Cornerstone OnDemand Announces Fourth Quarter and Fiscal Year 2012 Financial Results

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Cornerstone OnDemand Announces Fourth Quarter and Fiscal Year 2012 Financial Results

  • Record quarterly revenue of $36.4 million, up 63% year-over-year
  • Record quarterly non-GAAP revenue of $36.7 million, up 64% year-over-year1
  • Record full year revenue of $117.9 million, up 56% year-over-year2
  • Record full year non-GAAP revenue of $119.4 million, up 58% year-over-year1,2
  • Record annual bookingsof $154.3 million, up 58% year-over-year1
  • Record net cash provided by operating activities of $10.3 million, up from $1.8 million in 2011
  • Record full year non-GAAP gross margin of 73.2%1
  • Ended the year with over 1,200 clients and over 10.5 million users3

SANTA MONICA, Calif.--(BUSINESS WIRE)-- Learning and talent management software provider Cornerstone OnDemand, Inc. (NAS: CSOD) today announced results for its fourth quarter and fiscal year ended December 31, 2012.


"Through all of the consolidation that took place during 2012, our business continued to excel, and Cornerstone OnDemand is today the clear independent SaaS leader in learning and talent management," said Adam Miller, the Company's President and CEO. "We are extremely proud of what our team was able to accomplish this past year. Our persistent drive to innovate has provided our clients with a best-of-breed, end-to-end talent management solution. With a truly global market opportunity, and our relentless focus on client success, we look forward to continued growth in the future."

Revenue for the fourth quarter of 2012 was $36.4 million, representing a 63% increase compared to the same period in 2011. Non-GAAP revenue for the fourth quarter of 2012 was $36.7 million, representing a 64% increase compared to the same period in 2011.1 Revenue for the full fiscal year 2012 was $117.9 million, representing a 56% increase compared to gross revenue for the full fiscal year 2011.2 Non-GAAP revenue for the full fiscal year 2012 was $119.4 million, representing a 58% increase compared to the full fiscal year 2011.1

Bookings, which the Company defines as gross revenue plus the change in deferred revenue for the period, were $56.1 million for the fourth quarter of 2012, representing a 46% increase compared to the same period in 2011.1 Bookings for the full fiscal year 2012 were $154.3 million, representing a 58% increase compared to the full fiscal year 2011.1 Deferred revenue at December 31, 2012 was $92.3 million, representing a 65% increase compared to the balance at December 31, 2011.

Gross profit for the fourth quarter of 2012 was $25.7 million, representing a 61% year-over-year increase compared to the same period in 2011.

Gross profit for the full fiscal year 2012 was $83.3 million, representing a 54% increase compared to gross profit for the full fiscal year 2011, based on gross revenue.2 Gross margin for the full fiscal year 2012 was 70.7%. On a non-GAAP basis, gross margin for the full fiscal year 2012 was 73.2%.1

The Company's net loss for the fourth quarter of 2012 was $7.4 million, or $0.15 net loss per share. Non-GAAP net loss for the fourth quarter of 2012 was $2.9 million, or $0.06 net loss per share. Net loss for the full fiscal year 2012 was $31.4 million, or $0.63 net loss per share. Non-GAAP net loss for the full fiscal year 2012 was $16.0 million, or $0.32 net loss per share. Non-GAAP net loss is based on non-GAAP revenue and excludes, for the periods in which they are present, stock-based compensation and employer-related payroll taxes, amortization of intangible assets, acquisition costs, amortization of debt discount and issuance costs, early debt retirement expense, change in the fair value of preferred stock warrant liabilities, adjustments to taxes related to acquisition adjustments, and accretion related to preferred stock.1

During the fourth quarter of 2012, net cash provided by operating activities was $14.1 million as compared to $4.9 million in the same period in 2011. For the full fiscal year 2012, net cash provided by operating activities was $10.3 million as compared to $1.8 million for the full fiscal year 2011. At December 31, 2012, the Company's total cash and cash equivalents were $76.4 million and accounts receivable were $47.5 million, yielding a total of approximately $124.0 million.

The Company ended the quarter with over 1,200 clients and over 10.5 million users, representing 53% and 41% year-over-year growth of the Company's client base and users, respectively.3

 
1Non-GAAP revenue, bookings, non-GAAP net cash provided by operating activities, non-GAAP net loss, non-GAAP net loss per share, non-GAAP gross profit, 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. Due to purchase accounting rules applicable to the acquisition of Sonar Limited we completed during the second quarter of 2012, the Company recorded an adjustment of $1.6 million to reduce to fair value the balance of deferred revenue attributable to contracts assumed from Sonar Limited. This fair value adjustment has the impact of reducing the amount of revenue attributable to contracts assumed from Sonar Limited by $0.3 million for the quarter ended December 31, 2012 and $1.4 million for the full fiscal year 2012. Our non-GAAP revenue calculation adds back these fair value adjustments.
 
2Comparative year-over-year changes of revenue or gross profit uses gross revenue for the full fiscal year 2011. Gross revenue for the full fiscal year 2011 excludes the impact of a non-cash reduction of revenue related to a common stock warrant issued to ADP of $2.5 million. Net revenue and net loss for the full fiscal year 2011 was impacted by this non-cash reduction of revenue.
 
3Includes contracted clients and active users of any combination of our cloud-based solutions, excluding Cornerstone Small Business Solution, or "CSB".

Quarterly Conference Call

Cornerstone OnDemand will host a conference call to discuss its fourth quarter and fiscal year 2012 results at 2:00 p.m. PST (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/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: 92587407. A replay of the call will also be available at http://investors.cornerstoneondemand.com/events.cfm or via telephone until 11:59 p.m. PST on February 16, 2013 by dialing (855) 859-2056 (U.S.) or (404) 537-3406 (outside the U.S.), and referencing passcode: 92587407.

About Cornerstone OnDemand

Cornerstone OnDemand, Inc. is a leading global provider of comprehensive learning and talent management solutions. 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 employees effectively, improve business execution, cultivate future leaders, and integrate with their external networks of customers, vendors and distributors. We currently empower more than 10.5 million users across 189 countries and in 38 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 from Cornerstone OnDemand's 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 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 from the results anticipated by our forward-looking statements is included in Cornerstone OnDemand's reports filed with the SEC, including its Form 10-Q filed with the SEC on November 14, 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) non-GAAP revenue, which is defined as gross revenue plus revenue not recognized in the period due to the impact of purchase accounting rules on deferred revenue acquired through acquisitions, (ii) bookings, which are defined as gross revenue plus the change in deferred revenue for the period, (iii) non-GAAP net cash provided by operating activities, which excludes acquisition and acquisition-related costs and employer-related taxes from stock-based compensation, (iv) non-GAAP net loss and non-GAAP net loss per share, which are based on non-GAAP revenue and exclude, for the periods in which they are present, stock-based compensation and employer-related payroll taxes, amortization of intangible assets, acquisition costs, adjustments to taxes related to acquisition adjustments, 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 (v) non-GAAP gross profit and non-GAAP gross margin, which are calculated based on non-GAAP revenue and exclude stock-based compensation and amortization of certain intangible assets reflected 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 financial measures used by other 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 measures. 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)
     
December 31, 2012December 31, 2011
Assets
Cash and cash equivalents$76,442$85,409
Accounts receivable, net47,52834,110
Deferred commissions9,3543,537
Prepaid expenses and other current assets, net 8,249  3,789 
Total current assets141,573126,845
 
Capitalized software development, net7,0074,106
Property and equipment, net7,9473,663
Intangible assets, net6,887609
Goodwill8,193-
Other assets, net 227  139 
Total Assets$171,834 $135,362 
 
Liabilities and Stockholders' Equity
Liabilities
Accounts payable$4,849$3,834
Accrued expenses14,9868,039
Deferred revenue, current portion87,75952,338
Capital lease obligations, current portion1,6431,617
Debt, current portion916265
Other liabilities 3,885  996 
Total current liabilities

114,038

67,089
 
Other liabilities, non-current3,592806
Deferred revenue, net of current portion4,4933,542
Capital lease obligations, net of current portion1,2271,056
Long-term debt, net of current portion 1,836  409 
Total liabilities125,18672,902
 
Stockholders' Equity
Common stock55
Additional paid-in capital242,767226,916
Accumulated deficit(196,041)(164,651)
Accumulated other comprehensive (loss) income (83) 190 
Total stockholders' equity 46,648  62,460 
Total Liabilities and Stockholders' Equity$171,834 $135,362 
       
Cornerstone OnDemand, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
 
Three Months Ended

December 31,

Year Ended

December 31,

 2012  2011  2012  2011 
 
Gross revenue$36,426$22,386$117,914$75,522

Common stock warrant charge 1

 -  -  -  (2,500)
Net revenue36,42622,386117,91473,022

Cost of revenue 2, 3

 10,722  6,382  34,591  21,285 
Gross profit25,70416,00483,32351,737
 
Operating expenses:

Sales and marketing 2

21,28013,52973,56345,773
Research and development 24,2612,54114,88610,149
General and administrative 27,5664,54525,91215,122
Amortization of certain acquired intangible assets 251  -  739  - 
Total operating expenses 33,358  20,615  115,100  71,044 
Loss from operations(7,654)(4,611)(31,777)(19,307)
Other income (expense):
Interest income-5-20
Interest expense(84)(105)(442)(902)
Change in fair value of preferred stock warrant liabilities---(42,559)
Withdrawn secondary offering expense---(555)
Other, net 82  (196) 40  (416)
Other income (expense), net (2) (296) (402) (44,412)
Loss before income tax benefit (provision)(7,656)(4,907)(32,179)(63,719)
Income tax benefit (provision) 239  (49) 789  (181)
Net loss(7,417)(4,956)(31,390)(63,900)
Accretion of redeemable preferred stock -  -  -  (5,208)
Net loss attributable to common stockholders$(7,417)$(4,956)$(31,390)$(69,108)
Net loss per share a
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