Why Cornerstone OnDemand Shares Plunged Today

Guidance left a little to be desired.

Evan Niu
Evan Niu, CFA
Nov 4, 2016 at 12:41PM
Technology and Telecom

Image source: Cornerstone OnDemand.

What happened

Shares of Cornerstone OnDemand (NASDAQ:CSOD) have plunged today, down by 20% as of 12:20 p.m. EDT, after the company announced third-quarter earnings.

So what

Revenue in the third quarter rose 24% to $107.8 million. On a constant currency basis, sales would have increased 30%. Billings came in at $107 million. Non-GAAP net income for the quarter was $6.9 million, or $0.11 per share. The company easily beat analyst expectations, which called for $104.5 million in sales and an adjusted net loss of $0.01 per share. CEO Brian L. Swartz said significant improvements in sales and marketing expenses helped profitability.


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Now what

Guidance for the fourth quarter calls for revenue in the range of $108 million to $110 million, which would translate into growth of 14% at the midpoint. Cornerstone OnDemand updated its full-year guidance as well, and now expects non-GAAP net income of $2.5 million, or $0.04 per share. The Street was unhappy with guidance as foreign currency concerns weigh on sales cycles and Cornerstone is restructuring some of its sales organization. At least four analysts have downgraded shares today.