Cornerstone OnDemand demonstrated continued momentum in the talent management space, growing top line revenue by 52% year over year to $57.4 million in Q1 2014-15. However, it missed bottom line non-GAAP EPS at -$0.10 from market expectations of -$0.09.
- Record quarterly revenue of $57.4 million, up 52% year-over-year
- Record first quarter bookings of $49.7 million, up 38% year-over-year
- Record quarterly gross profit of $40.0 million, up 52% year-over-year
- Ended the quarter with over 1,700 clients and over 14.5 million users
Spot the problem?
On this as in past earnings calls, the company chooses to almost completely ignore GAAP measures. When those are taken into account then the picture changes considerably. See image below:
The good news is that the net loss shrunk from 14.1% to 8.8% with an expectation that the net loss margin will shrink further to 5% by the end of the year. Continuing the upside, Adam Miller, CEO claimed that deployments in large enterprise are among the fastest that customers experience and that increasingly, those deals include a suite of products.
On the competitive landscape, the company said that in certain geographies, acquisition in the mid-market elsewhere has made it easier to sell into the mid-market. On product penetration, the company says that learning is at about 85%, performance is 60%, succession 30%, compensation is 25%, recruitment is about 10%. Two thirds of customers have two or more products.
Looking forward to the upcoming customer conference, Miller said that we can expect to see further improvements in UX as the company continues on it path of making its solutions 'consumer like,' that it will be the first company with campus recruiting with more on mobile and analytics capabilities.
While all that may sound comforting, I remain concerned that as one of the few large pure play talent management vendors left in the market, Cornerstone will likely have to continue spending ahead of the demand curve in order to consolidate its position in the market place both for enterprise and mid-market segments.
Having said that, the company maintained past guidance for the full year even though, according to the company pipelines remain 'very robust.' In short, Cornerstone is making sure it doesn't set overtly optimistic expectations at a time when the market is generally jittery.
In after hours trading, the Cornerstone price was volatile, settling out at $36.59, down 3.94%
Featured image: via Wn.com