csod investor deck third quarter1052015
TRANSCRIPT
Corporate Overview Fourth Quarter 2015
Safe Harbor This presentation includes forward-looking statements. In this presentation, the words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “predict,” “potential” and similar expressions, as they relate to Cornerstone OnDemand, Inc. (“Cornerstone OnDemand” or the “Company”), business and
management, are intended to identify forward-looking statements. In light of the risks and uncertainties outlined below, the future events and circumstances discussed in this presentation may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. The Company has based
these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting its business. Forward-looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such
performance or results will be achieved. Forward-looking statements are based on information available at the date of this presentation and management’s good faith belief as of such date with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those
expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
• Statements regarding the Company’s business strategies;
• The Company’s anticipated future operating results and operating expenses;
• The Company’s ability to attract new clients to enter into subscriptions for its solution;
• The Company’s ability to service those clients effectively and induce them to renew and upgrade their deployments of the Company’s solution;
• The Company’s ability to expand its sales organization to address effectively the new industries, geographies and types of organizations the company intends to target;
• The Company’s ability to accurately forecast revenue and appropriately plan its expenses; market acceptance of enhanced solutions, alternate ways of addressing learning and talent management needs or new technologies generally by the Company and its competitors; continued acceptance of SaaS as an effective method for
delivering learning and talent management solutions and other business management applications; the attraction and retention of qualified employees and key personnel;
• The Company’s ability to protect and defend its intellectual property; costs associated with defending intellectual property infringement and other claims; events in the markets for the Company’s solution and alternatives to the Company’s solution, as well as in the United States and global markets generally; future regulatory, judicial
and legislative changes in the Company’s industry; changes in the competitive environment in the Company’s industry and the markets in which the Company operates; and other factors discussed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s
periodic reports filed with the Securities and Exchange Commission (the “SEC”).
Forward-looking statements speak only as of the date of this presentation. You should not put undue reliance on any forward-looking statement. The Company assumes no obligation to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting future performance or results,
except to the extent required by applicable laws. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.
In considering investing in the Company’s securities, you should read the documents the Company has filed with the SEC for more complete information about the
Company. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov.
2
1999
Our Evolution 15 Years Ago…
3
2010
Our Evolution The Last Decade…
4
2015
Our Evolution Today
5
The Opportunity
Work is Changing
7
WHO
WHAT
WHERE
WHEN
HOW
The Market Need is Real
8
Ben Schiller | May 8, 2015
What Do Workers Want from the Boss?
Walter Frick | November 3, 2015
When Treating Workers Well Leads to More
Innovation
Adam Miller | March 26, 2015
3 Things Millennials Want in a Career
(hint: it’s not more money)
Sylvia Voerhauser-Smith | October 15, 2015
Is HR Disconnected? Here’s How HR Can
Reconnect and Embrace the Future
Lauren Weber | September 30, 2015
How to Get More Women Into the Workforce
The Market is HUGE
9
22.2M USERS
ADDRESSABLE MARKET
$31B
81M EST. USERS
CURRENT MARKET
400M ADDRESSABLE SEATS
CORNERSTONE
Source: Adapted from Gartner, IDC, US Census Bureau
Scale to Meet the Need
11 Note: User and client count figures exclude Growth Edition and Cornerstone for Salesforce.
CLIENTS
2,400+ USERS
22M+ COUNTRIES
191 LANGUAGES
42 OFFICES
19
San Francisco
Santa Monica
Sunnyvale
Sao Paulo
Madrid Paris
London Amsterdam
Stockholm
Dusseldorf Munich
Tel Aviv
Bangalore
Mumbai
Hong Kong
Tokyo
Sydney
Auckland
Global Reach
As of September 30, 2015
New Delhi
Leadership Position in Talent Management
12
Niche Players Visionaries
Challengers Leaders
Magic Quadrant for Talent Management Suites
Lumesse
COMPLETENESS OF VISION
ABI
LITY
TO
EX
ECU
TE
Source: Gartner (August 2015)
Deltek (HRsmart)
Technomedia
Haufe PeopleFluent
SumTotal
Halogen Software
Saba
Oracle (Talent Management Cloud)
SAP (SuccessFactors)
Talentsoft
Organically-Grown Core Suite
Acquired by
Acquired by
Acquired by
Acquired by
Acquired by
13
Marching to $1Billion
• Focus on innovation • Organically grown
• Pure SaaS
• System of engagement
• Focus on client success
• Focus on integration
• Built through acquisition
• Mix of SaaS and On-Premise
• System of record
• Clients multiple levels removed
ERP Suite Best Of Breed
The Competitive Landscape
15
2003-2004 2009 2011 2013 2007
2008 2010 2012 2014 2005-2006
Key Client Additions
CSOD has Accelerating Client Traction
12 21 44 73 105 168 280 481
805
1,237
1,631
2,153
0
400
800
1,200
1,600
2,000
2,400
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
16
Expanded Global Footprint
17
Europe, Middle East & Africa
Select Notable Clients Select Notable Clients
JAPAN CHINA
AUSTRALIA
JAPAN
INDIA CHINA
Asia Pacific
SOUTH AFRICA SPAIN
AUSTRIA FRANCE UNITED KINGDOM
GERMANY
8 29 OFFICES LANGUAGES EST. USERS
7 9 1.8M OFFICES LANGUAGES EST. USERS
6.2M
Growth Across All Metrics
18
$11.0 $19.6
$29.3
$46.6
$75.5
$117.9
$185.1
$263.6
2007 2008 2009 2010 2011 2012 2013 2014
Revenue Growth
105 168
280
481
805
1,237
1,631
2,153
2007 2008 2009 2010 2011 2012 2013 2014
Client Growth
0.9
2.1
3.3
4.9
7.5
10.6
14.0
18.1
2007 2008 2009 2010 2011 2012 2013 2014
User Growth (in millions) (in millions)
Note: User and client count figures exclude Growth Edition and Cornerstone for Salesforce.
Now with More People, More to Sell
ANALYTICS LEARNING PERFORMANCE RECURITING
Bolstered by Tier One Global Partners
20
Content Partners Service Partners Technology Partners
Opportunities Abound
Investment Landscape
ü Market Segments
ü Vertical Opportunity
ü Installed Base Opportunity
ü Extended Enterprise
ü Big Data
ü Link
ü Platform
22
STRATEGIC ACCOUNTS
GROWTH EDITION
ENTERPRISE
MID-MARKET
5000+ Employees
1000-5000 Employees (Nationals)
400-1000 Employees
(Majors)
<400 Employees
UP MARKET
DOWN MARKET
23
Top
150 Accounts
Opportunities Across All Market Segments
Healthcare
Vertical Opportunity
Public Sector Life Sciences
24
HAVE 2+ MODULES
2 / 3
Installed Base Penetration
2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+
2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+ 2+
3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+ 3+
3+ 3+ 3+
HAVE 3+ MODULES
1 / 2Nearly
25
Installed Base Opportunity
26
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
Learning Performance Succession Connect Compensation Recruiting Onboarding
Existing Client Penetration Client Opportunity
Num
ber o
f Clie
nts
Approximately $1.5B opportunity within installed base
60% penetration
among other
products results in nearly $700M
opportunity
Calculated based on 2,466 clients with approximately 9,000 users on average
Extended Enterprise Opportunity
Engage and enable the entire ecosystem
• Training for profit
• Partner enablement
• Customer engagement
• Crowdsourcing
27
Cornerstone has “Massive Data”
28
User
ü Position ü Previous Position ü Education ü Skills ü Certifications ü Accomplishments ü Languages ü Organization ü Preferences
Collaboration
ü Connections ü Live Feed (Status) ü Feedback ü Actions ü Snapshot ü Teams ü Discussions ü Badges ü Likes ü Comments
Talent Organization
ü Transcript ü Performance ü Skills ü Goals ü Assessments ü Dev Plans ü Succession ü Compensation ü Applicants ü Applicant Status
ü Industry ü Business Unit ü Department ü Division ü Region ü Groups ü Hierarchies ü Cost Center ü Grade ü Location
22.2M USERS | 191 COUNTRIES | DECADE OF DATA
Cornerstone Analytics
29
REPORT DISCOVER PREDICT PLAN
Cornerstone Reporting
Standard & custom reports embedded with Cornerstone
Cornerstone View
Highly visual dashboards that can easily slice/dice talent
information
Cornerstone Insights
Predictive analytics for managing talent decisions
Cornerstone Planning
Big data solution for workforce planning
30
DEEPER INSIGHTS
Understand the real dynamics behind
your business.
SMARTER DECISIONS
Tap into real-time data to drive smarter talent
decisions.
DATA-DRIVEN RECOMMENDATIONS
Actionable predictions & recommendations.
The Power of Predictive Analytics
One Global System of Record
• Unify employee and talent data • Gain a complete workforce view
• Manage the complete employee lifecycle
• Easily feed data to/from other systems
Cornerstone Link
32
GLOBAL VIEW
Maintain one centralized source of
employee data.
REDUCE RISKS
Eliminate error-prone manual processes to
improve compliance.
SAVINGS
Free up valuable human capital resources and streamline
processes.
INSIGHTS
Integrate employee data
for deeper insights.
The Power of Link
Platform Opportunity: Cornerstone Edge
33
LEARN INTEGRATE BUILD MARKET
Cornerstone Developer
Developer community to learn and access key resources for
Cornerstone Edge
Cornerstone API Services
Review Cornerstone API library, documentation, tutorials
Cornerstone App Builder
Create new, unique applications leveraging Cornerstone APIs &
development tools
Cornerstone Marketplace
Easily access, download, install and configure custom and 3rd
party apps
Cornerstone Platform Changes Everything
34
Multi-tenant REST APIs Mobile-Ready
Cornerstone Apps Partner Apps Custom Apps One unified suite to recruit, train,
develop, and connect employees Marketplace of apps integrated and
embedded within Cornerstone Client-specific applications designed
and built by clients or partners
35
The Power of Platform
AGILITY
Solve your rapidly
changing business needs.
SPEED
Build and deploy apps quickly, or
use existing apps.
SIMPLICITY
Create apps with ease using EDGE
builder tools.
COST
Save money leveraging our state-of-the-art
SaaS infrastructure.
Financial Highlights
Strong Momentum
37
$11.0 $19.6
$29.3
$46.6
$75.5
$117.9
$185.1
$263.6
$0
$60
$120
$180
$240
$300
2007 2008 2009 2010 2011 2012 2013 2014
$15.0 $24.9
$34.5
$60.9
$97.6
$154.3
$231.7
$316.1
$0
$65
$130
$195
$260
$325
2007 2008 2009 2010 2011 2012 2013 2014
(in millions) (in millions)
Revenue Bookings
Growing Revenue Per User
38
$11.27
$12.14
$13.05
$15.04
$16.40
$10
$11
$12
$13
$14
$15
$16
$17
2010 2011 2012 2013 2014
Calculated using full-year revenue for the period divided by the midpoint of the beginning and ending user base during the period.
Bootstrapped Mentality Since Inception
39
November 1999
Founded with
raised from angel investors
September 2007
in first round of funding led by
Bessemer Venture Partners & Bay Partners
Primarily financed
through debt and revenue
March 2009
in second round of funding led by Meritech Capital
Partners
Initial public offering
March 2011
$32.0M
$12.7M
$700K
Clear Path to Profitability
40
$0.2 $2.2
$11.2
$20.6
$33.3
$43.0
$0
$9
$18
$27
$36
$45
2010 2011 2012 2013 2014 2015E
(in millions)
-21.9%
-17.0%
-13.5%
-6.7% -6.4% -5.6%
-25%
-20%
-15%
-10%
-5%
0% 2010 2011 2012 2013 2014 2015E
Non-GAAP Operating Cash Flow
Non-GAAP Net Loss Margin
Note: 2015E values reflect the latest issued guidance. 2015E non-GAAP net loss margin uses the
midpoint of the revenue guidance range of $340.5 - $342.0M
41
Not Just Software, But Service too! • 95% average dollar
retention since inception
• Many repeat buyers
• Pioneering Client Success Framework
• Business consulting, client success management and solution architecture
41
Thank You!