Chordiant Software Announces Financial Results for the Second Quarter of Fiscal Year 2006 Ended March 31, 2006

Reports Record Revenue of $26.3 Million, Up 37% Year-Over-Year
Achieves Record License Revenue of $13.2 Million, Up 90% Year-Over-Year
Generates Positive Cash Flow from Operations

CUPERTINO, CA - May 4, 2006—Chordiant Software, Inc. (Nasdaq: CHRD), the leading provider of Customer Experience (Cx™) software and services, today announced financial results for the second quarter and first six months of Fiscal Year (FY) 2006, ended March 31, and filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission (SEC).

Second Quarter Fiscal Year 2006 Highlights

Second Quarter Fiscal Year 2006 Results
Total revenues for the second quarter of FY 2006 increased 37% to $26.3 million from the $19.2 million reported for the three months ended March 31, 2005. For the first six months of FY 2006, total revenues increased to $48.8 million, compared to $40.8 million for the same period of the prior year. License revenues for the second quarter of FY 2006 increased 90% to $13.2 million from the $7.0 million reported for the three months ended March 31, 2005. For the first six months of FY 2006, license revenues increased to $22.3 million, compared to the $15.8 million reported for the same period of FY 2005. Service revenues for the second quarter of FY 2006 were $13.1 million, compared to $12.2 million reported for the three months ended March 31, 2005. For the first six months of FY 2006, service revenues were $26.5 million, compared to $25.0 million reported for the same period of FY 2005.

Deferred Revenue
Deferred revenue remained strong at $25.7 million as of March 31, 2006. This compares to $27.5 million as of December 31, 2005, and a balance of $18.0 million as of March 31, 2005. The sequential change in the second quarter deferred revenue was the result of percentage-of-completion projects having been completed and the delivery of Chordiant’s Credit Card Version 3.5 product which includes the Fraud Management Resolution functions.

Customer Successes
“We made excellent progress in the second quarter and our momentum continues to be strong,” said Steven R. Springsteel, Chordiant’s president and chief executive officer. “We are seeing sentiment swing from “build” to “buy” as Chordiant emerges as the leading choice for rapid applications development in credit card, retail consumer finance and other key customer-facing categories. Consequently, we are continuing to win significant license transactions with world-class customers in our core vertical markets of financial services and telecommunications having completed three $1.0 million-plus license transactions, one of which was in the $5 million range, with new and existing customers. Notable customer wins included Citigroup, Inc. which purchased an initial development license; Canadian Tire Financial Services purchased Chordiant’s Collections Module; HSBC added Chordiant’s Direct Lending Module for their Consumer Lending Division; and ComparisonMarket, Inc. purchased Chordiant’s Decision Management and Marketing Director Solutions for its Insurance.com business,” Mr. Springsteel stated.

Creating Superior Customer Experiences
“In early March, we announced that we are pioneering a new standard for enterprise software. By providing technology that anticipates customer intentions and individually recommends actions to optimize the customer experience, Chordiant's Cx solutions will help enterprises to deliver the best possible customer experience,” Mr. Springsteel said. “We believe our new vision raises the bar to where every business interaction becomes a personal experience. This strategy represents the next level of maturity for Chordiant from our strong leadership in business process management. Chordiant's vision is the beginning of a new era for customer experience solutions."

Backlog of Business
For the second quarter of FY 2006, Chordiant’s backlog was $34.6 million, compared to $37.2 million reported for the December FY 2005 quarter. Backlog is comprised of non-cancelable current software license orders, deferred license revenue orders which have not met all of the required criteria for revenue recognition, deferred revenue from customer support contracts, and deferred consulting and education orders for services not yet completed or delivered. The backlog of Chordiant’s business is not necessarily indicative of revenues to be recognized in a specified future period.

Cash Position
Chordiant increased its cash balances in aggregate by $1.8 million in the second quarter and had $44.1 million in cash and cash equivalents and restricted cash at March 31, 2006.

GAAP and Non-GAAP Financial Measures
On October 1, 2005, Chordiant was required to adopt Statement of Financial Accounting Standard No.123 (Revised) “Share-Based Payment”, (SFAS 123(R)), which requires the measurement and recognition of compensation expense for all share-based payment awards granted, modified, cancelled, repurchased, as well as the expense associated with the unvested portion of prior awards issued to the Company’s employees and directors. Total U. S. GAAP (Generally Accepted Accounting Principles) operating expenses for the second quarter of 2006 were $19.8 million, compared to $17.7 million in GAAP operating expenses for the same period of the previous year. Excluding $2.0 million in GAAP operating expenses which relate to stock-based compensation and certain other costs that are non-cash or unusual in nature, non-GAAP operating expenses for the second quarter of FY 2006 were $17.9 million.

This compares to non-GAAP operating expenses of $16.9 million (excluding stock-based compensation expense, amortization of intangible assets, a restructuring benefit and purchased in-process research and development costs) for the same period of the previous year.

Chordiant posted a GAAP net loss of $2.1 million, or $0.03 per share loss for the second quarter of FY 2006 ended March 31, compared to a GAAP net loss of $6.4 million, or $0.09 per share loss for the three months ended March 31, 2005. Chordiant reported a second quarter FY 2006 non-GAAP net profit of $0.2 million (which excludes stock-based compensation expense of $1.1 million, amortization of intangible assets of approximately $0.3 million, non-recurring severance accruals for officers of $0.6 million and lease termination costs of $0.3 million) or a non-GAAP profit of $0.00 per share, compared to non-GAAP net loss (which excludes stock-based compensation benefit, amortization of intangible assets and a restructuring charge) of $5.0 million, or a non-GAAP loss of $0.07 per share for the three months ended March 31, 2005.

Non-GAAP Financial Measurements
The Company’s management believes that the presentation of a non-GAAP financial measure of net income or net loss, excluding purchased in-process research and development, amortization of deferred stock-based compensation, share-based compensation expense measured in accordance with SFAS 123(R), amortization of intangible assets, non-recurring severance accruals for officers, lease termination costs and restructuring expenses, provides useful information regarding the Company’s financial performance and earnings potential by calculating and quantifying the effect of certain charges on net income or net loss per share calculated in accordance with GAAP and gives investors and analysts insight into the profitability of the Company’s on-going operating business. Management also believes that the presentation of the non-GAAP financial measures is consistent with its past practice, as well as industry practice in general, and will enable investors and analysts to compare non-GAAP measures of the current period with non-GAAP measures presented in prior periods. The non-GAAP financial information may not be comparable to similarly titled measures used by other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

Unaudited Condensed Consolidated Statements of Operations

Unaudited Condensed Consolidated Balance Sheets

About Chordiant Software, Inc.
Chordiant solutions and services help major enterprises around the world deliver the best possible customer experience. Unlike traditional business applications, Chordiant Customer Experience (Cx) solutions blend insight with agile business strategies and decisions to uniquely understand the customer's behavior. This deeper understanding develops a lasting, one-to-one relationship that aligns the most appropriate value proposition to each consumer. With Chordiant Cx solutions, customer loyalty, operational productivity and profitability reach unprecedented levels of return. For more information, visit Chordiant at www.chordiant.com.

Chordiant and the Chordiant logo are registered trademarks of Chordiant Software, Inc. The Customer Experience Company and Cx are trademarks of Chordiant Software, Inc. All other trademarks and registered trademarks are the properties of their respective owners.

Safe Harbor Statement
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," "projects" and similar expressions which are intended to identify forward-looking statements. There are a number of important factors that could cause the results or outcomes discussed herein to differ materially from those indicated by these forward-looking statements, including, among others, market acceptance of our products. Further information on potential factors that could affect Chordiant are included in risks detailed from time to time in Chordiant's Securities and Exchange Commission filings, including, without limitation, Chordiant's Annual Report on Form 10-K for the period of October 1, 2004 to September 30, 2005, and Chordiant’s most recent quarterly report on Form 10-Q. 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.

Investor Relations Contact:
Steve Polcyn
Chordiant Software, Inc.
(408) 517-6282
steve.polcyn@chordiant.com