Cornerstone OnDemand Announces
Second Quarter 2017 Financial Results
SANTA MONICA, Calif. — August 3, 2017 — Human capital management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results for its second quarter ended June 30, 2017. A summary of the Company’s Operational and Financial Highlights is available on the Company’s Investor Relations website at http://investors.cornerstoneondemand.com.
“In the second quarter, we closed what we expect will become the largest contract in the history of the Company with the U.S. Postal Service to support their more than 600,000 employees,” said Adam Miller, the Company’s President and CEO. “We believe the breadth of our platform, the enormous size of our total addressable market and our substantial global distribution will enable us to reach our goal of $1 billion in sales, without the need to enter new markets or develop new product categories.”
Second Quarter 2017 Results:
- Revenue for the second quarter of 2017 was $116.7 million, representing a 9.0% increase compared to the same period in 2016. Revenue growth on a constant currency basis represented a 12.7% increase compared to the prior year.1
- Billings were $119.0 million for the second quarter of 2017, representing a 11.9% increase compared to the same period in 2016.1 Billings growth on a constant currency basis represented a 6.4% increase compared to the prior year.1
- The Company’s operating loss for the second quarter of 2017 was $(18.6) million, yielding an operating loss margin of (15.9)%, compared to an operating loss of $(15.1) million, yielding an operating loss margin of (14.1)%, for the second quarter of 2016.
- Non-GAAP operating income for the second quarter of 2017 was $1.2 million, yielding a non-GAAP operating income margin of 1.1%, compared to a non-GAAP operating income of $0.2 million, yielding a non-GAAP operating income margin of 0.1%, for the second quarter of 2016.1
- The Company’s net loss for the second quarter of 2017 was $(21.3) million, or a $(0.37) diluted net loss per share, compared to a net loss of $(17.6) million, or a $(0.32) diluted net loss per share, for the second quarter of 2016
- Non-GAAP net income for the second quarter of 2017 was $0.9 million, or a $0.02 non-GAAP diluted net income per share, compared to a non-GAAP net loss of $(0.1) million, or a $0.00 non-GAAP diluted net loss per share, for the second quarter of 2016.1
- Free cash flow for the second quarter of 2017 was $(5.0) million compared to free cash flow of $(1.7) million for the second quarter of 2016..1
“Our second quarter performance further highlighted our commitment to profitability with Q2 marking the first time in which we achieved two consecutive quarters of non-GAAP net income,” said Brian Swartz, the Company’s CFO. “While our operational excellence initiatives have already demonstrated strong progress, we believe they will continue to drive margin improvement into the future.”
- Commvault, a global leader in enterprise backup, recovery, archive and cloud management, uses the Company’s learning and performance management software to support its overall goal of unlocking employee potential through continuous learning and development.
- Sylvan Learning, a global franchise organization focused on personalized instruction and tutoring, plans to use the Company’s software to facilitate training and social collaboration across its more than 750 franchise and corporate-owned locations worldwide.
- The Company announced plans to reimagine workplace learning with the launch of a learning experience platform and a new subscription content offering tied to the Cornerstone Learning suite.
- The Company announced the addition of two new people analytics applications, Cornerstone Engage (offered in the Cornerstone Performance suite) and Cornerstone Benchmark (offered in the Cornerstone HR suite), designed to give organizations deeper, real-time insight into their workforce. Both products enable HR and business leaders to make more strategic talent decisions that can have a positive impact on business results
- The Company introduced Cornerstone Realize, a smarter, accelerated and simplified software implementation service that transforms a pivotal part of the overall client experience.
- The Company announced that Steffan Tomlinson, chief financial officer of Palo Alto Networks, Inc., and Dean Carter, vice president of human resources and shared services of Patagonia, Inc., have been elected to its board of directors.
- The Company ended the second quarter of 2017 with 3,076 clients and more than 32.1 million users.2
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 third quarter ending September 30, 2017, the Company provides the following outlook:
- Revenue between $117.0 million and $120.0 million, representing year-over-year growth at the mid-point of 10%3, or 10%4 on a constant currency basis.
For the year ending December 31, 2017, the Company provides the following outlook:
- Revenue between $477.0 million and $487.0 million, representing year-over-year growth at the mid-point of 14%5, or 16%6 on a constant currency basis.
- Non-GAAP operating margin of approximately 6% of revenue.
- Free cash flow margin of approximately 6% to 7% of revenue.
The Company has not reconciled the guidance for non-GAAP operating margin to the corresponding GAAP measures because it does not provide guidance for such GAAP measure and would not be able to present the reconciling items between such GAAP and non-GAAP measure without unreasonable efforts. For non-GAAP operating margin, the Company excludes stock-based compensation expense, which is impacted by factors that are outside of the Company’s control and can be difficult to predict. The actual amount of stock-based compensation expense in the third quarter ending September 30, 2017 and the year ending December 31, 2017 will have a significant impact on the Company’s GAAP operating margin.
1 Billings, financial measures presented on a constant currency basis, non-GAAP operating income (loss), non-GAAP operating income (loss) margin, non-GAAP net income (loss), non-GAAP diluted net income (loss) per share, free cash flow and free cash flow margin are non-GAAP financial measures. Please see the discussion in the section titled “Non-GAAP Financial Measures” and the reconciliations at the end of this press release. 2 Includes contracted clients and active users of our enterprise human capital management platform and excludes clients and users of our Cornerstone for Salesforce and Cornerstone Growth Edition products.
In order to translate the financial outlook for entities reporting in British pounds (GBP) to United States dollars (USD), the following exchange rates have been applied: 3 Exchange rate applied to revenue for the third quarter of 2017 $1.31 USD per GBP 4 Exchange rate from the third quarter of 2016 applied to calculate revenue growth for the third quarter of 2017 on a constant currency basis $1.31 USD per GBP 5 Exchange rate applied to revenue for fiscal 2017 $1.31 USD per GBP 6 Exchange rate from fiscal 2016 applied to calculate revenue growth for fiscal 2017 on a constant currency basis $1.35 USD per GBP
Quarterly Conference Call
Cornerstone OnDemand, Inc. will host a conference call to discuss its second quarter 2017 results at 2:00 p.m. PT (5:00 p.m. ET) today. A live audio webcast of the conference call, together with detailed financial information, can be accessed through the Company’s Investor Relations website at http://investors.cornerstoneondemand.com. The live call can be accessed by dialing (877) 445-4619 (U.S.) or (484) 653-6763 (outside the U.S.) and referencing passcode: 54113332. A replay of the call will also be available at http://investors.cornerstoneondemand.com/investors/news-and-events/events/default.aspx or via telephone until 11:59 p.m. PT on August 6, 2017 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 54113332.
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 more than 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.