance of $24.7 in the same calendar period of the prior year. Chordiant had $39.2 million in cash and cash equivalents, restricted cash, and marketable securities at June 30, 2005

Chordiant posted a U.S. GAAP (Generally Accepted Accounting Principles) net loss of $3.1 million, or $0.04 per share loss for the third quarter of FY 2005 ended June 30, 2005, compared to a GAAP net loss of $1.5 million, or $0.02 per share loss for the three months ended June 30, 2004. Chordiant reported a third quarter FY 2005 non-GAAP financial measure loss of $2.5 million (which excludes stock-based compensation, and amortization of intangible assets), or a non-GAAP loss of $0.03 per share, compared to non-GAAP net loss (which excludes, stock-based compensation and amortization of intangible assets) of $1.4 million, or non-GAAP loss of $0.02 per share for the three months ended June 30, 2004.

Non-GAAP Financial Measurements
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 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.

Operating Expenses
General and administrative expenses were $4.6 million for the three months ended June 30, 2005, compared to $1.7 million for the same period of 2004. The increase in these expenses was mainly attributable to an increase in consulting and professional services fees and expenses associated with efforts to comply with the Sarbanes-Oxley Act of 2002 (SOX) and to fill vacant accounting positions, as well as additional fees and expenses related to the filing of Chordiant's Form 10-Q for the periods ended December 31, 2004 and March 31, 2005.

Sales and marketing expenses were $7.1 million for the three months ended June 30, 2005, compared to $5.7 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 were $5.2 million for the three months ended June 30, 2005, compared to $4.2 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 third quarter of FY 2005 was a challenging quarter for Chordiant," said Stephen Kelly, Chordiant CEO. "However, we achieved a record license bookings quarter, grew deferred revenue 42 percent over the March 2005 quarter, and completed five million-dollar-plus license transactions with new and existing customers. Two license transactions each exceeded $5 million," Kelly stated. "Notable customer wins included Wachovia Corporation, ING, Carphone Warehouse, USAA and OnStar. In addition, we also completed transactions with Halifax Bank of Scotland, ABN AMRO, Fortis Bank Group, T-Mobile and UniCredit Servizi Informativi," Kelly added. "In terms of market perspective, we are continuing to see strong demand in our target markets of retail banking and insurance, and improvements in the broadband and wireless areas of telecommunications. The pipeline remains strong especially in North America." 

Teleconference Webcast Tuesday - August 9, 2005 at 2:00 P.M. (Pacific)
Chordiant management has scheduled a teleconference for Tuesday, August 9, 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, code 11036430.

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.

Safe Harbor Statement
This news release includes "forward-looking statements" that are subject to risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from those contemplated by the forward-looking statements. Forward-looking statements in this release are generally identified by words, such as "believes," "anticipates," "plans," "expects," "will," "would," "guidance," "projects" and similar expressions which are intended to identify forward-looking statements. There are a number of important factors that could cause the results or outcomes discussed herein to differ materially from those indicated by these forward-looking statements, including, among others, interpretations of accounting principles which may impact the amount of revenues which may be recognized by Chordiant in the periods reported, difficulties in the implementation of our new financial information system, and difficulties in hiring and retaining staff for our finance department. Further information on potential factors that could affect Chordiant are included in risks detailed from time to time in Chordiant's Securities and Exchange Commission filings, including, without limitation, Chordiant's Annual Report on Form 10-K/T for the transition period of January 1, 2004 to September, 30, 2004, and our Quarterly Report filed on Form 10-Q for the quarterly period ended June 30, 2005 filed on August 9, 2005. These filings are available on a Web site maintained by the Securities and Exchange Commission at http://www.sec.gov. Chordiant does not undertake an obligation to update forward-looking or other statements in this release.

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						Nine Months Ended
			June 30, 2005			June 30, 2004			June 30, 2005			June 30, 2004
Revenues:
	License	$	9,228		$	5,391		$	25,029		$	23,944
	Service		12,393			11,433			37,440			32,729
	Total revenues		21,621			16,824			62,469			56,673
Cost of revenues:
	License		338			301			702			1,217
	Service		7,134			6,499			21,985			19,021
	Stock-based compensation		85			(42	)		77			843
	Amortization of intangible assets		303			252			765			1,732
	Total cost of revenues		7,860			7,010			23,529			22,813
Gross profit			13,761			9,814			38,940			33,860
Operating expenses:
	Sales and marketing		7,051			5,666			21,144			17,375
	Research and development		5,194			4,222			15,040			12,853
	General and administrative		4,563			1,695			13,505			4,864
	Stock-based compensation		272			(79	)		307			3,092
	Amortization of intangible assets		--			16			117			206
	Purchased in-process research and development		--			--			1,940			--
	Restructuring expense (reversal)		--			--			(97	)		996
	Total operating expenses		17,080			11,520			51,956			39,386
Loss from operations			(3,319	)		(1,706	)		(13,016	)		(5,526)
Interest income, net			147			144			539			371
Other income (expense), net			186			120			(45	)		87
Net loss before income taxes			(2,986	)		(1,442	)		(12,522	)		(5,068)
Provision for income taxes			138			100			293			765
Net loss		$	(3,124	)	$	(1,542	)	$	(12,815	)	$	(5,833)
Other comprehensive income:
	Foreign currency translation gain (loss)	$	(588	)	$	(201	)	$	(514	)	$	911
Comprehensive loss		$	(3,712)		$	(1,743)		$	(13,329	)	$	(4,922)
Net loss per share:
	Basic and diluted	$	(0.04	)	$	(0.02	)	$	(0.17	)	$	(0.09)
	Shares used in per share calculation:		75,080			70,345			73,966			66,128
Supplemental information [1]:
Non-GAAP financial measures and reconciliation:
	Net loss		(3,124	)		(1,542	)		(12,815	)		(5,833)
	Less: Stock-based compensation		357			(121	)		384			3,935
	Less: Amortization of intangible assets		303			268			882			1,938
	Less: Purchased in-process research and development		--			--			1,940			--
	Less: Restructuring expense (reversal)		--			--			(97	)		996
Pro forma net income (loss):		$	(2,464	)	$	(1,395	)	$	(9,706	)	$	1,036
Basic pro forma net income (loss) per share:		$	(0.03	)	$	(0.02	)	$	(0.13	)	$	0.02
Diluted pro forma net income (loss) per share:		$	(0.03	)	$	(0.02	)	$	(0.13	)	$	0.01
		Basic	75,080			70,345			73,966			66,128
	Shares used in per share calculation [2]:	Diluted	75,080			70,345			73,966			71,325

[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 nine months ended June 30, 2005, is computed excluding total potential outstanding common shares of 13,433 and 13,433 as their effect is anti-dilutive.

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

			June 30, 2005			September 30, 2004
ASSETS
Current assets:
	Cash and cash equivalents		$	32,739		$	55,748
	Marketable securities			4,100			4,000
	Restricted cash			1,785			279
	Accounts receivable, net			23,719			20,161
	Prepaid expenses and other current assets			4,463			3,097
		Total current assets		66,806			83,285
Restricted cash				559			2,057
Property and equipment, net				2,790			3,237
Goodwill				31,978			24,874
Intangible assets, net				5,451			244
Other assets				3,525			1,643
		Total assets	$	111,109		$	115,340
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	5,000		$	6,394
	Accrued expenses			9,277			11,681
	Deferred revenue			25,166			18,459
	Current portion of capital lease obligations			209			191
		Total current liabilities		39,652			36,725
Deferred revenue, long-term				301			2,122
Restructuring costs, net of current portion				2,316			--
Long-term portion of capital lease obligations				150			317
		Total liabilities		42,419			39,164
	Common stock			77			72
	Additional paid-in capital			272,117			262,703
	Deferred stock-based compensation			(3,915	)		(339	)
	Accumulated deficit			(202,164	)		(189,349	)
	Accumulated other comprehensive income			2,575			3,089
		Total stockholders' equity		68,690			76,176
		Total liabilities and stockholders' equity	$	111,109		$	115,340