SANTA MONICA, Calif. — Human capital management software provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results1, 2 for its third quarter ended September 30, 2019. The Company has provided a quarterly shareholder letter on its Investor Relations website at http://investors.cornerstoneondemand.com.
“During Q3, we continued to make progress towards many of our strategic and operational goals,” said Adam Miller, Founder and CEO of Cornerstone. “As the digital era continues to unfold, workforces need to be reskilled to ensure they remain relevant and productive. We believe we are extremely well positioned to help organizations of all sizes address this skills divide.”
Third Quarter 2019 Results:
- Revenue for the third quarter of 2019 was $145.0 million compared to a guided range of $141.0 million to $143.0 million.This represents an 8.2% increase compared to the same period of the prior year. Revenue growth on a constant currency basis was 9.6%.
- Subscription revenue for the third quarter of 2019 was $137.4 million compared to a guided range of $135.0 million to $137.0 million.This represents a 15.7% increase compared to the same period of the prior year. Subscription revenue growth on a constant currency basis was 17.2%.
- Operating income for the third quarter of 2019 was $3.7 million, yielding a margin of 2.6%, compared to $1.6 million and margin of 1.2% in the same period of the prior year.
- Non-GAAP operating income for the third quarter of 2019 was $24.3 million, yielding a margin of 16.7%, compared to $17.8 million and margin of 13.3% in the same period of the prior year.
- Net loss for the third quarter of 2019 was $(1.2) million, or a $(0.02) diluted net loss per share, compared to $(2.4) million, or $(0.04) diluted net loss per share in the same period of the prior year.
- Non-GAAP net income for the third quarter of 2019 was $20.4 million, or $0.31 diluted net income per share, compared to $14.8 million and $0.23 diluted net income per share in the same period of the prior year.
- Operating cash flow for the third quarter of 2019 was $24.5 million, yielding a margin of 16.9%, compared to $32.6 million, yielding a margin of 24.3%, in the same period of the prior year.
- Unlevered free cash flow for the third quarter of 2019 was $21.7 million, yielding a margin of 15.0%, compared to $32.1 million, yielding a margin of 23.9%, in the same period of the prior year.
“Through the third quarter of 2019, Cornerstone has produced a good mix of growth and profitability,” said Brian Swartz, CFO of Cornerstone. “For the balance of the year and for the full-year 2020, we expect continued improvement in operating and unlevered free cash flow margins.”
Recent Highlights:
- The Company was recognized as a Core Challenger in the October 2019 Fosway 9-Grid™ for Talent Acquisition.
- The Company attended the 22nd annual HR Technology Conference & Exposition, and showcased its offerings including Cornerstone Learning, Performance, Recruiting, and HR as well as content subscription service, Content Anytime.
- The Company joined Ultimate Software’s UltiPro Connect Partners program. The partnership gives Cornerstone and Ultimate the ability to integrate their solutions to make it easier for mutual customers to exchange data between the UltiPro HCM solution and Cornerstone Learning.
- The University of North Carolina System, a multi-campus university, selected the Company’s software to support the development of its employees.
At November 1, 2019, $127.6 million remained available under the share repurchase program.
Financial Outlook:
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, 2019, the Company provides the following outlook:
- Revenue between $145 million and $147 million, representing year-over-year growth at the mid-point of 5.6%3, or 5.7%4 on a constant currency basis.
- Subscription revenue between $141 million and $143 million, representing year-over-year growth at the mid-point of 12.4%3, or 12.6%4 on a constant currency basis.
For the year ending December 31, 2019, the Company provides the following outlook:
- Revenue between $572 million and $574 million, representing year-over-year growth at the mid-point of 6.5%5, 7, or 7.8%6 on a constant currency basis.
- Subscription revenue between $542 million and $544 million, representing year-over-year growth at the mid-point of 14.8%5, 7, or 16.2%6 on a constant currency basis.
- Annual recurring revenue as of December 31, 2019 between $581 million and $590 million, representing year-over-year growth at the mid-point of 14.8%,5, 7 or 15.3%5, 7 on a constant currency basis.
- Non-GAAP operating income between $85.5 million and $87.5 million. Assuming the midpoint of the revenue and non-GAAP operating income ranges, this represents a non-GAAP operating margin of 15.1%.
- Unlevered free cash flow between $86 million and $92 million. Assuming the midpoint of the revenue and non-GAAP operating income ranges, this represents an unlevered free cash flow margin of 15.5%.
The Company has not reconciled the guidance for non-GAAP operating income or non-GAAP operating income 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 income and non-GAAP operating margin, the Company excludes stock-based compensation expense, which is impacted by the number of shares issued and the market price, both of which are uncertain. The actual amount of stock-based compensation expense in the year ending December 31, 2019 will have a significant impact on the Company’s GAAP operating margin.
