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| 8-K - FORM 8-K - Cornerstone OnDemand Inc | form8-kq3fy2016.htm |
Cornerstone OnDemand Announces Third Quarter 2016 Financial Results
SANTA MONICA, Calif. – November 3, 2016 – Human capital management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results for its third quarter ended September 30, 2016. A summary of the Company’s Operational and Financial Highlights is available on the Company’s Investor Relations website at http://investors.cornerstoneondemand.com.
“In the third quarter, we exceeded revenue expectations and came in well ahead of our profitability goals,” said Adam Miller, the Company’s President and CEO. “We have made great strides in our operational excellence initiatives, and believe our continued focus on efficiency will enable us to achieve even stronger gains in profitability while continuing to pursue the tremendous long-term growth opportunities ahead.”
Third Quarter 2016 Results:
• | Revenue for the third quarter of 2016 was $107.8 million, representing a 23.5% increase compared to the same period in 2015. Revenue growth on a constant currency basis represented a 29.7% increase compared to the prior year.1 |
• | Billings were $107.0 million for the third quarter of 2016, representing a 3.2% increase compared to the same period in 2015.1 Billings growth on a constant currency basis represented a 8.7% increase compared to the prior year.1 |
• | The Company’s operating loss for the third quarter of 2016 was $(10.0) million, yielding an operating loss margin of (9.3)%, compared to an operating loss of $(17.0) million, yielding an operating loss margin of (19.5)%, for the third quarter of 2015. This represents an increase of 1,020 basis points year-over-year. |
• | Non-GAAP operating income for the third quarter of 2016 was $6.9 million, yielding a non-GAAP operating income margin of 6.4%, compared to a non-GAAP operating loss of $(2.2) million, yielding a non-GAAP operating loss margin of (2.5)%, for the third quarter of 2015.1 This represents an increase of 890 basis points year-over-year. |
• | The Company’s net loss for the third quarter of 2016 was $(12.4) million, or a $(0.22) diluted net loss per share, compared to a net loss of $(20.1) million, or a $(0.37) diluted net loss per share, for the third quarter of 2015. |
• | Non-GAAP net income for the third quarter of 2016 was $6.9 million, or a $0.11 non-GAAP diluted net income per share, compared to a non-GAAP net loss of $(3.2) million, or a $(0.06) non-GAAP diluted net loss per share, for the third quarter of 2015.1 |
• | Free cash flow for the third quarter of 2016 was $7.8 million compared to free cash flow of $(3.8) million for the third quarter of 2015.1 |
“We once again came in well ahead of our margin expectations in Q3, largely driven by significant improvement in sales and marketing expense as a percentage of revenue,” said Brian L. Swartz, the Company’s CFO. “We are especially pleased with our progress, particularly considering we have yet to realize many of the potential benefits from our various operational excellence initiatives.”
Recent Highlights:
• | The Company remained positioned as a Strategic Leader in the October 2016 Fosway 9-GridTM for Integrated Talent Management systems. |
• | ResCare, Inc., the nation’s largest provider of services to people with disabilities, began using the Company’s cloud-based talent management software to recruit candidates, quickly onboard new hires and deliver learning content to its mostly remote workforce. |
• | Electrolux, a leading global appliance manufacturer, expanded its use of the Company’s cloud-based talent management software solutions in an effort to support the execution of its business strategy. |
• | The Company ended the third quarter of 2016 with 2,805 clients and approximately 27.7 million users.2 |
1
Financial Outlook:
The following outlook is based on information available as of the date of this press release and is subject to change in the future. For the fourth quarter ending December 31, 2016, the Company provides the following outlook:
• | Revenue between $108.0 million and $110.0 million, representing year-over-year growth at the mid-point of 13.6%3, or 21.9%4 on a constant currency basis. |
For the year ending December 31, 2016, the Company provides the following updated outlook:
• | Revenue between $422.0 million and $424.0 million, representing year-over-year growth at the mid-point of 24.5%5, or 29.6%6 on a constant currency basis. |
• | Non-GAAP net income of approximately $2.5 million and a non-GAAP diluted net income per share of $0.04. |
• | Free cash flow of approximately $10.0 million. The Company’s free cash flow outlook has been adjusted to reflect timing changes related to certain one-time working capital adjustments and increased payment terms given to clients signed late in the third quarter, as well as the impact of the continued devaluation of the British pound. |
The Company has not reconciled the guidance for non-GAAP net income or non-GAAP diluted net income per share to the corresponding GAAP measures because it does not provide guidance for such GAAP measures and would not be able to present the reconciling items between such GAAP and non-GAAP measures without unreasonable efforts. For non-GAAP net income and non-GAAP diluted net income per share, the Company excludes stock-based compensation expense, which is impacted by factors that are outside of the Company’s control and can be difficult to predict. The actual amount of stock-based compensation expense in the fourth quarter and the year ending December 31, 2016 will have a significant impact on the Company’s GAAP net income (loss) and GAAP diluted net income (loss) per share.
1 | Billings, financial measures presented on a constant currency basis, non-GAAP operating income (loss), non-GAAP operating income (loss) margin, non-GAAP net income (loss), non-GAAP diluted net income (loss) per share and free cash flows are non-GAAP financial measures. Please see the discussion in the section titled “Non-GAAP Financial Measures” and the reconciliations at the end of this press release. | |
2 | Includes contracted clients and active users of our Enterprise and Mid-Market solution, excluding Cornerstone for Salesforce and Cornerstone Growth Edition. | |
In order to translate the financial outlook for entities reporting in British pounds (GBP) to the United States dollars (USD), the following exchange rates have been applied: | |||||
3 | Exchange rate applied to revenue for the fourth quarter of 2016 | $1.22 USD per GBP | |||
4 | Exchange rate from the fourth quarter of 2015 applied to calculate revenue growth for the fourth quarter of 2016 on a constant currency basis | $1.52 USD per GBP | |||
5 | Exchange rate applied to revenue for fiscal 2016 | $1.34 USD per GBP | |||
6 | Exchange rate from fiscal 2015 applied to calculate revenue growth for fiscal 2016 on a constant currency basis | $1.53 USD per GBP | |||
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Quarterly Conference Call
Cornerstone OnDemand, Inc. will host a conference call to discuss its third quarter 2016 results at 2:00 p.m. PT (5:00 p.m. ET) today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the Company’s Investor Relations website at http://investors.cornerstoneondemand.com. The live call can be accessed by dialing (877) 445-4619 (U.S.) or (484) 653-6763 (outside the U.S.) and referencing passcode: 93641176. A replay of the call will also be available at http://investors.cornerstoneondemand.com/investors/news-and-events/events/default.aspx or via telephone until 11:59 p.m. PT on November 6, 2016 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 93641176.
About Cornerstone OnDemand
Cornerstone OnDemand, Inc. (NASDAQ: CSOD) is a global leader in cloud-based human capital management software. The Company’s solutions help organizations realize the potential of the modern workforce. From recruitment, onboarding, training and collaboration, to performance management, compensation, succession planning, people administration and analytics, Cornerstone is designed to enable a lifetime of learning and development that is fundamental to the growth of employees and organizations.
Based in Santa Monica, California, the Company’s solutions are used by 2,805 clients worldwide, spanning nearly 28 million users across 191 countries and in 42 languages. To learn more about Cornerstone, visit us on Twitter, Facebook and our blog. www.cornerstoneondemand.com
Note: Cornerstone® and Cornerstone OnDemand® are registered trademarks of Cornerstone OnDemand, Inc.
Forward-looking Statements
This press release and the quarterly conference call referenced above contain forward-looking statements, including, but not limited to, statements regarding our future financial and operating performance, including our GAAP and non-GAAP guidance, the growth of the human capital management market, our business strategy, plans and objectives for future operations, the demand for and benefits from the use of our current and future solutions both domestically and internationally, the opportunity to upsell to our existing clients, the timing and release of new solutions, our ability to realize potential benefits from our recent operational excellence initiatives, and general business conditions. Any forward-looking statements contained in this press release or the quarterly conference call are based upon our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent our expectations as of the date of this press release. Subsequent events may cause these expectations to change, and we disclaim any obligation to update the forward-looking statements in the future, except as required by law. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from our current expectations. Important factors that could cause actual results to differ materially from those anticipated in our forward-looking statements include, but are not limited to, our ability to attract new clients; the extent to which clients renew their subscriptions for our solutions; the timing of when consulting services are delivered to new and existing clients by our services organization and implementation subcontractors; the complexity of deployments and product implementations, which can impact the timing of when revenue is recognized from new and existing clients; our ability to compete as the human capital management provider for organizations of all sizes; changes in the proportion of our client base that is comprised of enterprise or mid-sized organizations; our ability to manage our growth, including additional headcount and entry into new geographies; our ability to expand our enterprise and mid-market sales teams; our ability to maintain stable and consistent quota attainment rates; our ability to exploit Big Data to drive increased demand for our products; continued strong demand for human capital management in the U.S., Europe, Asia Pacific and Latin America; the timing and success of efforts to increase operational efficiency; the timing and success of solutions offered by our competitors; unpredictable macro-economic conditions; the impact of foreign exchange rates, including as a result of the recent “Brexit” vote in the United Kingdom; reductions in information technology spending; the success of our new product and service introductions; a disruption in our hosting network infrastructure; costs and reputational harm that could result from defects in our solutions; the success of our strategic relationships with third parties; the loss of any of our key employees and our ability to locate qualified replacements; failure to protect our intellectual property; acts of terrorism or other vandalism, war or natural disasters; changes in current tax or accounting rules; and unanticipated costs or liabilities related to businesses that we acquire. Further information on factors that could cause actual results to differ materially from the results anticipated by our forward-looking statements is included in the reports we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.
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Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, the Company has provided in this press release and the quarterly conference call held on the date hereof certain measures that have not been prepared in accordance with GAAP. These non-GAAP financial measures include (i) non-GAAP cost of revenue, which is defined as cost of revenue less amortization of intangible assets and stock-based compensation, (ii) billings (formerly referred to as “bookings”), which are defined as revenue plus the change in total deferred revenue as presented on the Consolidated Balance Sheets, (iii) free cash flows, which is defined as net cash provided by (used in) operating activities minus capital expenditures and capitalized software costs, (iv) free cash flows margin, which is defined as free cash flows divided by revenue (v) non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share, which exclude, for the periods in which they are presented, stock-based compensation, amortization of intangible assets, accretion of debt discount and amortization of debt issuance costs, unrealized fair value adjustment on strategic investment, and excludes the impacts of unamortized stock-based compensation expense in applying the treasury method for determining the non-GAAP weighted average number of dilutive shares outstanding, (vi) non-GAAP gross profit and non-GAAP gross margin, which exclude stock-based compensation and amortization of intangible assets reflected in cost of revenue, (vii) non-GAAP operating income (loss) and non-GAAP operating income (loss) margin, which are defined as loss from operations excluding stock-based compensation and amortization of intangible assets, (viii) non-GAAP operating expenses, which exclude stock-based compensation and amortization of intangible assets, and (ix) non-GAAP sales and marketing expense, non-GAAP research and development expense, and non-GAAP general and administrative expense, each of which excludes stock-based compensation attributable to the corresponding GAAP financial measures. In addition, the Company discloses revenue and billings growth on a constant currency basis. To present amounts on a constant currency basis, current period results for entities reporting in functional currencies other than the United States dollar are translated into the United States dollar at the prior period exchange rates as opposed to the actual exchange rates in effect for the current period. The Company presents constant currency information to provide a framework for assessing how its underlying business performed excluding the effect of foreign currency fluctuations.
The Company’s management uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating the Company’s ongoing operational performance and trends and in comparing its financial measures with other companies in the same industry, many of which present similar non-GAAP financial measures to help investors understand the operational performance of their businesses. In addition, the Company believes that the following non-GAAP adjustments are useful to management and investors for the following reasons:
• | Stock-based compensation. The Company excludes stock-based compensation expense because it is non-cash in nature, and management believes that its exclusion provides additional insight into the Company’s operational performance and also provides a useful comparison of the Company’s operating results to prior periods and its peer companies. Additionally, determining the fair value of certain stock-based awards involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of such awards. |
• | Amortization of intangible assets. The Company excludes amortization of acquired intangible assets because the expense is a non-cash item and management believes that its exclusion provides meaningful supplemental information regarding the Company’s operational performance and allows for a useful comparison of its operating results to prior periods and its peer companies. |
• | Accretion of debt discount and amortization of debt issuance costs. Under GAAP, the Company is required to separately account for liability and equity components of the senior convertible notes that were issued in June 2013. Accordingly, for GAAP purposes, the Company is required to recognize the effective interest expense on its senior convertible notes and amortize the issuance costs over the term of the notes. The difference between the effective interest expense and the contractual interest expense, and the amortization expense of issuance costs are excluded from management’s assessment of the Company’s operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. In addition, the exclusion of these items provides a useful comparison of the Company’s operating results to prior periods and its peer companies. |
• | Fair value adjustment on strategic investments. The Company views the increase or decrease in fair value of its strategic investments as not indicative of operational performance during any particular period and believes that the exclusion of these gains or losses provides investors with a supplemental view of the Company’s operational performance. |
4
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies. For prior periods, a reconciliation of the non-GAAP financial measures to such GAAP measures has been provided in the tables included as part of this press release.
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Cornerstone OnDemand, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, 2016 | December 31, 2015 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 65,290 | $ | 107,691 | |||
Short-term investments | 172,015 | 136,841 | |||||
Accounts receivable, net | 99,581 | 104,686 | |||||
Deferred commissions | 32,642 | 35,910 | |||||
Prepaid expenses and other current assets | 18,995 | 15,297 | |||||
Total current assets | 388,523 | 400,425 | |||||
Capitalized software development costs, net | 28,796 | 23,089 | |||||
Property and equipment, net | 24,790 | 27,021 | |||||
Long-term investments | 73,716 | 64,247 | |||||
Intangible assets, net | 9,638 | 16,713 | |||||
Goodwill | 25,894 | 25,894 | |||||
Other assets, net | 482 | 878 | |||||
Total Assets | $ | 551,839 | $ | 558,267 | |||
Liabilities and Stockholders’ Equity | |||||||
Liabilities: | |||||||
Accounts payable | $ | 13,982 | $ | 18,954 | |||
Accrued expenses | 40,408 | 44,111 | |||||
Deferred revenue, current portion | 225,827 | 237,679 | |||||
Capital lease obligations, current portion | — | 33 | |||||
Other liabilities | 1,359 | 2,663 | |||||
Total current liabilities | 281,576 | 303,440 | |||||
Convertible notes, net | 236,110 | 229,305 | |||||
Other liabilities, non-current | 2,154 | 3,240 | |||||
Deferred revenue, net of current portion | 9,240 | 14,460 | |||||
Total liabilities | 529,080 | 550,445 | |||||
Stockholders’ Equity: | |||||||
Common stock | 6 | 5 | |||||
Additional paid-in capital | 454,399 | 394,089 | |||||
Accumulated deficit | (435,101 | ) | (386,882 | ) | |||
Accumulated other comprehensive income | 3,455 | 610 | |||||
Total stockholders’ equity | 22,759 | 7,822 | |||||
Total Liabilities and Stockholders’ Equity | $ | 551,839 | $ | 558,267 | |||
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Cornerstone OnDemand, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | $ | 107,758 | $ | 87,271 | $ | 314,095 | $ | 243,789 | |||||||
Cost of revenue 1, 2 | 33,369 | 27,246 | 100,974 | 79,801 | |||||||||||
Gross profit | 74,389 | 60,025 | 213,121 | 163,988 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing 1 | 53,690 | 53,255 | 168,226 | 150,659 | |||||||||||
Research and development 1 | 12,130 | 10,457 | 34,927 | 30,207 | |||||||||||
General and administrative 1 | 18,608 | 13,194 | 51,611 | 36,545 | |||||||||||
Amortization of certain acquired intangible assets | — | 150 | 150 | 450 | |||||||||||
Total operating expenses | 84,428 | 77,056 | 254,914 | 217,861 | |||||||||||
Loss from operations | (10,039 | ) | (17,031 | ) | (41,793 | ) | (53,873 | ) | |||||||
Other income (expense): | |||||||||||||||
Interest income | 451 | 218 | 1,182 | 590 | |||||||||||
Interest expense | (3,245 | ) | (3,138 | ) | (9,652 | ) | (9,343 | ) | |||||||
Other, net | 663 | (66 | ) | 2,938 | (3,257 | ) | |||||||||
Other income (expense), net | (2,131 | ) | (2,986 | ) | (5,532 | ) | (12,010 | ) | |||||||
Loss before income tax provision | (12,170 | ) | (20,017 | ) | (47,325 | ) | (65,883 | ) | |||||||
Income tax provision | (218 | ) | (132 | ) | (894 | ) | (790 | ) | |||||||
Net loss | $ | (12,388 | ) | $ | (20,149 | ) | $ | (48,219 | ) | $ | (66,673 | ) | |||
Net loss per share, basic and diluted | $ | (0.22 | ) | $ | (0.37 | ) | $ | (0.87 | ) | $ | (1.24 | ) | |||
Weighted average common shares outstanding, basic and diluted | 55,964 | 54,260 | 55,359 | 53,917 | |||||||||||
1 | Includes stock-based compensation as follows: | |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Cost of revenue | $ | 1,215 | $ | 1,106 | $ | 3,477 | $ | 2,769 | |||||||
Sales and marketing | 6,741 | 6,672 | 19,186 | 16,869 | |||||||||||
Research and development | 2,144 | 1,663 | 5,777 | 4,175 | |||||||||||
General and administrative | 4,646 | 2,726 | 12,310 | 6,855 | |||||||||||
Total | $ | 14,746 | $ | 12,167 | $ | 40,750 | $ | 30,668 | |||||||
2 | Cost of revenue includes amortization of intangibles as follows: | |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Cost of revenue | $ | 2,228 | $ | 2,492 | $ | 6,915 | $ | 7,476 | |||||||
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Cornerstone OnDemand, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Cash flows from operating activities: | |||||||||||||||
Net loss | $ | (12,388 | ) | $ | (20,149 | ) | $ | (48,219 | ) | $ | (66,673 | ) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization | 8,416 | 6,993 | 23,867 | 19,897 | |||||||||||
Accretion of debt discount and amortization of debt issuance costs | 2,296 | 2,186 | 6,805 | 6,478 | |||||||||||
Purchased investment premium, net of amortization | (343 | ) | (206 | ) | 219 | (94 | ) | ||||||||
Net foreign currency loss (gain) | 64 | (529 | ) | (1,146 | ) | 1,669 | |||||||||
Stock-based compensation expense | 14,746 | 12,167 | 40,750 | 30,668 | |||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Accounts receivable | 2,234 | (13,009 | ) | 1,056 | (9,523 | ) | |||||||||
Deferred commissions | (36 | ) | (885 | ) | 1,688 | (2,127 | ) | ||||||||
Prepaid expenses and other assets | (1,258 | ) | (1,217 | ) | (3,807 | ) | (4,789 | ) | |||||||
Accounts payable | (2,257 | ) | 662 | (4,937 | ) | (1,045 | ) | ||||||||
Accrued expenses | 677 | 894 | (5,211 | ) | 386 | ||||||||||
Deferred revenue | 1,833 | 18,754 | (7,490 | ) | 16,544 | ||||||||||
Other liabilities | (1,152 | ) | 387 | (1,857 | ) | (675 | ) | ||||||||
Net cash provided by (used in) operating activities | 12,832 | 6,048 | 1,718 | (9,284 | ) | ||||||||||
Cash flows from investing activities: | |||||||||||||||
Purchases of investments | (113,478 | ) | (58,152 | ) | (174,992 | ) | (162,191 | ) | |||||||
Maturities of investments | 53,034 | 35,609 | 130,229 | 81,415 | |||||||||||
Capital expenditures | (984 | ) | (6,497 | ) | (4,345 | ) | (15,006 | ) | |||||||
Capitalized software costs | (4,009 | ) | (3,366 | ) | (12,236 | ) | (9,996 | ) | |||||||
Net cash used in investing activities | (65,437 | ) | (32,406 | ) | (61,344 | ) | (105,778 | ) | |||||||
Cash flows from financing activities: | |||||||||||||||
Repayment of debt | — | (79 | ) | — | (295 | ) | |||||||||
Principal payments under capital lease obligations | — | (37 | ) | (33 | ) | (185 | ) | ||||||||
Proceeds from employee stock plans | 5,294 | 5,539 | 17,770 | 9,197 | |||||||||||
Net cash provided by financing activities | 5,294 | 5,423 | 17,737 | 8,717 | |||||||||||
Effect of exchange rate changes on cash and cash equivalents | 26 | (517 | ) | (512 | ) | (2,285 | ) | ||||||||
Net decrease in cash and cash equivalents | (47,285 | ) | (21,452 | ) | (42,401 | ) | (108,630 | ) | |||||||
Cash and cash equivalents at beginning of period | 112,575 | 79,379 | 107,691 | 166,557 | |||||||||||
Cash and cash equivalents at end of period | $ | 65,290 | $ | 57,927 | $ | 65,290 | $ | 57,927 | |||||||
Supplemental cash flow information: | |||||||||||||||
Cash paid for interest | $ | 1,898 | $ | 1,900 | $ | 3,796 | $ | 1,914 | |||||||
Cash paid for income taxes | 741 | 565 | 1,837 | 1,209 | |||||||||||
Proceeds from employee stock plans received in advance of stock issuance | 1,283 | 959 | 1,485 | 1,130 | |||||||||||
Non-cash investing and financing activities: | |||||||||||||||
Capitalized assets financed by accounts payable and accrued expenses | $ | 1,993 | $ | 538 | $ | 1,993 | $ | 538 | |||||||
Capitalized stock-based compensation | 1,226 | 798 | 3,111 | 2,019 | |||||||||||
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Cornerstone OnDemand, Inc.
RECONCILIATIONS OF COST OF REVENUE TO NON-GAAP COST OF REVENUE, GROSS PROFIT AND GROSS MARGIN TO NON-GAAP GROSS PROFIT AND NON-GAAP GROSS MARGIN, LOSS FROM OPERATIONS TO NON-GAAP OPERATING INCOME (LOSS) AND OPERATING MARGIN TO NON-GAAP OPERATING MARGIN
(in thousands)
(unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Reconciliation of cost of revenue, gross profit and gross margin: | |||||||||||||||
Revenue | $ | 107,758 | $ | 87,271 | $ | 314,095 | $ | 243,789 | |||||||
Cost of revenue | 33,369 | 27,246 | 100,974 | 79,801 | |||||||||||
Gross profit | $ | 74,389 | $ | 60,025 | $ | 213,121 | $ | 163,988 | |||||||
Gross margin | 69.0 | % | 68.8 | % | 67.9 | % | 67.3 | % | |||||||
Cost of revenue | $ | 33,369 | $ | 27,246 | $ | 100,974 | $ | 79,801 | |||||||
Adjustments to cost of revenue: | |||||||||||||||
Amortization of intangible assets | (2,228 | ) | (2,492 | ) | (6,915 | ) | (7,476 | ) | |||||||
Stock-based compensation | (1,215 | ) | (1,106 | ) | (3,477 | ) | (2,769 | ) | |||||||
Total adjustments to cost of revenue | (3,443 | ) | (3,598 | ) | (10,392 | ) | (10,245 | ) | |||||||
Non-GAAP costs of revenue | 29,926 | 23,648 | 90,582 | 69,556 | |||||||||||
Non-GAAP gross profit | $ | 77,832 | $ | 63,623 | $ | 223,513 | $ | 174,233 | |||||||
Non-GAAP gross margin | 72.2 | % | 72.9 | % | 71.2 | % | 71.5 | % | |||||||
Reconciliation of operating income (loss) and operating margin: | |||||||||||||||
Loss from operations | $ | (10,039 | ) | $ | (17,031 | ) | $ | (41,793 | ) | $ | (53,873 | ) | |||
Operating margin | (9.3 | )% | (19.5 | )% | (13.3 | )% | (22.1 | )% | |||||||
Adjustments to loss from operations: | |||||||||||||||
Stock-based compensation | 14,746 | 12,167 | 40,750 | 30,668 | |||||||||||
Amortization of intangible assets | 2,228 | 2,642 | 7,073 | 7,926 | |||||||||||
Total adjustments to loss from operations | 16,974 | 14,809 | 47,823 | 38,594 | |||||||||||
Non-GAAP operating income (loss) | $ | 6,935 | $ | (2,222 | ) | $ | 6,030 | $ | (15,279 | ) | |||||
Non-GAAP operating income (loss) margin | 6.4 | % | (2.5 | )% | 1.9 | % | (6.3 | )% | |||||||
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Cornerstone OnDemand, Inc.
RECONCILIATIONS OF NET LOSS TO NON-GAAP NET INCOME (LOSS) AND NON-GAAP NET INCOME (LOSS) PER SHARE
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net loss | $ | (12,388 | ) | $ | (20,149 | ) | $ | (48,219 | ) | $ | (66,673 | ) | |||
Adjustments to net loss | |||||||||||||||
Stock-based compensation | 14,746 | 12,167 | 40,750 | 30,668 | |||||||||||
Amortization of intangible assets | 2,228 | 2,642 | 7,073 | 7,926 | |||||||||||
Accretion of debt discount and amortization of debt issuance costs 1 | 2,296 | 2,186 | 6,805 | 6,478 | |||||||||||
Fair value adjustment on strategic investments 2 | — | — | 150 | — | |||||||||||
Total adjustments to net loss | 19,270 | 16,995 | 54,778 | 45,072 | |||||||||||
Non-GAAP net income (loss) | $ | 6,882 | $ | (3,154 | ) | $ | 6,559 | $ | (21,601 | ) | |||||
Non-GAAP basic net income (loss) per share | $ | 0.12 | $ | (0.06 | ) | $ | 0.12 | $ | (0.40 | ) | |||||
Non-GAAP diluted net income (loss) per share | $ | 0.11 | $ | (0.06 | ) | $ | 0.11 | $ | (0.40 | ) | |||||
Weighted-average common shares outstanding, basic | 55,964 | 54,260 | 55,359 | 53,917 | |||||||||||
Non-GAAP weighted-average common shares outstanding, diluted | 61,384 | 54,260 | 60,345 | 53,917 | |||||||||||
1 | Debt discount accretion and debt issuance cost amortization has been recorded in connection with our issuance of $253.0 million in convertible notes on June 17, 2013. These expenses represent non-cash charges that have been recorded in accordance with the authoritative accounting literature for such transactions. | |
2 | Unrealized fair value adjustment recorded for our strategic investment in a debt security of a privately-held company. | |
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Cornerstone OnDemand, Inc.
CALCULATIONS OF BILLINGS
(in thousands)
(unaudited)
Deferred Revenue Balance | Three Months Ended September 30, 2016 | ||||||
Revenue | $ | 107,758 | |||||
Deferred revenue at June 30, 2016 | $ | 235,834 | |||||
Deferred revenue at September 30, 2016 | 235,067 | ||||||
Change in deferred revenue | (767 | ) | |||||
Billings | $ | 106,991 | |||||
Deferred Revenue Balance | Three Months Ended September 30, 2015 | ||||||
Revenue | $ | 87,271 | |||||
Deferred revenue at June 30, 2015 | $ | 189,584 | |||||
Deferred revenue at September 30, 2015 | 205,996 | ||||||
Change in deferred revenue | 16,412 | ||||||
Billings | $ | 103,683 | |||||
Percentage period-over-period increase in billings for the three months ended September 30, 2016 | 3.2 | % | |||||
Percentage period-over-period increase in billings on a constant currency basis for the three months ended September 30, 2016 1 | 8.7 | % | |||||
Percentage period-over-period increase in revenue for the three months ended September 30, 2016 | 23.5 | % | |||||
Percentage period-over-period increase in revenue on a constant currency basis for the three months ended September 30, 2016 1 | 29.7 | % | |||||
Deferred Revenue Balance | Nine Months Ended September 30, 2016 | ||||||
Revenue | $ | 314,095 | |||||
Deferred revenue at December 31, 2015 | $ | 252,139 | |||||
Deferred revenue at September 30, 2016 | 235,067 | ||||||
Change in deferred revenue | (17,072 | ) | |||||
Billings | $ | 297,023 | |||||
Deferred Revenue Balance | Nine Months Ended September 30, 2015 | ||||||
Revenue | $ | 243,789 | |||||
Deferred revenue at December 31, 2014 | $ | 191,336 | |||||
Deferred revenue at September 30, 2015 | 205,996 | ||||||
Change in deferred revenue | 14,660 | ||||||
Billings | $ | 258,449 | |||||
Percentage period-over-period increase in billings for the nine months ended September 30, 2016 | 14.9 | % | |||||
1 | We present constant currency information to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency fluctuations. To present this information, current period results for entities reporting in British pounds are translated into the United States dollars at the prior period exchange rates of $1.55 USD per GBP, as opposed to the actual exchange rates in effect for the current period of $1.31 USD per GBP. | |
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Cornerstone OnDemand, Inc.
RECONCILIATION OF NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES TO FREE CASH FLOWS AND FREE CASH FLOWS MARGIN
(A Non-GAAP Financial Measure)
(in thousands)
(unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net cash provided by (used in) operating activities | $ | 12,832 | $ | 6,048 | $ | 1,718 | $ | (9,284 | ) | ||||||
Capital expenditures | (984 | ) | (6,497 | ) | (4,345 | ) | (15,006 | ) | |||||||
Capitalized software costs | (4,009 | ) | (3,366 | ) | (12,236 | ) | (9,996 | ) | |||||||
Free cash flows | $ | 7,839 | $ | (3,815 | ) | $ | (14,863 | ) | $ | (34,286 | ) | ||||
Free cash flows margin | 7.3 | % | (4.4 | )% | (4.7 | )% | (14.1 | )% | |||||||
Cornerstone OnDemand, Inc.
Investor Relations Contact:
Alexandra Geller
Cornerstone OnDemand
Phone: +1 (310) 752-1870
ageller@csod.com
or
Media Contact:
Kristy Gonzalez
Cornerstone OnDemand
Phone: +1 (310) 382-9563
kgonzalez@csod.com
Source: Cornerstone OnDemand
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