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Exhibit 99.1

 

LOGO

Cornerstone OnDemand Announces Third Quarter 2017 Financial Results

SANTA MONICA, Calif. – November 8, 2017 – Human capital management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results for its third quarter ended September 30, 2017. A summary of the Company’s Operational and Financial Highlights is available on the Company’s Investor Relations website at http://investors.cornerstoneondemand.com.

“Our third quarter results reflect another quarter of solid performance,” said Adam Miller, the Company’s President and CEO. “We saw improvements in both growth and profitability while significantly exceeding our expectations in several areas.”

Third Quarter 2017 Results:

 

    Revenue for the third quarter of 2017 was $121.8 million, representing a 13.0% increase compared to the same period in 2016. Revenue growth on a constant currency basis represented a 13.1% increase compared to the prior year.1

 

    Billings were $132.1 million for the third quarter of 2017, representing a 23.5% increase compared to the same period in 2016.1 Billings growth on a constant currency basis represented a 18.3% increase compared to the prior year.1

 

    The Company’s operating loss for the third quarter of 2017 was $(12.1) million, yielding an operating loss margin of (9.9)%, compared to an operating loss of $(10.0) million, yielding an operating loss margin of (9.3)%, for the third quarter of 2016.

 

    Non-GAAP operating income for the third quarter of 2017 was $7.7 million, yielding a non-GAAP operating income margin of 6.3%, compared to a non-GAAP operating income of $6.9 million, yielding a non-GAAP operating income margin of 6.4%, for the third quarter of 2016.1

 

    The Company’s net loss for the third quarter of 2017 was $(14.9) million, or a $(0.26) diluted net loss per share, compared to a net loss of $(12.4) million, or a $(0.22) diluted net loss per share, for the third quarter of 2016.

 

    Non-GAAP net income for the third quarter of 2017 was $7.3 million, or a $0.12 non-GAAP diluted net income per share, compared to a non-GAAP net income of $6.9 million, or a $0.11 non-GAAP diluted net income per share, for the third quarter of 2016.1

 

    Free cash flow for the third quarter of 2017 was $14.1 million, yielding a free cash flow margin of 11.6%, compared to free cash flow of $7.8 million, yielding a free cash flow margin of 7.3% for the third quarter of 2016.1

“We demonstrated continued improvement in profitability in Q3,” said Brian Swartz, the Company’s CFO. “Looking ahead to 2018, we anticipate even further margin improvement. We are increasing our prior 2018 operating margin target from 10% to a range of 11-13%, and we believe our actions to strengthen the business will enable growth and expanded profitability into the future.”

Recent Highlights:

 

    HR Tech World awarded Adam Miller with their Unleash Award for his outstanding contributions to HR technology.

 

    The Company announced that it was named a Strategic Leader in the October 2017 Fosway 9-GridTM for Integrated Management systems for a third consecutive year, while also advancing to a Core Challenger position in the October 2017 Fosway 9-GridTM for Cloud HCM.

 

    The Company announced that Cornerstone Content Anytime, its new subscription content offering, is available for its clients in the United States and Europe.

 

    AIESEC, an international youth-run nonprofit organization, began using the Company’s software to support its mission of being a global platform for young people to explore and develop their leadership potential.

 

    The University of Georgia, an American public research university, selected the Company’s learning software to support its growing research enterprise.

 

    The Company ended the third quarter of 2017 with 3,146 clients and more than 33.5 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, 2017, the Company provides the following outlook:

 

    Revenue between $129.0 million and $137.0 million, representing year-over-year growth at the mid-point of 22%3, or 20%4 on a constant currency basis.

For the year ending December 31, 2017, the Company provides the following outlook:

 

    Revenue between $479.0 million and $487.0 million, representing year-over-year growth at the mid-point of 14%5, or 16%6 on a constant currency basis.

 

    Non-GAAP operating margin of approximately 6% of revenue.

 

    Free cash flow margin of approximately 6% to 7% of revenue.

The Company has not reconciled the guidance for non-GAAP operating margin 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 operating margin, 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 ending December 31, 2017 and the year ending December 31, 2017 will have a significant impact on the Company’s GAAP operating margin.

Today, the Company also announced that Silver Lake and LinkedIn will make a $300.0 million strategic investment in the Company. In connection with the investment, the Company’s board of directors authorized a $100.0 million share repurchase program.

 

1    

  Billings, financial measures presented on a constant currency basis, non-GAAP operating income, non-GAAP operating income margin, non-GAAP net income, non-GAAP diluted net income per share, free cash flow and free cash flow margin 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 human capital management platform and excludes clients and users of our Cornerstone for Salesforce and PiiQ, formerly known as Cornerstone Growth Edition products.
  In order to translate the financial outlook for entities reporting in British pounds (GBP) to United States dollars (USD), the following exchange rates have been applied:

3    

  Exchange rate applied to revenue for the fourth quarter of 2017    $1.32 USD per GBP

4    

  Exchange rate from the fourth quarter of 2016 applied to calculate revenue growth for the fourth quarter of 2017 on a constant currency basis    $1.24 USD per GBP

5    

  Exchange rate applied to revenue for fiscal 2017    $1.32 USD per GBP

6    

  Exchange rate from fiscal 2016 applied to calculate revenue growth for fiscal 2017 on a constant currency basis    $1.35 USD per GBP

 

2


Quarterly Conference Call

Cornerstone OnDemand, Inc. will host a conference call to discuss its third quarter 2017 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: 99518530. 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 11, 2017 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 99518530.

About Cornerstone OnDemand

Cornerstone OnDemand, Inc. (NASDAQ: CSOD) is a global leader in cloud-based learning and human capital management software. The Company is pioneering solutions to 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 3,146 clients worldwide, spanning more than 33.5 million users across 192 countries and 43 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 learning and 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 and the success of such solutions, the investment by Silver Lake, together with LinkedIn, and the use of the proceeds and benefits thereof, the expected election of a director, and the share repurchase program and the factors that will impact the amount and timing of purchases, if any, thereunder, our ability to realize potential benefits from our recent and ongoing operational excellence and cost containment initiatives, our expectations regarding revenue resulting from content sales, focus on recurring revenue streams, 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; allowing our implementation subcontractors to contract directly with clients for implementation services; shifted focus to recurring revenue streams; our ability to compete as the learning and 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 opportunities; 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 learning and human capital management in the U.S., Europe, Asia Pacific and Latin America; the timing and success of efforts to increase operational efficiency and cost containment; the satisfaction of the conditions to closing the investment by Silver Lake, together with LinkedIn; the possibility that the share repurchase program may be suspended or discontinued; 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 “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; problems caused by security breaches; 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; legal or political changes in local or foreign jurisdictions that decrease demand for, or restrict our ability to

 

3


sell or provide, our products; 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, 2016 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.

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, which are defined as revenue plus the change in total deferred revenue as presented on the Consolidated Balance Sheets, (iii) free cash flow, which is defined as net cash provided by operating activities minus capital expenditures and capitalized software costs, (iv) free cash flow margin, which is defined as free cash flow divided by revenue (v) non-GAAP net income and non-GAAP diluted net income 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 and non-GAAP operating income 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.

 

5


Cornerstone OnDemand, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

     September 30,
2017
    December 31,
2016
 
Assets     

Cash and cash equivalents

   $ 76,433     $ 83,300  

Short-term investments

     232,268       218,791  

Accounts receivable, net

     124,461       136,657  

Deferred commissions

     37,778       36,298  

Prepaid expenses and other current assets

     22,800       18,467  
  

 

 

   

 

 

 

Total current assets

     493,740       493,513  

Capitalized software development costs, net

     37,586       30,683  

Property and equipment, net

     21,594       23,962  

Long-term investments

     37,927       41,046  

Intangible assets, net

     780       7,421  

Goodwill

     25,894       25,894  

Other assets, net

     3,878       1,110  
  

 

 

   

 

 

 

Total Assets

   $ 621,399     $ 623,629  
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Liabilities:

    

Accounts payable

   $ 16,020     $ 24,392  

Accrued expenses

     46,533       47,619  

Deferred revenue, current portion

     259,650       272,206  

Convertible notes, net

     245,583       —    

Other liabilities

     4,218       2,094  
  

 

 

   

 

 

 

Total current liabilities

     572,004       346,311  

Convertible notes, net

     —         238,435  

Other liabilities, non-current

     1,830       1,794  

Deferred revenue, net of current portion

     13,530       10,126  
  

 

 

   

 

 

 

Total liabilities

     587,364       596,666  

Stockholders’ Equity:

    

Common stock

     6       6  

Additional paid-in capital

     539,171       476,230  

Accumulated deficit

     (506,050     (453,719

Accumulated other comprehensive income

     908       4,446  
  

 

 

   

 

 

 

Total stockholders’ equity

     34,035       26,963  
  

 

 

   

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 621,399     $ 623,629  
  

 

 

   

 

 

 

 

6


Cornerstone OnDemand, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2017     2016     2017     2016  

Revenue

   $ 121,796     $ 107,758     $ 350,029     $ 314,095  

Cost of revenue 1, 2

     35,708       33,369       104,978       100,974  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     86,088       74,389       245,051       213,121  

Operating expenses:

        

Sales and marketing 1

     60,554       53,690       179,521       168,226  

Research and development 1

     16,389       12,130       44,484       34,927  

General and administrative 1

     21,249       18,608       64,866       51,611  

Amortization of certain acquired intangible assets

     —         —         —         150  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     98,192       84,428       288,871       254,914  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (12,104     (10,039     (43,820     (41,793

Other income (expense):

        

Interest income

     749       451       2,021       1,182  

Interest expense

     (3,373     (3,245     (10,015     (9,652

Other, net

     376       663       921       2,938  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net

     (2,248     (2,131     (7,073     (5,532
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income tax provision

     (14,352     (12,170     (50,893     (47,325

Income tax provision

     (503     (218     (1,438     (894
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

   $ (14,855   $ (12,388   $ (52,331   $ (48,219
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share, basic and diluted

   $ (0.26   $ (0.22   $ (0.92   $ (0.87
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding, basic and diluted

     57,627       55,964       57,072       55,359  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

1  Includes stock-based compensation as follows:

 

     Three Months Ended
September 30,
     Nine Months Ended
September 30,
 
     2017      2016      2017      2016  

Cost of revenue

   $ 1,216      $ 1,215      $ 3,629      $ 3,477  

Sales and marketing

     7,988        6,741        21,534        19,186  

Research and development

     2,641        2,144        7,140        5,777  

General and administrative

     5,737        4,646        18,726        12,310  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 17,582      $ 14,746      $ 51,029      $ 40,750  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

2  Cost of revenue includes amortization of intangibles as follows:

 

    

Three Months Ended

September 30,

    

Nine Months Ended

September 30,

 
     2017      2016      2017      2016  

Cost of revenue

   $ 2,206      $ 2,228      $ 6,640      $ 6,915  

 

7


Cornerstone OnDemand, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2017     2016     2017     2016  

Cash flows from operating activities:

        

Net loss

   $ (14,855   $ (12,388   $ (52,331   $ (48,219

Adjustments to reconcile net loss to net cash provided by operating activities:

        

Depreciation and amortization

     9,050       8,416       27,028       23,867  

Accretion of debt discount and amortization of debt issuance costs

     2,412       2,296       7,148       6,805  

Purchased investment premium, net of amortization

     120       (343     527       219  

Net foreign currency (gain) loss

     (223     64       (1,368     (1,146

Stock-based compensation expense

     17,582       14,746       51,029       40,750  

Changes in operating assets and liabilities:

        

Accounts receivable

     (4,740     2,234       14,631       1,056  

Deferred commissions

     (2,366     (36     (357     1,688  

Prepaid expenses and other assets

     187       (1,258     (4,033     (3,807

Accounts payable

     2,411       (2,257     (8,276     (4,937

Accrued expenses

     5,323       677       (2,107     (5,211

Deferred revenue

     7,710       1,833       (16,323     (7,490

Other liabilities

     (1,073     (1,152     359       (1,857
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     21,538       12,832       15,927       1,718  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchases of investments

     (144,903     (113,478     (231,384     (174,992

Maturities of investments

     96,524       53,034       219,846       130,229  

Capital expenditures

     (2,942     (984     (6,682     (4,345

Capitalized software costs

     (4,464     (4,009     (15,826     (12,236
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (55,785     (65,437     (34,046     (61,344
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Principal payments under capital lease obligations

     —         —         —         (33

Proceeds from employee stock plans

     3,411       5,294       9,722       17,770  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     3,411       5,294       9,722       17,737  
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     267       26       1,530       (512
  

 

 

   

 

 

   

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     (30,569     (47,285     (6,867     (42,401

Cash and cash equivalents at beginning of period

     107,002       112,575       83,300       107,691  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 76,433     $ 65,290     $ 76,433     $ 65,290  
  

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental cash flow information:

        

Cash paid for interest

   $ 1,943     $ 1,898     $ 3,841     $ 3,796  

Cash paid for income taxes

     812       741       1,800       1,837  

Proceeds from employee stock plans received in advance of stock issuance

     1,490       1,283       1,998       1,485  

Non-cash investing and financing activities:

        

Assets acquired under capital leases and other financing arrangements

   $ 1,643     $ —       $ 3,467     $ —    

Capitalized assets financed by accounts payable and accrued expenses

     631       1,993       631       1,993  

Capitalized stock-based compensation

     1,250       1,226       3,721       3,111  

 

8


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 AND OPERATING MARGIN TO NON-GAAP OPERATING

INCOME MARGIN

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2017     2016     2017     2016  

Reconciliation of cost of revenue, gross profit and gross margin:

        

Revenue

   $ 121,796     $ 107,758     $ 350,029     $ 314,095  

Cost of revenue

     35,708       33,369       104,978       100,974  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

   $ 86,088     $ 74,389     $ 245,051     $ 213,121  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     70.7     69.0     70.0     67.9

Cost of revenue

   $ 35,708     $ 33,369     $ 104,978     $ 100,974  

Adjustments to cost of revenue:

        

Amortization of intangible assets

     (2,206     (2,228     (6,640     (6,915

Stock-based compensation

     (1,216     (1,215     (3,629     (3,477
  

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments to cost of revenue

     (3,422     (3,443     (10,269     (10,392
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP costs of revenue

     32,286       29,926       94,709       90,582  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 89,510     $ 77,832     $ 255,320     $ 223,513  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross margin

     73.5     72.2     72.9     71.2

Reconciliation of operating income (loss) and operating income (loss) margin:

        

Loss from operations

   $ (12,104   $ (10,039   $ (43,820   $ (41,793

Operating margin

     (9.9 )%      (9.3 )%      (12.5 )%      (13.3 )% 

Adjustments to loss from operations:

        

Stock-based compensation

     17,582       14,746       51,029       40,750  

Amortization of intangible assets

     2,206       2,228       6,640       7,073  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments to loss from operations

     19,788       16,974       57,669       47,823  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 7,684     $ 6,935     $ 13,849     $ 6,030  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income margin

     6.3     6.4     4.0     1.9

 

9


Cornerstone OnDemand, Inc.

RECONCILIATIONS OF NET LOSS TO NON-GAAP NET INCOME AND NON-GAAP NET INCOME PER SHARE

(in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2017     2016     2017     2016  

Net loss

   $ (14,855   $ (12,388   $ (52,331   $ (48,219

Adjustments to net loss

        

Stock-based compensation

     17,582       14,746       51,029       40,750  

Amortization of intangible assets

     2,206       2,228       6,640       7,073  

Accretion of debt discount and amortization of debt issuance costs 1

     2,412       2,296       7,148       6,805  

Fair value adjustment on strategic investments 2

     —         —         600       150  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments to net loss

     22,200       19,270       65,417       54,778  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 7,345     $ 6,882     $ 13,086     $ 6,559  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP basic net income per share

   $ 0.13     $ 0.12     $ 0.23     $ 0.12  

Non-GAAP diluted net income per share

   $ 0.12     $ 0.11     $ 0.21     $ 0.11  

Weighted-average common shares outstanding, basic

     57,627       55,964       57,072       55,359  

Non-GAAP weighted-average common shares outstanding, diluted

     62,654       61,384       62,102       60,345  

 

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  Fair value adjustment recorded for our strategic investments in privately-held companies.

 

10


Cornerstone OnDemand, Inc.

CALCULATIONS OF BILLINGS

(in thousands)

(unaudited)

 

     Deferred Revenue
Balance
     Three Months Ended
September 30, 2017
 

Revenue

      $ 121,796  

Deferred revenue at June 30, 2017

   $ 262,866     

Deferred revenue at September 30, 2017

     273,180     
  

 

 

    

Change in deferred revenue

        10,314  
     

 

 

 

Billings

      $ 132,110  
     

 

 

 
     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  
     

 

 

 

Percentage period-over-period increase in billings for the three months ended September 30, 2017

        23.5

Percentage period-over-period increase in billings on a constant currency basis for the three months ended September 30, 2017 1

        18.3

Percentage period-over-period increase in revenue for the three months ended September 30, 2017

        13.0

Percentage period-over-period increase in revenue on a constant currency basis for the three months ended September 30, 2017 1

        13.1
     Deferred Revenue
Balance
     Nine Months Ended
September 30, 2017
 

Revenue

      $ 350,029  

Deferred revenue at December 31, 2016

   $ 282,332     

Deferred revenue at September 30, 2017

     273,180     
  

 

 

    

Change in deferred revenue

        (9,152
     

 

 

 

Billings

      $ 340,877  
     

 

 

 
     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  
     

 

 

 

Percentage period-over-period increase in billings for the nine months ended September 30, 2017

        14.8

Percentage period-over-period increase in billings on a constant currency basis for the nine months ended September 30, 2017 1

        10.7

Percentage period-over-period increase in revenue for the nine months ended September 30, 2017

        11.4

Percentage period-over-period increase in revenue on a constant currency basis for the nine months ended September 30, 2017 1

        14.3

 

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 $1.31 USD per GBP for the three months ended September 30, 2017 and $1.39 USD per GBP for the nine months ended September 30, 2017, as opposed to the actual exchange rates in effect for the current period of $1.31 USD per GBP for the three months ended September 30, 2017 and $1.28 USD per GBP for the nine months ended September 30, 2017.

 

11


Cornerstone OnDemand, Inc.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW AND

FREE CASH FLOW MARGIN

(A Non-GAAP Financial Measure)

(in thousands)

(unaudited)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2017     2016     2017     2016  

Net cash provided by operating activities

   $ 21,538     $ 12,832     $ 15,927     $ 1,718  

Capital expenditures

     (2,942     (984     (6,682     (4,345

Capitalized software costs

     (4,464     (4,009     (15,826     (12,236
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow

   $ 14,132     $ 7,839     $ (6,581   $ (14,863
  

 

 

   

 

 

   

 

 

   

 

 

 

Free cash flow margin

     11.6     7.3     (1.9 )%      (4.7 )% 
  

 

 

   

 

 

   

 

 

   

 

 

 

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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