Cornerstone OnDemand has scored itself a Federal Risk Authorization Management Program (FedRAMP) certification to offer its talent management platform to US government agencies.
That was an upbeat piece of news for the firm as it turned in disappointing numbers for its Q4 ending December 2015. Net loss increased to $18.8 million from a net loss of $18.2 million for the year-earlier period, on revenue up 26% to $95.9 million.
CEO Adam Millar maintains that the numbers don’t tell the full story:
Both our revenue and bookings were significantly impacted by foreign exchange headwinds in Q4 and throughout the year. And as a result, the reported numbers understate the overall performance and actual growth of our business. Specifically, about one-third of our business is international. And in the 8 weeks between November and the end of 2015, the British pound to US dollar exchange rate worsened by approximately 4%.
Millar argues that what Cornerstone has to offer the talent management market is different to other vendors with which the firm gets compared:
Today’s landscape consists of large ERPs, point solution providers and everything in between. Each quarter, I get asked about some new vendor that claims to be doing what we do. While that may raise concerns to those less familiar with our industry, we believe the reality is that few, if any, of those names are truly viable competitors. The history of talent management is littered with countless companies large and small who have attempted to enter the space and there is a reason why most of you on today’s call have likely never heard of any of them.
Customers wins and retentions
Our win rates continue to improve. Our product penetration continues to rise and our retention rate is as high as it has ever been. Put simply, the competitive positioning has never been better than it is today. We believe all of the recent competitiveness noise in our space demonstrates the opportunity that remains in every area of talent management. We are the leader in the space/none and we believe we are just getting started.
As evidence, he cites new wins and up-sells during the last quarter of 2015 that include:
The world’s largest package delivery company, America’s largest insurance company, the second and fifth largest banks in the U.S. as well as the largest bank in Switzerland, the largest aerospace manufacturer in Europe, the largest auto parts manufacturer in the world, one of the largest life reinsurance companies in the world, the largest healthcare REIT in the world, the largest telephone company in Denmark and one of the largest breweries in the UK.
And our up-sales for the quarter included the largest multinational pharmaceutical company in the world, the largest baking company in the world, the largest bank in Germany, the largest professional services firm in the world, the largest full service restaurant company in the world, the largest tax service provider in the world, the largest independent biotech firm in the world, and one of the largest appliance manufacturers in the world.
Cornerstone cites a client base of 2,595 clients as of 31 December 2015 and a user base of 23.8 million users, 5.7 million additional users for the full year. Annual dollar retention rate for 2015 increased by 1.7% to 95.4% which th firm positions as being:
amongst the highest in the SaaS industry.
As for the FedRAMP certification, Millar sees great opportunity there:
We have done fairly well on the services side in federal. We have maintained all of our clients. We have full implementations of all of our clients are all referenceable, and we have a very nice federal client base. But we have not sold much new in federal over the last couple of years.
FedRAMP definitely opens the door for us. We got authorization last week. We are the only ones in this space that are now FedRAMP certified and that is a big deal to federal agencies. So that puts us in the driver seat now going into this year. I am hopeful that we will see a change in trajectory now in federal government sales. We have changed out the leadership of that team and we think we are well positioned now going into this year.
A bumpy end to 2015, but the underlying trends all point to growth.