Earlier this week we hosted a Black Book call detailing our thesis on our Callidus Software (CALD) Short call. To view the webcast or learn more about this call email firstname.lastname@example.org.
At a time when good cloud software shorts seem few and far between, this one goes to the top of our list.
Callidus is a 21-year old software company, made up of 19 other companies and counting. To be clear, we have no fundamental problems with strategic M&A. But CALD substitutes R&D with an endless flywheel M&A strategy that involves getting its hands on anything the company can shove through its sales funnel.
This strategy is extremely costly and carries no ROI. Investors need to start asking why a mature, 2003-vintage software IPO is struggling to generate free cash flow.