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Cornerstone Counts on Content and Product

Posted on Friday, Sep 27th 2019

According to a Zion Market Research report, the global talent management software market is estimated to grow 10% annually to $10.9 billion industry by the year 2025 from $5.6 billion in 2018. Santa Monica-based Cornerstone OnDemand (Nasdaq: CSOD) recently announced its second quarter results that surpassed market expectations.

Cornerstone OnDemand’s Financials

Revenues for the second quarter grew 7% over the year to $141.9 million, ahead of the market’s forecast of $138.8 million. Subscription revenue grew 16% over the year to $132.6 million. Net loss was $8.8 million, compared with net loss of $12 million a year ago. Adjusted EPS was $0.21, compared with $0.12 a year ago and ahead of analyst estimates of $0.20.

For the third quarter, Cornerstone expects revenues of $141-$143 million with subscription revenues of $135-$137 million. It expects to end the current year with revenues of $566.5-$571 million and subscription revenues of $539.5-$544 million. The market had forecast Q3 revenues of $140.72 million with an EPS of $0.26 and revenues of $567.47 million for the year with an EPS of $1.03.

Cornerstone OnDemand’s Product Growth

During the quarter, Cornerstone announced several product upgrades and releases. The new products released during the quarter included Cornerstone Create, Express Class, and Cornerstone for Salesforce learning integration. These products are aimed at helping organizations grow their talent while the employees are at work.

Cornerstone Create helps accelerate the development, publishing, and management of an organization’s mobile-friendly Microlearning content. To help employees learn better, Cornerstone has devised the concept of Microlearning. It is a trend in workplace learning and development that delivers information to learners in very short pieces – usually under 5 minutes – over time. Microlearning content helps employees learn on-the-go and learn at their own pace. Cornerstone’s studies have revealed that this sort of training offers better results for the organization. Cornerstone Create is aimed at helping organizations create these knowledge nuggets for their employees.

Express Class is a recently released tool that allows managers to quickly create and administer informal, impromptu trainings within the Cornerstone Learning Management System. The application helps managers manage training content and audience more effectively. They can schedule a new training at any time, add attendees individually or in bulk, administer training on-the-spot, and capture training credits from any device.

Finally, Cornerstone for Salesforce learning integration enables Salesforce users to access Cornerstone’s learning software and training content while remaining on Salesforce’s platform. The integration allows organizations to use learning content from other systems or use pre-curated content subscriptions from Content Anytime to create courses that can be presented, studied, and completed within the Force.com application.

I met Cornerstone’s Founder and CEO Adam Miller a few years ago. The company has come a long way since then when it was trending at annual revenues of $72-$74 million. Today, Cornerstone prides itself on the vast library of content that it provides. Over the trailing twelve month period, it has recorded more than 550 million online course registrations. The sheer volume of courses gives it insight into the kinds of courses that are most referred to by various demographics including geography, industry, and job function. It has the ability to match the content with other employee metrics to identify trends influencing employee engagement, turnover, and productivity.

Its stock is trading at year-high levels of $55.16 with a market capitalization of $3.3 billion. It hit to a 52-week low of $45.89 in December last year and a 52-week high of $45.89 in July last year. The stock had listed on Nasdaq in 2010 when it raised $136.5 million by selling 10.5 million shares at $13 apiece. It was valued at $606 million at the time of listing.

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