Cornerstone OnDemand's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Cornerstone OnDemand, Inc. ( CSOD)

Q4 2011 Earnings Call

February 15, 2012 11:00 am ET


Perry Wallack - CFO

Adam Miller - President & CEO


Greg Dunham - Goldman Sachs

Laura Lederman - William Blair

Brendan Barnicle - Pacific Crest

Rick Sherlund - Nomura

Raimo Lenschow - Barclays Capital

Scott Berg - Feltl

Michael Huang - Needham & Company

Pat Walravens - JMP Securities



Good day ladies and gentlemen and welcome to Cornerstone OnDemand’s fourth quarter and fiscal yearend 2011 earnings conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. As a reminder, this conference call is being recorded. And now I will turn the conference over to Perry Wallack, CFO for Cornerstone OnDemand.

Perry Wallack

Thank you. Good afternoon everyone. This is Perry Wallack, CFO of Cornerstone OnDemand and welcome to our fourth quarter and fiscal yearend 2011 earnings conference call. Today's call will begin with Adam providing a brief overview of our company and the quarter and then I will review some key financial results for the fourth quarter. Later we will conduct a question-and-answer session. We will discuss the results of our fourth quarter which ended December 31st, 2011. By now you should have received the copy of our press release which was released after the market closed today and furnished with the SEC on Form 8-K. You can also access the press release and the detailed financials on our investor relations website.

As a reminder today's call is being recorded and a replay will be made available following the conclusion of the call. During the call, we will be referring to both GAAP and non-GAAP financial measures. The reconciliation of our GAAP to non-GAAP information is provided in the press release and on our website. All of the financial measures that we will discuss today are non-GAAP unless we state that the measure is a GAAP number.

Any non-GAAP outlook we provide has not yet been reconciled with the comparable GAAP outlook because among other things we cannot reliably estimate our future stock-based compensation expenses which are dependent on our future stock price. Our discussion will include forward-looking statements such as statements regarding our business strategy; demand for our products; certain projected financial results and operating metrics; product development; customer satisfaction and retention; customer attrition rate; market or business growth, our revenue runrate; investment activity in our business; visibility into our business model and results; the effect of capitalized development costs; spending on R&D; professional services and other aspects of our business; our appraisal of our competitors and their products; and our ability to compete effectively.

Forward-looking statements involve risks, uncertainties and assumptions. If any of the risks or uncertainties materializes or any of the assumptions prove incorrect, actual results could differ materially from those expressed or implied by the forward-looking statements we make. Words such as expect, believe, anticipate, plan, illustrate, intend, estimate and other similar words are also intended to identify such forward-looking statements.

These risks, uncertainties, assumptions as well as other information on potential factors that could affect our financial results are included in our registration statement on Form S-1 and subsequent periodic filings with the SEC.

And with that I will turn it over to Adam.

Adam Miller

Thanks, Perry and thank you to everyone joining us today. Our fourth quarter was a strong finish to a fantastic first year as a public company. Our revenues for the fourth quarter came in at $22.4 million representing a year-over-year increase of 59%. For the full year, revenues were $75.5 million representing a 62% increase over 2010. Bookings for the fourth quarter came in at $38.4 million representing a year-over-year increase of 58%. And full-year bookings were $97.6 million representing a 60% increase over 2010.

Clearly the momentum of our business did not slow down in 2011. Even as we invest heavily in the ongoing growth of our business and the success of our clients, we are starting to see leverage in our operating model. On a non-GAAP basis, gross margins for the full year of 2011 were 73% compared to 70% in 2010. And full year unlevered free cash flow came in at negative $1.4 million significantly better than our originally expected range of negative $4 million to $5 million.

As you may remember, we bootstrapped the company for the first seven years of the business and the disciplined financial management has been a core part of our DNA from the beginning. These results are a testament to that discipline. In the fourth quarter we added over 100 new clients bringing our total to over 800 clients worldwide. We continue to increase our presence amongst the world’s leading companies. With new client additions including Liz Claiborne, Blackbaud, the NASDAQ, one of the world’s largest theatrical exhibition and entertainment companies, one of the world’s largest insurance groups, inarguably the world’s premier investment bank. We increased our penetration within a number of verticals, such as healthcare and public sector and entered new verticals such as gaming and pharma. We also entered new geographies, most notably India where we officially planted our flag with the addition of Tata Motors as our first Indian client.

Our account management team helped us continue to strengthen our relationships with our existing clients in the fourth quarter delivering significant up sales to AIG, Air Liquide, one of the world’s largest office supply retail chains and one of the world’s largest thinking institutions.

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