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Cornerstone OnDemand Announces
Third Quarter 2016 Financial Results

SANTA MONICA, Calif. — November 3, 2016 — Human capital management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results for its third quarter ended September 30, 2016. 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 third quarter, we exceeded revenue expectations and came in well ahead of our profitability goals,” said Adam Miller, the Company’s President and CEO. “We have made great strides in our operational excellence initiatives, and believe our continued focus on efficiency will enable us to achieve even stronger gains in profitability while continuing to pursue the tremendous long-term growth opportunities ahead.”

Third Quarter 2016 Results:

  • Revenue for the third quarter of 2016 was $107.8 million, representing a 23.5% increase compared to the same period in 2015. Revenue growth on a constant currency basis represented a 29.7% increase compared to the prior year.1

  • Billings were $107.0 million for the third quarter of 2016, representing a 3.2% increase compared to the same period in 2015.1 Billings growth on a constant currency basis represented a 8.7% increase compared to the prior year.1

  • The Company’s operating loss for the third quarter of 2016 was $(10.0) million, yielding an operating loss margin of (9.3)%, compared to an operating loss of $(17.0) million, yielding an operating loss margin of (19.5)%, for the third quarter of 2015. This represents an increase of 1,020 basis points year-over-year.

  • Non-GAAP operating income for the third quarter of 2016 was $6.9 million, yielding a non-GAAP operating income margin of 6.4%, compared to a non-GAAP operating loss of $(2.2) million, yielding a non-GAAP operating loss margin of (2.5)%, for the third quarter of 2015.1 This represents an increase of 890 basis points year-over-year.

  • The Company’s net loss for the third quarter of 2016 was $(12.4) million, or a $(0.22) diluted net loss per share, compared to a net loss of $(20.1) million, or a $(0.37) diluted net loss per share, for the third quarter of 2015.

  • Non-GAAP net income for the third quarter of 2016 was $6.9 million, or a $0.11 non-GAAP diluted net income per share, compared to a non-GAAP net loss of $(3.2) million, or a $(0.06) non-GAAP diluted net loss per share, for the third quarter of 2015.1

  • Free cash flow for the third quarter of 2016 was $7.8 million compared to free cash flow of $(3.8) million for the third quarter of 2015.1

“We once again came in well ahead of our margin expectations in Q3, largely driven by significant improvement in sales and marketing expense as a percentage of revenue,” said Brian L. Swartz, the Company’s CFO. “We are especially pleased with our progress, particularly considering we have yet to realize many of the potential benefits from our various operational excellence initiatives.”

Recent Highlights:

  • The Company remained positioned as a Strategic Leader in the October 2016 Fosway 9-GridTM for Integrated Talent Management systems.

  • ResCare, Inc., the nation’s largest provider of services to people with disabilities, began using the Company’s cloud-based talent management software to recruit candidates, quickly onboard new hires and deliver learning content to its mostly remote workforce.

  • Electrolux, a leading global appliance manufacturer, expanded its use of the Company’s cloud-based talent management software solutions in an effort to support the execution of its business strategy.

  • The Company ended the third quarter of 2016 with 2,805 clients and approximately 27.7 million users.2

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 fourth quarter ending December 31, 2016, the Company provides the following outlook:

  • Revenue between $108.0 million and $110.0 million, representing year-over-year growth at the mid-point of 13.6%3, or 21.9%4 on a constant currency basis.

For the year ending December 31, 2016, the Company provides the following updated outlook:

  • Revenue between $422.0 million and $424.0 million, representing year-over-year growth at the mid-point of 24.5%5, or 29.6%6 on a constant currency basis.

  • Non-GAAP net income of approximately $2.5 million and a non-GAAP diluted net income per share of $0.04.

  • Free cash flow of approximately $10.0 million. The Company’s free cash flow outlook has been adjusted to reflect timing changes related to certain one-time working capital adjustments and increased payment terms given to clients signed late in the third quarter, as well as the impact of the continued devaluation of the British pound.

The Company has not reconciled the guidance for non-GAAP net income or non-GAAP diluted net income per share 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 net income and non-GAAP diluted net income per share, 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 fourth quarter and the year ending December 31, 2016 will have a significant impact on the Company’s GAAP net income (loss) and GAAP diluted net income (loss) per share.

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 and free cash flows 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 and Mid-Market solution, excluding Cornerstone for Salesforce and Cornerstone Growth Edition.

In order to translate the financial outlook for entities reporting in British pounds (GBP) to the United States dollars (USD), the following exchange rates have been applied: 3 Exchange rate applied to revenue for the fourth quarter of 2016 $1.22 USD per GBP 4 Exchange rate from teh fourth quarter of 2015 applied to calculate revenue growth for the fourth quarter of 2016 on a constant currency basis $1.52 USD per GBP 5 Exchange rate applied to revenue for fiscal 2016 $1.34 USD per GBP 6 Exchange rate from fiscal 2015 applied to calculate revenue growth for fiscal 2016 on a constant currency basis $1.53 USD per GBP
Quarterly Conference Call

Cornerstone OnDemand, Inc. will host a conference call to discuss its third quarter 2016 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: 93641176. 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 November 6, 2016 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 93641176.

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 approximately 6,300 clients of all sizes, spanning more than 75 million users across over 180 countries and nearly 50 languages. Learn more at www.cornerstoneondemand.com.

Investor Relations Contact

Jason Gold

jgold@csod.com

+1 (310) 526-2531

Media Contact

Deaira Irons

dirons@csod.com

+1 (310) 752-0164
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