Cornerstone OnDemand Announces
Third Quarter 2017 Financial Results
SANTA MONICA, Calif. — November 8, 2017 — Human capital management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results for its third quarter ended September 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.
“Our third quarter results reflect another quarter of solid performance,” said Adam Miller, the Company’s President and CEO. “We saw improvements in both growth and profitability while significantly exceeding our expectations in several areas.”
Third Quarter 2017 Results:
- Revenue for the third quarter of 2017 was $121.8 million, representing a 13.0% increase compared to the same period in 2016. Revenue growth on a constant currency basis represented a 13.1% increase compared to the prior year.1
- Billings were $132.1 million for the third quarter of 2017, representing a 23.5% increase compared to the same period in 2016.1 Billings growth on a constant currency basis represented a 18.3% increase compared to the prior year.1
- The Company’s operating loss for the third quarter of 2017 was $(12.1) million, yielding an operating loss margin of (9.9)%, compared to an operating loss of $(10.0) million, yielding an operating loss margin of (9.3)%, for the third quarter of 2016.
- Non-GAAP operating income for the third quarter of 2017 was $7.7 million, yielding a non-GAAP operating income margin of 6.3%, compared to a non-GAAP operating income of $6.9 million, yielding a non-GAAP operating income margin of 6.4%, for the third quarter of 2016.1
- The Company’s net loss for the third quarter of 2017 was $(14.9) million, or a $(0.26) diluted net loss per share, compared to a net loss of $(12.4) million, or a $(0.22) diluted net loss per share, for the third quarter of 2016.
- Non-GAAP net income for the third quarter of 2017 was $7.3 million, or a $0.12 non-GAAP diluted net income per share, compared to a non-GAAP net income of $6.9 million, or a $0.11 non-GAAP diluted net income per share, for the third quarter of 2016.1
- Free cash flow for the third quarter of 2017 was $14.1 million, yielding a free cash flow margin of 11.6%, compared to free cash flow of $7.8 million, yielding a free cash flow margin of 7.3% for the third quarter of 2016.1
“We demonstrated continued improvement in profitability in Q3,” said Brian Swartz, the Company’s CFO. “Looking ahead to 2018, we anticipate even further margin improvement. We are increasing our prior 2018 operating margin target from 10% to a range of 11-13%, and we believe our actions to strengthen the business will enable growth and expanded profitability into the future.”
• HR Tech World awarded Adam Miller with their Unleash Award for his outstanding contributions to HR technology.
• The Company announced that it was named a Strategic Leader in the October 2017 Fosway 9-GridTM for Integrated Management systems for a third consecutive year, while also advancing to a Core Challenger position in the October 2017 Fosway 9-GridTM for Cloud HCM.
• The Company announced that Cornerstone Content Anytime, its new subscription content offering, is available for its clients in the United States and Europe.
• AIESEC, an international youth-run nonprofit organization, began using the Company’s software to support its mission of being a global platform for young people to explore and develop their leadership potential.
• The University of Georgia, an American public research university, selected the Company’s learning software to support its growing research enterprise.
• The Company ended the third quarter of 2017 with 3,146 clients and more than 33.5 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 fourth quarter ending December 31, 2017, the Company provides the following outlook:
• Revenue between $129.0 million and $137.0 million, representing year-over-year growth at the mid-point of 22%3, or 20%4 on a constant currency basis.
For the year ending December 31, 2017, the Company provides the following outlook:
• Revenue between $479.0 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 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 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 fourth quarter ending December 31, 2017 and the year ending December 31, 2017 will have a significant impact on the Company’s GAAP operating margin.
Today, the Company also announced that Silver Lake and LinkedIn will make a $300.0 million strategic investment in the Company. In connection with the investment, the Company’s board of directors authorized a $100.0 million share repurchase program.
1 Billings, 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, 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 PiiQ, formerly known as 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 fourth quarter of 2017 $1.32 USD per GBP 4 Exchange rate from the fourth quarter of 2016 applied to calculate revenue growth for the fourth quarter of 2017 on a constant currency basis $1.24 USD per GBP 5 Exchange rate applied to revenue for fiscal 2017 $1.32 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 third 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: 99518530. 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 11, 2017 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 99518530.
Cornerstone powers the future ready workforce, with HR software and solutions designed to unite people, teams, technology and business, and inspire a work environment of growth, agility and success for all. With an AI-powered and skills-forward system designed for the contemporary workforce, we help organizations modernize the learning and development experience, deliver the most relevant content from anywhere, accelerate talent and career mobility, and establish skills as the universal language of growth and success across the business. Cornerstone serves over 6,000 customers and 75M users and is available in 180 countries and 50 languages. https://www.cornerstoneondemand.com/