Top Picks 2016: Callidus Software
01/20/2016 7:00 am EST
Our Top Pick for growth investors in 2016 is a company that sells sales effectiveness and sales performance management (SPM) software and services, notes small-cap expert Jim Oberweis, Jr., editor of The Oberweis Report.
Based in Dublin, California, Callidus Software (CALD) makes CallidusCloud software which helps businesses hire and train sales professionals, manage leads, construct and quote deals, and manage sales incentive compensation.
The company's products are offered as an on-demand SaaS subscription and are typically charged on a per-month and per-user fee basis.
Because only 300 of their 4000+ customers have more than a single CALD product and the firm offers multiple products across seven product categories, cross-selling into their current customer base should provide additional revenue growth beyond their proven success at winning new customers.
The space is competitive, but other mostly smaller players are focused on selling point-solutions that address a single need versus the Callidus suite of integrated solutions.
Larger software companies including IBM (IBM) and Oracle (ORCL) have also delved into this space, through acquisitions of smaller niche players to boost their presence. Should that trend continue, it's plausible that Callidus could become a target.
In addition to growing their revenues at a faster clip than industry growth—indicating market share gains—Gartner named CallidusCloud a 2015 leader in its coveted Magic Quadrant for SPM software, further suggesting strong product positioning in the marketplace.
Callidus is growing sales north of 20% while earnings have taken off, doubling in 2014 and expected to grow in excess of 35% for 2015. Shares trade for 56 times my forward estimate of $0.30.
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