Cornerstone OnDemand, Inc. Announces First Quarter 2012 Financial Results

Learning and talent management software provider Cornerstone OnDemand, Inc. (NASDAQ:CSOD) today announced results for its quarter ended March 31, 2012.

Revenue for the first quarter of 2012 was $24.0 million, representing a 52% increase compared to the same period in 2011.

Bookings 1, which the company defines as revenue plus the change in deferred revenue, were $24.0 million for the first quarter of 2012, representing a 67% increase compared to the first quarter of 2011. Deferred revenue at March 31, 2012 was $55.8 million, which was 72% higher than the balance at March 31, 2011.

“We are extremely pleased with our first quarter and our continued innovation with the launch of our Recruiting Cloud and Volunteer Management System,” said Adam Miller, President and CEO of Cornerstone. “We continue to acquire marquee accounts and grow existing accounts. As our bookings demonstrate, the momentum of our business has not slowed down. The expansion of our products and services, as well as the growth of our global sales teams and our acquisition of Sonar6, has allowed us to grow our total addressable market with new and existing clients alike.”

Gross profit for the first quarter of 2012 was $17.2 million, representing a 54% year-over-year improvement compared to the same period in 2011. Gross margin for the first quarter of 2012 was 71.5% compared to 70.9% in the same period in 2011. Non-GAAP gross margin 1 for the first quarter of 2012 was 73.5% compared to 71.2% in the same period of 2011.

In accordance with Generally Accepted Accounting Principles, or on a "GAAP" basis, Cornerstone's net loss for the first quarter of 2012 was $8.1 million, or $(0.16) per share, compared to a net loss of $47.6 million, or $(3.65) per share, for the first quarter of 2011.

Non-GAAP net loss 1 for the first quarter of 2012 was $4.9 million, or $(0.10) per share, compared to non-GAAP net loss 1 of $3.7 million, or $(0.26) per share, for the same period in 2011.

During the first quarter of 2012, net cash provided by operating activities was $3.0 million and non-GAAP net cash provided by operating activities 1 was $3.2 million.

At March 31, 2012, Cornerstone’s total cash and cash equivalents were $87.2 million and accounts receivable were $25.1 million.

Cornerstone ended the quarter with 891 clients and approximately 8.2 million users, representing 59% and 57% year-over-year growth and 11% and 9% when compared to the prior quarter, of Cornerstone’s client base and users, respectively.

1 Bookings, non-GAAP net cash provided by (used in) operating activities, non-GAAP net loss, non-GAAP net loss per share, and non-GAAP gross margin are non-GAAP financial measures. Please see the discussion in the section "Non-GAAP Financial Measures" and the reconciliations at the end of this release.

Quarterly Conference Call

Cornerstone OnDemand will host a conference call to discuss its first quarter 2012 results at 2:00 p.m. PT (5:00 p.m. ES) 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/events.cfm. The live call can be accessed by dialing (888) 357-3694 (U.S.) or (973) 890-8276 (outside the U.S.) and referencing passcode: 80975882. A replay of the call will also be available at http://investors.cornerstoneondemand.com/events.cfm or via telephone until 12:00 a.m. PT on May 18, 2012 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 80975882.

About Cornerstone OnDemand

Cornerstone OnDemand is a leading global provider of a comprehensive learning and talent management solution. We enable organizations to meet the challenges they face in empowering their people and maximizing the productivity of their human capital. Our integrated software-as-a-service (SaaS) solution consists of the Cornerstone Recruiting Cloud, the Cornerstone Performance Cloud, the Cornerstone Learning Cloud and the Cornerstone Extended Enterprise Cloud. Our clients use our solution to source and recruit top talent, develop employees throughout their careers, engage all employees effectively, improve business execution, cultivate future leaders, and integrate with their external networks of customers, vendors and distributors. We currently empower approximately 8.2 million users across 180 countries and in 32 languages. www.csod.com

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

Forward-looking Statements

This release contains forward-looking statements, including statements regarding Cornerstone OnDemand's future financial performance, market growth, the demand for and benefits from the use of Cornerstone OnDemand's solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon Cornerstone OnDemand's historical performance and its current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent Cornerstone OnDemand's expectations as of the date of this press release. Subsequent events may cause these expectations to change, and Cornerstone OnDemand disclaims any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, our ability to attract new clients; the extent to which clients renew their subscriptions for our solution; our ability to compete as the talent management provider for organizations of all sizes; changes in the proportion of our client base that is comprised of enterprise or mid-sized organizations; our ability to manage our growth, including additional headcount and entry into new geographies; the timing and success of solutions offered by our competitors; unpredictable macro-economic conditions; reductions in information technology spending; the success of our new product and service introductions; a disruption in our hosting network infrastructure; costs and reputational harm that could result from defects in our solution; the success of our strategic relationships with third parties; the loss of any of our key employees; increased demands on our infrastructure and costs associated with operating as a public company; failure to protect our intellectual property; acts of terrorism or other vandalism, war or natural disasters; changes in current tax or accounting rules; unanticipated costs or liabilities related to businesses that we acquire; and other risks and uncertainties. Further information on factors that could cause actual results to differ materially is included in Cornerstone OnDemand's reports filed with the SEC, including its Form 10-K filed with the SEC on March 6, 2012.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, Cornerstone OnDemand has provided in this release certain measures that have not been prepared in accordance with GAAP. These non-GAAP financial measures include (i) bookings, which is defined as revenue plus the change in deferred revenue, (ii) non-GAAP net cash provided by operating activities, which excludes acquisition and acquisition related costs and employer related taxes from stock-based compensation, (iii) non-GAAP net loss and non-GAAP net loss per share, which exclude, for the periods in which they are present, stock-based compensation and employer-related payroll taxes, acquisition costs, amortization of debt discount and issuance costs, early debt retirement expense, change in the fair value of preferred stock warrant liabilities, and accretion related to preferred stock, and (iv) non-GAAP gross margin, which excludes common stock warrant charges and stock-based compensation in cost of revenue.

Cornerstone OnDemand’s management uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to the corresponding GAAP measures, in evaluating Cornerstone OnDemand'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 to help investors understand the operational performance of their businesses. However, it is important to note that the particular items Cornerstone excludes from, or includes in, its non-GAAP financial measures may differ from the items excluded from, or included in, similar non-GAAP financials used by companies in the same industry.

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 measure. A reconciliation of the non-GAAP financial measures to such GAAP measures has been provided in the tables included as part of this press release.
         

Cornerstone OnDemand, Inc.

CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)
 
March 31, 2012 December 31, 2011
Assets
Cash and cash equivalents $ 87,186 $ 85,409
Accounts receivable, net 25,096 34,110
Deferred commissions 3,895 3,537
Prepaid expenses and other current assets, net   4,015     3,789  
Total current assets 120,192 126,845
 
Capitalized software development, net 4,760 4,106
Property and equipment, net 4,182 3,663
Other assets, net   1,541     748  
Total Assets $ 130,675   $ 135,362  
 
Liabilities, Convertible Preferred Stock and Stockholders' Equity
Liabilities:
Accounts payable $ 5,357 $ 3,834
Accrued expenses 5,631 8,039
Deferred revenue, current portion 53,003 52,338
Capital lease obligations, current portion 1,701 1,617
Short term debt 456 265
Other liabilities   752     996  
Total current liabilities 66,900 67,089
 
Other liabilities, non-current 1,145 806
Deferred revenue, net of current portion 2,834 3,542
Capital lease obligation, net of current portion 1,447 1,056
Long-term debt, net of current portion   957     409  
Total liabilities 73,283 72,902
 
Stockholders' Equity
Common stock 5 5
Additional paid-in capital 230,110 226,916
Accumulated deficit (172,757 ) (164,651 )
Accumulated other comprehensive income (loss)   34     190  
Total stockholders’ equity   57,392     62,460  
Total Liabilities, Convertible Preferred Stock and Stockholders' Equity $ 130,675   $ 135,362  
         

Cornerstone OnDemand, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)
 
Three Months Ended

March 31,
  2012     2011  
 
Revenue $ 24,002 $ 15,747
Cost of revenue1   6,844     4,579  
Gross profit 17,158 11,168
 
Operating expenses:
Sales and marketing1 16,237 9,845
Research and development1 3,093 2,322
General and administrative1   5,954     3,553  
Total operating expenses   25,284     15,720  
Loss from operations (8,126 ) (4,552 )
Other income (expense):
Interest expense (143 ) (684 )
Change in fair value of preferred stock warrant liabilities - (42,559 )
Other, net   239     236  
Other income (expense), net   96     (43,007 )
Loss before provision for income taxes (8,030 ) (47,559 )
Provision for income taxes   (82 )   (34 )
Net loss (8,112 ) (47,593 )
Accretion of redeemable preferred stock   -     (5,208 )
Net loss attributable to common stockholders $ (8,112 ) $ (52,801 )
Net loss per share attributable to common stockholders, basic and diluted $ (0.16 ) $ (3.65 )
Weighted-average common shares outstanding, basic and diluted   49,384     14,453  
 
1Includes stock-based compensation and employer-related taxes as follows:
 
 
Three Months Ended

March 31,
  2012     2011  
 
Cost of revenue $ 491 $ 46
Sales and marketing 515 212
Research and development 153 114
General and administrative   1,389     433  
Total $ 2,548   $ 805  

 
 

 

Cornerstone OnDemand, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)
       
 
Three Months Ended
March 31,
  2012     2011  
 
Cash flows from operating activities:
Net loss $ (8,112 ) $ (47,593 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 1,161 823
Non-cash interest expense 68 387
Change in fair value of preferred stock warrant liabilities - 42,559
Unrealized foreign exchange gain (201 ) -
Stock-based compensation expense 2,499 805
Non-cash charitable contribution of common stock - 193
Changes in operating assets and liabilities:
Accounts receivable 9,225 5,744
Deferred commissions (279 ) (305 )
Prepaid expenses and other assets (269 ) (1,077 )
Accounts payable 1,426 1,474
Accrued expenses (2,301 ) (10 )
Deferred revenue (362 ) (1,415 )
Other liabilities   174     (194 )
Net cash provided by operating activities   3,029     1,391  
Cash flows from investing activities:
Purchases of property and equipment (46 ) (64 )
Capitalized software costs   (1,264 )   (663 )
Net cash used in investing activities   (1,310 )   (727 )
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts and commissions - 90,539
Proceeds from issuance of preferred stock upon warrant exercises - 3,163
Proceeds from common stock warrant exercises - 159
Payments of initial public offering costs - (1,256 )
Repayment of debt (210 ) (9,072 )
Principal payments under capital lease and financing obligations (449 ) (398 )
Proceeds from stock option exercises   594     179  
Net cash provided by (used in) financing activities   (65 )   83,314  
Effect of exchange rate changes on cash and cash equivalents   123     -  
Net increase in cash and cash equivalents 1,777 83,978
Cash and cash equivalents at beginning of period   85,409     7,067  
Cash and cash equivalents at end of period $ 87,186   $ 91,045  
 
Supplemental cash flow information
Cash paid for interest $ 75 $ 325
         

Cornerstone OnDemand, Inc.

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

(in thousands, except per share amounts)

(unaudited)
 
Three Months Ended

March 31,
2012 2011
 
 
Net loss 1 $ (8,112 ) $ (47,593 )
Adjustments to net loss
Stock-based compensation and employer-related payroll taxes 2,548 805
Acquisition costs 568 -
Amortization of debt discount and issuance costs 68 453
Early debt retirement expense - 54
Change in fair value of preferred stock warrant liabilities   -     42,559  
Total adjustments to net loss   3,184     43,871  
Non-GAAP net loss $ (4,928 ) $ (3,722 )
Weighted-average common shares outstanding, basic and diluted 2   49,384     14,453  
Non-GAAP net loss per share $ (0.10 ) $ (0.26 )
 
(1)

Net loss excludes the accretion of redeemable preferred stock of $0 million and $5.2 million for the three months ended March 31, 2012 and 2011, respectively.

 
 
(2)

The weighted-average common shares for the three months ended March 31, 2011 reflect the actual conversion of our preferred stock to common stock upon our initial public offering and the issuance of shares in the initial public offering in March 2011.

 
       

Cornerstone OnDemand, Inc.

CALCULATION OF BOOKINGS (DEFINED AS REVENUE PLUS CHANGE IN DEFERRED REVENUE)

(dollars in thousands)

(unaudited)
 
Deferred Revenue Three Months Ended
Balance March 31, 2012
 
 
Revenue $ 24,002
 
Deferred revenue at December 31, 2011 $ 55,880
Deferred revenue at March 31, 2012   55,837  
Change in deferred revenue (43 )   (43 )
 
Bookings $ 23,959  
 
 
Deferred Revenue Three Months Ended
Balance March 31, 2011
 
 
Revenue $ 15,747
 
Deferred revenue at December 31, 2010 $ 33,818
Deferred revenue at March 31, 2011   32,403  
Change in deferred revenue (1,415 )   (1,415 )
 
Bookings $ 14,332  
 

 

Percentage period-over-period increase in bookings for the three months ended March 31, 2012
67 %
     

 

Cornerstone OnDemand, Inc.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO NON-GAAP NET CASH PROVIDED BY OPERATING ACTIVITIES

(in thousands)

(unaudited)
 
 
 
Three Months Ended

March 31,
  2012     2011  
 
Net cash provided by operating activities $ 3,029 $ 1,391
Acquisition and acquisition related costs 103 -
Employer related taxes from stock-based compensation   49     -  
Non-GAAP net cash provided by operating activities $ 3,181   $ 1,391  
 
Net cash used in investing activities $ (1,310 ) $ (727 )

Net cash (used in) provided by financing activities
$ (65 ) $ 83,314
       

Cornerstone OnDemand, Inc.

RECONCILIATION OF GROSS MARGIN TO NON-GAAP GROSS MARGIN

(dollars in thousands)

(unaudited)
 
Three Months Ended March 31,
  2012       2011  
 
 
Revenue $ 24,002 $ 15,747
Cost of revenue   6,844     4,579  
Gross profit $ 17,158   $ 11,168  
Gross margin 71 % 71 %
 
Reconciliation between gross margin and non-GAAP gross margin
Adjustments
Stock based compensation in cost of revenue

$
491  

$
46  
Total adjustments   491     46  
Non-GAAP gross profit $ 17,649   $ 11,214  
Non-GAAP gross margin 74 % 71 %

Copyright Business Wire 2010

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