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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Amendment No. 5

CALLIDUS SOFTWARE INC.

160 West Santa Clara Street, Suite 1500

Reed D. Taussig

Copies to:

        If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o                          

        If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o                          

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o                          

        If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.    o

        The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED NOVEMBER 17, 2003

Common Stock

          We are selling 5,000,000 shares of our common stock. We have granted the underwriters an option to purchase up to 750,000 additional shares of common stock to cover over-allotments.

      This is the initial public offering of our common stock. We currently expect the initial public offering price to be between $12.00 and $14.00 per share. We have applied to have the common stock included for quotation on the Nasdaq National Market under the symbol “CALD.”

       Investing in our common stock involves risks. See “Risk Factors” beginning on page 5.

       Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

      The underwriters expect to deliver the shares to purchasers on or about                     , 2003.

Citigroup

	Lehman Brothers

	U.S. Bancorp Piper Jaffray

                    , 2003

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Enterprise Incentive Management Solutions

Aligning Employee, Sales and Channel Incentives with Corporate Strategy and Shareholder Value.

Solutions for the Strategic Enterprise™

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      You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front of this prospectus.

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      Until                     , 2003 (25 days after the date of this prospectus), all dealers that effect transactions in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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SUMMARY

      This summary highlights information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. You should read this entire prospectus carefully before making an investment decision, including the “Risk Factors” section and the consolidated financial statements and the notes to those statements.

Callidus Software Inc.

      We are a leading provider of Enterprise Incentive Management (EIM) software systems to global companies across multiple industries. Large enterprises use EIM systems to model, administer, analyze and report on incentive compensation, or “pay-for-performance,” plans, which compensate employees and business partners for the achievement of targeted quantitative and qualitative objectives, such as sales quotas, product development milestones and customer satisfaction. We provide a suite of software products that enable companies to access applicable transaction data, allocate compensation credit to appropriate employees and business partners, determine relevant compensation measurements, payment amounts and timing, and accurately report on compensation results. By facilitating effective management of complex pay-for-performance programs, our products allow our customers to increase productivity, improve profitability and achieve competitive advantage. Our product suite is based on our proprietary technology and extensive expertise in pay-for-performance programs and provides the flexibility and scalability required to meet the dynamic EIM requirements of large, complex businesses across multiple industries. Our installed base of over 75 active customers includes industry leaders in the insurance, retail banking, telecommunications, distribution, and manufacturing and technology industries, such as Allstate, J.P. Morgan Chase & Co., AT&T Wireless, DIRECTV and Apple Computer.

Market Opportunity

      While pay-for-performance programs are increasingly recognized as important management tools for companies, the administration of pay-for-performance programs presents complex challenges due to the large numbers of potential payees, compensation transactions, incentive programs and corporate policies involved. For large and complex pay-for-performance programs, these payments can represent millions of separate calculations per pay period, with total payouts ranging from approximately $100 million to over $1 billion annually. Currently, the majority of large businesses administer these programs using manual methods or internally developed solutions that do not adequately address these challenges. Failure to effectively meet these challenges erodes the effectiveness of incentive compensation, impairs management’s ability to adapt pay-for-performance programs to changing corporate objectives and results in costly errors. We believe that large enterprises are increasingly seeking dedicated EIM solutions to manage their pay-for-performance programs and, as a result, that the EIM market represents a substantial new market opportunity. However, the development of the EIM market will depend upon the extent to which large companies determine that the management of pay-for-performance programs warrants the purchase of externally-developed specialized software solutions. As a result, the market for dedicated and specialized EIM systems is currently small, newly emerging and difficult to measure and it may not achieve the growth we anticipate.

The Callidus Solution

      We develop, market, install and support a suite of EIM products to address the complex challenges of pay-for-performance programs for large enterprises. Our software products are designed to be administered using an easily understandable menu of commands, or rules, that allow business users, who are otherwise unfamiliar with computer software programming techniques, to create and manage enterprise incentive compensation plans. We provide a transparent and reliable data resource for enterprises to plan and manage pay-for-performance programs and accurately allocate credit among a wide range of payees. Our product suite allows management to accurately calculate and coordinate the payment of incentive compensation based on a highly flexible and scalable software architecture. In addition, our reporting

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      We Solve Complex Pay-for-Performance Problems. By focusing exclusively on solving the challenges and complexities inherent in pay-for-performance programs, we have developed a suite of EIM products designed to enable timely and accurate planning, calculation and management of variable, salary and management-by-objective (MBO) compensation, as well as dispute resolution, referral tracking and reporting.

      We Address Key Industry-Specific Requirements. We believe that extensive knowledge of our customers’ industry-specific incentive compensation programs and requirements, or domain expertise, is critical to designing a successful EIM system. We apply our domain expertise to build specific functionality into our products to address the key requirements of the insurance, retail banking, telecommunications, distribution, and manufacturing and technology industries.

      We Have Superior Technology. Our products are based on our proprietary rules-based software and run on our grid computing architecture, which enables customers to increase computing performance by harnessing a virtually unlimited number of processors within the enterprise. We believe this technology differentiates our products and offers superior performance, scalability and flexibility in an easy-to-use and reliable system, resulting in a lower total cost of ownership than manual methods and internally developed solutions.

      Our objective is to extend our leadership position in the EIM market for large businesses. To achieve this goal we are pursuing the following strategies:

      Capitalize on Our Technological Leadership. We intend to leverage our six years of experience in the EIM market and our technological leadership by continuing to invest in research and development to expand our product line and increase our products’ functionality, and thereby to capitalize on the EIM market opportunity.

      Continue Our Industry-Specific Focus and Develop Additional Referenceable Accounts. Our domain expertise enables our products to offer industry-specific advantages in functionality, implementation and deployment for our five key markets and allows us to achieve greater efficiency and effectiveness in our sales, marketing and product development efforts. We intend to add industry leaders as customers in each of our key markets and to leverage these referenceable accounts to increase penetration of these markets.

      Increase the Industry-Specific Modeling and Analytic Capabilities of Our Products. We are developing new products and product enhancements to provide customers with more extensive industry-specific modeling and analytic capabilities required in increasingly competitive marketplaces.

      Continue to Build Loyalty Through Superior Customer Care. As we grow our installed base, we intend to increase our investment in customer care to further strengthen customer loyalty and referenceability.

Company Information

      We were incorporated in Delaware as TallyUp Software Inc. in 1996 and changed our name to Callidus Software Inc. in 1997. Our principal executive offices are located at 160 West Santa Clara Street, Suite 1500, San Jose, California 95113 and our telephone number is (408) 808-6400. Our website address is http://www.callidussoftware.com. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which it forms a part.

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THE OFFERING

      The number of shares to be outstanding after the offering is based on 17,488,261 shares outstanding on September 30, 2003 and excludes:

	•	5,297,034 shares of common stock issuable upon exercise of outstanding options at a weighted average exercise price of $1.95 per share as of September 30, 2003 (of which an aggregate of 70,500 shares subject to options held by two of our executive officers will become vested and exercisable as a result of the consummation of this offering);
	•	843,197 shares of common stock issuable upon exercise of outstanding warrants at a weighted average exercise price of $3.63 per share as of September 30, 2003; and
	•	3,697,588 shares of common stock available for future issuance under our various stock plans, plus the annual increases in the number of shares authorized under each of our stock plans beginning July 1, 2004.

      Unless otherwise noted, this prospectus:

	•	gives effect to a 3-for-5 reverse split of our common stock effected on November 6, 2003 and the conversion of all of our outstanding preferred stock into common stock effective upon the consummation of this offering; and
	•	assumes no exercise by the underwriters of their option to purchase 750,000 additional shares of our common stock in this offering.

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SUMMARY CONSOLIDATED FINANCIAL DATA

      The following table sets forth a summary of our consolidated financial data for the periods presented. This summary consolidated financial data should be read together with “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes contained elsewhere in this prospectus. The consolidated balance sheet data is set forth as of September 30, 2003 both on an actual basis and on an as adjusted basis to reflect our receipt of the estimated net proceeds from the sale of shares of common stock by us in this offering at an assumed initial public offering price of $13.00 per share. See “Use of Proceeds” and “Capitalization.”

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RISK FACTORS

      An investment in our common stock involves a high degree of risk. You should consider the risks described below carefully and all of the information contained in this prospectus before deciding whether to purchase our common stock. If any of the adverse events described in the following risk factors actually occurs, our business, financial condition and results of operations may suffer significantly. As a result, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.

Risks Related to Our Business

We have a history of losses, and we cannot assure you that we will achieve or sustain profitability. If we fail to do so, our stock price may decline.

      We incurred net losses of $25.4 million for 2000, $20.8 million for 2001 and $19.1 million for 2002. Taking account of the $2.6 million of stock-based compensation we recorded in the first nine months of 2003, we recorded net income of approximately $171,000 in the nine months ended September 30, 2003. After this offering, we expect to significantly increase our expenses in the near term in order to expand our business. In addition, based on stock options granted through September 30, 2003, we expect to amortize an aggregate of $1.9 million and $5.9 million of deferred stock-based compensation in the three months ending December 31, 2003 and in 2004, respectively. We expect that these increased operating expenses and amortization charges will result in a net loss for the quarter and year ending December 31, 2003. In addition, these increased expenses and charges will adversely affect our future operating results and may result in or contribute to net losses in future periods. We cannot assure you that we will be able to achieve or sustain profitability on a quarterly or annual basis. Our results of operations will be harmed if our revenues do not increase at a rate equal to or greater than increases in our expenses or if our revenues are insufficient for us to achieve or sustain profitability. If we are not able to achieve or sustain profitability, our stock price may decline and we may require additional financing, which may not be available.

Our quarterly revenues and operating results can be difficult to predict and can fluctuate substantially, which may harm our results of operations.

      Our revenues, particularly our license revenues, are difficult to forecast and are likely to fluctuate significantly from quarter to quarter due to a number of factors, many of which are outside of our control. These factors include:

	•	Competitive conditions in our industry, including new products, product announcements and special pricing offered by our competitors;
	•	varying size, timing and contractual terms of orders for our products, which may delay the recognition of revenues;
	•	the discretionary nature of our customers’ purchase and budget cycles and changes in their budgets for software and related purchases;
	•	strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;
	•	our ability to timely complete our service obligations related to product sales;
	•	general weakening of the economy resulting in a decrease in the overall demand for computer software and services;
	•	the utilization rate of our professional services personnel and the degree to which we use third-party consulting services;
	•	changes in our pricing policies;
	•	timing of product development and new product initiatives;

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	•	our ability to hire, train and retain sufficient sales and professional services staff; and
	•	changes in the mix of revenues attributable to higher-margin product license revenues as opposed to substantially lower-margin service revenues.

      In addition, we make assumptions and estimates as to the timing and amount of future revenues in budgeting our future operating costs and capital expenditures. Specifically, our sales personnel monitor the status of all proposals, including the estimated closing date and potential dollar amount of such transactions. We aggregate these estimates periodically to generate our sales forecasts and then evaluate the forecasts to identify trends in our business. Because our costs are relatively fixed in the short term and a substantial portion of our license revenue contracts are completed in the latter part of a quarter, we may be unable to reduce our expenses to avoid or minimize the negative impact on our quarterly results of operations if our estimates prove inaccurate and our anticipated revenues are not realized. As a result, our quarterly results of operations could be worse than anticipated, which could adversely affect our stock price.

Our quarterly license revenues are dependent on a relatively small number of transactions involving sales of our products to new customers, and any delay or failure in closing one or more of these transactions could adversely affect our results of operations.

      Our quarterly license revenues are dependent upon a relatively small number of transactions involving sales of our products to new customers, and to date recurring license revenues from existing customers have not comprised a substantial part of our revenues. As such, even minor variations in the rate and timing of conversion of our sales prospects into revenues could result in our failure to meet revenue objectives in future periods. In addition, based upon the terms of our customer contracts, we recognize the bulk of our license revenues for a given sale either at the time we enter into the agreement and deliver the product, or over the period in which we perform any services that are essential to the functionality of the product. Unexpected changes in contractual terms late in the negotiation process or changes in the mix of contracts we enter into could therefore materially and adversely affect our license revenues in a quarter. Delays or reductions in the amount of customers’ purchases would adversely affect our revenues, results of operations and financial condition and could cause our stock price to decline.

Our products have long sales cycles, which make it difficult to plan our expenses and forecast our results.

      The sales cycles for our products are generally between six and nine months for the majority of our sales, and in some cases can be a year or longer. It is therefore difficult to predict the quarter in which a particular sale will occur and to plan our expenditures accordingly. The period between our initial contact with a potential customer and its purchase of our products and services is relatively long due to several factors, including:

	•	The complex nature of our products;
	•	the need to educate potential customers about the uses and benefits of our products;
	•	the requirement that a potential customer invest significant resources in connection with the purchase and implementation of our products;
	•	budget cycles of our potential customers that affect the timing of purchases;
	•	customer requirements for competitive evaluation and internal approval before purchasing our products;
	•	potential delays of purchases due to announcements or planned introductions of new products by us or our competitors; and
	•	the lengthy approval processes of our potential customers, many of which are large organizations.

      The delay or failure to complete sales in a particular quarter would reduce our revenues in that quarter, as well as any subsequent quarters over which revenues for the sale would likely be recognized. If

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Managing large-scale deployments of our products requires substantial technical implementation and support by us or third-party service providers. Failure to meet these requirements could cause a decline or delay in recognition of our revenues and an increase in our expenses.

      Our customers may require large, enterprise-wide deployments of our products, which require a substantial degree of technical implementation and support. It may be difficult for us to manage the timeliness of these deployments and the allocation of personnel and resources by us or our customers. Failure to successfully manage this process could harm our reputation and cause us to lose existing customers, face potential customer disputes or limit the number of new customers that purchase our products, which could adversely affect our revenues and increase our technical support and litigation costs.

      Our software license customers have the option to receive implementation, maintenance, training and consulting services from our internal professional services organization or from outside consulting organizations. If we are unable to expand our internal professional services organization to keep pace with sales, we will be required to increase our use of third-party service providers to help meet our implementation and service obligations. If we require a greater number of third-party service providers than we currently have available, we will be required to negotiate additional arrangements, which may result in lower gross margins for maintenance or service revenues.

      If a customer selects a third-party implementation service provider and such implementation services are not provided successfully and in a timely manner, our customers may experience increased costs and errors, which may result in customer dissatisfaction and costly remediation and litigation, any of which could adversely impact our operating results and financial condition.

Our success depends upon our ability to develop new products and enhance our existing products. Failure to successfully introduce new or enhanced products to the market may adversely affect our operating results.