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Cornerstone OnDemand Announces Second Quarter 2019 Financial Results


SANTA MONICA, Calif. – August 5, 2019 – Human capital management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results1, 2 for its second quarter ended June 30, 2019. The Company has provided a quarterly shareholder letter on its Investor Relations website at http://investors.cornerstoneondemand.com.

“During the second quarter, we continued the momentum we demonstrated in the first quarter of 2019 and throughout 2018,” said Adam Miller, founder and CEO of Cornerstone. “The growing skills divide is forcing companies around the world to take action to continuously train and reskill their workers. We believe our leading market position puts us in a prime position to capitalize on this multi-year macro trend.”

Second Quarter 2019 Results:

  • Revenue for the second quarter of 2019 was $141.9 million compared to a guided range of $137.0 million to $140.0 million. This represents a 7.1% increase compared to the same period of the prior year. Revenue growth on a constant currency basis was 8.7%.

  • Subscription revenue for the second quarter of 2019 was $132.6 million compared to a guided range of $131.0 million to $133.0 million. This represents a 15.5% increase compared to the same period of the prior year. Subscription revenue growth on a constant currency basis was 17.3%.

  • Operating income for the second quarter of 2019 was $(3.6) million, yielding a margin of (2.5)%, compared to $(3.1) million and margin of (2.3)% in the same period of the prior year.

  • Non-GAAP operating income for the second quarter of 2019 was $16.6 million, yielding a margin of 11.7%, compared to $13.2 million and margin of 10.0% in the same period of the prior year.

  • Net loss for the second quarter of 2019 was $(8.8) million, or a $(0.15) diluted net loss per share, compared to $(12.0) million and $(0.21) diluted net loss per share in the same period of the prior year.

  • Non-GAAP net income for the second quarter of 2019 was $12.4 million, or a $0.19 diluted net income per share, compared to $7.8 million and $0.12 diluted net income per share in the same period of the prior year.

  • Operating cash flow for the second quarter of 2019 was $21.2 million, yielding a margin of 14.9%, compared to $17.2 million, yielding a margin of 13.0%, in the same period of the prior year.

  • Unlevered free cash flow for the second quarter of 2019 was $9.5 million, yielding a margin of 6.7%, compared to $7.9 million, yielding a margin of 6.0%, in the same period of the prior year.


“During Q2, we continued to focus on margin expansion 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. Additionally, we expect to substantially improve our cash flow margins in 2020.”

Recent Highlights:

  • The Company's CEO, Adam Miller, was recognized as a 2019 Best CEO for Women by Comparably.

  • The Company hired Heidi Spirgi as Chief Marketing and Strategy Officer. She brings more than 20 years of experience helping organizations unleash the power of their workforce by reimagining their approach to talent management.

  • The Company announced new products including Cornerstone Create, Express Class, and Cornerstone for Salesforce learning integration to help organizations more effectively train and develop their teams by integrating learning directly into employees’ flow of work.


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 third quarter ending September 30, 2019, the Company provides the following outlook:

  • Revenue between $141 million and $143 million, representing year-over-year growth at the mid-point of 6.0%3, or 7.6%4 on a constant currency basis.

  • Subscription revenue between $135 million and $137 million, representing year-over-year growth at the mid-point of 14.4%3, or 16.2%4 on a constant currency basis.

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

  • Revenue between $566.5 million and $571 million, representing year-over-year growth at the mid-point of 5.7%5, 7, or 7.3%6 on a constant currency basis.

  • Subscription revenue between $539.5 million and $544 million, representing year-over-year growth at the mid-point of 14.5%5, 7, or 16.2%6 on a constant currency basis.

  • Annual recurring revenue as of December 31, 2019 between $579.5 million and $589.5 million, representing year-over-year growth at the mid-point of 14.6%,5, 7 or 15.2%5, 7 on a constant currency basis.

  • Non-GAAP operating income between $79 million and $85 million. Assuming the midpoint of the revenue range, this represents a non-GAAP operating margin of 14.4%.

  • Unlevered free cash flow between $85 million and $92 million. Assuming the midpoint of the revenue range, this represents an unlevered free cash flow margin of 15.6%.

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, both of which are uncertain. The actual amount of stock-based compensation expense in the third quarter ending September 30, 2019 and the year ending December 31, 2019 will have a significant impact on the Company’s GAAP operating margin. 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. 2 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. 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: 3 Exchange rate applied to revenue for the third quarter of 2019 $1.22 USD per GBP 4 Exchange rate from the third quarter of 2018 applied to calculate revenue growth for the third quarter of 2019 on a constant currency basis $1.30 USD per GBP 5 Exchange rate applied to revenue and annual recurring revenue for fiscal 2019 $1.22 USD per GBP 6 Average exchange rate from fiscal 2018 applied to calculate revenue growth for fiscal 2019 on a constant currency basis $1.33 USD per GBP 7 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 second 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: 5269638. 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 August 9, 2019 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 5269638.

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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