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Cornerstone OnDemand Announces First Quarter 2019 Financial Results


SANTA MONICA, Calif. – May 7, 2019 – Human capital management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results1 for its first quarter ended March 31, 2019. The Company has provided a quarterly shareholder letter on its Investor Relations website at http://investors.cornerstoneondemand.com.

“We are off to a great start for 2019, continuing the momentum that we saw during 2018,” said Adam Miller, founder and CEO of Cornerstone. “With the skills divide making news almost every week, learning and development directors are embracing solutions like ours. The injection of our emerging content business into our massive installed base of more than 40 million users, is enabling us to truly differentiate.”

Adoption of the New Lease Standard - ASC 842:
The Company adopted the new lease accounting standard Accounting Standards Codification (“ASC”) 842 effective January 1, 2019 on a modified retrospective basis. Financial results for reporting periods during 2019 are presented in compliance with the new lease standard. Historical financial results for reporting periods prior to 2019 are presented in conformity with amounts previously disclosed under the prior lease accounting standard. The new lease accounting standard does not result in any change to future operating expenses or cash flows.

First Quarter 2019 Results:

  • Revenue for the first quarter of 2019 was $140.1 million compared to a guided range of $134.5 million to $136.5 million. This represents a 5.3% increase compared to the same period of the prior year. Revenue growth on a constant currency basis was 7.3%.

  • Subscription revenue for the first quarter of 2019 was $131.3 million compared to a guided range of $127.5 million to $129.5 million. This represents a 16% increase compared to the same period of the prior year. Subscription revenue growth on a constant currency basis was 18.2%.

  • Operating income for the first quarter of 2019 was $1.2 million, yielding a margin of 0.9%, compared to $(8.8) million and margin of (6.6)% in the same period of the prior year.

  • Non-GAAP operating income for the first quarter of 2019 was $19.6 million, yielding a margin of 14%, compared to $12.9 million and margin of 9.7% in the same period of the prior year.

  • Net loss for the first quarter of 2019 was $(3.5) million, or a $(0.06) diluted net loss per share, compared to $(16.2) million and $(0.28) diluted net loss per share in the same period of the prior year.

  • Non-GAAP net income for the first quarter of 2019 was $15.9 million, or a $0.25 diluted net income per share, compared to $9.0 million and $0.14 diluted net loss per share in the same period of the prior year.

  • Operating cash flow for the first quarter of 2019 was $7.3 million, yielding a margin of 5.2%, compared to $(4.6) million, yielding a margin of (3.4)%, in the same period of the prior year.

  • Unlevered free cash flow for the first quarter of 2019 was $4.3 million, yielding a margin of 3.1%, compared to $(10.2) million, yielding a margin of (7.6)%, in the same period of the prior year.


“During Q1, we continued to expand our operating margins while investing in our key priorities,” said Brian Swartz, CFO of Cornerstone. “As we look out to the balance of 2019, we are encouraged by the opportunities we see ahead and are raising our financial guidance accordingly.”

Recent Highlights:

  • The Company helps the Ventura County Fire Department serve its community through online learning and performance management.

  • The Company launched a 14-day free trial for small businesses to try PiiQ Learning by Cornerstone.

  • The Company was recognized by TrustRadius with four 2019 Top Rated Awards in the categories of Corporate Learning Management and Talent Management Software.

  • The Company was named to the Constellation ShortList™ for Talent Management Suites.

  • The Company and its CEO Adam Miller, announced the 5 for 20 Challenge, a program challenging companies to dedicate 5 percent of their employees’ time to learning, which will deliver improved employee retention.

  • The Company received the 2019 Talented Learning Award for Best Corporate Extended Enterprise Learning System.

  • The Company hired Trish Coughlin as its first Chief Accounting Officer. She brings more than 25 years of experience in finance and operations to the Company and will lead its new hub in Utah.


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 second quarter ending June 30, 2019, the Company provides the following outlook:

  • Revenue between $137 million and $140 million, representing year-over-year growth at the mid-point of 4.5%2, or 6%3 on a constant currency basis.

  • Subscription revenue between $131 million and $133 million, representing year-over-year growth at the mid-point of 15%2, or 16%3 on a constant currency basis.

For the year ending December 31, 2019, the Company provides the following outlook:

  • Revenue between $562 million and $570 million, representing year-over-year growth at the mid-point of 5%4, 6, or 6%5 on a constant currency basis.

  • Subscription revenue between $537 million and $545 million, representing year-over-year growth at the mid-point of 14.5%4, 6, or 15%5 on a constant currency basis.

  • Annual recurring revenue as of December 31, 2019 between $578 million and $590 million, representing year-over-year growth at the mid-point of 15%,4, 6 or 15%4, 6 on a constant currency basis.

  • Non-GAAP operating income between $78 million and $85 million. Assuming the midpoint of the revenue range, this represents a non-GAAP operating margin of 14.5%.

  • Unlevered free cash flow between $84 million and $92 million. Assuming the midpoint of the revenue range, this represents an unlevered free cash flow margin of 15.5%.

The Company has not reconciled the guidance for non-GAAP operating income or non-GAAP operating income 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 income and non-GAAP operating margin, the Company excludes stock-based compensation expense, which is impacted by the number of shares issued and the market price, which are both uncertain. The actual amount of stock-based compensation expense in the second quarter ending June 30, 2019 will have a significant impact on the Company’s GAAP operating margin.
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. Please see the discussion in the section titled “Non-GAAP Financial Measures” and the reconciliations at the end of this press release. 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: 2 Exchange rate applied to revenue for the second quarter of 2019 $1.32 USD per GBP 3 Exchange rate from the second quarter of 2018 applied to calculate revenue growth for the
second quarter of 2019 on a constant currency basis $1.36 USD per GBP 4 Exchange rate applied to revenue and annual recurring revenue for fiscal 2019 $1.32 USD per GBP 5 Average exchange rate from fiscal 2018 applied to calculate revenue growth for fiscal 2019
on a constant currency basis $1.33 USD per GBP 6 Exchange rate applied to revenue and annual recurring revenue for fiscal 2019 $1.12 USD per EUR
Quarterly Conference Call
Cornerstone will host a conference call to discuss its first quarter 2019 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: 3438807. 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 (2:59 p.m. ET) on May 10, 2019 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 3438807.

Investor Relations Contact

Jason Gold

jgold@csod.com

+1 (310) 526-2531

Media Contact

Deaira Irons

dirons@csod.com

310-752-0164
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