Chordiant Software Announces Financal Results for the First Quarter of Fiscal 2007 Ended December 31, 2006

First Quarter Fiscal 2007 Financial Highlights

• Record bookings of $56.4 million, an increase of 108% sequentially;
• Revenue of $22.9 million, a slight increase year over year;
• Record deferred revenue of $61.5 million, up 124% year over year;
• Record backlog of $69.8 million, up 92% sequentially; and
• Cash flow positive in fiscal Q1.

• Chordiant's Audit Committee concluded its review of the historical stock option practices. On Friday, February 9th, Chordiant filed its Annual Report on Form 10-K for Fiscal Year 2006 ended September 30th, and its Form 10-Q for the third quarter of Fiscal 2006 ended June 30th, with the Securities and Exchange Commission (SEC). With today's filing of Form 10-Q for the first quarter ended December 31, 2006, Chordiant is now current with all of its SEC filings;
• The staff of the Securities and Exchange Commission has advised Chordiant that it has elected to terminate its inquiry into Chordiant's historical stock option practices and has not recommended enforcement action to the Commission;
• Signed four transactions with new and existing customers greater than a million dollars;
• Announced availability of the Chordiant Cx Lending Platform. The new Chordiant Cx Lending Platform enables financial institutions to now initiate lending products -- from auto loans to mortgages to credit cards -- within one unified environment;
• Added significant enhancements to its Marketing Director application, including support for the Microsoft .NET platform;
• Announced the availability of the Chordiant Wholesale Lending Point-of-Sale (POS) solution. Built on the Chordiant Cx Lending Platform, this unified solution enables financial institutions to re-purpose consumer data obtained through the wholesale channel for campaigns offering different lending products throughout the customer lifecycle; and
• The Company completed a restructuring plan whereby it realigned certain functional resources eliminating approximately 10% of its workforce and reduced its facilities footprint in Europe leading to a reduced ongoing cost structure moving forward.

Customer Wins

"Chordiant's business momentum is strong," said Steven R. Springsteel, Chairman and Chief Executive Officer. "We continue to win significant license transactions with marquee-named customers in our core vertical markets of financial services, insurance/healthcare and telecommunications."

As previously indicated in separate Form 8-K filings in the first quarter of fiscal 2007, Chordiant entered into transactions with Citigroup North American Consumer Group, a unit of Citigroup, and IBM/Deutsche Angestellten-Krankenkasse ("DAK"), the second largest health insurance provider in Germany. Within the quarter the Company also closed large transactions with IBM/ING Poland; and France Telecom subsidiaries Orange UK and Orange Romania.

"We have had an outstanding start to FY 2007, and Chordiant has emerged as a leader in its vertical markets. Moving forward, Chordiant is stronger than ever before and our team is highly focused on making our customers successful, achieving expense controls and cash management and securing our path to profitability," said Mr. Springsteel. "Our goal is to achieve a significant and diversified deferred revenue balance so that our business and financial results are predictable. We are also focused on building our business for the long term," he added.

Bookings

For the first time, Chordiant is disclosing its quarterly bookings, defined as contractual commitments by its customers through purchase orders or contracts, which it believes will provide investors and analysts with insight into the Company's on-going business. For the first quarter of FY 2007, Chordiant reported record bookings of $56.4 million, an increase of 108% from bookings of $27.1 million reported for the fourth quarter of fiscal 2006.

First Quarter Fiscal Year 2007 Financial Results

Total revenues for the first quarter of FY 2007 were $22.9 million, an increase of 2% from the $22.6 million reported for the three months ended December 31, 2005. License revenues for the first quarter of FY 2007 were $7.2 million, compared to $9.1 million reported for the three months ended December 31, 2005. Service revenues for the first quarter of FY 2007 were $15.8 million, compared to $13.4 million reported for the same period of FY 2006.

Including a restructuring and non-recurring charges of approximately $6.7 million, Chordiant posted a GAAP net loss of $10.7 million, or $0.14 per share loss for the first quarter of FY 2007 ended December 31, compared to a GAAP net loss of $1.8 million, or $0.02 per share loss for the three months ended December 31, 2005.

Chordiant reported a first quarter FY 2007 non-GAAP net loss of $2.7 million, or a non-GAAP loss of $0.03 per share, compared to a non-GAAP net loss of $0.00 per share for the three months ended December 31, 2005.

Deferred Revenue

The record deferred revenue balance of $61.5 million in fiscal Q1 2007 increased 124% as compared to the fiscal Q1 2006 ending balance of $27.5 million at December 31, 2005.

Backlog of Business

At December 31 2006, Chordiant's record backlog, which includes deferred revenue, increased 92% to $69.8 million, as compared to $36.4 million at the end of September 30, 2006. The quarterly change in backlog is primarily related to strong bookings in both North American and International in the first quarter of FY 2007.

Cash Position

Chordiant increased its cash, cash equivalents and restricted cash position by $2.2 million to $48.0 million at December 31, 2006 as compared to $45.8 million at the end of September 30, 2006. After the close of the quarter, Chordiant received a payment of $20 million from Citi which was classified in accounts receivable as of December 31, 2006.

Non-GAAP Financial Measurements

This press release and the accompanying tables include non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles, please see the section of the accompanying tables titled "NON-GAAP Financial Measures" as well as the related Table C which follows it.

Increasing Fiscal Year 2007 Financial Guidance

Today, Chordiant is increasing its financial guidance for fiscal year 2007 as follows:

• The Company's total bookings for fiscal year 2007 is expected to range between $145 million and $155 million representing a proposed increase of approximately 44% to 54% from total bookings achieved in fiscal 2006;
• The Company's total revenue for fiscal year 2007 is expected to range between $120 million and $125 million representing a proposed increase of between 23% and 28% from total revenue reported in fiscal 2006;
• The Company's current record level of deferred revenue balance of $61.5 million is expected to remain relatively flat for the remainder of fiscal 2007;
• The Company's total fiscal 2007 GAAP income (loss) from operations as a percentage of revenues is expected to range between a loss of (3%) to income of 2% for fiscal 2007 and non-GAAP income from operations as a percentage of revenues is expected to range between 8% and 12% for fiscal 2007;
• The Company expects to exit fiscal 2007 with GAAP income from operations as a percentage of revenues greater than 12% and expects non-GAAP income from operations as a percentage of revenues to exceed its targeted 15% operating model; and
• The Company expects to exit fiscal 2007 ending cash and restricted cash balances in excess of $65 million, representing proposed positive cash flow of approximately $20 million in fiscal 2007.

These 2007 financial projections and a reconciliation of non-GAAP projections to the most directly comparable financial measures prepared in accordance with Generally Accepted Accounting Principles can be found in the accompanying tables titled "Financial Projections" as well as the related Table D which follows it.

Conference Call and Webcast

Chordiant Software will host a conference call and webcast today, February 14, 2007 at 2:00 p.m. (PT), 5:00 p.m. (ET) and 22:00 (GMT). The live audio webcast will be available to investors and the general public from the following website:

http://www.veracast.com/webcasts/chordiant2/75111109.cfm

Alternatively, you may prefer to access Chordiant's website at http://www.chordiant.com, where you will see the event listed on the homepage. Access is also possible from Chordiant's Investor Relations web site.

The webcast will be archived on the Chordiant website; in addition, a telephone replay will be available on Wednesday, February 14, 2007, beginning at approximately 5:00 p.m. (Pacific) for seven days after the live call. The replay can be accessed by dialing 303-590-3000, access code 11084057#.

Safe Harbor

Chordiant and the Chordiant logo are registered trademarks of Chordiant Software, Inc. The Customer Experience Company and Cx are trademarks of Chordiant Software, Inc. All other trademarks and registered trademarks are the properties of their respective owners.