Cornerstone OnDemand Announces
Second Quarter 2016 Financial Results
- Record quarterly revenue of $107.0 million, up 29.6% year-over-year
- Second quarter billings of $106.3 million, up 16.5% year-over-year, or 29.0% on a constant currency basis 1
SANTA MONICA, Calif. — August 4, 2016 — Talent management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results for its second quarter ended June 30, 2016. A summary of the Company’s Operational and Financial Highlights, as well as an example of the constant currency revenue and billings calculation, is available on the Company’s Investor Relations website at http://investors.cornerstoneondemand.com.
“As our first half of year results demonstrate, Cornerstone continued to see strong global demand for our state-of-the-art talent management solutions, and we are well on our way to full-year profitability,” said Adam Miller, the Company’s President and CEO. “We believe our proven ability to retain and grow our existing client base, our continued product innovation, and our commitment to client success position Cornerstone as the long-term leader in talent management.”
Second Quarter 2016 Results:
- Revenue for the second quarter of 2016 was $107.0 million, representing a 29.6% increase compared to the same period in 2015. Revenue growth on a constant currency basis represented a 32.1% increase compared to the prior year.1
- Billings were $106.3 million for the second quarter of 2016, representing a 16.5% increase compared to the same period in 2015.1 Billings growth on a constant currency basis represented a 29.0% increase compared to the prior year.1
- The Company’s operating loss for the second quarter of 2016 was $(15.1) million, yielding an operating loss margin of (14.1)%, compared to an operating loss of $(19.2) million, yielding an operating loss margin of (23.2)%, for the second quarter of 2015. This represents an increase of 910 basis points year-over-year.
- Non-GAAP operating income for the second quarter of 2016 was $0.2 million, yielding a non-GAAP operating income margin of 0.1%, compared to a non-GAAP operating loss of $(6.7) million, yielding a non-GAAP operating loss margin of (8.2)%, for the second quarter of 2015.1 This represents an increase of 830 basis points year-over-year.
- The Company’s net loss for the second quarter of 2016 was $(17.6) million, or a $(0.32) net loss per share, compared to a net loss of $(23.3) million, or a $(0.43) net loss per share, for the second quarter of 2015.
- Non-GAAP net loss for the second quarter of 2016 was $(0.1) million, or a $0.00 non-GAAP net loss per share, compared to a non-GAAP net loss of $(8.7) million, or a $(0.16) non-GAAP net loss per share, for the second quarter of 2015.1
- Free cash flows for the second quarter of 2016 was $(1.7) million compared to free cash flows of $(19.3) million for the second quarter of 2015.1
“In the second quarter, we once again broke even in non-GAAP net income with more than six percentage points of improvement in sales and marketing, as a percentage of revenue, through the first half of 2016,” said Brian L. Swartz, the Company’s CFO. “Despite the impact of Brexit on our financial results, we are confident in the strength of our operations and our growth opportunity, and remain committed to achieving non-GAAP profitability this year.”
- The Company appointed Brian L. Swartz to replace Perry Wallack as its Chief Financial Officer during the second quarter of 2016.
- At Convergence, the Company announced two new products as part of the expansion of its analytics suite of products, Cornerstone View, which enables executives to visualize their people data and discover new opportunities for their organization, and Cornerstone Planning, a workforce planning tool that helps users develop hiring plans over multiple time horizons, monitor progress against those plans and adjust plans based on market or business changes.
- The Company was recognized as a Leader for the sixth consecutive year in the IDC MarketScape: Worldwide Integrated Talent Management 2016 Vendor Assessment.
- The Company ended the second quarter of 2016 with 2,730 clients and approximately 26.3 million users.2
Updated Definitions of Certain Non-GAAP Financial Measures
Beginning in the second quarter of 2016, the Company updated the definitions of certain non-GAAP financial measures. Under the updated definitions, the Company is removing adjustments to revenue and employer related payroll taxes resulting from stock-based compensation. Additionally, the Company has redefined free cash flow as net cash provided by (used in) operating activities minus capital expenditures and capitalized software costs. To ensure that non-GAAP operating results can be evaluated on a comparable basis, historical non-GAAP financial measures have been adjusted to match this updated go-forward definition. Please refer to Appendix A for a summary of current period and historical changes to these non-GAAP financial measures.
The Company is providing the following outlook, which is based on information available as of the press release date and is subject to change in the future. For its third quarter ending September 30, 2016:
- Revenue between $103.5 million and $105.0 million, representing year-over-year growth at the mid-point of 19.5% and 26.4% on a constant currency basis.
For the year ending December 31, 2016, the Company provides the following updated outlook:
- Revenue between $424.0 million and $428.0 million, representing year-over-year growth at the mid-point of 25.4% and 29.9% on a constant currency basis.
- Non-GAAP net income of approximately $0.5 million and a non-GAAP diluted net income per share of $0.01.
- Free cash flow of approximately $27.0 million.
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 third quarter ending September 30, 2016 and the year ending December 31, 2016 will have a significant impact on the Company’s GAAP net income (loss) and GAAP 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 loss, non-GAAP net 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. Quarterly Conference Call
Cornerstone OnDemand, Inc. will host a conference call to discuss its second 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 Web site 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: 85879203. 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 May 7, 2016 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 85879203.
Cornerstone was founded with a passion for empowering people through learning and a conviction that people should be your organisation’s greatest competitive advantage.
Cornerstone is a global human capital management leader with a core belief that companies thrive when they help their employees to realize their potential. Putting this belief into practice, Cornerstone offers solutions to help companies strategically manage and continuously develop their talent throughout the entire employee lifecycle.
Featuring comprehensive recruiting, personalised learning, development-driven performance management, and holistic HR planning, Cornerstone’s human capital management platform is successfully used by more than 3,500 global clients of all sizes, spanning more than 42 million users across 192 countries and 43 languages.
Learn more at cornerstoneondemand.co.uk.