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Cornerstone OnDemand, Inc. (NASDAQ:CSOD)
Q1 2020 Earnings Call
May 11, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Cornerstone OnDemand's First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Mr. Jason Gold, Vice President of Finance and Corporate Development. Sir, you may begin.

Jason Gold -- Vice President of Finance and Corporate Development

Thank you. Good afternoon, everyone, and welcome to Cornerstone OnDemand's first quarter 2020 earnings call. With me today virtually are our Chief Executive Officer, Adam Miller; and our Chief Financial Officer, Brian Swartz; as well as Phil Saunders.

In conjunction with today's call, we published a presentation that's located on the Investor Relations section of our website. During the call, Adam and Brian will be making reference to particular slides in that presentation. Today's call will be a bit longer than normal as we have a lot to discuss. Today's press releases were furnished to the SEC in a Form 8-K.

Today's discussion will include forward-looking statements, including but not limited to, statements regarding the expected performance of our business; our future financial and operating performance, including our GAAP and non-GAAP guidance; the integration of Saba into our business and achievement of related cost synergies and efficiencies; our strategy, our long-term growth and our overall future prospects. Forward-looking statements involve risks, uncertainties and assumptions. These risks, uncertainties and assumptions, as well as other factors that could cause actual results to differ materially from those contained in our forward-looking statements are included in our most recent 10-Q and 10-K, as well as subsequent periodic filings with the SEC.

During the call, we will be referring to both GAAP and non-GAAP financial measures. All financial figures discussed today are non-GAAP unless we state the measure is a GAAP number. The reconciliation of our GAAP to non-GAAP information is provided in the earnings press release and also in the presentation.

With that as a backdrop, I'd like to turn the call over to Adam.

Adam Miller -- Founder and Chief Executive Officer

Thanks, Jason. Before we get to the presentation for today's earnings call, I wanted to address today's announcement. It's hard to believe that two decades ago on this month, Cornerstone was incorporated in my one-bedroom apartment in New York City. I started with a simple but audacious mission, and we can leverage the power of the Internet to improve access to education on a global basis. From the outside, the 20-year journey may seem to be mostly up into the right. But it was filled with twist and turns: a bubble bursting; September 11; the financial crisis; a pandemic; for the first the seven years I had a practically begged for capital, mostly from friends and family. We almost ran out of money on multiple occasions. But we persevered, building the team one smart cool, dependable and visionary person at a time; building the Company one client at a time, manically focused on client success and the mission. We faced bigger competitors from the beginning. In fact, our first really big competitor was a company called Saba. Over time, ERP has entered our space but our product vision, our ability to innovate and our focus on client success enabled us to win.

Today, with the acquisition of Saba completed, we are helping over 75 million people across over 180 countries to realize their potential. We are now clearly on track to over $1 billion in revenue. And as the world's leading technology learning company, we have delivered over 800 million online courses in the last year. In other words, we have made real progress on our mission.

So after 20 years, having achieved much with an amazing global team, I'm excited for the next chapter. I found an amazing partner and a phenomenal operator in Phil Saunders, who is Saba's CEO. Having spent so much time in talent management, I have learned that the importance of having the right person at the right time. Phil is that person for Cornerstone, and now is the time. Today, we announced that Phil will be taking over as Cornerstone's CEO next month, and I will move up to Executive Co-Chair, partnering with Elisa Steele. I will continue to work with Phil to help drive Cornerstone's innovation into the future, as we leverage the power of our combined R&D team to empower nearly 100 million people around the world.

Before we get to the presentation, I've asked Phil to say a few words. Phil?

Philip S. Saunders -- Chief Executive Officer of Saba Software, Inc.

Thank you, Adam, for the warm introduction, and thanks, everyone, for giving me a moment to introduce myself. As Adam said, we've had the opportunity to get to know each other and our respective companies quite well over the past couple of years. I have come to witness firsthand why Adam is the respected visionary in both the HCM and talent management space and have also seen the impact of his contagious passion evidenced by such a winning company culture at Cornerstone. As in any competitive arena, you come to appreciate and respect the strengths and capabilities of others in the game, your competitors. It's truly exciting to now be one combined in what I believe a -- to be a very powerful force, both in financial prowess and market strength. This is a tremendous opportunity for me personally as Adam and I both navigate through our transitions, execute on the integration and drive success here at Cornerstone.

I believe my past 12-plus years of transforming companies in a private equity setting, and more notably, my past five years in the evolution of Saba in the HCM space, is a wonderful backdrop and a complement to Adam and the Cornerstone team. Having led many acquisitions, successful integrations and, of course, the related synergy activities while building a winning company culture makes for a really good fit for all of us.

Adam and I have been working closely with the integration management office over the past several weeks, and I'm quite confident in what will be a successful and really exciting outcome. This is much more than an opportunity to further Cornerstone's financial and market strength. It's an opportunity to serve our clients and employees with a meaningful, lasting, personalized development experience that I believe only Cornerstone can deliver on.

I look forward to talking with you and meeting you all in the near future. Thank you for the time. Back to you, Adam.

Adam Miller -- Founder and Chief Executive Officer

Thanks, Phil. And now on to our formal presentation. We will refer to slide numbers so that you can follow along. Starting on Slide 4. We want to recognize this unprecedented moment that we are living in with COVID-19. This is a historic public health crisis that none of us have ever experienced. And we are being impacted by this pandemic just like everyone else. About 1% of our workforce tested positive for the virus. And thankfully, they have all recovered. However, we all have friends, family members, customers and communities that are being impacted by the virus in very serious ways. And we know that we are not yet in the clear. We have offices in most of the big cities that have been adversely affected by the virus, and we have taken this virus extremely seriously. We believe we were one of the first companies in Southern California, home to our global headquarters, to implement a mandatory work-from-home policy. As the pandemic begins to dissipate and stay-at-home orders are relaxed and were lifted, we will make changes to our policies in accordance with federal, state and local guidelines and recommendations. Until then, all of our employees worldwide remain in a work-from-home environment.

On the business planning level, we have collaborated with a team around a few key areas. Our primary focus has been on the safety of our employees and empowering our customers through these difficult times. For our community and our clients, we recently launched Cornerstone Cares, a program that includes both free -- a free online portal for the general public and a free content offering for our clients, both leveraging the Cornerstone platform. Cornerstone Care provides training on COVID-19, managing anxiety and working remotely for both managers and employees. Since launching this program, we've had over 1 million course registrations.

We also released Cornerstone Content Anytime Remote Work Essentials, which is meant to help train our clients on how to best work from home. We've worked with those clients who're experiencing financial hardship since our mission is to help clients realize their potential. And we have stepped up our commitment to that goal during these trying times. Our global team has adapted well to remote work. From a business continuity perspective, we have seen no disruption to our services. Our platform has been stable during this period, and our employees' productivity levels have been strong.

With respect to our financials, our models contemplate various outcomes. We've done scenario planning, including some scenarios that are terribly bleak, and we're remaining confident in our liquidity position, even with the added debt we took on to complete the Saba acquisition.

Moving on to Slide 5. As you know, we're a subscription-based business with historically high renewal rates. As a result, we expect to continue to grow revenue through the crisis, albeit at a slower rate than what was expected in a more normalized environment. We have reasonably high levels of visibility, a substantial portion of our revenues amortized off of our balance sheet. And in comparison to other businesses that are more transactional and have to book and ship the bulk of the revenue each quarter, we believe we operate under a more stable and predictable business model. Although we have lived through the dotcom bubble, September 11, and the global financial crisis, and therefore, have some experience dealing with adverse situations, this situation is still different than anything we've seen before.

Despite what we believe is a relatively stable and predictable aspects of our business, we are not immune to the effects of this pandemic, and we are seeing some business challenges that I'd like to discuss. First off, our new logo acquisition has trended down at the end of Q1. Our sales cycles for new customers generally range from two months for smaller customers to over 10 months as we get into large strategic enterprises. As the COVID situation caused the economy to freeze, we noticed the lengthening of sales cycles. We are continuing to drive these opportunities forward and many deals have already closed. And our reps can continue doing demos and writing proposals while working remotely. And we expect that we could see the elongated sales cycles for new companies signing multiyear agreements with a new vendor until some sense of normalcy returns to the broader economy.

Number two, our ability to cross-sell new products to our clients slowed a bit as we ended Q1. Cross-sells are handled by our client sales team. And while cross-sells are still doing well, they are bright spot for our Company as we sell content and other new products to our customer base, the uncertain economic climate has caused some companies to pause and reconsider any new spending. Nonetheless, we still believe quite strongly in our cross-selling value proposition as our solutions drive increased value in ROI to our clients. So, although our team is facing some headwinds, we remain cautiously optimistic about their ability to continue driving new ARR.

Having said all that, keep in mind that even with the headwinds, our solutions, what Cornerstone does is particularly relevant to our clients in an environment where their employees are working from home. For example, while many of our clients have historically done executive development and all of their employee onboarding in person, we have now seen almost all of our clients move their training and onboarding online.

On Slide 6, we talk about how our client base has been impacted. Obviously, the pandemic has had varying effects on different sectors of the economy. As you can see on Slide 6, Cornerstone services all major industries around the world. We thought, therefore, it might be helpful to look at the combined Cornerstone and Saba entity on a holistic basis by the industries that we serve. This chart shows our total combined ARR for 2019 by industry so that you could see our potential exposure. We provided this information to help you get a more granular look at our business during this very unusual time. We do not expect to update or provide this information regularly going forward.

As you can see, our client base spans across a broad range of industries. And we've called out on the right base industries that are often thought of by the press and others as being some of the most negatively impacted due to the COVID-19 pandemic. As an example, combined with Saba, we have less than 1% of our annual recurring revenue in the airline sector. On the flip side, we also have clients like Amazon and UPS, both of which have had a very different experience in the pandemic than most other companies. In addition, we have a substantial public sector business, which is less impacted due to the government's desire to preserve the economy.

The chart on Slide 7 shows the combined exposure to small businesses. We wanted to give you a sense of what our exposure was to these smaller companies. As you can see, our exposure to this segment is relatively small. I will point out, however, that our SMB segment, which we define as companies fewer than 1,000 employees, this chart is really focused on under 500 employees, is one of our fastest-growing segments and one about which we're very excited over the long-term.

Slide 8 shows total dollars of annual recurring revenue for the combined Cornerstone and Saba entity that are up for renewal in 2020 grouped by industry. So why are we showing this? Remember, we generally sign three-year contracts with our customers. And so, we're showing this data in this way in addition to these other two slides because it's primarily the contracts that are up for renewal in 2020 that present the highest risk of churn in this economic climate. If you believe, for example, that certain industries will see more severe impacts and could therefore be candidates for increased churn, it's 2020 dollars up for renewal that you want to analyze. I'll let you draw your own conclusions, but you can see that we have low concentration risk in those industries that are most impacted by the pandemic.

Turning to Slide 9. Any company that takes on significant leverage during this pandemic owes it to their shareholders to run liquidity stress test assuming truly dire outcomes. This is precisely what we've done. And on this chart, you can see what happens to Cornerstone if all new sales were to stop between Q2 of this year and Q4 of next year. In other words, if we had no sales from April for the next several -- seven quarters through next year with zero new ARR for seven quarters, which we modeled, we believe the combination of our high renewal rates, the realization of our planned synergies and the ultimate rolling off of one-time costs associated with the transaction has our model showing that our total liquidity rises from approximately $150 million pro forma at the end of Q1 2020 to greater than $225 million at the end of Q4 2021. What this shows is that, we generate cash flow well in excess of our interest expense even in this super unlikely incredibly dire scenario. It's this kind of planning and the conclusions that we're able to draw from them that give us confidence in the Saba deal and our overall business. I will point out that whatever scenario we face, our priority use of cash in the coming quarters will be to pay down our debt and delever our balance sheet.

Now, a quick review of Q1. Please turn to Slide 11. As you can see here, we had a strong quarter from a reported financials perspective. Our subscription revenue came in at $144.4 million with the high end of our guidance, while our total revenue came in at $150 million, which slightly exceeded the high end of our guidance range. Additionally, although we saw a slowdown in new business signings late in Q1, it's worth pointing out that our Q1 renewal rates were slightly ahead of plan, which helped support our total ending Q1 ARR balance.

Our non-GAAP operating margin exceeded the high end of our guidance, coming in at nearly 17%. Several factors continued to the strength in our operating margins. And as we implemented work-from-home policies, our travel and entertainment expenses-related costs came down meaningfully.

In the next few minutes, I'd like to talk about the Saba transaction and why we're so excited about it. We believe the acquisition of Saba will create meaningful shareholder value. And while both of our businesses have been impacted due to the pandemic, we believe the impacts are manageable, and we're just as excited today about the deal as we were when we first announced it. As you know, there were press reports last summer that Saba would be put up for sale, and we participated in the transaction on the seller's timetable.

Turning to Slide 13. As you know, we completed the acquisition of Saba on April 22 for a total purchase price of approximately $1.295 billion, which is about $100 million less than the announced price from February. Brian will discuss the final details of the transaction, but I just want to thank all of our investors who reached out and offered their support, advice and guidance during this process. We think that the transaction brings a significant opportunity for value creation to our Cornerstone shareholders.

Over the course of the next few minutes, I'll walk you through our logic. There are three basic reasons why we did the Saba transaction: number one is innovation; number two, is scale or what we refer here to as reach; and number three, cash flow. So let's dig deeper into each of these.

On Slide 15, you can see that we believe the huge infusion of engineering talent will enable us to accelerate our product road map. The deal increases our innovation-focused engineering resources by more than 60%, while simultaneously lowering average headcount costs by expanding our footprint into lower-cost geography. Yet the real key here is that, we won't be integrating our products in a traditional way software companies integrate. Because our product significantly overlap, we are not trying to deeply integrate two different core bases together. Rather, we are connecting feature sets where they make sense and eliminating duplication of efforts to free up substantial capacity to accelerate innovation. This allows us to simultaneously service our clients more effectively and deliver on our product vision faster, building more competitive differentiation with a relatively lower cost of development and higher returns for our shareholders.

Turning to Slide 16. The increased reach that this transaction brings us is immense. The increased number of clients and users will enable us to feed a huge increase in data into our machine learning engines to help deliver the right learning opportunities to the right people at the right time. Think about how giant companies like Netflix evolved. As it got bigger, the recommendation engines got smarter, and they were able to show you content that they knew you'd like through better personalization. This drove increased engagement, which lowered churn and further expanded the user base. The Saba acquisition vastly increases our reach, which we expect will help us to improve user engagement and ultimately drive more growth. And the transaction brings us an opportunity to meaningfully expand our revenues, if we're able to successfully cross-sell our products into one another's user bases.

Now, in light of current market conditions, we believe that having a large incumbent base is likely to work in our favor. Just consider the reverse situation. Imagine if we were a start-up, like many of ones that I told you compete with us, working hard with limited development resources in a small customer base, in that case, survival depends on two things: raising more money and winning new clients. Although we didn't do the acquisition with the foresight to know about the pandemic, the fact is that both raising money and winning new clients is more difficult today than it has been for a long time. And as the incumbent now in more than 7,000 accounts with over 75 million users and an army of developers that is 60% larger than it was before we did this deal, we think we are in a strong competitive position within HR tech against any of those start-ups and better positioned today than we have been in quite some time. In fact, just in the last quarter, I made some statements about how the competitive environment, it played a role in some of the churn we saw last year. In the current environment, we're seeing some companies stick with what they have rather than making big decisions to switch providers. The combination of a larger client base and larger engineering team positions us well, both during and after this pandemic.

Now, on Slide 17, you can see the third benefit of the deal, which is financial. When we first announced the transaction, we told you that we were planning to achieve $35 million in synergies over the first 24 months following the transaction's close. Today, as a result of the hard work that we did in conjunction with the team at AlixPartners, we're raising that guidance to $50 million in run rate synergies that we expect now to achieve by the end of this year. I'm really proud of the team for all the hard work that they put in on this. And we see savings in many areas, some of which are listed on this chart. The good news about these synergies is that, they're cash. Having this extra cash flow cushion is especially helpful during times like these and reducing the impact of the virus on our cash flows. As I pointed out earlier, we believe the combination of our recurring revenue business and these synergies gives us ample cash flow, and as a result, sufficient liquidity to weather the current storm.

I think this chart on Slide 18 succinctly captures the way we see the economic value of this transaction. On a stand-alone basis, Saba did roughly $85 million in unlevered free cash flow in 2019. If you add the $50 million in cash synergies we expect to achieve and hold the $85 million of 2019 cash flow flat, we bought an asset that we believe should generate approximately $135 million in unlevered free cash flow as part of Cornerstone on a pre-COVID basis. The economic cost to Cornerstone shareholders from doing this deal is roughly $55 million of incremental annual cash interest expense, taking the full debt load into account and roughly 1 million shares of dilution on a base of 67 million shares or just under 1.5%. That drives $80 million of net incremental cash flow each year. We think that represents a good value to shareholders and not only provides us with some flexibility to weather the near-term challenges presented to us by the pandemic but also gives us a strong base from which to grow and create additional value when things improve.

Now, on Slide 19. I'd like to talk about Saba as a business and help disaggregate its trends. Saba ended 2019 with $243 million in annual recurring revenue, which grew 2% year-over-year. As we discussed in our February 24 deal announcement call, Saba categorized its ARR into what Saba calls core ARR, which was $200 million, growing 10% in 2019; and migration ARR, which was $44 million, declining 23% in 2019. The difference between these two categories is that, Saba focused on selling core products to new customers, while products labeled as migration were not sold to new clients, simply maintain.

Further disaggregating the $200 million in core ARR, Saba's learning management system product called Saba Cloud, which when combined with the ARR from Saba's TalentLink recruiting product grew ARR 22% in 2019. While Saba Cloud functionality is quite similar to Cornerstone Learning, there are some feature sets which gave them the advantage in certain sales situation. We plan to leverage that functionality, including Saba Meeting within Cornerstone Learning in much the same way that we will leverage Cornerstone's Content Anytime offering into the Saba Cloud client base.

Saba's recruiting product, TalentLink, which came from Lumesse, was predominantly sold in Europe. Saba plan to bring the product to the US in 2020. We believe TalentLink is a strong applicant-tracking system with solid candidate relationship management capabilities, and we plan to sell it on a stand-alone basis for recruiting deals around the world.

Saba's SMB performance product, TalentSpace, came from Halogen and is just under half of the Saba Cloud plus TalentLink ARR. TalentSpace ARR declined 7% year-over-year in 2019. Now, this is because Saba stopped selling TalentSpace to new clients during the year, and it was not a good migration option for those accounts. We believe there's a significant opportunity to move some of the TalentSpace client base to Cornerstone Performance, which then gives us the ability to provide those clients with a full talent management solution and gives us a real cross-sell opportunity.

In providing this disaggregation of Saba's ARR to help you better understand why we believe that in addition to the cost synergies we will realize, we expect to see some real revenue synergies from this deal. Although this represents pre-COVID performance, we continue to believe the combined Cornerstone product and Saba products will offer great benefit for customers, partners, employees and shareholders for many years to come.

Pulling all this together on the next slide, Slide 20, you can see how we thought about the value of each component stacking on top of each other to generate something on the order of $225 million in 2019 pro forma unlevered free cash flow. If you start on the left of the chart, we did $90 million in unlevered free cash flow in 2019. We also told you that Saba did about $85 million in unlevered free cash flow in 2019. And then you can add the $50 million in synergies that I talked about earlier. And you can see a path to the $225 million figure on the right. Of course, these numbers ignore any of the one-time costs associated with the transaction. And we wanted to give you the framework that we've been using to evaluate this transaction and to help you understand the value creation opportunity that we see. Of course, you'll also remember that we had expected to grow cash flow this year and into the future. And so, we look at this as a clear opportunity to significantly increase cash flow over time.

Turning to Slide 21. Bringing the sales teams together also give us some interesting opportunities to drive shareholder value creation. The first is that, we're actively reviewing the combined sales teams and plan to develop what we call an all-star team of the best reps from each of the two companies. While Cornerstone has an exceptional sales culture, we've also been really impressed with what we've seen with Saba, and we're looking forward to working with this all-star team. We're also looking to take the best concepts that Saba use to win deals and apply that to our go-forward market motion. It's going to be a combination of their best reps and our best reps, and I think that will position us to be quite successful together.

So just to the point of better market motion in certain cases, they had higher win rates in certain areas. And so, we plan to take a few pages out of their playbook to improve our combined go-to-market strategy and our execution. And finally, in certain areas, Saba's compensation programs contributed to higher customer satisfaction and renewal rates. We plan to incorporate some of these improvements into our joint compensation plan over time.

I'd like to now take a few minutes to talk about our product vision. Obviously, the world is moving -- I'm on Slide 23, from the pre-COVID world to rebounding from the volatility we have seen, trying to stabilize their companies and ultimately rebound and plan for the future. What we see is an opportunity to create a vision for our clients in the new world of work and to help these companies operate unbound, not just rebounding, but beyond the rebound, operating in a new way, more adaptable, more responsive and more effective in the new world.

On Slide 24, we talk about learning being the primary accelerator to enable this. We've been in a world where skills matter. The skills divide is real. That has become even more true during this pandemic. We're seeing this idea of digital transformation go from a future prospect to a current reality. Companies have been forced to digitally transform on a dime. And that means massive technology change for employees all over the world. And we think the only way for people to be able to adapt well in those environments is to learn.

Training is the accelerator. And we believe in that world, learning should be unbound. People should be able to have personalized learning anytime, anywhere. And that's why you can see on Slide 25, our initiatives around curating, not just professional content that we do with Content Anytime, but also external open source content that can be curated by our machine learning, as well as by our clients. We want to make sure that that content, both professional and informal is available to people in the flow of work. Everybody has been using collaboration tools during this remote work era to stay connected. We want to enable training in the flow of work in Slack, in Teams, in Workplace, allowing people to learn in the flow of work. And we want to ensure that the learning is happening in the context of skills gaps that people have for their current job and for the job they dream of. So, completely personalized training available anytime, anywhere on any device.

On Slide 26, we also believe that the unbound company allows for personalized coaching for every single employee. Now, a lot of us are aware of executive coaching programs and executive development programs. And imagine if you could use the power of artificial intelligence to accomplish two different things: one, make sure that the managers are better coaches. Everybody has had a bad manager in their life. Why not make every manager a better manager and a better coach? Give them the tools, leverage machine learning and personalization for the manager to give better coaching to the employee. And at the same time, give the employee direct access to the tools they need for truly personalized career navigation, making the recommendations so that not only executives have coaches, but every employee has an AI-based coach from a machine to supplement their manager. This is all possible. And the acquisition of Clustree combined with the incremental R&D resources we have from Saba make this entirely possible for us.

And we believe, on Slide 27, that we have the opportunity to provide holistic employee data to enable our clients and executives and even line managers to make better people decisions. That means enabling people to have deep skills profiles on employees, understand the whole view of the employee, be able to make skills-based recommendations about people and understand gaps in the workforce based on skills, capabilities and experiences to ensure that the company is optimized.

On Slide 28, we talk about the points of integration with Saba. So, for example, Cornerstone Learning will get supplemented with Saba Meeting and Saba Classroom, enabling us to have a very deep virtual instructor-led training experience to complement what we're already doing with online training. In this environment, there's almost no classroom training taking place. As a result, everything is happening virtually. So, in addition to the relationships we have with companies like Zoom and Cisco WebEx, we're going to supplement our offering with Saba Meeting and Saba Classroom.

We are going to make Cornerstone Content Anytime available to all Saba Cloud clients. Saba had already begun selling content, leveraging some partnerships that they had, but they were about two years behind where we are from a content curation standpoint. And we're able to bring them Content Anytime right away, which leapfrogs them into the modern era with fully curated mobile-ready content available anytime in a constantly evolving subscription.

We're going to take the candidate relationship management capability of TalentLink, which was built using a microservices architecture, and apply it to Cornerstone Recruiting to enable an even better recruiting solution for our clients. And we're going to take the power of Saba Org Planning and Transition Manager and apply it to Cornerstone HR. There are lots of opportunities to integrate. We'll also, over time, going to make our two newest products, Cornerstone Careers and Cornerstone Development, available to the Saba client base.

On Slide 29, you'll see our immediate cross-sell opportunities. We have the ability to cross-sell Content Anytime, again, to that Saba Cloud learning base. We can cross-sell Saba Meeting and Saba Classroom to the Cornerstone Learning client base. To the extent, we have clients move from TalentSpace to Cornerstone Performance, we can upsell Cornerstone Careers, Recruiting and HR, as well as Content Anytime. And we will have the ability to upsell Saba Org Planning and Transition Manager to the Cornerstone HR client base. So, lots of immediate opportunities and lots of focus on making our clients successful. Phil and I believe that the number one priority for this combined business is to make our clients successful and ensure high levels of renewals and long-term relationships with our 7,000 strong client base.

With that, I'll hand it over to Brian to discuss our financials.

Brian Swartz -- Chief Financial Officer

Thanks, Adam, and good afternoon, everyone. I'd like to spend a few minutes reviewing our quarterly financial results and then jump right into more detail about the Saba transaction and how we're thinking about our cash flow generation framework going forward.

As Adam already pointed out, we had a solid Q1 from a reported financials perspective, as you can see on Slide 31. Our Q1 subscription revenue came in at $144 million, or 10.7% year-over-year constant currency growth. And our Q1 total revenue came in at $150 million, or 7.8% constant currency growth.

Our gross margins were a little less than 75% and were adversely impacted on a year-over-year basis by higher content revenue, which carries a lower gross margin as well as higher allocated engineering and service delivery costs in 2020. These higher allocated costs created about 1.5 points of headwind to gross margins, of which about two-thirds comes out of R&D and one-third comes out of sales and marketing. Accordingly, R&D and sales and marketing as a percentage of revenue were favorably impacted on a year-over-year basis by the same amount. Overall, our operating margin improved by 3 percentage points from 14% in the prior year to 17% this year.

Turning to slide 32. As Adam mentioned, we completed the acquisition of Saba on April 22 for a total purchase price of $1.295 billion. Given these unprecedented times, we naturally received a number of questions and comments from investors about the deal following the COVID-19 outbreak, and we appreciate all of your feedback. Setting aside the details of the purchase agreement, I want to clarify, we did not have a simple $75 million walkaway breakup fee. However, we did obtain a purchase price reduction in light of general market conditions. We believe at the time of the announcement, and we continue to believe today, that this transaction will be value-accretive to Cornerstone shareholders.

Given current market conditions, we obtained a headline purchase price reduction of $100 million based on reduced equity value of $32 million and reduced cash consideration of $68 million. It's worth pointing out that we agreed to pay certain seller expenses, which resulted in a net cash reduction of a bit more than $50 million. As I mentioned, we moved forward with this transaction because we believe the acquisition is in the best interest of our shareholders.

The next slide simply lays out our various debt instruments. On the left, you can see that we raised a little over $1 billion in a term loan B. The deal was fully underwritten and ultimately funded by a consortium of banks. The banks have not yet syndicated the term loan B given market conditions. The debt is priced at LIBOR plus a spread. Because the banks have not yet gone to market with the deal, there is still some flexibility on the spread, although we do have a cap and we know within a reasonably tight range what the ultimate interest rate will be once the syndication is complete.

To help you with your financial models, based on where the current LIBOR rate is trading, it is reasonable to assume a total cash interest expense of approximately 5%, plus or minus. We also have access to a revolving line of credit, and as we discussed on the last call, Silver Lake agreed to extend the maturity of their 5.75% convertible notes from July of 2021 to March of 2023.

Moving on to slide 34, you can see our pro forma capitalization table. To calculate our leverage ratios, we are using non-GAAP operating income and adding back depreciation, amortization and certain other adjustments, including $50 million in synergies. Pro forma as of the close of Q1, our capitalization included $114 million in cash on hand, just over $1 billion of term loan B and $300 million in debt from our convertible notes.

This drives a total net debt position of just under $1.2 billion or a net leverage of 4.3 times. Pro forma at the end of Q1, we had over $160 million of available liquidity composed of $114 million of cash on hand and access to $50 million of revolver capacity. As Adam mentioned earlier, I would like to reiterate that our capital allocation priority in the coming quarters is to pay down debt.

Since we announced the transaction, we have gotten a ton of questions about our leverage ratio. I understand the confusion given the way we discussed it on our last call. So for the avoidance of doubt, as you can see on slide 35, pro forma at the end of March, our net leverage inclusive of our current view on synergies is 4.3 times. Again, we are committed to paying down debt and reducing our leverage over time.

Now I'd like to spend a few minutes talking about our financial framework. While Adam showed you a version of the chart on slide 37 earlier in the presentation, I think it's worth repeating here. The version shows our Q1 new ARR in the blue bar and then assumes we do not sell any new ARR for the next seven quarters. Although we don't expect this to happen and based on what we've seen so far in Q2, this is not going to happen, we wanted to run some dire scenarios to ensure we had adequate liquidity given the COVID-19 environment and our increased debt load.

What you can see here is that our liquidity in the next few quarters is burdened by the front unloading of our onetime cost. As these begin to fade and the synergies start to be realized, aided, of course, by the natural cash flow generation of our business, you can see that our liquidity position builds. The result is an increase of approximately $150 million of pro forma liquidity at the end of Q1 2020 to over $225 million at the end of 2021. Again, we don't expect this extremely low level of new sales to occur. We simply wanted to make sure we are as prepared as possible for very challenging times.

I'd also like to point out this assumes flat renewal rates for Cornerstone. Although we feel good about this assumption, we also ran some further stress tests to see what happens if renewal rates decline, and the conclusion is the same. Ultimately, we feel very good about our position, even in these types of situations where we'd face multiple headwinds. In planning for dire scenarios like this, and the conclusions that we're able to draw from them, that give us confidence in the Saba deal in our business overall.

To summarize, even in extreme situation where we sell no new ARR for seven quarters, we believe we're able to not only service the debt balance but also reduce it by generating increased liquidity. As a result, we feel very good about what we'll be able to do in a scenario that shows any resemblance of return to normalcy.

As Adam and I mentioned earlier, our new ARR in January and February was good but did fall off in March due to COVID-19. Those bookings were somewhat offset by stronger-than-expected performance on renewals during Q1. Given these trends, combined with the need to complete the integration of our financial records, including items like purchase accounting, which will certainly require a writedown of deferred revenue, we are not providing quantitative guidance at this time for 2020. However, as we bring the Company together over the next few quarters, we will share more granular detail when possible.

With all that said, while visibility is definitely limited and we expect uncertainty to persist, since the start of Q2, some signals have emerged in our latest sales forecast models that give us some cautious optimism. As a reminder, a large percentage of our new bookings are typically closed in the last few weeks of the quarter, so the onus is upon us to capitalize on these opportunities.

More importantly, and as we've discussed today and as you can see on our final slide, number 38, we believe the available synergy value when combining Cornerstone and Saba will enable us to continue expanding our unlevered free cash flow margins from 21% pro forma in 2019, into the 30s after all the onetime costs are incurred and we realize all the synergies. While we'd love to give you a time frame over which we will hit $1 billion in revenue, the current environment makes this a bit tricky. And so we are not commenting on that at this time. Once the environment settles down, we'll look to be more explicit on this target. I, like Adam, would like to thank all of our global team members for all their hard work each and every day as we strive to exceed our customer expectations, while at the same time enhancing shareholder value.

Adam and I will now take your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question comes from Scott Berg from Needham. Your line is open.

Scott Berg -- Needham & Company -- Analyst

Hi, everyone. Thanks for taking my questions. Congrats on a good quarter. I guess a couple of different things here. First, Phil, welcome. I look forward to meeting you in person. Adam, congrats on a 20-year run. I think I've been chatting with you for about half of that. I look forward to hearing about your next endeavors whenever they materialize. I guess first question is, Adam, on the transition, why is now the right time? And part of that is, was this kind of contingent on the acquisition? Or was this part of the negotiations, either before or during your time chatting with Saba?

Adam Miller -- Founder and Chief Executive Officer

Yeah. I mean, obviously, the logic of the acquisition stands on its own, the enormous innovation benefits, scale benefits and cash flow benefits. So we think it made financial sense. But Phil and I have gotten to know each other over the last couple of years and in particular, over the last several months, have been working very closely together, and this became a natural move.

Scott Berg -- Needham & Company -- Analyst

Got it. Helpful. And then as you ran through product and product synergies, it was striking me that you're really pushing the product upsell opportunity, which I certainly get given the amount of additional product that the new combined entity will have. But as we look out, maybe, 12 to 24 months down the line, hopefully when the current macro subsides a little bit, is this an organization that will sell more to new logos? Or do you think it's really more about selling more to your existing installed base?

Adam Miller -- Founder and Chief Executive Officer

I mean there's always a balance. We want to always sell to both. I don't think it's ever one or the other. It's not binary. We obviously have a very large client base now. And so you would just expect that there will be a significant amount of cross-sell and upsell to the install base into the future, relative to what we had before. It's just a much bigger base. And so if you have roughly a similar-sized direct sales team on a much bigger client sales organization and client base, of course you would expect a meaningful portion of the business to be cross-sell and upsell, to that install base.

Brian Swartz -- Chief Financial Officer

Scott, it's Brian. One thing I would add to that, just as a reminder, I mean, the last several quarters, probably more than the last several quarters, call it, in the last four to six quarters, I believe, I have commented that a larger percentage of our new ARR when it was Cornerstone stand-alone, pre-Saba transaction, was coming from. And that was actually part of the basis and the theory and one of the three reasons that Adam explained on why we thought the Saba deal made a lot of sense. Now we have 7,000 plus clients. That's a lot of clients. By the way, there's still a lot of new logo opportunity and greenfield opportunities, certainly, in emerging markets like APJ and LatAm and way downmarket in SMB. But that was one of the trends we were seeing in the Cornerstone business over the last several quarters.

Scott Berg -- Needham & Company -- Analyst

Got it. Quite helpful. I will jump back into the queue. Congrats, again and good luck, everyone.

Adam Miller -- Founder and Chief Executive Officer

Thanks, Scott.

Operator

Thank you. Our next question comes from Rishi Jaluria from D.A. Davidson. Your line is open.

Rishi Jaluria -- D.A. Davidson -- Analyst

Hey, guys. Thanks so much for taking my questions. Adam, congrats on a great run and really looking forward to seeing the next chapter of Cornerstone evolve. Maybe two questions I wanted to drill down on. First, I wanted to maybe better understand -- I know last time when the deal was first announced, there was talk about the integration plan from a technology perspective. And I believe kind of the line is it's going to be pretty distinct for now, and the focus is going to be on joint go-to-market. Can you maybe expand it on that and thinking in terms of back-end integration or anything, what sort of work do you expect from a product and tech perspective? And then I've got a follow-up.

Adam Miller -- Founder and Chief Executive Officer

Yeah. So this is different than a lot of other acquisitions that you might see because we're not trying to deeply integrate the products together. We're not going down to the code level and trying to create a single unified user experience across multiple disparate products. We already have that in the Cornerstone platform. And we have the opportunity now to take the best feature sets within Saba's product portfolio and apply that to Cornerstone products like Saba Meeting, like the CRM capability or like the org planning capability.

And then we have, conversely, the ability to upsell and cross-sell the Saba base with Content Anytime with the new products that were coming out, which will be built to work both with Cornerstone clients and Saba clients, like our learning experience platform product that's coming out of Cornerstone Development. And we have the ability to leverage connectors that both companies have made. So it's not that -- I'll just use Saba Classroom as an example. We already have an API-based connector to enable virtual instructor led training providers to hook into Cornerstone Learning, kind of leverage that exact API set for the integration of Saba Classroom.

So there's not a whole lot of work required. This is work that we had already done to open up our system. The same thing is true for Saba with regard to Content Anytime. They already were allowing third-party content to run through Saba Cloud. Content Anytime essentially is third party content from Saba's perspective, which will run through Saba Cloud. So the tools already exist. And the work required to do that integration is relatively minimal, which allows us to very quickly go-to-market and focus our integration efforts on back-office processes and go-to-market.

Rishi Jaluria -- D.A. Davidson -- Analyst

Okay. Great. That's really helpful. And then, Adam, in the prepared remarks, you talked a little bit about what you're seeing in terms of deals kind of slipping with newer customers. Wanted to get a sense for any changes in customer buying behavior from existing customers, maybe beyond that. Anything in terms of customers looking for restructuring of contracts, shortening duration? Any customers looking for changes in payment terms or extending them? Any sort of color on that would be really helpful. Thank you.

Adam Miller -- Founder and Chief Executive Officer

Yeah. I mean like you hear from other companies, we're obviously seeing a little bit of that. What's different in this case, I believe is maybe two or threefold. Number one, we've been through these types of situations before. We lived through the financial crisis. We had a much smaller client base, but we were heavily weighted to the financial services sector back then. And that was the sector most impacted by the financial crisis. So it was significant.

During that time, we were able to navigate that period, ended up keeping most of our clients and actually growing a lot of those accounts. So it's something that our contracts are built for and something that we've learned how of navigate. The second thing is you have to remember that our products are perfectly applicable to the situation that we're in right now. Most organizations are trying to deal with the fact that they have to work remotely. And keep in mind what I've said, we are operating at 100% even with the integration of a very large other business that we just acquired.

How did we do that? We did that leveraging video conferencing tools, leveraging collaboration tools and leveraging our own system. We have used Cornerstone to help us do the integration and onboarding of the Saba team into Cornerstone. So our tools are highly relevant in this environment. And the third piece is that we're seeing different parts of the economy impacted in different ways. So the reason we gave the very specific detail of our ARR by industry is so that people really could put a box around these concerns. Obviously, the airlines are impacted. Obviously, the major hotel chains and restaurant chains are impacted by the quarantine and by the pandemic in a way that's very different from e-commerce companies or technology companies or perhaps healthcare companies.

And so we wanted people to understand that we are highly diversified. We do not have concentration risk. And to the extent that we do have a larger set of clients in a particular area like public sector, those are the sectors that are navigating this economic uncertainty a little bit better than others. And so we're in a -- we have relatively mitigated the risk, and we wanted people to -- we want to be very transparent about that. And we wanted the people to be able to see for themselves what is the risk profile.

We showed you the industries that we believe are most impacted. You might have different views of what industries might be impacted today or in the future. And so all the data is now available. And hopefully, people will draw the conclusion that we have a very strong, sustainable business now. And having a larger client base helps us in this environment.

Rishi Jaluria -- D.A. Davidson -- Analyst

Great. That's super helpful. Thank you so much.

Operator

Thank you. Our next question comes from Raimo Lenschow from Barclays. Your line is open.

Raimo Lenschow -- Barclays -- Analyst

Hey, thank you. I hope you guys are all staying safe. Adam, first of all, congratulations on the successful career for the last 20 years. Now that you're handing over the leadership, like what's in place? Like so you're now obviously a Co-Chairman as well, like how this is going to work? Because, obviously, it's still your baby, Phil running it. Can you just help us -- or help us to be comfortable about that kind of that new situation that we have there?

And then, Brian, just you talked about some early signs in April. Can you just talk us through like what are you looking for in terms of like signs there? Is that like number of conversation to clients, new logos engaged in the funnel or that you -- at the top of the funnel? Like how do you kind of quantify that or qualify that? Thank you.

Adam Miller -- Founder and Chief Executive Officer

Thanks, Raimo. So on June 15th, Phil becomes CEO, and I become Co-Chair of the Board. The roles will be very clear. Phil is running the Company day to day. I will support the team and I will support Phil in any way needed. And I will remain a major shareholder of the Company and obviously on the Board as Co-Chair. I will also stay very involved with the innovation that has gotten our Company to where it is today and will take us to a very successful place in the future. And so that's where my passion is, and that's where I'll stay involved. But Phil is taking command of the ship and is running all day-to-day activities and running all operations at the Company.

Raimo Lenschow -- Barclays -- Analyst

Thank you, OK.

Brian Swartz -- Chief Financial Officer

Yeah. Raimo, it's Brian. With respect to early April or kind of since Q2, I mean, the last several weeks, we've certainly seen some -- what I would characterize as just more confidence, more positive signals in our forecast and how we're feeling about Q2 bookings, the content business in particular, where we've been having deeper and more serious conversations with clients. Clients are more interested. And so there just feels like a little bit of reengagement by our client base and the opportunity that we had in the pipeline for Q2.

So again, I think it's probably too early to call it a trend, but I think it's an important data point for everyone to understand. We're obviously sitting here in the early -- mid-May we're about halfway through the quarter. As I've told you many times, Raimo, and you know most of that -- and as I mentioned, most of our bookings happen in the last -- a couple of weeks of the quarter or the last few weeks of the quarter. So there's a lot to do, but I think the opportunity is there for us to gain some ground here. And if the signals we've seen in the last few weeks continue, that will be positive heading into the end of Q2.

Raimo Lenschow -- Barclays -- Analyst

Perfect. Hey, thank you, all the best.

Brian Swartz -- Chief Financial Officer

Thanks.

Operator

Thank you. Our next question comes from Pat Walravens from JMP Securities. Your line is open.

Joseph Goodwin -- JMP Securities -- Analyst

Hi. This is actually Joe on for Pat. Thank you so much for taking our questions. So we know Saba's revenue performance in 2019, but just directionally, in the combined entity, how should we think about that? How should we kind of think about revenue growth going forward?

Brian Swartz -- Chief Financial Officer

Yeah. Joe, it's Brian. I mean listen, there's obviously -- there's two factors really impacting this that I want everyone to understand. I think everyone knows I try to provide the best transparency that we can on guidance at least that's our goal. I mean we have two -- as I said, two things impacting this. One, there's obviously the environmental and marketplace issues going on, in particular with COVID. That clearly impacts and creates some volatility that we don't normally experience.

The second one is, as we bring Saba into our financial numbers, which will happen on a reported basis from April 22 forward, there will be things like, purchase accounting has to be done. We have to adjust their deferred revenue to fair value. That will have a meaningful impact on growth rates, really, for the next four quarters, for the most part, a little bit longer than that. Likely, we'll have to see how the work is done.

We'll provide as much transparency so that everyone can adjust for that kind of pro forma in their models. Obviously, none of that impacts cash flow and what we're mostly focused on. What we're -- in fact, what we're exclusively focused on, is capturing the synergies on target, including the onetime costs that we have to incur to capture those synergies and make sure that comes in or below budget to make sure we hit and hopefully exceed the synergy target that we've outlined today, and that's what's most important for us. So that's what we're focused on.

And when we have confidence in our ability to forecast to that, whether it's one quarter out, two, three, four quarters out, coupled with all the marketplace and environmental factors, we'll talk more about it. But as of right now, we're just trying to give you a perspective of what cash flow generation can look like one, two, three years from now, given these synergies, given where we're at last year and focusing less on the very near-term results here.

Joseph Goodwin -- JMP Securities -- Analyst

Got it. Thank you.

Operator

Thank you. Our next question comes from Brad Sills from Bank of America Securities. Your line is open.

Brad Sills -- Bank of America Securities -- Analyst

Hey, guys. I wanted to ask about the comments made on the combined R&D organization and focused on accelerating the content road map. Could you elaborate on that? And kind of what is the focus for Content Anytime development?

Adam Miller -- Founder and Chief Executive Officer

Yeah. So we continue to build out the Content Anytime offering. There are both technical aspects of it, which we've been working on, and there are product aspects of it. The product itself keeps getting more and more mature. We have dozens of content providers that are working with us now. It's available in multiple languages, and we continue to expand offering. All of the content is mobile-ready, and it's covering our full taxonomy of subjects that we gleaned from the aggregate of our client base.

In terms of other development, we are going to leverage the power of the combined team to really accelerate our launch of Cornerstone Development, which is our own learning experience platform and the launch and build-out of Cornerstone Careers, which allows for that personal life navigation by the employee of their career, working with both the employee and managers. So a lot of development coming, and it allows us to accelerate the road map across the board.

Brad Sills -- Bank of America Securities -- Analyst

Got it. Thank you. And then -- thanks for that. And then I wanted to ask about comments you made on renewal rates improving from last quarter. Can you just provide some color on where the changes were made and what impact that's had on renewal rates? Thank you.

Adam Miller -- Founder and Chief Executive Officer

Yeah. So we've been hard at work at -- and I'll let Brian comment on the actual change on renewal rates. But generally speaking, as you know, we've been working hard on our support operations and our client success operations. We had a misstep in 2018, beginning of 2019 with our support operations based on the transformation we made out of the services business. We will be doing something very similar with Saba, but we will not make the same mistake twice. And so we are paying very close attention to support required support levels and how we ensure that the clients have the access they need and the response times they need and get the help they need if they need it. Brian?

Brian Swartz -- Chief Financial Officer

Yeah. Hi, Brad. Yeah. Just to put it in perspective, Brad, I mean, obviously, every quarter, every month, we're forecasting new bookings, new ARR as well as renewal rates. And the point of the comments were, although new ARR did trail off in March post-COVID, which had an impact on total bookings for Q1 relative to internal expectations, helping offset some of that were favorability in our forecasted renewal rate.

So listen, is that going to be a trend for the full year? It's way too early to tell. And obviously, Q1 is a good seasonally soft quarter for both renewals and new bookings. But in general, it's one of those green shoots and not all that unexpected, given what's happening in the world and the fact that more and more clients, incumbents are staying with their existing providers like us in the case of every new client. And obviously, making it a bit harder, at least right now, to acquire new logo.

So that was the nature of the comment. Hopefully, that will continue. Hopefully, the renewal rate improvements relative to expectations will continue regardless of what happens with COVID. That's what we're focused on and what we obviously spent a lot of time talking about last year with respect to the support issue that Adam mentioned.

Brad Sills -- Bank of America Securities -- Analyst

Got it. Thanks, guys.

Operator

Thank you. Our next question comes from Siti Panigrahi from Mizuho. Your line is open.

Siti Panigrahi -- Mizuho Securities -- Analyst

Hi. Thanks for taking my question. And I hope you all are doing well. So a question on Saba. So what percentage of Saba contract is up for renewal this year? And what's the renewal rate? And then are you going to end-of-life Saba products or continue to maintain without much innovation on Saba?

Brian Swartz -- Chief Financial Officer

Yeah. So the Saba products -- with respect to the renewal rate question, the Saba Cloud clients, which are the primary product that Saba went to market with, contractually and renewal rates are very similar to Cornerstone's core product, which three-year contracts, build in advance annually and then renewals of three-year terms.

Some of the other products, namely TalentSpace and some of the TalentLink products were on slightly different renewable basis. Some of them had initial three-year terms with annual auto-renewals. Some of them have more periodic billings such as quarterly billings, those types of things. But the core product is very similar, the Saba Cloud ran up is very similar to Cornerstone. And I'm sorry, what was the second question? You asked about renewal rate.

Siti Panigrahi -- Mizuho Securities -- Analyst

And are you going to end-of-life Saba? Or are you going to maintain without much innovation on the Saba side?

Adam Miller -- Founder and Chief Executive Officer

Yeah. Brian, I'll take that. So on the -- Saba has a broad range of products. Some of them were already in maintenance mode and will continue in maintenance mode. These are older products that came from prior acquisitions. We are going to continue developing the core products, most notably Saba Cloud and TalentLink. Those will still be produced. They will still be sold. They'll still be actively in the market.

And we are actually going to be breathing life into some of the products that didn't have a good home at Saba but have a very good home with Cornerstone, namely the build planning and transition management products, which fit very well with Cornerstone HR and the opportunity to take Saba Meeting and Saba Classroom to a much larger base. Those will actually get more development than they've had in the past. So overall, the products are either being maintained or even more development than they had before.

Siti Panigrahi -- Mizuho Securities -- Analyst

Thank you for that. And I understand the immediate cross-sell opportunity, like CCA into Saba and a few other products you talked about. But have you guys talked about when you're going to start migrating Saba customer? And also, do you expect a price uplift or downshift when you might get Saba to Cornerstone?

Adam Miller -- Founder and Chief Executive Officer

Yeah. So nothing in our industrial logic or in the business case for this deal included the requirement that we migrate clients. In fact, it's a little bit of contrary. We are very, very focused on client retention. And so if a client likes the products that they're on, they could stay on their product. If they want something different or more notably, if they want to move to a more unified talent management solution, we would enable them to easily move over to the Cornerstone platform. So our goal is to make this a win-win for the Saba client base so that they get to stay on what they have or move to something different if they so choose. Either way, it's a good option for them. Either way, they'll be supported.

Siti Panigrahi -- Mizuho Securities -- Analyst

Thanks, Adam. Thanks for the color.

Adam Miller -- Founder and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Mark Murphy from JPMorgan. Your line is open.

Mark Murphy -- JPMorgan -- Analyst

Yes, thank you. Adam, was there any pause in spending that you can associate with the actual announcement of the merger? Maybe some customers or prospects were waiting to see the combined road map. I'm just -- I'm curious looking back on it, how do you discern and separate out the pandemic impact versus anything that was kind of merger-related pausing?

Adam Miller -- Founder and Chief Executive Officer

Yeah, Mark, that's a great question. And I think those things get conflated together. And I think it's hard even in the client's mind to disaggregate those two things. Having said that, there are certain deals where both Saba and Cornerstone were finalists. And we know at least some of those deals have been dispositioned. So in some cases, Saba won, in other cases, Cornerstone won. But they did pause all of them to see what would happen to hear from either me or Phil or Jeff to get a sense of what the go-forward plan was.

We've been very transparent with the clients on both sides, both the Cornerstone clients and the Saba clients and with the employees. So the Company, our clients and our prospects have a good understanding of what the road map is, what the plan is and where they fit. And that's allowed us to relatively quickly progress on those deals. That doesn't mean all of them have been finalized. There are still deals that had slipped and are still open right now.

Mark Murphy -- JPMorgan -- Analyst

Okay. And as a follow-up, Brian, how do you see the combined Company headcount trending, say, between today and end of year?

Brian Swartz -- Chief Financial Officer

Yeah. So just high level, there's roughly 2,000 employees on the Cornerstone side. There's roughly 1,200 or so on the Saba side. We will -- it's reasonable to expect that to come down, but we're not guiding to a specific number as we work on synergies.

Mark Murphy -- JPMorgan -- Analyst

Okay. One final one, Brian, going back to an earlier question, I just wanted to double click on what you've seen since the start of Q2. Are you -- would you say you're back to the original bookings plan either for the month of April or the original Q2 bookings forecast? Or are you kind of more just pointing to qualitatively more people are answering the phone, and you're sort of off the kind of bookings levels that you were seeing in late March?

Brian Swartz -- Chief Financial Officer

Yeah. So we're not back to our original plan for Q2, if that's your question. But we are relative to the late March, early April drop that we saw for obvious reasons, given what's happening. We have seen some momentum come back from that, but we are not back to our original plan for either April or may or even our forecast for Q2.

Mark Murphy -- JPMorgan -- Analyst

Okay. Thank you. And Adam, congrats on 20 years of great success, and best wishes in your new role.

Adam Miller -- Founder and Chief Executive Officer

Thanks, Mark.

Operator

Thank you. Our next question comes from Alex Zukin from RBC Capital Markets. Your line is open.

Scott Wilson -- RBC Capital Markets -- Analyst

Yeah. Hi, thanks, guys. This is Scott on for Alex. I guess, first question -- Adam, congrats on the 20 year run, very impressive. And now that you're leaving with kind of two of the largest pure-play vendors being merged, I'm curious how do you think the competitive environment may or may not change for Cornerstone when you think about specifically competing with the ERP vendors that are also in this market. So I'm thinking, does your size, either from a revenue perspective or a product breadth perspective or even just a customer account perspective, give you any advantages that you think -- as you think -- kind of think toward the future here?

Adam Miller -- Founder and Chief Executive Officer

Yeah. Thanks for that question. So I would say, first of all, one of the reasons is it's a good time for me with the transition is we have now gotten to where we inch for day one, which is we are the clear leader in the space. We are number 1, without a doubt. And the combination gives us, I think two real advantages. So number one is, it is now truly, for prospects, a decision between ERP suite or best-of-breed. If they want the ERP suite, then they're going to go with whoever the incumbent vendor is, whether that's SAP or Workday. If they want best-of-breed, there's really only one choice now, which is Cornerstone. They used to have two choices. They can go with Cornerstone or Saba. Now it's a very clear binary decision. I think that will work to our advantage.

The other is, our scale does matter. I had talked about this in the past when we first talked about the deal. Having bigger scale means better support from system integrators and software partners all over the world, and that evens the playing field for us and makes it easier for us to win deals against the ERP vendors. And so Saba gives us both advantages, which I think will result in higher win rates and a better opportunity for our sales community going forward.

Scott Wilson -- RBC Capital Markets -- Analyst

Got it. And then just kind of -- I think a couple of people have asked about these positive signals that you're seeing in early 2Q here. I'd be curious, have you seen any kind of shift in what customers are looking at from a product perspective? I guess in the current environment, are any products kind of resonating louder or less loudly? I'd be curious if you're seeing any kind of mix in what customers are looking for today.

Adam Miller -- Founder and Chief Executive Officer

Yeah. I mean obviously, there's less focus on recruiting right now. Nobody's hiring. But there is absolutely massive focus on learning and, in particular, online training. We saw, in March, the highest number of hours of training consumed ever in our history of online training consumed, over 27 million hours of training consumed just in the month of March, which is an all-time high for us.

And that speaks to the fact that both companies are required to do all of their training online. They can't do classroom training right now. And the fact that employees, in many cases, have more time in this work-from-home environment, depending on what's happening with the Company. And the companies have seen this as an opportunity to take some of that excess time and use it to better upskill and reskill their employees. So we're seeing more training happening, and we are clearly the leader in that space. So for us that's potentially a tailwind into the future.

Scott Wilson -- RBC Capital Markets -- Analyst

Perfect. Thanks, and congrats again.

Adam Miller -- Founder and Chief Executive Officer

Thank you.

Operator

Thank you. And that does conclude the question-and-answer session for today's conference. I'd now like to turn the call back over to Adam Miller for any closing remarks.

Adam Miller -- Founder and Chief Executive Officer

So I want to thank everyone for joining the call today and enabling us to walk through the presentation. I also want to, today, especially thank our amazing global team for being part of this journey with me as we have gone from really an idea to be the largest learning company in the world, with over 75 million people using our products across 180 countries, and most importantly, enabling tens of millions of people around the world to realize their potential. Thank you all for being part of it. Stay safe.

Operator

[Operator Closing Remarks]

Duration: 87 minutes

Call participants:

Jason Gold -- Vice President of Finance and Corporate Development

Adam Miller -- Founder and Chief Executive Officer

Philip S. Saunders -- Chief Executive Officer of Saba Software, Inc.

Brian Swartz -- Chief Financial Officer

Scott Berg -- Needham & Company -- Analyst

Rishi Jaluria -- D.A. Davidson -- Analyst

Raimo Lenschow -- Barclays -- Analyst

Joseph Goodwin -- JMP Securities -- Analyst

Brad Sills -- Bank of America Securities -- Analyst

Siti Panigrahi -- Mizuho Securities -- Analyst

Mark Murphy -- JPMorgan -- Analyst

Scott Wilson -- RBC Capital Markets -- Analyst

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