Chordiant Continues Strong Momentum with 126% Revenue Growth for 2001; Reaffirms Revenue Guidance of $100 to $107 Million for 2002.

Business Editors

CUPERTINO, Calif.--(BUSINESS WIRE)--February 5, 2002

Chordiant Software, Inc. (Nasdaq:CHRD), today announced that total revenues for 2001 grew by 126 percent over 2000 to a record $76 million for the year ended December 31, 2001.

Chordiant's record revenue results of $23.8 million for the fourth quarter and $76 million for the year exceeded the company's previously issued guidance of $22 to $23 million and $74 to $75 million, respectively, in spite of a tough global economy. During 2001, Chordiant added 50 engagements with new and existing customers. Chordiant now has approximately 165 customers and partners worldwide, the majority of whom are listed among the Global 1000.

"Chordiant's fourth quarter results brought a strong year to an excellent conclusion," said Stephen Kelly, chief executive officer of Chordiant. "Chordiant continues its strong momentum with eight consecutive quarters of revenue growth as a public company and triple-digit growth for the year, making Chordiant one of the fastest-growing software companies."

Fourth quarter 2001 revenues were $23.8 million more than double the $11.6 million reported for the fourth quarter of 2000. Fourth-quarter license revenues were $12.8 million, up from $6.2 million year over year. Service revenues were $11.1 million, up from $5.4 million a year earlier. Fourth-quarter gross margin was 62 percent, up from 53 percent a year ago.

Fourth quarter 2001 pro forma net loss which excludes in-process research and development, stock-based compensation and amortization of acquired intangible assets, was 9 cents per share, improved from a pro forma net loss of 14 cents per share for the year-ago quarter.

For the twelve months ended December 31, 2001, total revenues were $76 million, up 126 percent from $33.7 million for the same period of the prior year. 2001 license revenues were $39.7 million, up 135 percent from $16.9 million a year ago. Service revenues for 2001 were $36.3 million, up 116 percent from $16.8 million year over year.

"Despite the tough market environment during the fourth quarter, we are seeing the benefits of consistently delivering high return on investment for enterprise CRM customers. Chordiant's customers are experiencing greatly reduced operating expenses and increased top line improvements - specifically, increased retention rates, up-selling and cross-selling," said Kelly. "Chordiant is the only company delivering dynamically driven CRM applications developed on an end-to-end J2EE platform. Chordiant has a passion for innovation and we will continue to enhance our technology and engage with new customers in major CRM projects that deliver demonstrable ROI in our mainstream verticals such as financial services, telecommunications and consumer direct," Kelly stated.

On a GAAP (Generally Accepted Accounting Principles) basis, fourth quarter 2001 net loss was $9.4 million, or 18 cents per share, compared with a reported net loss of $6.3 million, or 17 cents per share, for the year-ago quarter. For the year ended December 31, 2001, net loss was $42.3 million, or 86 cents per share, compared with a reported net loss of $35.4 million, or $1.05 per share, for the year ended December 31, 2000.

At December 31, 2001, Chordiant's cash, cash equivalents and short-term investments were $51.1 million. Cash usage for the fourth quarter was $5.2 million, in line with prior expectations of $5 to $7 million and down from $6.2 million in the third quarter of 2001.

"For the year 2002, we continue to anticipate revenues to be in the range of $100 to $107 million and we expect to achieve operating and cash flow break even in the first half of 2002," said Steve Vogel, chief financial officer. "For the first quarter of 2002, we expect revenues to be in the range of $22 to $23 million and we anticipate cash usage of $4 million to $6 million."

FOURTH QUARTER BUSINESS HIGHLIGHTS

Customers

-- Added key customers in financial services, telecommunications

and consumer direct vertical market segments including CIBC,

Littlewoods plc, TeleDanmark, Farmacias Ahumada, ING Postbank

and Haufe Media.

Products

-- Announced in early January 2002 Chordiant Insurance Industry Initiative to
serve the insurance industry directly.

-- Announced the availability of Chordiant Marketing Director for use with data
warehousing platforms.

Corporate

-- Announced the promotion of Stephen Kelly from president and

chief operating officer to chief executive officer. Sam

Spadafora, formerly CEO, continues in his role as chairman.

-- Boosted management team with senior appointments: Jeremy

Coote, formerly general manager of Siebel North America and

president of SAP North America, joined as president of

Chordiant's Americas operations; Paul Burrin, formerly senior

vice president of corporate marketing at Oracle Corporation,

joined as senior vice president for worldwide marketing.

Robert Mullen, senior vice president and general manager, was

appointed head of the Chordiant Insurance Industry Initiative;

promoted Ian Bowles as managing director international and Craig

Probert as managing director UK/Ireland.

2001 BUSINESS HIGHLIGHTS

Customers

-- Commenced 50 engagements with new and existing customers in

2001 including: Hutchinson Whampoa (H3G); Signal Iduna,

Optus, Banco Bilbao de Viscaya y Argentaria, General American

Life Insurance; MetLife; AXA, British Sky Broadcasting, the

Financial Services Authority in the UK; Bank of Ireland; AEON

Credit; BPN--Banca Popolare di Novara, Tesco Personal Finance,

ING and RAC Motoring Services.

Partnerships

-- Forged a strategic alliance with Accenture to jointly develop

multi-channel customer relationship management (CRM) solutions

for financial services organizations.

Mergers and Acquisitions

-- Integrated PrimeResponse marketing automation solutions with

Chordiant's Intelligent Customer Interaction Management

(ICIM) platform and Intelligent Business Services, combining

the two companies' worldwide operations and customer bases.

-- Acquired Java server technology, development resources and

customers from ActionPoint, Inc.

-- Acquired certain intellectual property assets and technology of

the AoNet Java 2 Enterprise Edition (J2EE) Workflow Server

from ASP Outfitters, Inc.

Products

-- Expanded Chordiant's suite of enterprise-class products,

including Marketing, Interactive Selling, Customer Service

and ICIM platform solutions.

-- Increased its selection of product offerings from 5 products

available in the first quarter of 2000 to 15 products available

today in the Chordiant 5 solution suite, providing the most

modern architecture in CRM and the software industry's first

end-to-end J2EE-standard solution delivering a real-time,

adaptive CRM platform.

Corporate

-- Appointed George Reyes, former vice president, corporate

controller and treasurer of Sun Microsystems, to the company's

Board of Directors.

-- Strengthened the management team with the addition of Allen

Swann as president of Chordiant International, Gary Daniels

as senior vice president of WW engineering, Albert Caravelli

as vice president of sales for Chordiant's East Coast operations

and Steve Vogel as senior vice president and chief financial

officer.

TELECONFERENCE WEBCAST

Chordiant management has scheduled a teleconference for 7.30 a.m. PST / 10.30 a.m. EST today to discuss full-year financial results and business events, as well as the current outlook for the first quarter and full-year 2002. This teleconference will be Web-cast live for all investors. Industry analysts and media are invited to attend the conference on a listen-only basis. For more information, please visit the Investor Relations section of Chordiant's Website 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, access code #433216.

ABOUT CHORDIANT SOFTWARE, INC.

Chordiant Software, Inc. (www.chordiant.com) is a worldwide leader in developing and delivering Dynamically Driven CRM(TM)solutions for global B2C enterprises.

The Chordiant solution enables enterprises to gain a sustained competitive advantage through more efficient and effective marketing, selling and customer service. Only Chordiant delivers real-time, process-centric solutions that provide multidimensional customer interactions. The unique Chordiant JX Architecture(TM) leverages existing investments inside the enterprise and beyond, resulting in a more relevant and consistent customer experience.

Headquartered in Cupertino, California, Chordiant maintains offices in Boston; Chicago; Manchester, N.H.; New York; London; Paris; Amsterdam, Netherlands; Frankfurt and Munich, Germany; Johannesburg, South Africa; Sydney and Melbourne, Australia.

SAFE HARBOR

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" and similar expressions which are intended to identify forward-looking statements. There are a number of important factors that could cause the results of Chordiant to differ materially from those indicated by these forward-looking statements, including, among others, potential difficulties in the assimilation of operations, strategies, technologies, personnel and products of acquired companies and technologies, the impact of perceived or actual weakening of economic conditions on customers' and prospective customers' spending on Chordiant software and services; quarterly fluctuations in Chordiant's revenues or other operating results; failure by Chordiant to meet financial expectations of analysts and investors, including failure resulting from significant reductions in demand from earlier anticipated levels; risks related to market acceptance of Chordiant's products; customization and deployment delays or errors associated with Chordiant products; impact of long sales and implementation cycles for certain Chordiant products; reliance by Chordiant on a limited number of customers for a majority of its revenues; Chordiant's need to retain and enhance business relationships with systems integrators and other parties; Chordiant's use in its products of third-party software; activities by Chordiant and others regarding protection of intellectual property; and competitors' release of competitive products and other actions. Further information on potential factors that could affect the financial results of Chordiant are included in risks detailed from time to time in Chordiant's Securities and Exchange Commission filings, including without limitation Chordiant's report on Form 10-Q for the quarterly period ended September 30, 2001, and the Annual Report on Form 10-K filed on March 27, 2001. 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.

Note to Editors: Chordiant and the Chordiant logo are registered trademarks of Chordiant Software, Inc. JX Architecture and Dynamically Driven CRM are trademarks of Chordiant Software, Inc. All other trademarks and registered trademarks are the properties of their respective owners.

                       Chordiant Software, Inc.
          Unaudited Condensed Consolidated Income Statements
                (in thousands, except per-share amounts)

                            Three months ended    Twelve months ended
                                December 31,         December 31,
                              2001       2000       2001       2000
                            --------   -------    --------   --------

Net Revenues:
  License                   $ 12,750   $ 6,206    $ 39,664   $ 16,896
  Service                     11,092     5,374      36,307     16,793
                            --------   -------    --------   --------
    Total net revenues        23,842    11,580      75,971     33,689

Cost of net revenues:
  License                        529       468       1,982        912
  Service                      8,604     5,032      30,607     17,510
                            --------   -------    --------   --------
    Total cost of
     net revenues              9,133     5,500      32,589     18,422

Gross profit (loss)           14,709     6,080      43,382     15,267
                            --------   -------    --------   --------

Operating expenses:
  Sales and marketing         11,439     6,792      41,651     22,422
  Research and development     5,555     4,046      20,457     14,437
  Purchased in-process
   research and
   development                   333         0       3,025      4,234
  General and
   administrative              2,620     1,425       9,604      5,493
  Amortization of
   deferred stock-based
   compensation                  598       367       3,220      6,256
  Amortization of
   acquired intangible
   assets                      3,514       449       9,699        802
  Integration related
   costs                           0         0       1,669          0
                            --------   -------    --------   --------
    Total operating
     expenses                 24,059    13,079      89,325     53,644
                            --------   -------    --------   --------

Loss from operations          (9,350)   (6,999)    (45,943)   (38,377)
Interest expense                 (26)      (20)        (79)      (269)
Other income (expense),
 net                             226       753       3,960      3,290
                            --------   -------    --------   --------
Net loss before
 income taxes                 (9,150)   (6,266)    (42,062)   (35,356)

Provision for
 income taxes                    200         0         200          0
                            --------   -------    --------   --------
Net loss                    $ (9,350)  $(6,266)   $(42,262)  $(35,356)
                            ========   =======    ========   ========

Net loss per share:
  Basic and diluted         $  (0.18)  $ (0.17)   $  (0.86)  $  (1.05)
                            ========   =======    ========   ========
  Weighted average shares     53,059    37,858      49,252     33,690
                            ========   =======    ========   ========

Supplemental information(1)

Net loss                    $ (9,350)  $(6,266)   $(42,262)  $(35,356)
Pro forma items
  Purchased in-process
   research and
   development                   333         0       3,025      4,234
  Amortization of
   deferred stock-based
   compensation                  598       367       3,220      6,256
  Contract termination
   fee                             0         0        (500)         0
  Amortization of
   acquired intangible
   assets                      3,514       449       9,699        802
  Integration related
   costs                           0         0       1,669          0
                            --------   -------    --------   --------
Net loss (pro forma)        $ (4,905)  $(5,450)   $(25,149)  $(24,064)
                            ========   =======    ========   ========
  Basic and diluted         $  (0.09)  $ (0.14)   $  (0.51)  $  (0.66)
                            ========   =======    ========   ========
  Shares Outstanding(2)       53,059    37,858      49,252     36,633
                            ========   =======    ========   ========

(1) The accompanying supplemental financial information is presented
for informational purposes only and should not be considered as
substitute for the historical financial information presented in
accordance with generally accepted accounting principles in the United
States.

(2) Pro forma net loss per share is computed using the weighted
average number of common stock outstanding, including the assumed
conversion of Chordiant's preferred stock and the conversion of
convertible debt as if such conversion occurred on the first day of
the period presented, or at the date of original issuance, if later.
The calculation of pro forma net loss per share excludes other
potential common shares, as the effect is anti-dilutive. Pro forma
potential common stock is comprised of common stock subject to
repurchase and incremental common stock issuable upon exercise of
stock options.



                       Chordiant Software, Inc.
            Unaudited Condensed Consolidated Balance Sheets
                            (in thousands)

                                 December 31,     December 31,
                                    2001              2000
                                 ------------     ------------

ASSETS

Current Assets:
  Cash and cash equivalents       $ 28,068          $ 41,465
  Short-term investments            23,072            26,203
  Accounts receivable, net          21,573            20,480
  (Includes $6,734 and
   $11,734 of deferred
   revenue respectively)
  Other current assets               5,267             7,149
                                  --------          --------
    Total current assets            77,980            95,297
  Property and
   equipment, net                    7,083             5,050
  Intangible assets, net            27,792             4,585
  Other assets                       2,010             2,516
                                  --------          --------
                                  $114,865          $107,448
                                  ========          ========


LIABILITIES AND
 STOCKHOLDERS' EQUITY

Current Liabilities:
  Borrowings                      $     75          $    595
  Accounts payable                   5,575             5,081
  Accrued expenses                  10,142             8,163
  Deferred revenue                  22,457            20,929
                                  --------          --------
    Total current liabilities       38,249            34,768

 Deferred revenue, long-term         4,406             9,116
 Other liabilities                     910               244
                                  --------          --------
                                    43,565            44,128
                                  --------          --------
Stockholders' Equity:               71,300            63,320
                                  --------          --------
                                  $114,865          $107,448
                                  ========          ========