EX-99.1 2 exhibit991q42020ng.htm EX-99.1 Document

Cornerstone OnDemand Announces Fourth Quarter and Fiscal Year 2020 Financial Results

SANTA MONICA, Calif. – February 16, 2021 – People development solutions provider Cornerstone OnDemand, Inc. (NASDAQ: CSOD) today announced results1 for its fourth quarter and fiscal year ended December 31, 2020. The Company has provided supplemental financial information located on its Investor Relations website. On April 22, 2020, the Company acquired Saba Software, Inc. (“Saba”); the discussion below includes Saba’s results for the post-acquisition period.
Fourth Quarter 2020 Results:
•Revenue for the fourth quarter of 2020 was $206.9 million. This represents a 38.3% increase compared to the same period of the prior year. Without giving effect to the acquisition of Saba, revenue would have increased 4.7%.
•Subscription revenue for the fourth quarter of 2020 was $197.9 million. This represents a 39.6% increase compared to the same period of the prior year. Without giving effect to the acquisition of Saba, subscription revenue would have increased 7.3%.
•(Loss) income from operations for the fourth quarter of 2020 was $(4.8) million, yielding a margin of (2.3)%, compared to (loss) income from operations of $10.6 million and margin of 7.1% in the same period of the prior year.
•Non-GAAP operating income for the fourth quarter of 2020 was $52.1 million, yielding a non-GAAP operating margin of 25.2%, compared to non-GAAP operating income of $28.3 million and a non-GAAP operating margin of 18.9% in the same period of the prior year.
•Net income for the fourth quarter of 2020 was $1.6 million, or $0.02 diluted net income per share, compared to net income of $9.4 million and $0.15 diluted net income per share in the same period of the prior year.
•Non-GAAP net income for the fourth quarter of 2020 was $44.0 million, or $0.64 non-GAAP diluted net income per share, compared to non-GAAP net income of $28.3 million and $0.43 non-GAAP diluted net income per share in the same period of the prior year.
•Unlevered free cash flow for the fourth quarter of 2020 was $36.4 million, yielding a margin of 17.6%, compared to unlevered free cash flow of $54.7 million and a margin of 36.6%, in the same period of the prior year. Unlevered free cash flow for the fourth quarter of 2020 includes approximately $11.2 million of restructuring and acquisition-related cash outflows.
Fiscal Year 2020 Results:
•Revenue for the full year of 2020 was $740.9 million. This represents a 28.5% increase compared to the prior year. Without giving effect to the acquisition of Saba, revenue would have increased 6.5%.
•Subscription revenue for the full year of 2020 was $705.2 million. This represents a 29.9% increase compared to the prior year. Without giving effect to the acquisition of Saba, subscription revenue would have increased 9.4%.
•(Loss) income from operations for the full year of 2020 was $(31.6) million, yielding a margin of (4.3)%, compared to (loss) income from operations of $11.9 million and margin of 2.1% in the prior year.
•Non-GAAP operating income for the full year of 2020 was $163.5 million, yielding a non-GAAP operating margin of 22.1%, compared to non-GAAP operating income of $88.8 million and a non-GAAP operating margin of 15.4% in the prior year.
•Net loss for the full year of 2020 was $(40.0) million, or $(0.63) diluted net loss per share, compared to net loss of $(4.1) million and $(0.07) diluted net loss per share in the prior year.
•Non-GAAP net income for the full year of 2020 was $121.4 million, or $1.78 non-GAAP diluted net income per share, compared to non-GAAP net income of $77.0 million and $1.17 non-GAAP diluted net income per share in the prior year.
•Unlevered free cash flow for the full year of 2020 was $113.9 million, yielding a margin of 15.4%, compared to unlevered free cash flow of $90.2 million and a margin of 15.6%, in the prior year. Unlevered free cash flow for the full year of 2020 includes approximately $47.4 million of restructuring and acquisition-related cash outflows.
“I’m very pleased with our fourth quarter and full year 2020 results, which show operational and financial strength,” said Phil Saunders, Chief Executive Officer. “While we have a long roadmap of execution ahead of us, I believe we are starting to unlock the growth and earnings power of this company.”
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Recent Highlights:
•The Company announced the appointment of Chirag Shah as Chief Financial Officer.
•The Company appointed two new members to the board of directors: Felicia Alvaro, former Chief Financial Officer and Treasurer for Ultimate Software, and Nancy Altobello, former Global Vice Chair of Talent for Ernst & Young.
•The Company announced the formation of the Cornerstone Innovation lab for AI, a new center of excellence within the Company composed of data scientists and machine learning experts who specialize in innovating practical and ethical ways to apply AI technology to the workplace.
“Our financial results represent a strong finish to 2020, and I am proud of our accomplishments as a team,” said Chirag Shah, Chief Financial Officer. “After a year in which we completed a major acquisition, navigated a pandemic, transitioned leadership, and initiated significant internal transformation, we believe our fourth quarter performance is indicative of the strength of this company’s opportunity, and we are confident that the steps taken over the past year will position us for sustained long-term success.”
2

Financial Outlook:
The following outlook2 is based on information available as of the date of this press release and is subject to change in the future.
For the first quarter ending March 31, 2021, the Company provides the following outlook:
•Revenue between $203.0 million and $205.0 million.
•Subscription revenue between $198.0 million and $200.0 million.
•Non-GAAP operating income between $44.0 million and $46.0 million.
For the year ending December 31, 2021, the Company provides the following outlook:
•Revenue between $847.0 million and $857.0 million.
•Subscription revenue between $825.0 million and $835.0 million.
•Annual recurring revenue between $868.0 million and $878.0 million.
•Non-GAAP operating income between $205.0 million and $212.0 million.
•Unlevered free cash flow between $195.0 million and $205.0 million. Captured in this is approximately $50.0 million in non-recurring cash outflows for restructuring and integration activities related to the Saba acquisition.
The revenue, subscription revenue, and non-GAAP operating income numbers above are impacted by a deferred revenue write-down related to purchase accounting. For more information, refer to the Company’s investor relations presentation.
The Company has not reconciled the guidance for non-GAAP operating income or unlevered free cash flow 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 example, stock-based compensation expense is excluded from the Company’s non-GAAP operating income as the quantification requires additional unknown inputs such as the number of shares granted and market prices that are not ascertainable.













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. See the discussion in the section titled “Non-GAAP Financial Measures and Other Key Metrics” and the reconciliations at the end of this press release.
2 In order to translate the financial outlook for entities reporting in GBP to USD and EUR to USD, the following exchange rates have been applied:
Exchange rate applied to revenue for the first quarter of 2021$1.37 USD per GBP
Exchange rate applied to revenue and annual recurring revenue for fiscal 2021$1.37 USD per GBP
Exchange rate applied to revenue for the first quarter of 2021$1.22 USD per EUR
Exchange rate applied to annual recurring revenue for fiscal 2021$1.22 USD per EUR

3

Quarterly Conference Call
Cornerstone will host a conference call to discuss its fourth quarter and fiscal year 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: 6062779. 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 5:00 p.m. PT (8:00 p.m. ET) on February 23, 2020 by dialing (855) 859-2056 (US) or (404) 537-3406 (outside the US), and referencing passcode: 6062779.
Featured Presentation
An accompanying featured presentation will be available at https://investors.cornerstoneondemand.com/investors/overview/default.aspx.
About Cornerstone
Cornerstone is a premier 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 over 6,000 customers of all sizes, spanning more than 75 million users across over 180 countries and nearly 50 languages. Learn more at www.cornerstoneondemand.com.
Note: Cornerstone® and Cornerstone OnDemand® are registered trademarks of Cornerstone OnDemand, Inc.
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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 non-GAAP guidance, strategy, long-term growth and overall future prospects, the demand for our offerings, our competitive position, general business conditions, our ability to execute our strategies and business plans, the integration of Saba into our business, anticipated synergies from our acquisition of Saba, the recent departure of our chief financial officer and appointment of a new chief financial officer, 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 composed 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 us and Saba; our ability to successfully integrate Saba’s 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 Quarterly Report on Form 10-Q for the quarter ended September 30, 2020. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2020.
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 and other key metrics include:
(i)non-GAAP cost of revenue, which is defined as cost of revenue less stock-based compensation and amortization of intangible assets;
(ii)annual recurring revenue, which is defined as the annualized recurring value of all active contracts at the end of a reporting period;
(iii)net annual dollar retention rate, which is defined as the percentage of annual recurring revenue from all customers on the first day of a fiscal year that is retained from those same customers on the last day of that same fiscal year. This percentage excludes all annual recurring revenue from new customers added during the fiscal year. Incremental sales during the fiscal year to customers are included in the calculation solely for customers that existed as of the first day of the fiscal year. Therefore, it is possible for our net annual dollar retention rate to exceed 100% in a given year if incremental sales to existing customers exceed the churn in annual recurring revenue from those same customers during the fiscal year.
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Prior to 2020, incremental sales were only included to the extent those sales offset any decrease in annual recurring revenue from the original amount on the first day of the fiscal year and therefore, the historical net annual dollar retention rate could never exceed 100%. This ratio for 2020 includes all customers. Previously, Cornerstone for Salesforce, Cornerstone PiiQ, Grovo, and Workpop customers were excluded from the calculation. We believe that our net annual dollar retention rate is an important metric to measure the long-term value of customer agreements and our ability to retain and incrementally sell to our customers;
(iv)unlevered free cash flow, a non-GAAP financial measure, which is defined as net cash provided by operating activities minus capital expenditures and capitalized software costs plus cash paid for interest;
(v)unlevered free cash flow margin, a non-GAAP financial measure, which is defined as unlevered free cash flow divided by revenue;
(vi)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, acquisition-related and integration expenses, restructuring expenses, accretion of debt discount and amortization of debt issuance costs, discrete tax items, fair value adjustments on strategic investments, 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;
(vii)non-GAAP gross profit and non-GAAP gross margin, which exclude stock-based compensation and amortization of intangible assets reflected in cost of revenue;
(viii)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, acquisition-related and integration expenses, and restructuring expenses;
(ix)non-GAAP operating expenses, which exclude stock-based compensation, amortization of intangible assets, acquisition-related and integration expenses, and restructuring expenses; and
(x)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 and amortization of intangible assets 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. 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.
•Acquisition-related and integration. The Company excludes expenses related to acquisitions and integration 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 expenses provides investors with a supplemental view of the Company’s operational performance.
•Restructuring. The Company excludes expenses related to restructuring because the expense is not indicative of its continuing operations. The Company believes that the exclusion of these expenses provides investors with a supplemental view of the Company’s operational performance.
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•Accretion of debt discount and amortization of debt issuance costs. The Company recognizes effective interest expense on its debt. The difference between the effective interest expense and the contractual interest expense, which is composed of accretion of debt discounts and amortization of issuance costs, is 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.
•Discrete tax items. The Company excludes discrete income tax charges or benefits that are not expected to recur because the items are not indicative of continuing operations. The Company believes that the exclusion of these items provides investors with a supplemental view of the Company’s operational performance.
•Fair value adjustments 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.
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.
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Cornerstone OnDemand, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)

December 31, 2020December 31, 2019
Assets
Current assets:
Cash and cash equivalents$153,151 $215,907 
Short-term investments— 201,579 
Accounts receivable, net221,461 131,105 
Deferred commissions, current portion45,786 33,215 
Prepaid expenses and other current assets30,615 30,512 
Total current assets451,013 612,318 
Capitalized software development costs, net50,812 50,023 
Property and equipment, net32,271 36,526 
Operating right-of-use assets74,419 72,944 
Deferred commissions, net of current portion89,698 74,563 
Long-term investments8,565 60,192 
Intangible assets, net436,290 9,440 
Goodwill961,322 47,453 
Deferred tax assets19,169 1,045 
Other assets11,010 1,597 
Total assets$2,134,569 $966,101 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$1,424 $3,803 
Accrued expenses112,274 78,075 
Deferred revenue, current portion446,886 339,522 
Operating lease liabilities, current portion10,830 7,235 
Debt, current portion10,047 — 
Other liabilities16,210 11,015 
Total current liabilities597,671 439,650 
Debt, net of current portion1,176,239 293,174 
Deferred revenue, net of current portion5,184 6,945 
Operating lease liabilities, net of current portion65,911 67,195 
Deferred tax liabilities11,936 — 
Other liabilities, non-current8,754 655 
Total liabilities1,865,695 807,619 
Stockholders’ equity:
Common stock, $0.0001 par value6 6 
Additional paid-in capital835,069 682,717 
Accumulated deficit(564,662)(524,680)
Accumulated other comprehensive income(1,539)439 
Total stockholders’ equity268,874 158,482 
Total liabilities and stockholders’ equity$2,134,569 $966,101 

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Cornerstone OnDemand, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)

 Three Months EndedTwelve Months Ended
December 31,December 31,
 2020201920202019
Revenue $206,924 $149,594 $740,916 $576,523 
Cost of revenue 1,2
62,587 38,166 227,014 149,215 
Gross profit144,337 111,428 513,902 427,308 
Operating expenses:
Sales and marketing 1,2
73,394 56,722 265,516 227,733 
Research and development 1
30,857 23,373 112,945 101,151 
General and administrative 1,2
31,408 20,750 110,637 86,491 
Acquisition-related and integration5,533 — 37,289 — 
Restructuring1
7,971 — 19,066 — 
Total operating expenses149,163 100,845 545,453 415,375 
(Loss) income from operations(4,826)10,583 (31,551)11,933 
Other income (expense):
Interest expense(19,687)(5,416)(63,016)(21,559)
Other, net7,884 4,728 7,823 8,262 
Other expense, net(11,803)(688)(55,193)(13,297)
(Loss) income before income tax provision(16,629)9,895 (86,744)(1,364)
Income tax benefit (provision)3
18,190 (463)46,762 (2,690)
Net income (loss)$1,561 $9,432 $(39,982)$(4,054)
Net income (loss) per share, basic$0.02 $0.16 $(0.63)$(0.07)
Net income (loss) per share, diluted$0.02 $0.15 $(0.63)$(0.07)
Weighted average common shares outstanding, basic64,717 60,813 63,585 60,086 
Weighted average common shares outstanding, diluted66,092 63,482 63,585 60,086 

1 Includes stock-based compensation as follows:
 Three Months EndedTwelve Months Ended
December 31,December 31,
 2020201920202019
Cost of revenue$1,817 $1,612 $8,845 $6,282 
Sales and marketing6,894 7,009 28,303 27,780 
Research and development5,329 3,203 17,136 16,003 
General and administrative5,320 4,892 19,873 22,365 
Restructuring671 — 1,071 — 
Total$20,031 $16,716 $75,228 $72,430 

2 Includes amortization of intangible assets as follows:
 Three Months EndedTwelve Months Ended
December 31,December 31,
 2020201920202019
Cost of revenue$9,405 $1,047 $27,864 $4,427 
Sales and marketing14,039 — 39,078 — 
General and administrative597 — 1,657 — 
Total$24,041 $1,047 $68,599 $4,427 
3 Includes a discrete income tax benefit of approximately $18.8 million and $45.5 million during the three and twelve months ended December 31, 2020, respectively, related to release of valuation allowance against previously reserved deferred tax assets.

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Cornerstone OnDemand, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 Three Months EndedTwelve Months Ended
December 31,December 31,
 2020201920202019
Cash flows from operating activities
Net income (loss)$1,561 $9,432 $(39,982)$(4,054)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization36,796 10,751 116,986 41,599 
Accretion of debt discount and amortization of debt issuance costs4,290 1,077 11,792 4,207 
Amortization (accretion) of purchased investment premium or discount, net— (57)41 (957)
Net foreign currency and other gain(7,901)(3,179)(6,239)(1,079)
Stock-based compensation expense20,031 16,716 75,228 72,430 
Deferred income taxes(22,108)61 (54,189)61 
Bad debt expense712 46 3,113 450 
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable(63,212)(29,454)(30,969)(5,554)
Deferred commissions(17,151)(13,111)(25,866)(27,241)
Prepaid expenses and other assets(2,678)245 13,213 12,834 
Accounts payable(5,059)(2,719)(11,911)(8,759)
Accrued expenses19,414 13,991 14,869 8,428 
Deferred revenue72,533 58,683 29,184 19,635 
Other liabilities(2,203)112 1,664 3,549 
Net cash provided by operating activities35,025 62,594 96,934 115,549 
Cash flows from investing activities
Purchases of marketable investments— (79,001)(20,419)(282,426)
Purchases of non-marketable investments— (9,000)— (9,000)
Maturities and sales of investments— 28,917 272,173 236,401 
Capital expenditures(2,875)(2,047)(5,785)(18,034)
Capitalized software costs(6,779)(5,833)(27,075)(24,668)
Cash paid for acquisitions, net of cash acquired— — (1,295,508)— 
Other, net(1,387)— (1,387)— 
Net cash used in investing activities(11,041)(66,964)(1,078,001)(97,727)
Cash flows from financing activities
Proceeds from term loan debt, net of discount— — 979,582 — 
Payments of debt issuance and modification costs— — (30,429)— 
Repayment of debt(52,512)— (52,512)— 
Proceeds from employee stock plans4,592 9,528 20,545 42,600 
Repurchases of common stock— (8,826)— (22,356)
Payment of tax withholdings for employee stock plans— — — (5,469)
Net cash (used in) provided by financing activities(47,920)702 917,186 14,775 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash3,825 837 3,828 (286)
Net (decrease) increase in cash, cash equivalents, and restricted cash(20,111)(2,831)(60,053)32,311 
Cash, cash equivalents, and restricted cash at beginning of period175,965 218,738 215,907 183,596 
Cash, cash equivalents, and restricted cash at end of period1
$155,854 $215,907 $155,854 $215,907 
Supplemental cash flow data
Cash paid for interest$10,985 $— $49,858 $17,356 
Cash paid for income taxes2,465 216 6,190 1,704 
Non-cash investing and financing activities:
Capitalized stock-based compensation(333)1,420 5,134 4,847 
Issuance of common stock for partial consideration for acquisition— — 32,889 — 
Increase in debt discount as a result of modification of Convertible Notes— — 18,598 — 

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1 Below is a reconciliation of cash, cash equivalents, and restricted cash:
As of December 31,
20202019
Cash and cash equivalents$153,151 $215,907 
Restricted cash included in prepaid expenses and other current assets484 — 
Restricted cash included in other assets2,219 — 
Total cash, cash equivalents, and restricted cash$155,854 $215,907 

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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 MARGIN
(in thousands)
(unaudited)

 Three Months EndedTwelve Months Ended
December 31,December 31,
 2020201920202019
Reconciliation of cost of revenue, gross profit, and gross margin:
Revenue $206,924 $149,594 $740,916 $576,523 
Cost of revenue62,587 38,166 227,014 149,215 
Gross profit$144,337 $111,428 $513,902 $427,308 
Gross margin69.8 %74.5 %69.4 %74.1 %
Cost of revenue$62,587 $38,166 $227,014 $149,215 
Adjustments to cost of revenue:
Stock-based compensation1
(1,817)(1,612)(8,282)(6,282)
Amortization of intangible assets(9,405)(1,047)(27,864)(4,427)
Total adjustments to cost of revenue(11,222)(2,659)(36,146)(10,709)
Non-GAAP cost of revenue51,365 35,507 190,868 138,506 
Non-GAAP gross profit$155,559 $114,087 $550,048 $438,017 
Non-GAAP gross margin75.2 %76.3 %74.2 %76.0 %
Reconciliation of (loss) income from operations and operating margin:
(Loss) income from operations$(4,826)$10,583 $(31,551)$11,933 
Operating margin(2.3)%7.1 %(4.3)%2.1 %
Adjustments to (loss) income from operations:
Stock-based compensation1, 3
19,360 16,716 70,096 72,430 
Amortization of intangible assets24,041 1,047 68,599 4,427 
Acquisition-related and integration2
5,533 — 37,289 — 
Restructuring3
7,971 — 19,066 — 
Total adjustments to (loss) income from operations56,905 17,763 195,050 76,857 
Non-GAAP operating income$52,079 $28,346 $163,499 $88,790 
Non-GAAP operating margin25.2 %18.9 %22.1 %15.4 %
1 The difference between stock-based compensation presented above and stock-based compensation as reported in the consolidated statement of operations for the twelve months ended December 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.
Twelve Months Ended
December 31,
2020
Cost of revenue$8,282 
Sales and marketing27,393 
Research and development15,722 
General and administrative18,699 
Total$70,096 
2 Expenses related to the acquisitions of Saba Software, Inc. and Clustree SAS primarily consisting of external professional services directly associated with the acquisitions, such as advisory fees, accounting and legal costs, filing fees, due diligence, and integration costs.
3 Stock-based compensation related to restructuring is presented in the restructuring line item.


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Cornerstone OnDemand, Inc.
RECONCILIATIONS OF NET INCOME (LOSS) TO NON-GAAP NET INCOME AND NON-GAAP NET INCOME PER SHARE
(in thousands, except per share amounts)
(unaudited)

 Three Months EndedTwelve Months Ended
December 31,December 31,
2020201920202019
Net income (loss)$1,561 $9,432 $(39,982)$(4,054)
Adjustments to net income (loss)
Stock-based compensation1, 3
19,360 16,716 70,096 72,430 
Amortization of intangible assets24,041 1,047 68,599 4,427 
Acquisition-related and integration2
5,533 — 37,289 — 
Restructuring3
7,971 — 19,066 — 
Accretion of debt discount and amortization of debt issuance costs4
4,290 1,077 11,792 4,207 
Income tax benefit5
(18,795)— (45,454)— 
Total adjustments to net income (loss)42,400 18,840 161,388 81,064 
Non-GAAP net income$43,961 $28,272 $121,406 $77,010 
Non-GAAP basic net income per share$0.68 $0.46 $1.91 $1.28 
Non-GAAP diluted net income per share$0.64 $0.43 $1.78 $1.17 
Weighted-average common shares outstanding, basic 64,717 60,813 63,585 60,086 
Non-GAAP weighted-average common shares outstanding, diluted69,067 66,072 68,365 65,605 

1 The difference between stock-based compensation presented above and stock-based compensation as reported in the consolidated statement of operations for the twelve months ended December 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 Expenses related to the acquisitions of Saba Software, Inc. and Clustree SAS primarily consisting of external professional services directly associated with the acquisitions, such as advisory fees, accounting and legal costs, filing fees, due diligence, and integration costs.
3 Stock-based compensation related to restructuring is presented in the restructuring line item.
4 Debt discount accretion and debt issuance cost amortization have been recorded in connection with our issuance of (i) $1.0047 billion of term loan debt on April 22, 2020; and (ii) $300.0 million in convertible notes on December 8, 2017 as well as the modification of these convertible notes on April 20, 2020 to extend the maturity date from July 1, 2021 to March 17, 2023. These expenses represent non-cash charges that have been recorded in accordance with the authoritative accounting literature for such transactions.
5 Discrete income tax benefits of approximately $18.8 million and $45.5 million were recognized during the three and twelve months ended December 31, 2020, respectively, related to release of valuation allowance against previously reserved deferred tax assets.


















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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 EndedTwelve Months Ended
December 31,December 31,
 2020201920202019
Reconciliation of unlevered free cash flow:
Net cash provided by operating activities$35,025 $62,594 $96,934 $115,549 
Capital expenditures(2,875)(2,047)(5,785)(18,034)
Capitalized software costs(6,779)(5,833)(27,075)(24,668)
Cash paid for interest10,985 — 49,858 17,356 
Unlevered free cash flow$36,356 $54,714 $113,932 $90,203 
Unlevered free cash flow margin17.6  %36.6  %15.4  %15.6  %

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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 to 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 2019FY 2020
Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20FY18FY19FY20
SELECTED METRICS:
Number of customers1
3,367 3,423 3,446 3,508 3,522 6,308 6,229 6,157 3,333 3,508 6,157 
% y/y8.6  %6.9  %5.7  %5.3  %4.6  %84.3  %80.8  %75.5  %2.6  %5.3  %75.5  %
% q/q1.0 %1.7 %0.7 %1.8 %0.4 %79.1 %(1.3)%(1.2)%n/an/an/a
Number of employees2,017 2,034 1,986 1,993 1,975 3,184 3,027 2,919 1,953 1,993 2,919 
% y/y10.3  %9.9  %5.0  %2.0  %(2.1) %56.5  %52.4  %46.5  %3.3  %2.0  %46.5  %
% q/q3.3  %0.8  %(2.4) %0.4  %(0.9)%61.2 %(4.9)%(3.6)%n/an/an/a
Net annual dollar retention rate2
n/an/an/an/an/an/an/an/a105.7 %104.6 %95.1 %
Annual recurring revenue (in thousands)n/an/an/an/an/an/an/an/a510,000 575,000 840,000 
Net cash provided by operating activities (in thousands)7,294 21,183 24,478 62,594 5,988 22,774 33,147 35,025 90,253 115,549 96,934 
Unlevered free cash flow (in thousands)4,337 9,470 21,682 54,714 6,253 15,394 55,929 36,356 63,471 90,203 113,932 
Unlevered free cash flow margin3.1  %6.7  %15.0  %36.6  %4.2  %8.4  %28.0  %17.6  %11.8  %15.6  %15.4  %
FINANCIAL DATA (in thousands, except percentages):
Revenue140,117 141,860 144,952 149,594 150,136 184,358 199,498 206,924 537,891 576,523 740,916 
Subscription revenue131,256 132,562 137,446 141,704 144,421 177,217 185,643 197,878 473,052 542,968 705,159 
% y/y growth16.0  %15.5  %15.7  %12.2  %10.0 %33.7 %35.1 %39.6 %n/a14.8  %29.9  %
% y/y growth constant currency3
18.2  %17.3  %17.2  %12.4  %10.7 %n/an/an/an/a16.2  %n/a
Subscription revenue % of total revenue93.7  %93.4  %94.8  %94.7  %96.2 %96.1 %93.1 %95.6 %87.9  %94.2  %95.2  %
Income (loss) from operations1,231 (3,594)3,713 10,583 (2,739)(22,368)(1,618)(4,826)(7,769)11,933 (31,551)
MARGIN DATA:
Gross margin76.0  %71.7  %74.4  %74.5  %72.1  %68.5 %67.7 %69.8 %73.2  %74.1  %69.4  %
Sales and marketing % of revenue38.9  %41.4  %39.9  %37.9  %36.9  %35.2 %36.0 %35.5 %41.8  %39.5  %35.8  %
Research and development % of revenue19.8  %17.2  %17.7  %15.6  %16.0  %15.4 %14.9 %14.9 %14.3  %17.5  %15.2  %
General and administrative % of revenue16.4  %15.6  %14.2  %13.9  %16.5  %13.8 %14.5 %15.2 %16.7  %15.0  %14.9  %
Acquisition-related and integration % of revenue— — — — 4.5 %10.9 %2.4 %2.7 %0.2  %— 5.0 %
Restructuring % of revenue— — — — — 5.3 %0.7 %3.9 %1.7  %— 2.6 %
Operating margin0.9  %(2.5) %2.6  %7.1  %(1.8) %(12.1)%(0.8)%(2.3)%(1.4) %2.1  %(4.3) %
NON-GAAP MARGIN DATA:
Non-GAAP gross margin77.7 %73.7 %76.3 %76.3 %74.6 %73.7 %73.5 %75.2 %74.1 %76.0 %74.2 %
Non-GAAP sales and marketing % of revenue34.6 %36.6 %34.4 %33.2 %31.7 %26.4 %25.3 %25.4 %37.2 %34.7 %26.9 %
Non-GAAP research and development % of revenue16.8 %14.1 %14.8 %13.5 %13.8 %13.9 %12.7 %12.3 %12.1 %14.8 %13.1 %
Non-GAAP general and administrative % of revenue12.3 %11.3 %10.3 %10.6 %12.5 %11.8 %12.1 %12.3 %13.2 %11.1 %12.2 %
Non-GAAP operating margin14.0 %11.7 %16.7 %18.9 %16.6 %21.6 %23.4 %25.2 %11.8 %15.4 %22.1 %
Non-GAAP research and development plus capitalized software % of revenue22.1 %18.8 %18.0 %17.4 %18.7 %17.2 %16.1 %15.6 %16.8 %19.1 %16.8 %
FOREIGN EXCHANGE RATES:
GBP to USD average period rate1.30 1.29 1.23 1.29 1.28 1.26 1.29 1.32 1.34 1.28 1.29 
GBP to USD end of period spot rate1.30 1.27 1.23 1.32 1.23 1.23 1.28 1.37 1.27 1.32 1.37 
EUR to USD average period rate1.14 1.12 1.11 1.11 1.10 1.11 1.17 1.19 1.18 1.12 1.14 
EUR to USD end of period spot rate1.12 1.14 1.09 1.12 1.10 1.12 1.17 1.23 1.14 1.12 1.23 
1 During the second quarter of 2020, we adjusted our method of determining customer count to exclude customers that are sold through resellers that share one tenant or instance of our product. The numbers included here reflect this change. We continue to exclude customers from our Cornerstone for Salesforce, PiiQ, Grovo, Workpop, and Clustree products from our customer count metrics.
2 During 2020, we adjusted our method of determining our net annual dollar retention rate. Prior to 2020, incremental sales were only included to the extent those sales offset any decrease in annual recurring revenue from the original amount on the first day of the fiscal year and therefore, the historical net annual dollar retention rate could never exceed 100%. This ratio for 2020 includes all customers. Previously, Cornerstone for Salesforce, Cornerstone PiiQ, Grovo, and Workpop customers were excluded from the calculation. The percentages included here reflect these changes.
3 We have historically presented constant currency information, a non-GAAP financial measure, to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency fluctuations. However, due to the acquisition of Saba in the second quarter of 2020, constant currency results on a combined company basis were not presented for the second, third, and fourth quarters in 2020 as the historical comparative periods did not include the combined company results for a full quarter.
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FY 2019FY 2020
Q1'19Q2'19Q3'19Q4'19Q1'20Q2'20Q3'20Q4'20FY18FY19FY20
NON-GAAP RECONCILIATIONS FOR SELECTED METRICS
(in thousands, except percentages):
Net cash provided by operating activities7,294 21,183 24,478 62,594 5,988 22,774 33,147 35,025 90,253 115,549 96,934 
Capital expenditures(4,243)(5,031)(6,713)(2,047)(971)(1,304)(635)(2,875)(14,895)(18,034)(5,785)
Capitalized software costs(7,399)(6,728)(4,708)(5,833)(7,389)(6,135)(6,772)(6,779)(25,515)(24,668)(27,075)
Cash paid for interest8,685 46 8,625 — 8,625 59 30,189 10,985 13,628 17,356 49,858 
Unlevered free cash flow 4,337 9,470 21,682 54,714 6,253 15,394 55,929 36,356 63,471 90,203 113,932 
Unlevered free cash flow margin3.1  %6.7  %15.0  %36.6  %4.2  %8.4  %28.0  %17.6  %11.8  %15.6  %15.4  %
Gross margin76.0 %71.7 %74.4 %74.5 %72.1 %68.5 %67.7 %69.8 %73.2 %74.1 %69.4 %
Stock-based compensation0.8 %1.3 %1.2 %1.1 %1.4 %1.2 %1.1 %0.9 %0.7 %1.1 %1.0 %
Amortization of intangible assets0.9 %0.7 %0.7 %0.7 %1.1 %4.0 %4.7 %4.5 %0.2 %0.8 %3.8 %
Non-GAAP gross margin77.7 %73.7 %76.3 %76.3 %74.6 %73.7 %73.5 %75.2 %74.1 %76.0 %74.2 %
Sales and marketing % of revenue38.9  %41.4  %39.9  %37.9  %36.9  %35.2  %36.0  %35.5  %41.8  %39.5  %35.8  %
Stock-based compensation(4.3) %(4.8) %(5.5) %(4.7) %(5.1) %(3.0) %(3.5) %(3.3) %(4.6) %(4.8) %(3.6) %
Amortization of intangible assets—  %—  %—  %—  %(0.1) %(5.8) %(7.2) %(6.8) %—  %—  %(5.3) %
Non-GAAP sales and marketing % of revenue34.6  %36.6  %34.4  %33.2  %31.7  %26.4  %25.3  %25.4  %37.2  %34.7  %26.9  %
Research and development % of revenue19.8  %17.2  %17.7  %15.6  %16.0  %15.4  %14.9  %14.9  %14.3  %17.5  %15.2  %
Stock-based compensation(3.0) %(3.1) %(2.9) %(2.1) %(2.2) %(1.5) %(2.2) %(2.6) %(2.2) %(2.7) %(2.1) %
Non-GAAP research and development % of revenue16.8  %14.1  %14.8  %13.5  %13.8  %13.9  %12.7  %12.3  %12.1  %14.8  %13.1  %
General and administrative % of revenue16.4  %15.6  %14.2  %13.9  %16.5  %13.8  %14.5  %15.2  %16.7  %15.0  %14.9  %
Stock-based compensation(4.1) %(4.3) %(3.9) %(3.3) %(4.0) %(1.8) %(2.1) %(2.6) %(3.5) %(3.9) %(2.5) %
Amortization of intangible assets—  %—  %—  %—  %—  %(0.2) %(0.3) %(0.3) %—  %—  %(0.2) %
Non-GAAP general and administrative % of revenue12.3  %11.3  %10.3  %10.6  %12.5  %11.8  %12.1  %12.3  %13.2  %11.1  %12.2  %
Operating margin0.9  %(2.5) %2.6  %7.1  %(1.8) %(12.1) %(0.8) %(2.3) %(1.4) %2.1  %(4.3) %
Stock-based compensation12.2  %13.5  %13.4  %11.1  %12.7  %7.4  %8.9  %9.3  %11.1  %12.5  %9.5  %
Amortization of intangible assets0.9  %0.7  %0.7  %0.7  %1.2  %10.1  %12.2  %11.6  %0.2  %0.8  %9.3  %
Restructuring —  %—  %—  %—  %—  %5.3  %0.7  %3.9  %1.7  %—  %2.6  %
Acquisition-related and integration—  %—  %—  %—  %4.5  %10.9  %2.4  %2.7  %0.2  %—  %5.0  %
Non-GAAP operating margin14.0  %11.7  %16.7  %18.9  %16.6  %21.6  %23.4  %25.2  %11.8  %15.4  %22.1  %
Research and development plus capitalized software % of revenue25.1  %21.9  %20.9  %19.5  %20.9  %18.7  %18.3  %18.2  %19.0  %21.8  %18.9  %
Stock-based compensation(3.0) %(3.1) %(2.9) %(2.1) %(2.2) %(1.5) %(2.2) %(2.6) %(2.2) %(2.7) %(2.1) %
Non-GAAP research and development plus capitalized software % of revenue22.1  %18.8  %18.0  %17.4  %18.7  %17.2  %16.1  %15.6  %16.8  %19.1  %16.8  %

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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