News Release

LEADING ANALYST FIRM GIVES CALLIDUS SOFTWARE “POSITIVE” RATING IN ANNUAL MARKETSCOPE FOR SALES INCENTIVE COMPENSATION MANAGEMENT REPORT

Third consecutive “positive” rating since 2005

SAN JOSE, Calif., August 2, 2007 – Callidus Software, Inc., the leader in Sales Performance Management (SPM), today announced that it received a “Positive” rating from Gartner, Inc. in the technology research firm’s 2007 MarketScope for Sales Incentive Compensation Management (ICM) Software. Gartner also cites in the report that the industry is expanding “at a healthy rate.” (1)

According to Gartner, the “Sales ICM software market has rebounded strongly from a recent downturn, growing at least 15 percent year over year, with more enterprises investigating hosted and software-as-a-service (SaaS) deployment options, as well as sophisticated functionality such as modeling and analytics.”

“We are very excited about being on the cutting edge of this viable industry. Callidus has received a ‘Positive’ rating for the third consecutive year in the Gartner MarketScope report on sales incentive compensation management,” said Robert Youngjohns, president and CEO at Callidus Software. “Gartner’s findings are reflective of our success in providing the world’s leading companies with optimum SPM solutions. Gartner’s ‘Positive’ rating further affirms our ongoing commitment to providing our ever-growing global client base with SPM solutions software that aligns sales goals with business objectives to drive revenue and spike shareholder value. ”

The Gartner MarketScope for Sales ICM provides an overview of Callidus, highlighting the company’s strong points, such as its ability to lead in sales in the Sales ICM market, “mostly due to on-premise deployments of its core compensation application, TrueComp®, one of four modules offered under the TrueComp® Enterprise Suite (along with TrueInformation®, TrueResolution®, and TrueAnalytics™).”

A key component of effective sales performance management, sales ICM solutions makes it possible for companies to automate the sales compensation process and implement more strategic plans that ultimately generate more profitable sales behaviors. In the annual report, Gartner evaluated 11 incentive compensation management vendors in a number of areas including: overall viability, customer experience, products and services, and market responsiveness. Callidus was one of only three companies that received a “positive” rating.

According to the report, Callidus received the “positive” rating from Gartner for its ability to meet certain criteria, including “its large market share, success in regaining growth, deep expertise with incentive compensation software and mature product offering.”

Callidus is the only SPM company that offers its market-leading application on-premise and on-demand with complete portability between the two. This allows customers to focus on their business and technical requirements first and on the delivery vehicle second.

With this flexibility, a wide-reaching spectrum of enterprises can benefit from the power of Callidus Software applications. While other EIM vendors can only handle projects of moderate scope of up to a few hundred payees, companies can gear the Callidus solution around their business needs. Callidus customers can be certain that as their company succeeds and grows, Callidus Software product suite provides them with all the tools they need to continue sustained growth. Callidus’ recent partnership with Salesforce.com, a market and technology leader in on-demand business services, only further enhances the advantages of Callidus Software.

Vendor Rating Definition: Positive

Demonstrates strength in specific areas, but is largely opportunistic.

Customers: Continue incremental investments.

Potential customers: Put this vendor on a shortlist of tactical alternatives.

The author of MarketScope, Michael Dunne, Research VP at Gartner, will deliver a keynote speech at Callidus’ seventh annual user TrueConnection conference in November. (www.callidussoftware.com/events/)

(1) Gartner, Inc., “Marketscope for Sales Incentive Compensation Management Software, 2007” by Michael Dunne, July 30, 2007.

About Callidus Software

Callidus Software (www.callidussoftware.com, NASDAQ: CALD) is a leading provider of on-premise and on-demand Sales Performance Management (SPM) solutions to global companies across a broad range of industries. Our software allows innovative enterprises of all sizes to strategically manage incentive compensation, set quota targets, administer producers, and align territories, resulting in improved sales and distribution performance. Over 1.7 million salespeople, brokers, and channel representatives have their sales performance managed by Callidus Software’s products.

MarketScope Disclaimer

The MarketScope is copyrighted July 30, 2007 by Gartner, Inc. and is reused with permission. The MarketScope is an evaluation of a marketplace at and for a specific time period. It depicts Gartner’s analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the MarketScope, and does not advise technology users to select only those vendors with the highest rating. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

© 1998-2007 Callidus Software Inc. All rights reserved. Callidus Software, the Callidus Software logo, Callidus TrueAnalytics, TrueComp, TrueComp Grid, TrueComp Manager, TrueConnection, TrueFoundation, TrueInformation, TruePerformance, TruePerformance Index, TruePerformance Indicator, TrueProducer, TrueQuota, TrueReferral, TrueResolution, and TrueService+ are trademarks, servicemarks, or registered trademarks of Callidus Software Inc. in the United States and other countries. All other brand, service or product names are trademarks or registered trademarks of their respective companies or owners.

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