Cornerstone OnDemand Has Further To Fall
Alpha Gen Capital
Alpha Gen Capital
Cornerstone's Recent Stock Decline Presents A Better Risk Reward
Cornerstone Is A Growth Company In Search Of A Bright Future
Cornerstone OnDemand Has Further To Fall
Alpha Gen Capital
Alpha Gen Capital
Thu, Jul. 14, 3:00 PM
Wed, May 25, 10:57 AM
- Instructure (NYSE:INST) is up 6.1% today after Oppenheimer reiterated a Buy rating on the stock, noting three reasons for bullishness on prospects for its corporate learning product, vs. Cornerstone OnDemand (NASDAQ:CSOD).
- The firm's Brian Schwartz points to midmarket as a "greenfield opportunity" with a lack of fitting solutions; corporate customers who already want complementary products, like performance management; and pipeline momentum.
- Meanwhile this week, company CEO Joshua Coates filed effective Monday that he has acquired 10,000 shares of the company, at $16.9675. Shares are quoting currently at $18.22.
Mon, May 23, 4:28 PM
- Intuit (INTU +1.5%) gained today, and NetSuite (N -0.8%) declined, after Goldman Sachs saw them going in different directions in a launch of enterprise software coverage.
- The firm's analyst Jesse Hulsing also likes Cornerstone OnDemand (CSOD -0.2%) as a winner in that sector (and Intuit has gotten praise at Goldman for election/tax reasons as well): "We see the most opportunity at the lowest end of the market, where we believe market expansion is occurring for INTU. We also rate CSOD a Buy due to improving underlying fundamentals, M&A optionality, and what we view as an attractive valuation."
- NetSuite is a Sell, though, "on organic billings/bookings deceleration and risk that 2017 consensus estimates are too high." Analysts expect the company to record EPS of $0.72 for 2017 along with revenues of $1.228B.
- Now read Not Even A Buyout Justifies Cornerstone OnDemand's Valuation »
Thu, Apr. 21, 1:09 PM
- Three months ago, cloud/SaaS software firms sold off after cloud IT service management software (ITSM) firm ServiceNow (NOW +14.5%) missed its Q4 billings guidance and offered light 2016 sales guidance. Today, the group is rallying after ServiceNow beat Q1 estimates, provided in-line guidance, and reported billings of $376.7M, up 41% Y/Y and beating guidance of $360M-$365M. The company also reported a 48% Y/Y increase in clients with over $1M in annualized contract value, to 249.
- Cloud gainers include HR/financials software leader Workday (WDAY +2.3%), ERP/commerce software firm NetSuite (N +4.9%), marketing automation software firms Marketo (MKTO +3.1%) and HubSpot (HUBS +3.2%), talent management software firm Cornerstone OnDemand (CSOD +2.9%), customer support software firm Zendesk (ZEN +3.8%), collaboration/project management software firm Atlassian (TEAM +2.6%), enterprise healthcare software firm Castlight (CSLT +5.4%), and life sciences software firm Veeva (VEEV +2.4%). The Nasdaq is nearly flat.
- BTIG's Joel Fishbein has hiked his ServiceNow target by $5 to $85, while reiterating a Buy rating. "Strong results across the board suggest that the company continues to see success both in core ITSM and as a broader enterprise service tool. After enjoying most of its public life as a beat-and-raise stock, 2015 was somewhat messy; strong growth and good [key performance indicators] supportive of the bull thesis were overshadowed throughout the year by minor miscues -- a forecasting error, currency adjustments, and inconsistent billings reporting.
However, 1Q was clean, with strong billings growth, healthy upsells, and metrics showing growing contribution from non-IT services. Law of large numbers is still looming on the horizon but ServiceNow is on the path of being one of a few elite category-leading enterprise SaaS companies. We continue to be buyers of NOW."
Fri, Feb. 19, 11:33 AM
- Cornerstone OnDemand (CSOD +5.1%) director Joseph Payne bought 4K shares on Tuesday at $25.06. His total direct holdings now amount to 15,150. (source: InsiderInsights.com)
- The purchase came less than a week after the cloud talent management software firm posted a Q4 miss, issued light sales guidance and in-line EPS guidance, and disclosed CFO Perry Wallack plans to retire. Shares are now up 8% since the Q4 report.
Wed, Feb. 10, 6:45 PM
- In addition to missing Q4 estimates, Cornerstone OnDemand (NASDAQ:CSOD) guided on its earnings call for Q1 revenue of $95M-$96.5M and 2016 revenue of $425M-$433M, below consensus estimates of $97.3M and $438.4M. 2016 EPS guidance of $0.02 is in-line.
- The cloud talent management software firm's bookings rose 24% Y/Y to $142M in seasonally strong Q4, after having grown 26% in Q3. The deferred revenue balance was $252.1M at quarter's end, up 32% Y/Y.
- Clients rose by ~200 Q/Q to 2,600, and end-users by 1.6M to over 23.8M. GAAP operating expenses rose 20% Y/Y to $80.6M (compares with 26% revenue growth).
- CSOD -3.6% after hours to $23.51.
- Cornerstone's Q4 results, earnings release
Wed, Feb. 10, 4:04 PM
Mon, Feb. 8, 2:37 PM
- Many tech stocks are seeing 6%+ losses as investors flee to safety yet again. The Nasdaq is down 3.4%, and the S&P 2.7%.
- As was the case on Friday following Tableau and LinkedIn's disappointing guidance, a slew of enterprise tech stocks are seeing big losses, with cloud software and security tech names well-represented on the casualty list.
- Also: Solar stocks are having another brutal day (TAN -6.7%) as energy stocks get routed amid fears Chesapeake Energy is close to bankruptcy. WTI crude oil is once more near $30/barrel.
- Enterprise software decliners: Adobe (ADBE -9.6%), Paylocity (PCTY -19.1%), Salesforce (CRM -9.9%), Workday (WDAY -12%), Guidewire (GWRE -12.5%), ServiceNow (NOW -11.5%), Zendesk (ZEN -13.8%), Paycom (PAYC -13.4%), Marin Software (MRIN -10.3%), Castlight (CSLT -8.4%), Cornerstone OnDemand (CSOD -12.1%), Atlassian (TEAM -13.2%), inContact (SAAS -9.6%), and Bazaarvoice (BV -14.5%).
- Enterprise security decliners: Palo Alto Networks (PANW -12.2%), FireEye (FEYE -9.8%), CyberArk (CYBR -11.5%), Proofpoint (PFPT -12.7%), Qualys (QLYS -8.9%), Imperva (IMPV -9.7%), Rapid7 (RPD -9.4%), and Barracuda (CUDA -8.4%).
- Solar decliners: SunEdison (SUNE -11.3%), SunPower (SPWR -8.8%), JinkoSolar (JKS -7.6%), SolarEdge (SEDG -7.9%), Yingli (YGE -7.1%), TerraForm Power (TERP -10.7%), and TerraForm Global (GLBL -9.2%).
- Other major decliners: Micron (MU -9.1%), Western Digital (WDC -10.5%), Arista (ANET -10.9%), Universal Display (OLED -10.6%), Rackspace (RAX -11.3%), Fitbit (FIT -8.7%), Nimble Storage (NMBL -11.3%), Sierra Wireless (SWIR -9.9%), Rocket Fuel (FUEL -9.8%), Knowles (KN -9%), Mitel (MITL -8.9%), and Alarm.com (ALRM -8.9%).
- Previously covered: Yelp, Cognizant, Tableau, Globant, Ambarella, European tech stocks
Fri, Feb. 5, 11:01 AM
- A long list of enterprise software and security tech names are off sharply after business intelligence/analytics software upstart Tableau (down 45.3%) reported slower-than-expected license revenue growth and issued below-consensus Q1/2016 guidance.
- Also possibly weighing: LinkedIn (down 39.6%), which derives a large % of its revenue from cloud-based recruiting and sales tools for enterprises, issued weak Q1/2016 guidance.
- Given the magnitude of the drops, margin calls and forced selling by funds could be playing a big role. The Nasdaq is down 2.2%.
- Tableau suggested its growth slowdown has to do with softening IT spend and a need to improve sales productivity, but analysts have raised questions about competition from the likes of Microsoft, Amazon, and Qlik. LinkedIn forecast a growth slowdown for its field sales hiring solutions business, while blaming European/Asian macro pressures. The company also noted its display ad business continues declining amid weak industry growth.
- Major enterprise software decliners include Splunk (SPLK -23.7%), Workday (WDAY -15.1%), Adobe (ADBE -7%), Zendesk (ZEN -15.2%), ServiceNow (NOW -13.6%), NetSuite (N -12.4%), Salesforce (CRM -11.2%), Paycom (PAYC -10.6%), Ellie Mae (ELLI -11.5%), Cornerstone OnDemand (CSOD -7.8%), Veeva (VEEV -7.7%), Ultimate Software (ULTI -9%), Luxoft (LXFT -7.5%), Manhattan Associates (MANH -8.5%), Box (BOX -6.6%), Guidewire (GWRE -13.6%), Demandware (DWRE -9.3%), Hortonworks (HDP -9.7%), and Tableau rival Qlik (QLIK -16.6%). The casualty list includes many cloud software firms, as well as several analytics software plays. Previously covered: New Relic, Atlassian.
- Major decliners among security tech firms: Palo Alto Networks (PANW -12%), FireEye (FEYE -8.9%), Rapid7 (RPD -8.6%), CyberArk (CYBR -8.3%), Proofpoint (PFPT -8%), Imperva (IMPV -8.3%), Fortinet (FTNT -6.9%), and Vasco (VDSI -5.1%). The selloff comes in spite of an FQ3 beat and in-line FQ4 guidance from Symantec, which has been losing share to various upstarts.
Thu, Jan. 28, 2:53 PM
- Though the Nasdaq is up 0.8%, enterprise cloud software firms Salesforce (CRM -2.7%), Workday (WDAY -3.8%), Demandware (DWRE -4.5%), Veeva (VEEV -3.5%), Cornerstone OnDemand (CSOD -3.3%), Marketo (MKTO -4.4%), Actua (ACTA -2.4%), HubSpot (HUBS -6.2%), and Zendesk (ZEN -2.7%) are lower after cloud IT service management (ITSM) software leader ServiceNow (NOW -16.5%) posted a Q4 billings miss to go with revenue/EPS beats and issued light 2016 sales guidance.
- On ServiceNow's earnings call (transcript), CFO Michael Scarpelli attributed the billings shortfall to a ~$5M forecasting error. Regardless, Mizuho and MKM have responded to the Q4 report by downgrading to Neutral. Mizuho: "We find two [billings] misses in one year concerning." The firm is also worried about a premium valuation, missed quotas by sales reps, and a "large customer's preference to cut payment terms in half."
- MKM is less concerned about the billings miss, and calls Q4 results solid. But the firm is worried about macro pressures, and thinks ServiceNow's track record of major op. margin guidance beats is "unlikely to be sustained given decelerating billings and the current macroeconomic environment."
Wed, Jan. 6, 1:46 PM
- Barclays' Raimo Lenschow has downgraded firewall/security software firm Check Point (CHKP -1.9%), cloud talent management software firm Cornerstone OnDemand (CSOD -2.7%), and data warehousing hardware/software provider Teradata (TDC -3.8%) to Underweight. Cloud HR/financials software vendor Workday (WDAY -3.6%) and e-commerce software/services provider Demandware (DWRE -2.9%) have been cut to Equal Weight.
- Cloud HR software firm Paycom (PAYC -1%), on the other hand, has been upgraded to Overweight on a belief consensus estimates are too low. Meanwhile, BofA/Merrill has launched coverage on Demandware at Buy.
- Regarding Check Point, Lenschow says he prefer security tech firms that are gaining share - his top three ideas are Palo Alto Networks, Imprivata, and Rapid7. He sees security IT spend rising 7% in both 2016 and 2017, a rate on par with 2015's.
- Regarding Cornerstone, Lenschow is worried about slowing top-line growth, a lack of profits, and growing competition. Regarding Workday, he's concerned about competition from SAP/Oracle, a high valuation, and the relatively limited impact of its financials offerings on sales growth.
- The downgraded names are underperforming amid a 1.1% Nasdaq drop.
Nov. 6, 2015, 11:51 AM
- While Cornerstone OnDemand (NASDAQ:CSOD) missed Q3 estimates, it guided on its earnings call (webcast) for Q4 revenue of $96.7M-$98.2M, in-line with a $97.5M consensus. Full-year EPS guidance of -$0.35 is below a -$0.33 consensus, but full-year op. cash flow guidance of $43M has been maintained.
- Perhaps getting more attention: The cloud talent management software firm expects 2016 revenue growth to be "largely consistent" with 2015 growth. The midpoint of Cornerstone's 2015 revenue guidance implies 29% growth, while the 2016 consensus is for 27% growth.
- Top-line performance: Recent sales pressures are blamed on forex and service delivery timings. Bookings rose 26% Y/Y in Q3 to $103.7M, a slowdown from Q2's 30% growth but still well above revenue of $87.3M (+28%). Clients rose by ~100 Q/Q to 2,400+, and end-users by 1.7M to 22.2M. The deferred revenue balance rose 34% to $206M.
- Financials: Gross margin (non-GAAP) was 73%, up from Q2's 70% and flat Y/Y. GAAP operating expenses rose 32% Y/Y to $77.1M, with $53.3M spent on sales/marketing, $10.5M on R&D, and $13.2M on G&A. Cornerstone ended Q3 with $214M in cash, and $231M in convertible debt.
- Q3 results, PR
Aug. 5, 2015, 9:49 AM
- Stephens has upgraded Cornerstone OnDemand (CSOD +2%) to Overweight ahead of Thursday afternoon's Q2 report.
- The upgrade comes 6 days after Needham reported positive checks for the talent management software market, and hiked its Q2 Cornerstone billings estimtate in response. The firm also talked up the potential of new Life Sciences features and Cornerstone's recently-launched recruiting analytics platform, and stated it's now more confident in the company's ability to post 25%+ full-year billings growth.
- Update: More details here. Stephens cites encouraging talks with "industry partcipants," and thinks Cornerstone is seeing "outsized success" in the Life Sciences vertical.
May 19, 2015, 6:54 PM
- As part of a change in analyst coverage for cloud software stocks, Needham's Scott Berg has launched coverage on Workday (NYSE:WDAY) and HealthStream (NASDAQ:HSTM) at Buy, upgraded Cornerstone OnDemand (NASDAQ:CSOD) to Strong Buy, and upgraded Ultimate Software (NASDAQ:ULTI) to Buy after the close. Though their product lines differ, all 4 companies have exposure to the cloud HR/talent management space.
- Berg on Workday: "[W]e believe WDAY has the combination that growth investors seek: large market, well positioned product versus industry megatrends, and a financial model that yields significant revenue visibility ... Although we believe the company's current valuation assumes almost flawless near-term sales execution to further expand its valuation multiples, we believe its execution within a HCM market exhibiting high demand creates a positive risk/reward scenario..." The remarks come ahead of Workday's May 26 FQ1 report.
- Berg on HealthStream: "We believe HealthStream uniquely benefits from two significant mega-trends; 1) the strong secular adoption rates within the Talent Management Enterprise Software subsector, and also 2) an environment that is increasingly regulated, requiring its products’ end users to evaluate competencies and train employees on a more frequent basis." The cloud healthcare software firm is a month removed from posting a Q1 beat.
- WDAY +0.7% AH to $91.28. CSOD +1.9% to $32.44. ULTI +1.2% to $170.29. HealthStream hasn't yet moved AH.
May 19, 2015, 5:40 PM
May 6, 2015, 7:10 PM
- In addition to beating Q1 revenue estimates (while missing on EPS), Cornerstone OnDemand (NASDAQ:CSOD) has guided on its CC (webcast) for 2015 revenue of $337.5M-$341.5M, up from prior guidance of $336M-$341M and mostly above a $337.9M consensus. EPS guidance of -$0.30 is slightly below a -$0.29 consensus.
- The cloud talent management software vendor's Q1 bookings totaled $63.5M, +28% Y/Y but trailing revenue of $74.4M (seasonality played a role). The deferred revenue balance rose 38% to $180.9M.
- GAAP operating expenses rose 27% Y/Y to $67M, a much slower pace than Q4's 42%. The customer base rose by ~100 Q/Q to over 2,200, and end-users by ~1M to over 19.1M.
- Shares have risen to $31.25 AH. Cornerstone says it plans to show off analytics tools and a cloud app platform (PaaS) solution (presumably for apps that integrate with Cornerstone's) at its May 11-13 Convergence conference.
- Q1 results, PR
Cornerstone OnDemand, Inc. provides comprehensive learning and talent management solution delivered as software-as-a-service. Its solutions include Cornerstone Recruiting Cloud, Cornerstone Onboarding, Cornerstone Learning, Cornerstone Performance, Cornerstone Successio, Cornerstone... More
Industry: Multimedia & Graphics Software
Country: United States
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