Cornerstone OnDemand, Inc. Net Debt / EBITDA jumped on 8.6x from 2.3x to 10.9x in 2020 and EBITDA jumped on 56.7%
02/16/2021 • About Cornerstone OnDemand, Inc. (
$CSOD) • By InTwits
Cornerstone OnDemand, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Cornerstone OnDemand, Inc. is a fast growth stock: 2020 revenue growth was 28.5%, 5 year revenue CAGR was 16.9% at 2020 ROIC -2.8%
- EBITDA Margin is expanding: 13.7% in 2020 vs. 11.3% in 2019 vs. -5.7% in 2016
- EBITDA Margin is quite volatile: 13.7% in 2020, 11.3% in 2019, 5.1% in 2018, -2.9% in 2017, -5.7% in 2016
- Cornerstone OnDemand, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 was 6.8% while average EBITDA Margin was 5.7% for the sames years
- Cornerstone OnDemand, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.9%. At the same time it's in pair with industry average of 14.0%
- CAPEX is quite volatile: $6m in 2020, $18m in 2019, $15m in 2018, $7m in 2017, $6m in 2016
- In the last 5 years the company invested considerably less than D&A: $52m vs. $103m
- The company has unprofitable business model: ROIC is -2.8%
- It operates with high leverage: Net Debt/EBITDA is 10.9x while industry average is 18.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 28.5%. Revenue growth showed acceleration in 20Q4 - it increased 38.3% YoY. During 2016-2020 Revenue growth bottomed in 2019 at 7.2%. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.2 pp from 5.0% to 9.3% in 2020. EBITDA Margin stuck to a growing trend at 5.3 pp per annum in the last 5 years.
Gross Margin decreased on 4.8 pp from 74.1% to 69.4% in 2020. During 2016-2020 Gross Margin topped in 2019 at 74.1%. SG&A as a % of Revenue decreased on 3.7 pp from 54.5% to 50.8% in 2020. SG&A as a % of Revenue declined at -5.2 pp per annum in the last 5 years.
Net Income margin decreased on 4.7 pp from -0.70% to -5.4% in 2020. During the last 5 years Net Income margin topped in 2019 at -0.70%.
Investments (CAPEX, working capital and M&A)
In 2020 Cornerstone OnDemand, Inc. had CAPEX/Revenue of 0.78%. CAPEX/Revenue decreased slightly on 0.69 pp from 1.5% in 2017 to 0.78% in 2020. It's average level of CAPEX/Revenue for the last three years was 2.2%. During 2016-2020 CAPEX as a % of Revenue topped in 2019 at 3.1%.
Return on investment
The company operates at negative ROIC (-2.8%) and ROE (-18.7%). ROIC decreased on 5.9 pp from 3.1% to -2.8% in 2020. ROE dropped on 15.1 pp from -3.6% to -18.7% in 2020. During the last 5 years ROIC topped in 2019 at 3.1%. ROE stuck to a growing trend at 97.7 pp per annum in 2016-2020.
Leverage (Debt)
Debt level is 10.9x Net Debt / EBITDA and 12.4x Debt / EBITDA. Net Debt / EBITDA jumped on 8.6x from 2.3x to 10.9x in 2020. Debt surged on 244% while cash dropped on 29.1%.
Cornerstone OnDemand, Inc. has no short term refinancing risk: cash is higher than short term debt (733.6%).
Management team
Philip S Saunders "Phil" is a the company's CEO. Philip S Saunders "Phil" has spent 9 months with the company. The company's CFO is Chirag Shah. Chirag Shah has 1 month year tenure at the company.
Financial and operational results
FY ended 12/31/2020
Cornerstone OnDemand, Inc. ($CSOD) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 423.1 | 482.0 | 537.9 | 576.5 | 740.9 | 28.5% |
| Gross Profit | 287.4 | 339.1 | 393.5 | 427.3 | 513.9 | 20.3% |
| SG&A | 296.6 | 324.9 | 315.4 | 314.2 | 376.2 | 19.7% |
| EBITDA | -24.0 | -13.9 | 27.5 | 65.0 | 101.9 | 56.7% |
| EBIT | -56.3 | -49.3 | -7.8 | | | |
| Interest expence | 12.9 | 14.8 | 28.2 | | | |
| Tax | 1.2 | 1.7 | 2.6 | | | |
| Net Income | -66.8 | -61.3 | -33.8 | -4.1 | -40.0 | |
| Stock Based Compensation | 54.7 | 65.9 | 66.6 | | | |
Balance Sheet
|
|---|
| Cash | 83.3 | 393.6 | 183.6 | 215.9 | 153.2 | -29.1% |
| Accounts Receivable | 136.7 | 154.4 | 125.3 | | | |
| Accounts Payable | 24.4 | 17.6 | 11.9 | | | |
| Short Term Debt | 0.0 | 248.0 | 0.0 | 7.2 | 20.9 | 188.6% |
| Long Term Debt | 238.4 | 285.2 | 335.1 | 360.4 | 1,242.2 | 244.7% |
Cash flow
|
|---|
| Capex | 6.2 | 7.1 | 14.9 | 18.0 | 5.8 | -67.9% |
| Acquisitions | | | 41.1 | | | |
Ratios
|
|---|
| Revenue growth | 24.6% | 13.9% | 11.6% | 7.2% | 28.5% | |
| EBITDA growth | -41.9% | -42.1% | -298.1% | 136.4% | 56.7% | |
|
|---|
| Gross Margin | 67.9% | 70.4% | 73.2% | 74.1% | 69.4% | -4.8% |
| EBITDA Margin | -5.7% | -2.9% | 5.1% | 11.3% | 13.7% | 2.5% |
| EBIT Margin | -13.3% | -10.2% | -1.4% | | |
| SG&A, % of revenue | 70.1% | 67.4% | 58.6% | 54.5% | 50.8% | -3.7% |
| SBC, % of revenue | 12.9% | 13.7% | 12.4% | | |
| Net Income Margin | -15.8% | -12.7% | -6.3% | -0.7% | -5.4% | -4.7% |
| CAPEX, % of revenue | 1.5% | 1.5% | 2.8% | 3.1% | 0.8% | -2.3% |
|
|---|
| ROIC | -22.2% | -11.8% | -1.6% | 3.1% | -2.8% | -5.9% |
| ROE | -384.3% | -249.9% | -86.7% | -3.6% | -18.7% | -15.1% |
| Net Debt/EBITDA | | | 5.5x | 2.3x | 10.9x | 8.6x |
| Interest expence / Average debt | 5.4% | 3.8% | 6.5% | | | |
People
|
|---|
| Insider ownership | 8.0% | 8.0% | 8.0% | | | |
| Employees | 1,823 | 1,891 | 1,953 | | | |
| Revenue/Employee, th. $ | 232 | 255 | 275 | | | |
Cornerstone OnDemand, Inc. ($CSOD) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 150 | 184 | 199 | 207 | | 7.2% | 30.0% | 37.6% | 38.3% |
| EBITDA | 12 | 13 | 40 | 37 | | -19.5% | 48.8% | 127.8% | 55.8% |
| Net Income | -14 | -12 | -16 | 2 | | - | - | - | -83.4% |
Balance Sheet
|
|---|
| Cash | 456 | 136 | 171 | 153 | | 27.8% | -65.5% | -21.9% | -29.1% |
| Short Term Debt | 9 | 23 | 27 | 21 | | -5.4% | 102.4% | 117.7% | 188.6% |
| Long Term Debt | 359 | 1,297 | 1,294 | 1,242 | | -2.8% | 254.2% | 257.0% | 244.7% |
Ratios
|
|---|
| Gross Margin | 72.1% | 68.5% | 67.7% | 69.8% | | -3.9% | -3.1% | -6.7% | -4.7% |
| EBITDA Margin | 8.1% | 6.9% | 19.9% | 18.0% | | -2.7% | 0.9% | 7.9% | 2.0% |
| Net Income Margin | -9.2% | -6.5% | -7.9% | 0.8% | | -6.7% | -0.3% | -7.1% | -5.6% |
Peers in Application Software
Below we provide Cornerstone OnDemand, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.5% | 14.5% |
|---|
| Cornerstone OnDemand, Inc. ($CSOD) | - | 13.9% | 11.6% | 7.2% | 28.5% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 70.6% |
|---|
| Cornerstone OnDemand, Inc. ($CSOD) | 67.9% | 70.4% | 73.2% | 74.1% | 69.4% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -4.7% | -4.2% | -3.3% | 2.7% | 6.8% |
|---|
| Cornerstone OnDemand, Inc. ($CSOD) | -5.7% | -2.9% | 5.1% | 11.3% | 13.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 3.0% | 2.3% | 2.4% | 2.9% | 2.6% |
|---|
| Cornerstone OnDemand, Inc. ($CSOD) | 1.5% | 1.5% | 2.8% | 3.1% | 0.8% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -10.6% | -4.5% | -1.8% |
|---|
| Cornerstone OnDemand, Inc. ($CSOD) | -22.2% | -11.8% | -1.6% | 3.1% | -2.8% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.0x |
|---|
| Cornerstone OnDemand, Inc. ($CSOD) | - | - | 5.5x | 2.3x | 10.9x |
