People development solutions
provider Cornerstone OnDemand, Inc.
(NASDAQ: CSOD) today announced results1 for its fourth quarter and
fiscal year ended December 31, 2020. The Company has provided
supplemental financial information located on its Investor
Relations website. On April 22, 2020, the Company acquired Saba
Software, Inc. (“Saba”); the discussion below includes Saba’s
results for the post-acquisition period.
Fourth Quarter 2020 Results:
- Revenue for the fourth quarter of 2020 was $206.9 million. This
represents a 38.3% increase compared to the same period of the
prior year. Without giving effect to the acquisition of Saba,
revenue would have increased 4.7%.
- Subscription revenue for the fourth quarter of 2020 was $197.9
million. This represents a 39.6% increase compared to the same
period of the prior year. Without giving effect to the acquisition
of Saba, subscription revenue would have increased 7.3%.
- (Loss) income from operations for the fourth quarter of 2020
was $(4.8) million, yielding a margin of (2.3)%, compared to (loss)
income from operations of $10.6 million and margin of 7.1% in the
same period of the prior year.
- Non-GAAP operating income for the fourth quarter of 2020 was
$52.1 million, yielding a non-GAAP operating margin of 25.2%,
compared to non-GAAP operating income of $28.3 million and a
non-GAAP operating margin of 18.9% in the same period of the prior
year.
- Net income for the fourth quarter of 2020 was $1.6 million, or
$0.02 diluted net income per share, compared to net income of $9.4
million and $0.15 diluted net income per share in the same period
of the prior year.
- Non-GAAP net income for the fourth quarter of 2020 was $44.0
million, or $0.64 non-GAAP diluted net income per share, compared
to non-GAAP net income of $28.3 million and $0.43 non-GAAP diluted
net income per share in the same period of the prior year.
- Unlevered free cash flow for the fourth quarter of 2020 was
$36.4 million, yielding a margin of 17.6%, compared to unlevered
free cash flow of $54.7 million and a margin of 36.6%, in the same
period of the prior year. Unlevered free cash flow for the fourth
quarter of 2020 includes approximately $11.2 million of
restructuring and acquisition-related cash outflows.
Fiscal Year 2020 Results:
- Revenue for the full year of 2020 was $740.9 million. This
represents a 28.5% increase compared to the prior year. Without
giving effect to the acquisition of Saba, revenue would have
increased 6.5%.
- Subscription revenue for the full year of 2020 was $705.2
million. This represents a 29.9% increase compared to the prior
year. Without giving effect to the acquisition of Saba,
subscription revenue would have increased 9.4%.
- (Loss) income from operations for the full year of 2020 was
$(31.6) million, yielding a margin of (4.3)%, compared to (loss)
income from operations of $11.9 million and margin of 2.1% in the
prior year.
- Non-GAAP operating income for the full year of 2020 was $163.5
million, yielding a non-GAAP operating margin of 22.1%, compared to
non-GAAP operating income of $88.8 million and a non-GAAP operating
margin of 15.4% in the prior year.
- Net loss for the full year of 2020 was $(40.0) million, or
$(0.63) diluted net loss per share, compared to net loss of $(4.1)
million and $(0.07) diluted net loss per share in the prior
year.
- Non-GAAP net income for the full year of 2020 was $121.4
million, or $1.78 non-GAAP diluted net income per share, compared
to non-GAAP net income of $77.0 million and $1.17 non-GAAP diluted
net income per share in the prior year.
- Unlevered free cash flow for the full year of 2020 was $113.9
million, yielding a margin of 15.4%, compared to unlevered free
cash flow of $90.2 million and a margin of 15.6%, in the prior
year. Unlevered free cash flow for the full year of 2020 includes
approximately $47.4 million of restructuring and
acquisition-related cash outflows.
“I’m very pleased with our fourth quarter and full year 2020
results, which show operational and financial strength,” said Phil
Saunders, Chief Executive Officer. “While we have a long roadmap of
execution ahead of us, I believe we are starting to unlock the
growth and earnings power of this company.”
Recent Highlights:
- The Company announced the appointment of Chirag Shah as Chief
Financial Officer.
- The Company appointed two new members to the board of
directors: Felicia Alvaro, former Chief Financial Officer and
Treasurer for Ultimate Software, and Nancy Altobello, former Global
Vice Chair of Talent for Ernst & Young.
- The Company announced the formation of the Cornerstone
Innovation lab for AI, a new center of excellence within the
Company composed of data scientists and machine learning experts
who specialize in innovating practical and ethical ways to apply AI
technology to the workplace.
“Our financial results represent a strong finish to 2020, and I
am proud of our accomplishments as a team,” said Chirag Shah, Chief
Financial Officer. “After a year in which we completed a major
acquisition, navigated a pandemic, transitioned leadership, and
initiated significant internal transformation, we believe our
fourth quarter performance is indicative of the strength of this
company’s opportunity, and we are confident that the steps taken
over the past year will position us for sustained long-term
success.”
Financial Outlook:
The following outlook2 is based on information available as of
the date of this press release and is subject to change in the
future.
For the first quarter ending March 31, 2021, the Company
provides the following outlook:
- Revenue between $203.0 million and $205.0 million.
- Subscription revenue between $198.0 million and $200.0
million.
- Non-GAAP operating income between $44.0 million and $46.0
million.
For the year ending December 31, 2021, the Company provides the
following outlook:
- Revenue between $847.0 million and $857.0 million.
- Subscription revenue between $825.0 million and $835.0
million.
- Annual recurring revenue between $868.0 million and $878.0
million.
- Non-GAAP operating income between $205.0 million and $212.0
million.
- Unlevered free cash flow between $195.0 million and $205.0
million. Captured in this is approximately $50.0 million in
non-recurring cash outflows for restructuring and integration
activities related to the Saba acquisition.
The revenue, subscription revenue, and non-GAAP operating income
numbers above are impacted by a deferred revenue write-down related
to purchase accounting. For more information, refer to the
Company’s investor relations presentation.
The Company has not reconciled the guidance for non-GAAP
operating income or unlevered free cash flow 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 example, stock-based compensation expense is excluded
from the Company’s non-GAAP operating income as the quantification
requires additional unknown inputs such as the number of shares
granted and market prices that are not ascertainable.
1 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, unlevered free cash flow, and unlevered free cash
flow margin are non-GAAP financial measures. See the discussion in
the section titled “Non-GAAP Financial Measures and Other Key
Metrics” and the reconciliations at the end of this press
release.
2 In order to translate the financial
outlook for entities reporting in GBP to USD and EUR to USD, the
following exchange rates have been applied:
Exchange rate applied to revenue for the
first quarter of 2021
$1.37 USD per GBP
Exchange rate applied to revenue and
annual recurring revenue for fiscal 2021
$1.37 USD per GBP
Exchange rate applied to revenue for the
first quarter of 2021
$1.22 USD per EUR
Exchange rate applied to annual recurring
revenue for fiscal 2021
$1.22 USD per EUR
Quarterly Conference Call
Cornerstone will host a conference call to discuss its fourth
quarter and fiscal year 2020 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 (US) or (484)
653-6763 (outside the US) and referencing passcode: 6062779. 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 5:00 p.m. PT (8:00 p.m. ET) on February 23,
2020 by dialing (855) 859-2056 (US) or (404) 537-3406 (outside the
US), and referencing passcode: 6062779.
Featured Presentation
An accompanying featured presentation will be available at
https://investors.cornerstoneondemand.com/investors/overview/default.aspx.
About Cornerstone
Cornerstone is a premier people development company. We believe
people can achieve anything when they have the right development
and growth opportunities. We offer organizations the technology,
content, expertise, and specialized focus to help them realize the
potential of their people. Featuring comprehensive recruiting,
personalized learning, modern training content, development-driven
performance management, and holistic employee data management and
insights, Cornerstone’s people development solutions are used by
over 6,000 customers of all sizes, spanning more than 75 million
users across over 180 countries and nearly 50 languages. Learn more
at 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 the expected performance of our
business, our future financial and operating performance, including
our non-GAAP guidance, strategy, long-term growth and overall
future prospects, the demand for our offerings, our competitive
position, general business conditions, our ability to execute our
strategies and business plans, the integration of Saba into our
business, anticipated synergies from our acquisition of Saba, the
recent departure of our chief financial officer and appointment of
a new chief financial officer, and our expectations regarding
certain financial measures including subscription revenue, capital
expenditures, unlevered free cash flow, recurring revenue growth,
and operating margins. 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 customers; the extent to
which customers renew their subscriptions for our solutions; the
timing of when consulting services are delivered to new and
existing customers 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 customers; allowing our
implementation subcontractors to contract directly with customers
for implementation services; our shift to focusing on recurring
revenue streams; our ability to compete as the learning and people
development provider for organizations of all sizes; changes in the
proportion of our customer base that is composed 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; continued strong demand for learning and people
development in Europe, the Middle East, Africa, Asia-Pacific, and
Japan; the timing and success of efforts to increase operational
efficiency and cost containment; the timing and success of
solutions offered by our competitors; unpredictable macro-economic
conditions; the impact of foreign exchange rates; 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, natural
disasters, or the ongoing COVID-19 pandemic; 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
sell or provide, our products; the failure to achieve expected
synergies and efficiencies of operations between us and Saba; our
ability to successfully integrate Saba’s market opportunities,
technology, products, personnel, and operations; 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 Quarterly Report
on Form 10-Q for the quarter ended September 30, 2020. Additional
information will also be set forth in our Annual Report on Form
10-K for the year ended December 31, 2020.
Non-GAAP Financial Measures and Other Key Metrics
To supplement its consolidated financial statements, which are
prepared and presented in accordance with US 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 non-GAAP financial measures and other key metrics.
These non-GAAP financial measures and other key metrics
include:
(i)
non-GAAP cost of revenue, which is defined
as cost of revenue less stock-based compensation and amortization
of intangible assets;
(ii)
annual recurring revenue, which is defined
as the annualized recurring value of all active contracts at the
end of a reporting period;
(iii)
net annual dollar retention rate, which is
defined as the percentage of annual recurring revenue from all
customers on the first day of a fiscal year that is retained from
those same customers on the last day of that same fiscal year. This
percentage excludes all annual recurring revenue from new customers
added during the fiscal year. Incremental sales during the fiscal
year to customers are included in the calculation solely for
customers that existed as of the first day of the fiscal year.
Therefore, it is possible for our net annual dollar retention rate
to exceed 100% in a given year if incremental sales to existing
customers exceed the churn in annual recurring revenue from those
same customers during the fiscal year.
Prior to 2020, incremental sales were only
included to the extent those sales offset any decrease in annual
recurring revenue from the original amount on the first day of the
fiscal year and therefore, the historical net annual dollar
retention rate could never exceed 100%. This ratio for 2020
includes all customers. Previously, Cornerstone for Salesforce,
Cornerstone PiiQ, Grovo, and Workpop customers were excluded from
the calculation. We believe that our net annual dollar retention
rate is an important metric to measure the long-term value of
customer agreements and our ability to retain and incrementally
sell to our customers;
(iv)
unlevered free cash flow, a non-GAAP
financial measure, which is defined as net cash provided by
operating activities minus capital expenditures and capitalized
software costs plus cash paid for interest;
(v)
unlevered free cash flow margin, a
non-GAAP financial measure, which is defined as unlevered free cash
flow divided by revenue;
(vi)
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, acquisition-related and integration expenses, restructuring
expenses, accretion of debt discount and amortization of debt
issuance costs, discrete tax items, fair value adjustments on
strategic investments, 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;
(vii)
non-GAAP gross profit and non-GAAP gross
margin, which exclude stock-based compensation and amortization of
intangible assets reflected in cost of revenue;
(viii)
non-GAAP operating income and non-GAAP
operating income margin, which are defined as income or loss from
operations excluding stock-based compensation, amortization of
intangible assets, acquisition-related and integration expenses,
and restructuring expenses;
(ix)
non-GAAP operating expenses, which exclude
stock-based compensation, amortization of intangible assets,
acquisition-related and integration expenses, and restructuring
expenses; and
(x)
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 and amortization of intangible assets attributable to
the corresponding GAAP financial measures.
The Company’s management uses these non-GAAP financial measures
and other key metrics 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 and key metrics 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. 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.
- Acquisition-related and integration. The Company excludes
expenses related to acquisitions and integration because the
expenses are discrete to specific acquisitions and are not
necessarily indicative of its continuing operations. The Company
believes that the exclusion of these expenses provides investors
with a supplemental view of the Company’s operational
performance.
- Restructuring. The Company excludes expenses related to
restructuring because the expense is not indicative of its
continuing operations. The Company believes that the exclusion of
these expenses provides investors with a supplemental view of the
Company’s operational performance.
- Accretion of debt discount and amortization of debt issuance
costs. The Company recognizes effective interest expense on its
debt. The difference between the effective interest expense and the
contractual interest expense, which is composed of accretion of
debt discounts and amortization of issuance costs, is 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.
- Discrete tax items. The Company excludes discrete income tax
charges or benefits that are not expected to recur because the
items are not indicative of continuing operations. The Company
believes that the exclusion of these items provides investors with
a supplemental view of the Company’s operational performance.
- Fair value adjustments on strategic investments. The Company
views the increase or decrease in the 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.
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 the
periods presented, reconciliations of the non-GAAP financial
measures to their most directly comparable GAAP measures have been
provided in the tables included as part of this press release.
Cornerstone OnDemand,
Inc.
CONSOLIDATED BALANCE
SHEETS
(in thousands)
December 31, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
153,151
$
215,907
Short-term investments
—
201,579
Accounts receivable, net
221,461
131,105
Deferred commissions, current portion
45,786
33,215
Prepaid expenses and other current
assets
30,615
30,512
Total current assets
451,013
612,318
Capitalized software development costs,
net
50,812
50,023
Property and equipment, net
32,271
36,526
Operating right-of-use assets
74,419
72,944
Deferred commissions, net of current
portion
89,698
74,563
Long-term investments
8,565
60,192
Intangible assets, net
436,290
9,440
Goodwill
961,322
47,453
Deferred tax assets
19,169
1,045
Other assets
11,010
1,597
Total assets
$
2,134,569
$
966,101
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
1,424
$
3,803
Accrued expenses
112,274
78,075
Deferred revenue, current portion
446,886
339,522
Operating lease liabilities, current
portion
10,830
7,235
Debt, current portion
10,047
—
Other liabilities
16,210
11,015
Total current liabilities
597,671
439,650
Debt, net of current portion
1,176,239
293,174
Deferred revenue, net of current
portion
5,184
6,945
Operating lease liabilities, net of
current portion
65,911
67,195
Deferred tax liabilities
11,936
—
Other liabilities, non-current
8,754
655
Total liabilities
1,865,695
807,619
Stockholders’ equity:
Common stock, $0.0001 par value
6
6
Additional paid-in capital
835,069
682,717
Accumulated deficit
(564,662
)
(524,680
)
Accumulated other comprehensive income
(1,539
)
439
Total stockholders’ equity
268,874
158,482
Total liabilities and stockholders’
equity
$
2,134,569
$
966,101
Cornerstone OnDemand,
Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Revenue
$
206,924
$
149,594
$
740,916
$
576,523
Cost of revenue 1,2
62,587
38,166
227,014
149,215
Gross profit
144,337
111,428
513,902
427,308
Operating expenses:
Sales and marketing 1,2
73,394
56,722
265,516
227,733
Research and development 1
30,857
23,373
112,945
101,151
General and administrative 1,2
31,408
20,750
110,637
86,491
Acquisition-related and integration
5,533
—
37,289
—
Restructuring1
7,971
—
19,066
—
Total operating expenses
149,163
100,845
545,453
415,375
(Loss) income from operations
(4,826
)
10,583
(31,551
)
11,933
Other income (expense):
Interest expense
(19,687
)
(5,416
)
(63,016
)
(21,559
)
Other, net
7,884
4,728
7,823
8,262
Other expense, net
(11,803
)
(688
)
(55,193
)
(13,297
)
(Loss) income before income tax
provision
(16,629
)
9,895
(86,744
)
(1,364
)
Income tax benefit (provision)3
18,190
(463
)
46,762
(2,690
)
Net income (loss)
$
1,561
$
9,432
$
(39,982
)
$
(4,054
)
Net income (loss) per share,
basic
$
0.02
$
0.16
$
(0.63
)
$
(0.07
)
Net income (loss) per share,
diluted
$
0.02
$
0.15
$
(0.63
)
$
(0.07
)
Weighted average common shares
outstanding, basic
64,717
60,813
63,585
60,086
Weighted average common shares
outstanding, diluted
66,092
63,482
63,585
60,086
1 Includes stock-based compensation as
follows:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Cost of revenue
$
1,817
$
1,612
$
8,845
$
6,282
Sales and marketing
6,894
7,009
28,303
27,780
Research and development
5,329
3,203
17,136
16,003
General and administrative
5,320
4,892
19,873
22,365
Restructuring
671
—
1,071
—
Total
$
20,031
$
16,716
$
75,228
$
72,430
2 Includes amortization of intangible
assets as follows:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Cost of revenue
$
9,405
$
1,047
$
27,864
$
4,427
Sales and marketing
14,039
—
39,078
—
General and administrative
597
—
1,657
—
Total
$
24,041
$
1,047
$
68,599
$
4,427
3 Includes a discrete income tax benefit
of approximately $18.8 million and $45.5 million during the three
and twelve months ended December 31, 2020, respectively, related to
release of valuation allowance against previously reserved deferred
tax assets.
Cornerstone OnDemand,
Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Cash flows from operating
activities
Net income (loss)
$
1,561
$
9,432
$
(39,982
)
$
(4,054
)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization
36,796
10,751
116,986
41,599
Accretion of debt discount and
amortization of debt issuance costs
4,290
1,077
11,792
4,207
Amortization (accretion) of purchased
investment premium or discount, net
—
(57
)
41
(957
)
Net foreign currency and other gain
(7,901
)
(3,179
)
(6,239
)
(1,079
)
Stock-based compensation expense
20,031
16,716
75,228
72,430
Deferred income taxes
(22,108
)
61
(54,189
)
61
Bad debt expense
712
46
3,113
450
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
(63,212
)
(29,454
)
(30,969
)
(5,554
)
Deferred commissions
(17,151
)
(13,111
)
(25,866
)
(27,241
)
Prepaid expenses and other assets
(2,678
)
245
13,213
12,834
Accounts payable
(5,059
)
(2,719
)
(11,911
)
(8,759
)
Accrued expenses
19,414
13,991
14,869
8,428
Deferred revenue
72,533
58,683
29,184
19,635
Other liabilities
(2,203
)
112
1,664
3,549
Net cash provided by operating
activities
35,025
62,594
96,934
115,549
Cash flows from investing
activities
Purchases of marketable investments
—
(79,001
)
(20,419
)
(282,426
)
Purchases of non-marketable
investments
—
(9,000
)
—
(9,000
)
Maturities and sales of investments
—
28,917
272,173
236,401
Capital expenditures
(2,875
)
(2,047
)
(5,785
)
(18,034
)
Capitalized software costs
(6,779
)
(5,833
)
(27,075
)
(24,668
)
Cash paid for acquisitions, net of cash
acquired
—
—
(1,295,508
)
—
Other, net
(1,387
)
—
(1,387
)
—
Net cash used in investing activities
(11,041
)
(66,964
)
(1,078,001
)
(97,727
)
Cash flows from financing
activities
Proceeds from term loan debt, net of
discount
—
—
979,582
—
Payments of debt issuance and modification
costs
—
—
(30,429
)
—
Repayment of debt
(52,512
)
—
(52,512
)
—
Proceeds from employee stock plans
4,592
9,528
20,545
42,600
Repurchases of common stock
—
(8,826
)
—
(22,356
)
Payment of tax withholdings for employee
stock plans
—
—
—
(5,469
)
Net cash (used in) provided by financing
activities
(47,920
)
702
917,186
14,775
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
3,825
837
3,828
(286
)
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(20,111
)
(2,831
)
(60,053
)
32,311
Cash, cash equivalents, and restricted
cash at beginning of period
175,965
218,738
215,907
183,596
Cash, cash equivalents, and restricted
cash at end of period1
$
155,854
$
215,907
$
155,854
$
215,907
Supplemental cash flow data
Cash paid for interest
$
10,985
$
—
$
49,858
$
17,356
Cash paid for income taxes
2,465
216
6,190
1,704
Non-cash investing and financing
activities:
Capitalized stock-based compensation
(333
)
1,420
5,134
4,847
Issuance of common stock for partial
consideration for acquisition
—
—
32,889
—
Increase in debt discount as a result of
modification of Convertible Notes
—
—
18,598
—
1 Below is a reconciliation of cash, cash
equivalents, and restricted cash:
As of December 31,
2020
2019
Cash and cash equivalents
$
153,151
$
215,907
Restricted cash included in prepaid
expenses and other current assets
484
—
Restricted cash included in other
assets
2,219
—
Total cash, cash equivalents, and
restricted cash
$
155,854
$
215,907
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) INCOME
FROM OPERATIONS TO NON-GAAP OPERATING INCOME, AND OPERATING MARGIN
TO NON-GAAP OPERATING MARGIN
(in thousands)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Reconciliation of cost of revenue,
gross profit, and gross margin:
Revenue
$
206,924
$
149,594
$
740,916
$
576,523
Cost of revenue
62,587
38,166
227,014
149,215
Gross profit
$
144,337
$
111,428
$
513,902
$
427,308
Gross margin
69.8
%
74.5
%
69.4
%
74.1
%
Cost of revenue
$
62,587
$
38,166
$
227,014
$
149,215
Adjustments to cost of revenue:
Stock-based compensation1
(1,817
)
(1,612
)
(8,282
)
(6,282
)
Amortization of intangible assets
(9,405
)
(1,047
)
(27,864
)
(4,427
)
Total adjustments to cost of revenue
(11,222
)
(2,659
)
(36,146
)
(10,709
)
Non-GAAP cost of revenue
51,365
35,507
190,868
138,506
Non-GAAP gross profit
$
155,559
$
114,087
$
550,048
$
438,017
Non-GAAP gross margin
75.2
%
76.3
%
74.2
%
76.0
%
Reconciliation of (loss) income from
operations and operating margin:
(Loss) income from operations
$
(4,826
)
$
10,583
$
(31,551
)
$
11,933
Operating margin
(2.3
)%
7.1
%
(4.3
)%
2.1
%
Adjustments to (loss) income from
operations:
Stock-based compensation1, 3
19,360
16,716
70,096
72,430
Amortization of intangible assets
24,041
1,047
68,599
4,427
Acquisition-related and integration2
5,533
—
37,289
—
Restructuring3
7,971
—
19,066
—
Total adjustments to (loss) income from
operations
56,905
17,763
195,050
76,857
Non-GAAP operating income
$
52,079
$
28,346
$
163,499
$
88,790
Non-GAAP operating margin
25.2
%
18.9
%
22.1
%
15.4
%
1 The difference between stock-based
compensation presented above and stock-based compensation as
reported in the consolidated statement of operations for the twelve
months ended December 31, 2020, represents an amount accrued for
cash bonuses as of December 31, 2019, which was settled in equity
during the first quarter of 2020.
Twelve Months Ended
December 31,
2020
Cost of revenue
$
8,282
Sales and marketing
27,393
Research and development
15,722
General and administrative
18,699
Total
$
70,096
2 Expenses related to the
acquisitions of Saba Software, Inc. and Clustree SAS primarily
consisting of external professional services directly associated
with the acquisitions, such as advisory fees, accounting and legal
costs, filing fees, due diligence, and integration costs.
3 Stock-based compensation related to
restructuring is presented in the restructuring line item.
Cornerstone OnDemand,
Inc.
RECONCILIATIONS OF NET INCOME
(LOSS) TO NON-GAAP NET INCOME AND NON-GAAP NET INCOME PER
SHARE
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Net income (loss)
$
1,561
$
9,432
$
(39,982
)
$
(4,054
)
Adjustments to net income (loss)
Stock-based compensation1, 3
19,360
16,716
70,096
72,430
Amortization of intangible assets
24,041
1,047
68,599
4,427
Acquisition-related and integration2
5,533
—
37,289
—
Restructuring3
7,971
—
19,066
—
Accretion of debt discount and
amortization of debt issuance costs4
4,290
1,077
11,792
4,207
Income tax benefit5
(18,795
)
—
(45,454
)
—
Total adjustments to net income (loss)
42,400
18,840
161,388
81,064
Non-GAAP net income
$
43,961
$
28,272
$
121,406
$
77,010
Non-GAAP basic net income per share
$
0.68
$
0.46
$
1.91
$
1.28
Non-GAAP diluted net income per share
$
0.64
$
0.43
$
1.78
$
1.17
Weighted-average common shares
outstanding, basic
64,717
60,813
63,585
60,086
Non-GAAP weighted-average common shares
outstanding, diluted
69,067
66,072
68,365
65,605
1 The difference between stock-based
compensation presented above and stock-based compensation as
reported in the consolidated statement of operations for the twelve
months ended December 31, 2020, represents an amount accrued for
cash bonuses as of December 31, 2019, which was settled in equity
during the first quarter of 2020.
2 Expenses related to the acquisitions of
Saba Software, Inc. and Clustree SAS primarily consisting of
external professional services directly associated with the
acquisitions, such as advisory fees, accounting and legal costs,
filing fees, due diligence, and integration costs.
3 Stock-based compensation related to
restructuring is presented in the restructuring line item.
4 Debt discount accretion and debt
issuance cost amortization have been recorded in connection with
our issuance of (i) $1.0047 billion of term loan debt on April 22,
2020; and (ii) $300.0 million in convertible notes on December 8,
2017 as well as the modification of these convertible notes on
April 20, 2020 to extend the maturity date from July 1, 2021 to
March 17, 2023. These expenses represent non-cash charges that have
been recorded in accordance with the authoritative accounting
literature for such transactions.
5 Discrete income tax benefits of
approximately $18.8 million and $45.5 million were recognized
during the three and twelve months ended December 31, 2020,
respectively, related to release of valuation allowance against
previously reserved deferred tax assets.
Cornerstone OnDemand,
Inc.
RECONCILIATION OF NET CASH
PROVIDED BY OPERATING ACTIVITIES TO UNLEVERED FREE CASH FLOW AND
UNLEVERED FREE CASH FLOW MARGIN
(A Non-GAAP Financial
Measure)
(in thousands)
(unaudited)
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
2019
2020
2019
Reconciliation of unlevered free cash
flow:
Net cash provided by operating
activities
$
35,025
$
62,594
$
96,934
$
115,549
Capital expenditures
(2,875
)
(2,047
)
(5,785
)
(18,034
)
Capitalized software costs
(6,779
)
(5,833
)
(27,075
)
(24,668
)
Cash paid for interest
10,985
—
49,858
17,356
Unlevered free cash flow
$
36,356
$
54,714
$
113,932
$
90,203
Unlevered free cash flow margin
17.6
%
36.6
%
15.4
%
15.6
%
Cornerstone OnDemand,
Inc.
TRENDED OPERATIONAL &
FINANCIAL HIGHLIGHTS
(unaudited)
The following metrics are intended as a
supplement to the financial statements found in this press release
and other information furnished to or filed with the SEC. In the
event of discrepancies between amounts in these tables and the
Company’s historical disclosures or financial statements, readers
should rely on the Company’s filings with the SEC and financial
statements in the Company’s most recent earnings press release.
The Company intends to periodically review
and refine the definition, methodology, and appropriateness of each
of these supplemental metrics. As a result, metrics are subject to
removal and/or change, and such changes could be material.
FY 2019
FY 2020
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
Q3'20
Q4'20
FY18
FY19
FY20
SELECTED METRICS:
Number of customers1
3,367
3,423
3,446
3,508
3,522
6,308
6,229
6,157
3,333
3,508
6,157
% y/y
8.6
%
6.9
%
5.7
%
5.3
%
4.6
%
84.3
%
80.8
%
75.5
%
2.6
%
5.3
%
75.5
%
% q/q
1.0
%
1.7
%
0.7
%
1.8
%
0.4
%
79.1
%
(1.3
)%
(1.2
)%
n/a
n/a
n/a
Number of employees
2,017
2,034
1,986
1,993
1,975
3,184
3,027
2,919
1,953
1,993
2,919
% y/y
10.3
%
9.9
%
5.0
%
2.0
%
(2.1
)%
56.5
%
52.4
%
46.5
%
3.3
%
2.0
%
46.5
%
% q/q
3.3
%
0.8
%
(2.4
)%
0.4
%
(0.9
)%
61.2
%
(4.9
)%
(3.6
)%
n/a
n/a
n/a
Net annual dollar retention rate2
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
105.7
%
104.6
%
95.1
%
Annual recurring revenue (in
thousands)
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
510,000
575,000
840,000
Net cash provided by operating activities
(in thousands)
7,294
21,183
24,478
62,594
5,988
22,774
33,147
35,025
90,253
115,549
96,934
Unlevered free cash flow (in
thousands)
4,337
9,470
21,682
54,714
6,253
15,394
55,929
36,356
63,471
90,203
113,932
Unlevered free cash flow margin
3.1
%
6.7
%
15.0
%
36.6
%
4.2
%
8.4
%
28.0
%
17.6
%
11.8
%
15.6
%
15.4
%
FINANCIAL DATA (in thousands, except
percentages):
Revenue
140,117
141,860
144,952
149,594
150,136
184,358
199,498
206,924
537,891
576,523
740,916
Subscription revenue
131,256
132,562
137,446
141,704
144,421
177,217
185,643
197,878
473,052
542,968
705,159
% y/y growth
16.0
%
15.5
%
15.7
%
12.2
%
10.0
%
33.7
%
35.1
%
39.6
%
n/a
14.8
%
29.9
%
% y/y growth constant currency3
18.2
%
17.3
%
17.2
%
12.4
%
10.7
%
n/a
n/a
n/a
n/a
16.2
%
n/a
Subscription revenue % of total
revenue
93.7
%
93.4
%
94.8
%
94.7
%
96.2
%
96.1
%
93.1
%
95.6
%
87.9
%
94.2
%
95.2
%
Income (loss) from operations
1,231
(3,594
)
3,713
10,583
(2,739
)
(22,368
)
(1,618
)
(4,826
)
(7,769
)
11,933
(31,551
)
MARGIN DATA:
Gross margin
76.0
%
71.7
%
74.4
%
74.5
%
72.1
%
68.5
%
67.7
%
69.8
%
73.2
%
74.1
%
69.4
%
Sales and marketing % of revenue
38.9
%
41.4
%
39.9
%
37.9
%
36.9
%
35.2
%
36.0
%
35.5
%
41.8
%
39.5
%
35.8
%
Research and development % of revenue
19.8
%
17.2
%
17.7
%
15.6
%
16.0
%
15.4
%
14.9
%
14.9
%
14.3
%
17.5
%
15.2
%
General and administrative % of
revenue
16.4
%
15.6
%
14.2
%
13.9
%
16.5
%
13.8
%
14.5
%
15.2
%
16.7
%
15.0
%
14.9
%
Acquisition-related and integration % of
revenue
—
—
—
—
4.5
%
10.9
%
2.4
%
2.7
%
0.2
%
—
5.0
%
Restructuring % of revenue
—
—
—
—
—
5.3
%
0.7
%
3.9
%
1.7
%
—
2.6
%
Operating margin
0.9
%
(2.5
)%
2.6
%
7.1
%
(1.8
)%
(12.1
)%
(0.8
)%
(2.3
)%
(1.4
)%
2.1
%
(4.3
)%
NON-GAAP MARGIN DATA:
Non-GAAP gross margin
77.7
%
73.7
%
76.3
%
76.3
%
74.6
%
73.7
%
73.5
%
75.2
%
74.1
%
76.0
%
74.2
%
Non-GAAP sales and marketing % of
revenue
34.6
%
36.6
%
34.4
%
33.2
%
31.7
%
26.4
%
25.3
%
25.4
%
37.2
%
34.7
%
26.9
%
Non-GAAP research and development % of
revenue
16.8
%
14.1
%
14.8
%
13.5
%
13.8
%
13.9
%
12.7
%
12.3
%
12.1
%
14.8
%
13.1
%
Non-GAAP general and administrative % of
revenue
12.3
%
11.3
%
10.3
%
10.6
%
12.5
%
11.8
%
12.1
%
12.3
%
13.2
%
11.1
%
12.2
%
Non-GAAP operating margin
14.0
%
11.7
%
16.7
%
18.9
%
16.6
%
21.6
%
23.4
%
25.2
%
11.8
%
15.4
%
22.1
%
Non-GAAP research and development plus
capitalized software % of revenue
22.1
%
18.8
%
18.0
%
17.4
%
18.7
%
17.2
%
16.1
%
15.6
%
16.8
%
19.1
%
16.8
%
FOREIGN EXCHANGE RATES:
GBP to USD average period rate
1.30
1.29
1.23
1.29
1.28
1.26
1.29
1.32
1.34
1.28
1.29
GBP to USD end of period spot rate
1.30
1.27
1.23
1.32
1.23
1.23
1.28
1.37
1.27
1.32
1.37
EUR to USD average period rate
1.14
1.12
1.11
1.11
1.10
1.11
1.17
1.19
1.18
1.12
1.14
EUR to USD end of period spot rate
1.12
1.14
1.09
1.12
1.10
1.12
1.17
1.23
1.14
1.12
1.23
1 During the second quarter of 2020, we
adjusted our method of determining customer count to exclude
customers that are sold through resellers that share one tenant or
instance of our product. The numbers included here reflect this
change. We continue to exclude customers from our Cornerstone for
Salesforce, PiiQ, Grovo, Workpop, and Clustree products from our
customer count metrics.
2 During 2020, we adjusted our method of
determining our net annual dollar retention rate. Prior to 2020,
incremental sales were only included to the extent those sales
offset any decrease in annual recurring revenue from the original
amount on the first day of the fiscal year and therefore, the
historical net annual dollar retention rate could never exceed
100%. This ratio for 2020 includes all customers. Previously,
Cornerstone for Salesforce, Cornerstone PiiQ, Grovo, and Workpop
customers were excluded from the calculation. The percentages
included here reflect these changes.
3 We have historically presented constant
currency information, a non-GAAP financial measure, to provide a
framework for assessing how our underlying business performed
excluding the effect of foreign currency fluctuations. However, due
to the acquisition of Saba in the second quarter of 2020, constant
currency results on a combined company basis were not presented for
the second, third, and fourth quarters in 2020 as the historical
comparative periods did not include the combined company results
for a full quarter.
FY 2019
FY 2020
Q1'19
Q2'19
Q3'19
Q4'19
Q1'20
Q2'20
Q3'20
Q4'20
FY18
FY19
FY20
NON-GAAP RECONCILIATIONS FOR SELECTED
METRICS (in thousands, except percentages):
Net cash provided by operating
activities
7,294
21,183
24,478
62,594
5,988
22,774
33,147
35,025
90,253
115,549
96,934
Capital expenditures
(4,243
)
(5,031
)
(6,713
)
(2,047
)
(971
)
(1,304
)
(635
)
(2,875
)
(14,895
)
(18,034
)
(5,785
)
Capitalized software costs
(7,399
)
(6,728
)
(4,708
)
(5,833
)
(7,389
)
(6,135
)
(6,772
)
(6,779
)
(25,515
)
(24,668
)
(27,075
)
Cash paid for interest
8,685
46
8,625
—
8,625
59
30,189
10,985
13,628
17,356
49,858
Unlevered free cash flow
4,337
9,470
21,682
54,714
6,253
15,394
55,929
36,356
63,471
90,203
113,932
Unlevered free cash flow margin
3.1
%
6.7
%
15.0
%
36.6
%
4.2
%
8.4
%
28.0
%
17.6
%
11.8
%
15.6
%
15.4
%
Gross margin
76.0
%
71.7
%
74.4
%
74.5
%
72.1
%
68.5
%
67.7
%
69.8
%
73.2
%
74.1
%
69.4
%
Stock-based compensation
0.8
%
1.3
%
1.2
%
1.1
%
1.4
%
1.2
%
1.1
%
0.9
%
0.7
%
1.1
%
1.0
%
Amortization of intangible assets
0.9
%
0.7
%
0.7
%
0.7
%
1.1
%
4.0
%
4.7
%
4.5
%
0.2
%
0.8
%
3.8
%
Non-GAAP gross margin
77.7
%
73.7
%
76.3
%
76.3
%
74.6
%
73.7
%
73.5
%
75.2
%
74.1
%
76.0
%
74.2
%
Sales and marketing % of revenue
38.9
%
41.4
%
39.9
%
37.9
%
36.9
%
35.2
%
36.0
%
35.5
%
41.8
%
39.5
%
35.8
%
Stock-based compensation
(4.3
)
%
(4.8
)
%
(5.5
)
%
(4.7
)
%
(5.1
)
%
(3.0
)
%
(3.5
)
%
(3.3
)
%
(4.6
)
%
(4.8
)
%
(3.6
)
%
Amortization of intangible assets
—
%
—
%
—
%
—
%
(0.1
)
%
(5.8
)
%
(7.2
)
%
(6.8
)
%
—
%
—
%
(5.3
)
%
Non-GAAP sales and marketing % of
revenue
34.6
%
36.6
%
34.4
%
33.2
%
31.7
%
26.4
%
25.3
%
25.4
%
37.2
%
34.7
%
26.9
%
Research and development % of revenue
19.8
%
17.2
%
17.7
%
15.6
%
16.0
%
15.4
%
14.9
%
14.9
%
14.3
%
17.5
%
15.2
%
Stock-based compensation
(3.0
)
%
(3.1
)
%
(2.9
)
%
(2.1
)
%
(2.2
)
%
(1.5
)
%
(2.2
)
%
(2.6
)
%
(2.2
)
%
(2.7
)
%
(2.1
)
%
Non-GAAP research and development % of
revenue
16.8
%
14.1
%
14.8
%
13.5
%
13.8
%
13.9
%
12.7
%
12.3
%
12.1
%
14.8
%
13.1
%
General and administrative % of
revenue
16.4
%
15.6
%
14.2
%
13.9
%
16.5
%
13.8
%
14.5
%
15.2
%
16.7
%
15.0
%
14.9
%
Stock-based compensation
(4.1
)
%
(4.3
)
%
(3.9
)
%
(3.3
)
%
(4.0
)
%
(1.8
)
%
(2.1
)
%
(2.6
)
%
(3.5
)
%
(3.9
)
%
(2.5
)
%
Amortization of intangible assets
—
%
—
%
—
%
—
%
—
%
(0.2
)
%
(0.3
)
%
(0.3
)
%
—
%
—
%
(0.2
)
%
Non-GAAP general and administrative % of
revenue
12.3
%
11.3
%
10.3
%
10.6
%
12.5
%
11.8
%
12.1
%
12.3
%
13.2
%
11.1
%
12.2
%
Operating margin
0.9
%
(2.5
)
%
2.6
%
7.1
%
(1.8
)
%
(12.1
)
%
(0.8
)
%
(2.3
)
%
(1.4
)
%
2.1
%
(4.3
)
%
Stock-based compensation
12.2
%
13.5
%
13.4
%
11.1
%
12.7
%
7.4
%
8.9
%
9.3
%
11.1
%
12.5
%
9.5
%
Amortization of intangible assets
0.9
%
0.7
%
0.7
%
0.7
%
1.2
%
10.1
%
12.2
%
11.6
%
0.2
%
0.8
%
9.3
%
Restructuring
—
%
—
%
—
%
—
%
—
%
5.3
%
0.7
%
3.9
%
1.7
%
—
%
2.6
%
Acquisition-related and integration
—
%
—
%
—
%
—
%
4.5
%
10.9
%
2.4
%
2.7
%
0.2
%
—
%
5.0
%
Non-GAAP operating margin
14.0
%
11.7
%
16.7
%
18.9
%
16.6
%
21.6
%
23.4
%
25.2
%
11.8
%
15.4
%
22.1
%
Research and development plus capitalized
software % of revenue
25.1
%
21.9
%
20.9
%
19.5
%
20.9
%
18.7
%
18.3
%
18.2
%
19.0
%
21.8
%
18.9
%
Stock-based compensation
(3.0
)
%
(3.1
)
%
(2.9
)
%
(2.1
)
%
(2.2
)
%
(1.5
)
%
(2.2
)
%
(2.6
)
%
(2.2
)
%
(2.7
)
%
(2.1
)
%
Non-GAAP research and development plus
capitalized software % of revenue
22.1
%
18.8
%
18.0
%
17.4
%
18.7
%
17.2
%
16.1
%
15.6
%
16.8
%
19.1
%
16.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210216006046/en/
Investor Relations Contact: Jason Gold Phone: +1 (310) 526-2531
jgold@csod.com
Media Contact: Deaira Irons Phone: +1 (310) 752-0164
dirons@csod.com
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