People development solutions
provider Cornerstone OnDemand, Inc.
(NASDAQ: CSOD) today announced results1 for its first quarter ended
March 31, 2021. 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.
First Quarter 2021 Results:
- Revenue for the first quarter of 2021 was $209.3 million. This
represents a 39.4% increase compared to the same period of the
prior year.
- Subscription revenue for the first quarter of 2021 was $200.6
million. This represents a 38.9% increase compared to the same
period of the prior year.
- Income (loss) from operations for the first quarter of 2021 was
$9.1 million, yielding a margin of 4.3%, compared to income (loss)
from operations of $(2.7) million and a margin of (1.8)% in the
same period of the prior year.
- Non-GAAP operating income for the first quarter of 2021 was
$59.2 million, yielding a non-GAAP operating margin of 28.3%,
compared to non-GAAP operating income of $24.9 million and a
non-GAAP operating margin of 16.6% in the same period of the prior
year.
- Net loss for the first quarter of 2021 was $(12.5) million, or
$(0.19) diluted net loss per share, compared to net loss of $(13.8)
million, or $(0.22) diluted net loss per share, in the same period
of the prior year.
- Non-GAAP net income for the first quarter of 2021 was $48.4
million, or $0.70 non-GAAP diluted net income per share, compared
to non-GAAP net income of $15.0 million, or $0.23 non-GAAP diluted
net income per share, in the same period of the prior year.
- Unlevered free cash flow for the first quarter of 2021 was
$88.4 million, yielding a margin of 42.3%, compared to unlevered
free cash flow of $6.3 million and a margin of 4.2% in the same
period of the prior year. Unlevered free cash flow for the first
quarter of 2021 includes approximately $7.8 million of
restructuring and acquisition-related cash outflows.
“I’m very pleased with a solid first quarter and a strong start
to Cornerstone’s fiscal year 2021, despite these unprecedented
times,” said Phil Saunders, Chief Executive Officer. “We have
continued to execute on our transformation roadmap, and while we
believe we have an aggressive roadmap to implement this year, we
remain confident in our ability to unlock growth and earnings power
within the business.”
Recent Highlights:
- The Company announced its Strategic Leader position in the
Fosway 9-Grid™ for Learning Systems for 2021, retaining its leading
position for the eighth year in a row.
- Cornerstone mobilized internal executive talent to drive
innovation for its content business and align international
leadership to better support customers worldwide. Heidi Spirgi
transitioned into the role of Chief Strategy and Growth Officer,
Theresa Damato was named the Company’s Chief Marketing Officer, and
Vincent Belliveau was appointed Chief International Officer.
“We are proud of our first quarter business and operational
accomplishments, and the resulting financial performance,” said
Chirag Shah, Chief Financial Officer. “We are raising our
profitability estimates for 2021 to reflect our positive business
trends and the strong start to the year.”
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 second quarter ending June 30, 2021, the Company
provides the following outlook:
- Revenue between $208.0 million and $210.0 million.
- Subscription revenue between $203.0 million and $205.0
million.
- Non-GAAP operating income between $49.0 million and $51.0
million.
For the year ending December 31, 2021, the Company provides the
following outlook:
- Revenue between $851.0 million and $859.0 million.
- Subscription revenue between $827.0 million and $835.0
million.
- Annual recurring revenue between $868.0 million and $878.0
million.
- Non-GAAP operating income between $215.0 million and $222.0
million.
- Unlevered free cash flow between $208.0 million and $216.0
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 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 and EUR to USD, the following
exchange rates have been applied:
Exchange rate applied to revenue for the
second 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
second quarter of 2021
$1.19 USD per EUR
Exchange rate applied to revenue and
annual recurring revenue for fiscal 2021
$1.19 USD per EUR
Quarterly Conference Call
Cornerstone will host a conference call to discuss its first
quarter 2021 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). 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 May 13, 2021
by dialing (855) 859-2056 (US) or (404) 537-3406 (outside the
US).
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 ongoing integration of Saba into
our business, our ability to execute our transformation roadmap,
anticipated synergies from our acquisition of Saba, and our
expectations regarding certain financial measures including
revenue, subscription revenue, annual recurring revenue, non-GAAP
operating income, unlevered free cash flow, capital expenditures,
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 to execute our
transformation roadmap; 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 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 fiscal year if incremental sales to
existing customers exceed the churn in annual recurring revenue
from those same customers during that 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%. Beginning in 2020, this
ratio 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 discount and amortization of debt 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)
(unaudited)
March 31, 2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
128,862
$
153,151
Accounts receivable, net
137,191
221,461
Deferred commissions, current portion
45,587
45,786
Prepaid expenses and other current
assets
35,615
30,615
Total current assets
347,255
451,013
Capitalized software development costs,
net
51,559
50,812
Property and equipment, net
27,982
32,271
Operating right-of-use assets
69,470
74,419
Deferred commissions, net of current
portion
88,132
89,698
Long-term investments
1,750
8,565
Intangible assets, net
412,343
436,290
Goodwill
961,593
961,322
Deferred tax assets
19,152
19,169
Other assets
12,246
11,010
Total assets
$
1,991,482
$
2,134,569
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable, accrued expenses, and
other current liabilities
$
104,496
$
129,908
Deferred revenue, current portion
425,988
446,886
Operating lease liabilities, current
portion
12,866
10,830
Debt, current portion
10,047
10,047
Total current liabilities
553,397
597,671
Debt, net of current portion
1,077,714
1,176,239
Deferred revenue, net of current
portion
3,002
5,184
Operating lease liabilities, net of
current portion
61,563
65,911
Deferred tax liabilities
7,854
11,936
Other liabilities, non-current
5,315
8,754
Total liabilities
1,708,845
1,865,695
Stockholders’ equity:
Common stock, $0.0001 par value
7
6
Additional paid-in capital
860,980
835,069
Accumulated deficit
(577,114
)
(564,662
)
Accumulated other comprehensive loss
(1,236
)
(1,539
)
Total stockholders’ equity
282,637
268,874
Total liabilities and stockholders’
equity
$
1,991,482
$
2,134,569
Cornerstone OnDemand,
Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
data)
(unaudited)
Three Months Ended
March 31,
2021
2020
Revenue
$
209,273
$
150,136
Cost of revenue 1,2
60,536
41,924
Gross profit
148,737
108,212
Operating expenses:
Sales and marketing 1,2
69,735
55,330
Research and development 1
30,770
24,085
General and administrative 1,2
31,562
24,725
Acquisition-related and integration
1,530
6,811
Restructuring1
6,089
—
Total operating expenses
139,686
110,951
Income (loss) from operations
9,051
(2,739
)
Other income (expense):
Interest expense
(18,770
)
(5,501
)
Other, net
(4,904
)
(5,364
)
Other expense, net
(23,674
)
(10,865
)
Loss before income tax provision
(14,623
)
(13,604
)
Income tax benefit (provision)
2,171
(171
)
Net loss
$
(12,452
)
$
(13,775
)
Net loss per share, basic and
diluted
$
(0.19
)
$
(0.22
)
Weighted average common shares
outstanding, basic and diluted
65,397
61,631
1 Includes stock-based compensation as
follows:
Three Months Ended
March 31,
2021
2020
Cost of revenue
$
2,056
$
2,701
Sales and marketing
6,297
8,584
Research and development
4,055
4,800
General and administrative
5,873
7,085
Restructuring
1,201
—
Total
$
19,482
$
23,170
2 Includes amortization of intangible
assets as follows:
Three Months Ended
March 31,
2021
2020
Cost of revenue
$
9,490
$
1,663
Sales and marketing
14,182
83
General and administrative
603
—
Total
$
24,275
$
1,746
Cornerstone OnDemand,
Inc.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
March 31,
2021
2020
Cash flows from operating
activities
Net loss
$
(12,452
)
$
(13,775
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization
36,800
11,964
Accretion of debt discount and
amortization of debt issuance costs
4,184
1,090
Net foreign currency and other loss
4,928
5,179
Stock-based compensation expense
19,482
23,170
Deferred income taxes
(4,203
)
—
Bad debt (recoveries) expense
(306
)
447
Changes in operating assets and
liabilities, net of acquisitions:
Accounts receivable
81,394
35,516
Deferred commissions
2,248
582
Prepaid expenses and other assets
(6,488
)
(6,550
)
Accounts payable, accrued expenses, and
other current liabilities
(28,338
)
(18,135
)
Deferred revenue
(21,515
)
(35,557
)
Other liabilities, non-current
2,377
2,057
Net cash provided by operating
activities
78,111
5,988
Cash flows from investing
activities
Purchases of marketable investments
—
(20,419
)
Maturities and sales of investments
—
272,173
Capital expenditures
(943
)
(971
)
Capitalized software costs
(7,721
)
(7,389
)
Cash paid for acquisitions, net of cash
acquired
—
(18,639
)
Net cash (used in) provided by investing
activities
(8,664
)
224,755
Cash flows from financing
activities
Repayment of debt
(102,512
)
—
Proceeds from employee stock plans
7,511
10,130
Net cash (used in) provided by financing
activities
(95,001
)
10,130
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
1,187
(626
)
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(24,367
)
240,247
Cash, cash equivalents, and restricted
cash at beginning of period
155,854
215,907
Cash, cash equivalents, and restricted
cash at end of period1
$
131,487
$
456,154
Supplemental cash flow data
Cash paid for interest
$
18,976
$
8,625
Cash paid for income taxes
2,674
955
Non-cash investing and financing
activities:
Capitalized stock-based compensation
1,278
2,190
1 Below is a reconciliation of cash, cash
equivalents, and restricted cash:
As of March 31,
2021
2020
Cash and cash equivalents
$
128,862
$
456,154
Restricted cash included in prepaid
expenses and other current assets
396
—
Restricted cash included in other
assets
2,229
—
Total cash, cash equivalents, and
restricted cash
$
131,487
$
456,154
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, INCOME (LOSS)
FROM OPERATIONS TO NON-GAAP OPERATING INCOME, AND OPERATING MARGIN
TO NON-GAAP OPERATING MARGIN
(in thousands)
(unaudited)
Three Months Ended
March 31,
2021
2020
Reconciliation of cost of revenue,
gross profit, and gross margin:
Revenue
$
209,273
$
150,136
Cost of revenue
60,536
41,924
Gross profit
$
148,737
$
108,212
Gross margin
71.1
%
72.1
%
Cost of revenue
$
60,536
$
41,924
Adjustments to cost of revenue:
Stock-based compensation1
(2,056
)
(2,138
)
Amortization of intangible assets
(9,490
)
(1,663
)
Total adjustments to cost of revenue
(11,546
)
(3,801
)
Non-GAAP cost of revenue
48,990
38,123
Non-GAAP gross profit
$
160,283
$
112,013
Non-GAAP gross margin
76.6
%
74.6
%
Reconciliation of income (loss) from
operations and operating margin:
Income (loss) from operations
$
9,051
$
(2,739
)
Operating margin
4.3
%
(1.8
)%
Adjustments to income (loss) from
operations:
Stock-based compensation1, 3
18,281
19,109
Amortization of intangible assets
24,275
1,746
Acquisition-related and integration2
1,530
6,811
Restructuring3
6,089
—
Total adjustments to income (loss) from
operations
50,175
27,666
Non-GAAP operating income
$
59,226
$
24,927
Non-GAAP operating margin
28.3
%
16.6
%
1 The difference between stock-based
compensation presented above and stock-based compensation as
reported in the consolidated statement of operations for the three
months ended March 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.
Three Months Ended
March 31,
2020
Cost of revenue
$
2,138
Sales and marketing
7,674
Research and development
3,386
General and administrative
5,911
Total
$
19,109
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 LOSS TO
NON-GAAP NET INCOME AND NON-GAAP NET INCOME PER SHARE
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended
March 31,
2021
2020
Net loss
$
(12,452
)
$
(13,775
)
Adjustments to net loss
Stock-based compensation1, 3
18,281
19,109
Amortization of intangible assets
24,275
1,746
Acquisition-related and integration2
1,530
6,811
Restructuring3
6,089
—
Accretion of debt discount and
amortization of debt issuance costs4
4,184
1,090
Income tax benefit
(365
)
—
Fair value adjustment on strategic
investments5
6,862
—
Total adjustments to net loss
60,856
28,756
Non-GAAP net income
$
48,404
$
14,981
Non-GAAP basic net income per share
$
0.74
$
0.24
Non-GAAP diluted net income per share
$
0.70
$
0.23
Weighted-average common shares
outstanding, basic
65,397
61,631
Non-GAAP weighted-average common shares
outstanding, diluted
69,576
66,188
1 The difference between stock-based
compensation presented above and stock-based compensation as
reported in the consolidated statement of operations for the three
months ended March 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 A write-down of approximately $6.9
million was recognized during the three months ended March 31, 2021
related to a strategic investment.
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
March 31,
2021
2020
Reconciliation of unlevered free cash
flow:
Net cash provided by operating
activities
$
78,111
$
5,988
Capital expenditures
(943
)
(971
)
Capitalized software costs
(7,721
)
(7,389
)
Cash paid for interest
18,976
8,625
Unlevered free cash flow
$
88,423
$
6,253
Unlevered free cash flow margin
42.3
%
4.2
%
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 2020
FY 2021
Q1'20
Q2'20
Q3'20
Q4'20
Q1’21
FY18
FY19
FY20
SELECTED METRICS:
Number of customers1
3,522
6,308
6,229
6,157
6,084
3,333
3,508
6,157
% y/y
4.6
%
84.3
%
80.8
%
75.5
%
72.7
%
2.6
%
5.3
%
75.5
%
% q/q
0.4
%
79.1
%
(1.3
)%
(1.2
)%
(1.2
)
n/a
n/a
n/a
Number of employees
1,975
3,184
3,027
2,919
2,818
1,953
1,993
2,919
% y/y
(2.1
)%
56.5
%
52.4
%
46.5
%
42.7
%
3.3
%
2.0
%
46.5
%
% q/q
(0.9
)%
61.2
%
(4.9
)%
(3.6
)%
(3.5
)
n/a
n/a
n/a
Net annual dollar retention rate2
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
510,000
575,000
840,000
Net cash provided by operating activities
(in thousands)
5,988
22,774
33,147
35,025
78,111
90,253
115,549
96,934
Unlevered free cash flow (in
thousands)
6,253
15,394
55,929
36,356
88,423
63,471
90,203
113,932
Unlevered free cash flow margin
4.2
%
8.4
%
28.0
%
17.6
%
42.3
%
11.8
%
15.6
%
15.4
%
FINANCIAL DATA (in thousands, except
percentages):
Revenue
150,136
184,358
199,498
206,924
209,273
537.891
576,523
740,916
Subscription revenue
144,421
177,217
185,643
197,878
200,584
473.052
542,968
705,159
% y/y growth
10.0
%
33.7
%
35.1
%
39.6
%
38.9
%
n/a
14.8
%
29.9
%
Subscription revenue % of total
revenue
96.2
%
96.1
%
93.1
%
95.6
%
95.8
%
87.9
%
94.2
%
95.2
%
Income (loss) from operations
(2,739
)
(22,368
)
(1,618
)
(4,826
)
9,051
(7.769
)
11,933
(31,551
)
MARGIN DATA:
Gross margin
72.1
%
68.5
%
67.7
%
69.8
%
71.1
%
73.2
%
74.1
%
69.4
%
Sales and marketing % of revenue
36.9
%
35.2
%
36.0
%
35.5
%
33.3
%
41.8
%
39.5
%
35.8
%
Research and development % of revenue
16.0
%
15.4
%
14.9
%
14.9
%
14.7
%
14.3
%
17.5
%
15.2
%
General and administrative % of
revenue
16.5
%
13.8
%
14.5
%
15.2
%
15.1
%
16.7
%
15.0
%
14.9
%
Acquisition-related and integration % of
revenue
4.5
%
10.9
%
2.4
%
2.7
%
0.7
%
0.2
%
—
5.0
%
Restructuring % of revenue
—
5.3
%
0.7
%
3.9
%
2.9
%
1.7
%
—
2.6
%
Operating margin
(1.8
)%
(12.1
)%
(0.8
)%
(2.3
)%
4.3
%
(1.4
)%
2.1
%
(4.3
)%
NON-GAAP MARGIN DATA:
Non-GAAP gross margin
74.6
%
73.7
%
73.5
%
75.2
%
76.6
%
74.1
%
76.0
%
74.2
%
Non-GAAP sales and marketing % of
revenue
31.7
%
26.4
%
25.3
%
25.4
%
23.5
%
37.2
%
34.7
%
26.9
%
Non-GAAP research and development % of
revenue
13.8
%
13.9
%
12.7
%
12.3
%
12.8
%
12.1
%
14.8
%
13.1
%
Non-GAAP general and administrative % of
revenue
12.5
%
11.8
%
12.1
%
12.3
%
12.0
%
13.2
%
11.1
%
12.2
%
Non-GAAP operating margin
16.6
%
21.6
%
23.4
%
25.2
%
28.3
%
11.8
%
15.4
%
22.1
%
Non-GAAP research and development plus
capitalized software % of revenue
18.7
%
17.2
%
16.1
%
15.6
%
16.5
%
16.8
%
19.1
%
16.8
%
FOREIGN EXCHANGE RATES:
GBP to USD average period rate
1.28
1.26
1.29
1.32
1.38
1.34
1.28
1.29
GBP to USD end of period spot rate
1.23
1.23
1.28
1.37
1.38
1.27
1.32
1.37
EUR to USD average period rate
1.10
1.11
1.17
1.19
1.21
1.18
1.12
1.14
EUR to USD end of period spot rate
1.10
1.12
1.17
1.23
1.17
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%. Beginning in 2020, this ratio 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.
FY 2020
FY 2021
Q1'20
Q2'20
Q3'20
Q4'20
Q1’21
FY18
FY19
FY20
NON-GAAP RECONCILIATIONS FOR SELECTED
METRICS
(in thousands, except
percentages):
Net cash provided by operating
activities
5,988
22,774
33,147
35,025
78,111
90,253
115,549
96,934
Capital expenditures
(971
)
(1,304
)
(635
)
(2,875
)
(943
)
(14,895
)
(18,034
)
(5,785
)
Capitalized software costs
(7,389
)
(6,135
)
(6,772
)
(6,779
)
(7,721
)
(25,515
)
(24,668
)
(27,075
)
Cash paid for interest
8,625
59
30,189
10,985
18,976
13,628
17,356
49,858
Unlevered free cash flow
6,253
15,394
55,929
36,356
88,423
63,471
90,203
113,932
Unlevered free cash flow margin
4.2
%
8.4
%
28.0
%
17.6
%
42.3
%
11.8
%
15.6
%
15.4
%
Gross margin
72.1
%
68.5
%
67.7
%
69.8
%
71.1
%
73.2
%
74.1
%
69.4
%
Stock-based compensation
1.4
%
1.2
%
1.1
%
0.9
%
1.0
%
0.7
%
1.1
%
1.0
%
Amortization of intangible assets
1.1
%
4.0
%
4.7
%
4.5
%
4.5
%
0.2
%
0.8
%
3.8
%
Non-GAAP gross margin
74.6
%
73.7
%
73.5
%
75.2
%
76.6
%
74.1
%
76.0
%
74.2
%
Sales and marketing % of revenue
36.9
%
35.2
%
36.0
%
35.5
%
33.3
%
41.8
%
39.5
%
35.8
%
Stock-based compensation
(5.1
)
%
(3.0
)
%
(3.5
)
%
(3.3
)
%
(3.1
)
%
(4.6
)
%
(4.8
)
%
(3.6
)
%
Amortization of intangible assets
(0.1
)
%
(5.8
)
%
(7.2
)
%
(6.8
)
%
(6.7
)
%
—
%
—
%
(5.3
)
%
Non-GAAP sales and marketing % of
revenue
31.7
%
26.4
%
25.3
%
25.4
%
23.5
%
37.2
%
34.7
%
26.9
%
Research and development % of revenue
16.0
%
15.4
%
14.9
%
14.9
%
14.7
%
14.3
%
17.5
%
15.2
%
Stock-based compensation
(2.2
)
%
(1.5
)
%
(2.2
)
%
(2.6
)
%
(1.9
)
%
(2.2
)
%
(2.7
)
%
(2.1
)
%
Non-GAAP research and development % of
revenue
13.8
%
13.9
%
12.7
%
12.3
%
12.8
%
12.1
%
14.8
%
13.1
%
General and administrative % of
revenue
16.5
%
13.8
%
14.5
%
15.2
%
15.1
%
16.7
%
15.0
%
14.9
%
Stock-based compensation
(4.0
)
%
(1.8
)
%
(2.1
)
%
(2.6
)
%
(2.8
)
%
(3.5
)
%
(3.9
)
%
(2.5
)
%
Amortization of intangible assets
—
%
(0.2
)
%
(0.3
)
%
(0.3
)
%
(0.3
)
%
—
%
—
%
(0.2
)
%
Non-GAAP general and administrative % of
revenue
12.5
%
11.8
%
12.1
%
12.3
%
12.0
%
13.2
%
11.1
%
12.2
%
Operating margin
(1.8
)
%
(12.1
)
%
(0.8
)
%
(2.3
)
%
4.3
%
(1.4
)
%
2.1
%
(4.3
)
%
Stock-based compensation
12.7
%
7.4
%
8.9
%
9.3
%
8.8
%
11.1
%
12.5
%
9.5
%
Amortization of intangible assets
1.2
%
10.1
%
12.2
%
11.6
%
11.6
%
0.2
%
0.8
%
9.3
%
Acquisition-related and integration
4.5
%
10.9
%
2.4
%
2.7
%
0.7
%
0.2
%
—
%
5.0
%
Restructuring
—
%
5.3
%
0.7
%
3.9
%
2.9
%
1.7
%
—
%
2.6
%
Non-GAAP operating margin
16.6
%
21.6
%
23.4
%
25.2
%
28.3
%
11.8
%
15.4
%
22.1
%
Research and development plus capitalized
software % of revenue
20.9
%
18.7
%
18.3
%
18.2
%
18.4
%
19.0
%
21.8
%
18.9
%
Stock-based compensation
(2.2
)
%
(1.5
)
%
(2.2
)
%
(2.6
)
%
(1.9
)
%
(2.2
)
%
(2.7
)
%
(2.1
)
%
Non-GAAP research and development plus
capitalized software % of revenue
18.7
%
17.2
%
16.1
%
15.6
%
16.5
%
16.8
%
19.1
%
16.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506006131/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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