People development solution provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results1 for its first quarter ended March 31, 2020. The Company has provided supplemental financial information located on its Investor Relations website, including an accompanying featured presentation, at http://investors.cornerstoneondemand.com.

First Quarter 2020 Results:

  • Revenue for the first quarter of 2020 was $150.1 million compared to a guided range of $147.0 million to $150.0 million. This represents a 7.2% increase compared to the same period of the prior year. Revenue growth on a constant currency basis was 7.8%.
  • Subscription revenue for the first quarter of 2020 was $144.4 million compared to a guided range of $143.0 million to $145.0 million. This represents a 10.0% increase compared to the same period of the prior year. Subscription revenue growth on a constant currency basis was 10.7%.
  • Operating loss for the first quarter of 2020 was $2.7 million, yielding a margin of (1.8)%, compared to operating income of $1.2 million and margin of 0.9% in the same period of the prior year.
  • Non-GAAP operating income for the first quarter of 2020 was $24.9 million, yielding a margin of 16.6%, compared to $19.6 million and margin of 14.0% in the same period of the prior year.
  • Net loss for the first quarter of 2020 was $13.8 million, or $(0.22) diluted net income per share, compared to $3.5 million and $(0.06) diluted net loss per share in the same period of the prior year.
  • Non-GAAP net income for the first quarter of 2020 was $15.0 million, or a $0.23 diluted net income per share, compared to $15.9 million and $0.25 diluted net income per share in the same period of the prior year.
  • Unlevered free cash flow for the first quarter of 2020 was $6.3 million, yielding a margin of 4.2%, compared to $4.3 million, yielding a margin of 3.1%, in the same period of the prior year.

"Our combination with Saba is a significant milestone for Cornerstone and, more importantly, for our expanded community of clients around the world. With our shared passion for people development and our combined depth of expertise, we expect to accelerate product innovation and help tens of millions of people develop new skills to navigate the future,” said Adam Miller, founder and Chief Executive Officer of Cornerstone. "Although we are definitely not immune to the impact of COVID-19, we believe that our combined scale with approximately 7,000 customers and over 75 million users, along with the significant cash flow generation capabilities that our synergistic model provides, will enable us to drive meaningful shareholder value over time."

Recent Highlights:

  • In response to the Coronavirus pandemic, the Company created "Cornerstone Cares", a free public learning portal with playlists for COVID-19 Health and Safety, Stress Management, and Work From Home.
  • On April 22, 2020, the Company finalized its acquisition of Saba Software, Inc., a global leader in talent experience solutions, for an aggregate purchase price of approximately $1.295 billion, consisting of $1.262 billion in cash and 1,110,352 shares of common stock of the Company.

“Our first quarter was progressing well until the COVID-19 pandemic headwinds began to slow new sales at the end of March. To offset the impact of these headwinds, we have been able to augment and accelerate the synergies from the Saba acquisition as our integration progresses ahead of plan. We now expect to realize $50 million in run-rate synergies as we exit 2020, as compared to our prior guidance of $35 million over twenty-four months,” said Brian Swartz, Cornerstone’s Chief Financial Officer. “We have also spent considerable time analyzing our liquidity position under various scenarios given the current state of global economic uncertainty, and even under extreme scenarios, such as assuming no new sales through the end of 2021, we still expect to increase our cash balances through the end of 2021. This gives us a high level of confidence in our ability to weather this storm.”

1

 

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 of each non-GAAP financial measure to its most comparable GAAP financial measure at the end of this press release.

Quarterly Conference Call

Cornerstone will host a conference call to discuss its first quarter 2020 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 (US) or (484) 653-6763 (outside the US) and referencing passcode: 4879143. 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 6:00 p.m. PT (9:00 p.m. ET) on May 14, 2020 by dialing (855) 859-2056 (US) or (404) 537-3406 (outside the US), and referencing passcode: 4879143.

Featured Presentation

An accompanying featured presentation will be available at https://investors.cornerstoneondemand.com/investors/overview/default.aspx.

About Cornerstone

Cornerstone is a premier global 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 7,000 customers of all sizes, spanning more than 75 million users across over 180 countries and more than 50 languages. Learn more at www.cornerstoneondemand.com.

Note: Cornerstone® and Cornerstone OnDemand® are registered trademarks of Cornerstone OnDemand, Inc.

Forward-looking Statements

This press release and the quarterly conference call referenced above contain forward-looking statements, including, but not limited to, statements regarding the expected performance of our business, our future financial and operating performance, including our GAAP and non-GAAP guidance, strategy, long-term growth and overall future prospects, the demand for our offerings, our competitive position, general business conditions, the integration of Saba into our business, anticipated synergies from our acquisition of Saba, and our expectations regarding certain financial measures including subscription revenue, capital expenditures, unlevered free cash flow, recurring revenue growth and operating margins. Any forward-looking statements contained in this press release or the quarterly conference call are based upon our historical performance and our current plans, estimates, and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent our expectations as of the date of this press release. Subsequent events may cause these expectations to change, and we disclaim any obligation to update the forward-looking statements in the future, except as required by law. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from our current expectations. Important factors that could cause actual results to differ materially from those anticipated in our forward-looking statements include, but are not limited to, our ability to attract new customers; the extent to which customers renew their subscriptions for our solutions; the timing of when consulting services are delivered to new and existing customers by our services organization and implementation subcontractors; the complexity of deployments and product implementations, which can impact the timing of when revenue is recognized from new and existing customers; allowing our implementation subcontractors to contract directly with customers for implementation services; our shift to focusing on recurring revenue streams; our ability to compete as the learning and people development provider for organizations of all sizes; changes in the proportion of our customer base that is comprised of enterprise or mid-sized organizations; our ability to manage our growth, including additional headcount and entry into new geographies; our ability to expand our enterprise and mid-market sales opportunities; our ability to maintain stable and consistent quota attainment rates; continued strong demand for learning and people development in Europe, the Middle East, Africa, Asia-Pacific, and Japan; the timing and success of efforts to increase operational efficiency and cost containment; the timing and success of solutions offered by our competitors; unpredictable macro-economic conditions; the impact of foreign exchange rates; reductions in information technology spending; the success of our new product and service introductions; a disruption in our hosting network infrastructure; problems caused by security breaches; costs and reputational harm that could result from defects in our solutions; the success of our strategic relationships with third parties; the loss of any of our key employees and our ability to locate qualified replacements; failure to protect our intellectual property; acts of terrorism or other vandalism, war, natural disasters, or the ongoing COVID-19 pandemic; changes in current tax or accounting rules; legal or political changes in local or foreign jurisdictions that decrease demand for, or restrict our ability to sell or provide, our products; the failure to achieve expected synergies and efficiencies of operations between the Company and Saba; the ability of the Company and Saba to successfully integrate their respective market opportunities, technology, products, personnel and operations; and unanticipated costs or liabilities related to businesses that we acquire. Further information on factors that could cause actual results to differ materially from the results anticipated by our forward-looking statements is included in the reports we have filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

Non-GAAP Financial Measures and Other Key Metrics

To supplement its consolidated financial statements, which are prepared and presented in accordance with US generally accepted accounting principles, or GAAP, the Company has provided in this press release and the quarterly conference call held on the date hereof certain non-GAAP financial measures and other key metrics. These non-GAAP financial measures include:

(i)

non-GAAP cost of revenue, which is defined as cost of revenue less amortization of intangible assets and stock-based compensation;

(ii)

annual recurring revenue, which is defined as the annualized recurring value of all active contracts at the end of a reporting period;

(iii)

unlevered free cash flow, which is defined as net cash provided by operating activities minus capital expenditures and capitalized software costs plus cash paid for interest;

(iv)

unlevered free cash flow margin, which is defined as unlevered free cash flow divided by revenue;

(v)

 

non-GAAP net income and non-GAAP diluted net income per share, which exclude, for the periods in which they are presented, stock-based compensation, amortization of intangible assets, accretion of debt discount and amortization of debt issuance costs, unrealized fair value adjustment on strategic investments, restructuring costs, acquisition-related costs, and excludes the impacts of unamortized stock-based compensation expense in applying the treasury method for determining the non-GAAP weighted average number of dilutive shares outstanding;

(vi)

non-GAAP gross profit and non-GAAP gross margin, which exclude stock-based compensation and amortization of intangible assets reflected in cost of revenue;

(vii)

non-GAAP operating income and non-GAAP operating income margin, which are defined as income or loss from operations excluding stock-based compensation, amortization of intangible assets, restructuring costs, and acquisition-related costs;

(viii)

non-GAAP operating expenses, which exclude stock-based compensation, amortization of intangible assets, restructuring costs, and acquisition-related costs; and

(ix)

non-GAAP sales and marketing expense, non-GAAP research and development expense, and non-GAAP general and administrative expense, each of which excludes stock-based compensation attributable to the corresponding GAAP financial measures.

The Company’s management uses these non-GAAP financial measures and other key metrics internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating the Company’s ongoing operational performance and trends and in comparing its financial measures with other companies in the same industry, many of which present similar non-GAAP financial measures and key metrics to help investors understand the operational performance of their businesses. In addition, the Company believes that the following non-GAAP adjustments are useful to management and investors for the following reasons:

  • Stock-based compensation. The Company excludes stock-based compensation expense because it is non-cash in nature, and management believes that its exclusion provides additional insight into the Company’s operational performance and also provides a useful comparison of the Company’s operating results to prior periods and its peer companies. Additionally, determining the fair value of certain stock-based awards involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of such awards.
  • Amortization of intangible assets. The Company excludes amortization of acquired intangible assets because the expense is a non-cash item and management believes that its exclusion provides meaningful supplemental information regarding the Company’s operational performance and allows for a useful comparison of its operating results to prior periods and its peer companies.
  • Accretion of debt discount and amortization of debt issuance costs. The Company recognizes the effective interest expense on its senior convertible notes and amortize the issuance costs over the term of the notes. The difference between the effective interest expense and the contractual interest expense and the amortization expense of issuance costs are excluded from management’s assessment of the Company’s operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. In addition, the exclusion of these items provides a useful comparison of the Company’s operating results to prior periods and its peer companies.
  • Fair value adjustment on strategic investments. The Company views the increase or decrease in the fair value of its strategic investments as not indicative of operational performance during any particular period and believes that the exclusion of these gains or losses provides investors with a supplemental view of the Company’s operational performance.
  • Acquisition-related costs. The Company excludes costs related to acquisitions because the expenses are discrete to specific acquisitions and are not necessarily indicative of its continuing operations. The Company believes that the exclusion of these costs provides investors with a supplemental view of the Company’s operational performance.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly-titled measures presented by other companies. For the periods presented, reconciliations of the non-GAAP financial measures to their most directly comparable GAAP measures have been provided in the tables included as part of this press release.

Cornerstone OnDemand, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

March 31, 2020

 

December 31, 2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

456,154

 

 

$

215,907

 

Short-term investments

 

 

201,579

 

Accounts receivable, net

94,200

 

 

131,105

 

Deferred commissions, current portion

33,470

 

 

33,215

 

Prepaid expenses and other current assets

33,789

 

 

30,512

 

Total current assets

617,613

 

 

612,318

 

Capitalized software development costs, net

50,169

 

 

50,023

 

Property and equipment, net

33,581

 

 

36,526

 

Operating right-of-use assets

70,908

 

 

72,944

 

Deferred commissions, net of current portion

70,919

 

 

74,563

 

Long-term investments

9,715

 

 

60,192

 

Intangible assets, net

18,251

 

 

9,440

 

Goodwill

56,282

 

 

47,453

 

Other assets

3,947

 

 

2,642

 

Total assets

$

931,385

 

 

$

966,101

 

Liabilities and stockholders’ equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

4,511

 

 

$

3,803

 

Accrued expenses

59,247

 

 

78,075

 

Deferred revenue, current portion

300,068

 

 

339,522

 

Operating lease liabilities, current portion

8,769

 

 

7,235

 

Other liabilities

10,511

 

 

11,015

 

Total current liabilities

383,106

 

 

439,650

 

Convertible notes, net

294,264

 

 

293,174

 

Deferred revenue, net of current portion

6,850

 

 

6,945

 

Operating lease liabilities, net of current portion

64,252

 

 

67,195

 

Other liabilities, non-current

1,655

 

 

655

 

Total liabilities

750,127

 

 

807,619

 

Stockholders’ equity:

 

 

 

Common stock

6

 

 

6

 

Additional paid-in capital

716,158

 

 

682,717

 

Accumulated deficit

(538,455)

 

 

(524,680)

 

Accumulated other comprehensive income

3,549

 

 

439

 

Total stockholders’ equity

181,258

 

 

158,482

 

Total liabilities and stockholders’ equity

$

931,385

 

 

$

966,101

 

Cornerstone OnDemand, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

Three Months Ended

 

March 31,

 

2020

 

2019

Revenue

$

150,136

 

 

$

140,117

 

Cost of revenue 1, 2

41,924

 

 

33,695

 

Gross profit

108,212

 

 

106,422

 

Operating expenses:

 

 

 

Sales and marketing 1,2

55,330

 

 

54,505

 

Research and development 1

24,085

 

 

27,746

 

General and administrative 1

24,725

 

 

22,940

 

Acquisition-related costs

6,811

 

 

 

Total operating expenses

110,951

 

 

105,191

 

(Loss) income from operations

(2,739)

 

 

1,231

 

Other income (expense):

 

 

 

Interest income

1,728

 

 

1,990

 

Interest expense

(5,501)

 

 

(5,366)

 

Other, net

(7,092)

 

 

(597)

 

Other expense, net

(10,865)

 

 

(3,973)

 

Loss before income tax provision

(13,604)

 

 

(2,742)

 

Income tax provision

(171)

 

 

(722)

 

Net loss

$

(13,775)

 

 

$

(3,464)

 

Net loss per share, basic and diluted

$

(0.22)

 

 

$

(0.06)

 

Weighted average common shares outstanding, basic and diluted

61,631

 

 

59,141

 

1

Includes stock-based compensation as follows:

 

Three Months Ended

 

March 31,

 

2020

 

2019

Cost of revenue

$

2,701

 

 

$

1,136

 

Sales and marketing

8,584

 

 

6,047

 

Research and development

4,800

 

 

4,196

 

General and administrative

7,085

 

 

5,666

 

Total

$

23,170

 

 

$

17,045

 

2

Includes amortization of intangible assets as follows:

 

Three Months Ended

 

March 31,

 

2020

 

2019

Cost of revenue

$

1,663

 

 

$

1,286

 

Sales and marketing

83

 

 

 

Total

$

1,746

 

 

$

1,286

 

Cornerstone OnDemand, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

Three Months Ended

 

March 31,

 

2020

 

2019

Cash flows from operating activities

 

 

 

Net loss

$

(13,775)

 

 

$

(3,464)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

11,964

 

 

10,858

 

Accretion of debt discount and amortization of debt issuance costs

1,090

 

 

1,027

 

Amortization (accretion) of purchased investment premium or discount, net

41

 

 

(216)

 

Net foreign currency and other loss

5,585

 

 

294

 

Stock-based compensation expense

23,170

 

 

17,045

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

35,516

 

 

32,955

 

Deferred commissions

582

 

 

(4,274)

 

Prepaid expenses and other assets

(6,550)

 

 

3,641

 

Accounts payable

523

 

 

(2,781)

 

Accrued expenses

(18,079)

 

 

(23,287)

 

Deferred revenue

(35,557)

 

 

(23,959)

 

Other liabilities

1,478

 

 

(545)

 

Net cash provided by operating activities

5,988

 

 

7,294

 

Cash flows from investing activities

 

 

 

Purchases of marketable investments

(20,419)

 

 

 

Maturities and sales of investments

272,173

 

 

170,679

 

Capital expenditures

(971)

 

 

(4,243)

 

Capitalized software costs

(7,389)

 

 

(7,399)

 

Cash paid for acquisition, net of cash acquired

(18,639)

 

 

 

Net cash provided by investing activities

224,755

 

 

159,037

 

Cash flows from financing activities

 

 

 

Proceeds from employee stock plans

10,130

 

 

6,840

 

Net cash provided by financing activities

10,130

 

 

6,840

 

Effect of exchange rate changes on cash and cash equivalents

(626)

 

 

248

 

Net increase in cash and cash equivalents

240,247

 

 

173,419

 

Cash and cash equivalents at beginning of period

215,907

 

 

183,596

 

Cash and cash equivalents at end of period

$

456,154

 

 

$

357,015

 

Supplemental cash flow data

 

 

 

Cash paid for interest

$

8,625

 

 

$

8,685

 

Cash paid for income taxes

955

 

 

390

 

Non-cash investing and financing activities:

 

 

 

Assets acquired under capital leases and other financing arrangements

$

 

 

$

485

 

Capitalized assets financed by accounts payable and accrued expenses

176

 

 

1,789

 

Capitalized stock-based compensation

2,190

 

 

752

 

Cornerstone OnDemand, Inc.

RECONCILIATIONS OF COST OF REVENUE TO NON-GAAP COST OF REVENUE, GROSS PROFIT AND GROSS MARGIN TO NON-GAAP GROSS PROFIT AND NON-GAAP GROSS MARGIN, (LOSS) INCOME FROM OPERATIONS TO NON-GAAP OPERATING INCOME, AND OPERATING MARGIN TO NON-GAAP OPERATING INCOME MARGIN

(in thousands)

(unaudited)

 

 

Three Months Ended

 

March 31,

 

2020

 

2019

Reconciliation of cost of revenue, gross profit, and gross margin:

 

 

 

Revenue

$

150,136

 

 

$

140,117

 

Cost of revenue

41,924

 

 

33,695

 

Gross profit

$

108,212

 

 

$

106,422

 

Gross margin

72.1

%

 

76.0

%

 

 

 

 

Cost of revenue

$

41,924

 

 

$

33,695

 

Adjustments to cost of revenue:

 

 

 

Stock-based compensation

(2,138)

 

 

(1,136)

 

Amortization of intangible assets

(1,663)

 

 

(1,286)

 

Total adjustments to cost of revenue

(3,801)

 

 

(2,422)

 

Non-GAAP cost of revenue

38,123

 

 

31,273

 

Non-GAAP gross profit

$

112,013

 

 

$

108,844

 

Non-GAAP gross margin

74.6

%

 

77.7

%

 

 

 

 

Reconciliation of (loss) income from operations and operating margin:

 

 

 

(Loss) income from operations

$

(2,739)

 

 

$

1,231

 

Operating margin

(1.8)

%

 

0.9

%

Adjustments to loss from operations:

 

 

 

Stock-based compensation1

19,109

 

 

17,045

 

Amortization of intangible assets

1,746

 

 

1,286

 

Acquisition-related costs2

6,811

 

 

 

Total adjustments to (loss) income from operations

27,666

 

 

18,331

 

Non-GAAP operating income

$

24,927

 

 

$

19,562

 

Non-GAAP operating income margin

16.6

%

 

14.0

%

 

1

 

The difference between stock-based compensation presented above and stock-based compensation as reported in the consolidated statement of operations for the three months ended March 31, 2020, represents an amount accrued for cash bonuses as of December 31, 2019, which was settled in equity during the first quarter of 2020.

 

Three Months Ended

 

March 31,

 

2020

Cost of revenue

$

2,138

 

Sales and marketing

7,674

 

Research and development

3,386

 

General and administrative

5,911

 

Total

$

19,109

 

 

2

 

Costs related to the acquisitions of Clustree SAS and Saba Software, Inc.

Cornerstone OnDemand, Inc.

RECONCILIATIONS OF NET LOSS TO NON-GAAP NET INCOME AND NON-GAAP NET INCOME PER SHARE

(in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended

 

 

March 31,

 

 

2020

 

2019

Net loss

$

(13,775)

 

 

$

(3,464)

 

Adjustments to net loss

 

 

 

Stock-based compensation1

19,109

 

 

17,045

 

Amortization of intangible assets

1,746

 

 

1,286

 

Acquisition-related costs2

6,811

 

 

 

Accretion of debt discount and amortization of debt issuance costs3

1,090

 

 

1,026

 

Total adjustments to net loss

$

28,756

 

 

$

19,357

 

Non-GAAP net income

$

14,981

 

 

$

15,893

 

Non-GAAP basic net income per share

$

0.24

 

 

$

0.27

 

Non-GAAP diluted net income per share

$

0.23

 

 

$

0.25

 

Weighted-average common shares outstanding, basic

61,631

 

 

59,141

 

Non-GAAP weighted-average common shares outstanding, diluted

66,188

 

 

64,750

 

 

1

 

The difference between stock-based compensation presented above and stock-based compensation as reported in the consolidated statement of operations for the three months ended March 31, 2020, represents an amount accrued for cash bonuses as of December 31, 2019, which was settled in equity during the first quarter of 2020.

 

2

 

Costs related to the acquisitions of Clustree SAS and Saba Software, Inc.

 

3

 

Debt discount accretion and debt issuance cost amortization has been recorded in connection with our issuance of $300.0 million in convertible notes on December 8, 2017. These expenses represent non-cash charges that have been recorded in accordance with the authoritative accounting literature for such transactions.

Cornerstone OnDemand, Inc.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO UNLEVERED FREE CASH FLOW AND UNLEVERED FREE CASH FLOW MARGIN

(A Non-GAAP Financial Measure)

(in thousands)

(unaudited)

 

Three Months Ended

 

March 31,

 

2020

 

2019

Reconciliation of unlevered free cash flow:

 

 

 

Net cash provided by operating activities

$

5,988

 

 

$

7,294

 

Capital expenditures

(971)

 

 

(4,243)

 

Capitalized software costs

(7,389)

 

 

(7,399)

 

Cash paid for interest

8,625

 

 

8,685

 

Unlevered free cash flow

$

6,253

 

 

$

4,337

 

Unlevered free cash flow margin

4.2

%

 

3.1

%

 

Cornerstone OnDemand, Inc.

TRENDED OPERATIONAL & FINANCIAL HIGHLIGHTS

(unaudited)

 

The following metrics are intended as a supplement to the financial statements found in this press release and other information furnished or filed with the SEC. In the event of discrepancies between amounts in these tables and the Company’s historical disclosures or financial statements, readers should rely on the Company’s filings with the SEC and financial statements in the Company’s most recent earnings press release.

The Company intends to periodically review and refine the definition, methodology and appropriateness of each of these supplemental metrics. As a result, metrics are subject to removal and/or change, and such changes could be material.

 

FY 2019

 

FY 2020

 

 

 

Q1'19

Q2'19

Q3'19

Q4'19

 

Q1'20

 

FY17

FY18

FY19

SELECTED METRICS:

 

 

 

 

 

 

 

 

 

 

Number of customers1

3,567

 

3,604

 

3,645

 

3,698

 

 

3,693

 

 

3,250

 

3,535

 

3,698

 

% y/y

8.8

%

7.2

%

6.3

%

4.6

%

 

3.5

%

 

11.4

%

8.8

%

4.6

%

% q/q

0.9

%

1.0

%

1.1

%

1.5

%

 

(0.1)

%

 

n/a

n/a

n/a

Number of employees

2,017

 

2,034

 

1,986

 

1,993

 

 

1,975

 

 

1,891

 

1,953

 

1,993

 

% y/y

10.3

%

9.9

%

5.0

%

2.0

%

 

(2.1)

%

 

3.7

%

3.3

%

2.0

%

% q/q

3.3

%

0.8

%

(2.4)

%

0.4

%

 

(0.9)

%

 

n/a

n/a

n/a

Annual dollar retention rate

n/a

 

n/a

 

n/a

 

n/a

 

 

n/a

 

93.5

%

92.8

%

90.3

%

Annual recurring revenue (in thousands)

n/a

 

n/a

 

n/a

 

n/a

 

 

n/a

 

439,000

 

510,000

 

575,000

 

Net cash provided by operating activities (in thousands)

7,294

 

21,183

 

24,478

 

62,594

 

 

5,988

 

 

67,510

 

90,253

 

115,549

 

Unlevered free cash flow (in thousands)

4,337

 

9,470

 

21,682

 

54,714

 

 

6,253

 

 

43,680

 

63,471

 

90,203

 

Unlevered free cash flow margin

3.1

%

6.7

%

15.0

%

36.6

%

 

4.2

%

 

9.1

%

11.8

%

15.6

%

FINANCIAL DATA (in thousands, except percentages):

 

 

 

 

 

 

 

 

 

 

Revenue

140,117

 

141,860

 

144,952

 

149,594

 

 

150,136

 

 

 

537,891

 

576,523

 

Subscription revenue

131,256

 

132,562

 

137,446

 

141,704

 

 

144,421

 

 

 

473,052

 

542,968

 

% y/y growth

16.0

%

15.5

%

15.7

%

12.2

%

 

10.0

%

 

 

 

14.8

%

% y/y growth constant currency

18.2

%

17.3

%

17.2

%

12.4

%

 

10.7

%

 

 

 

16.2

%

Subscription revenue % of total revenue

93.7

%

93.4

%

94.8

%

94.7

%

 

96.2

%

 

 

87.9

%

94.2

%

Income (loss) from operations

1,231

 

(3,594)

 

3,713

 

10,583

 

 

(2,739)

 

 

 

(7,769)

 

11,933

 

MARGIN DATA:

 

 

 

 

 

 

 

 

 

 

Gross margin

76.0

%

71.7

%

74.4

%

74.5

%

 

72.1

%

 

 

73.2

%

74.1

%

Sales and marketing % of revenue

38.9

%

41.4

%

39.9

%

37.9

%

 

36.9

%

 

 

41.8

%

39.5

%

Research and development % of revenue

19.8

%

17.2

%

17.7

%

15.6

%

 

16.0

%

 

 

14.3

%

17.5

%

General and administrative % of revenue

16.4

%

15.7

%

14.2

%

13.9

%

 

16.5

%

 

 

16.7

%

15.0

%

Acquisition-related costs % of revenue

 

 

 

 

 

4.5

%

 

 

0.2

%

 

Restructuring % of revenue

 

 

 

 

 

 

 

 

1.7

%

 

Operating margin

0.9

%

(2.5)

%

2.6

%

7.1

%

 

(1.8)

%

 

 

(1.4)

%

2.1

%

NON-GAAP MARGIN DATA:

 

 

 

 

 

 

 

 

 

 

Non-GAAP gross margin

77.7

%

73.7

%

76.3

%

76.3

%

 

74.6

%

 

 

74.1

%

76.0

%

Non-GAAP sales and marketing % of revenue

34.6

%

36.6

%

34.4

%

33.2

%

 

31.7

%

 

 

37.2

%

34.7

%

Non-GAAP research and development % of revenue

16.8

%

14.1

%

14.8

%

13.5

%

 

13.8

%

 

 

12.1

%

14.8

%

Non-GAAP general and administrative % of revenue

12.3

%

11.3

%

10.3

%

10.6

%

 

12.5

%

 

 

13.2

%

11.1

%

Non-GAAP operating margin

14.0

%

11.7

%

16.7

%

18.9

%

 

16.6

%

 

 

11.8

%

15.4

%

Non-GAAP research and development plus capitalized software % of revenue

22.1

%

18.8

%

18.0

%

17.4

%

 

18.7

%

 

 

16.8

%

19.1

%

FOREIGN EXCHANGE RATES:

 

 

 

 

 

 

 

 

 

 

GBP to USD average period rate

1.30

 

1.29

 

1.23

 

1.29

 

 

1.28

 

 

1.29

 

1.34

 

1.28

 

GBP to USD end of period spot rate

1.30

 

1.27

 

1.23

 

1.32

 

 

1.23

 

 

1.35

 

1.27

 

1.32

 

EUR to USD average period rate

1.14

 

1.12

 

1.11

 

1.11

 

 

1.10

 

 

1.14

 

1.18

 

1.12

 

EUR to USD end of period spot rate

1.12

 

1.14

 

1.09

 

1.12

 

 

1.10

 

 

1.20

 

1.14

 

1.12

 

1

Includes contracted customers of our enterprise people development platform and excludes customers and users of Cornerstone for Salesforce, PiiQ, Workpop Inc. and Grovo Learning, Inc.

 

Investor Relations Contact: Jason Gold Phone: +1 (310) 526-2531 jgold@csod.com

Media Contact: Deaira Irons Phone: +1 (310) 752-0164 dirons@csod.com

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