April 19, 2013

Technology

Cornerstone OnDemand
Ticker: CSOD Recommendation: Buy

Current Price: $33.19 Implied Price: $45.81

Investment Thesis
Key Statistics Cornerstone OnDemand recently solidified its continued momentum in the
cloud based talent management space with 2012 revenue up 61%from 2011
52 Week Price Range and 2012 bookings up 58% from 2011. The company continues to prove its
$18.02-35.69
ability to sign new contracts with a five year bookings CAGR of 59%.
50-Day M oving Average $33.48
Several notable trends are working in Cornerstone OnDemands favor: 1)
Estimated Beta 1.58 increasing pressure on businesses to cut costs with technological advances,
2) increased adoption of cloud-hosted, SaaS based software as a cost saving
Dividend Yield N/A deployment method, and 3) with increasing competition and globalization,
firms are facing growing pressure to retain, attract, and develop talented
M arket Capitalization 1,771,805,136
individuals.
3-Year Revenue CAGR 59.0%
Cornerstone OnDemand has established an effective growth strategy by
aggressively increasing sales head counts while leveraging key reseller
Trading Statistics agreements and alliances. Notable resellers include Appirio, ADP, and T2
Diluted Shares Outstanding Optimise PTY. Notable alliances include ADP, salesforce.com, and
53,383,704 Workday.
Average Volume (3-M onth) 301,730

Institutional Ownership 78.2% One-Year Stock Chart

Insider Ownership 19.9% $40.00 10000000

9000000
$35.00
EV/EBIT (LTM ) -53.4x
8000000
$30.00
Margins and Ratios 7000000
$25.00
Gross M argin (LTM ) 71.9% 6000000

EBITDA M argin (LTM ) -26.9% $20.00 5000000

4000000
$15.00
Net M argin (LTM ) -26.6%
3000000
$10.00
Debt to Enterprise Value 0.0 2000000
$5.00
1000000

$0.00 0
Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13

Covering Analysts: Christian Meunier, Ian Strgar Volume Adjusted Close 50-Day Avg 200-Day Avg

[email protected], [email protected]
1 University of Oregon Investment Group
University of Oregon Investment Group April 19th, 2013
Business Overview
Cornerstone OnDemand, a leading global provider of talent management
solutions, was founded in 1999 and began principal operations in November of
that year. The company is headquartered in Santa Monica, CA and offers a
comprehensive application suite to service businesses talent management
needs: workforce planning, talent acquisition, performance assessment, goals
management, career development, succession planning, compensation
management, and more. Cornerstone OnDemands talent management platform
is delivered purely through SaaS based delivery.

The companys business segments are as follows:

Talent Management Suite

Clients sign multi-year (typically 1-3) contracts to subscribe to the Cornerstone
OnDemand talent management suite, which are priced based off the number of
employees at the client organization. These subscription fees are paid either
monthly, annually, or in three year installments. Cornerstone OnDemand offers
four integrated cloud applications within the talent management suite:
Recruiting Cloud: allows customer organizations to manage all the
processes within the recruiting cycle. Recruiting Cloud includes
managing job postings and requisitions, identification of strong
employee candidates, assessment of skills and competencies, and new
employee onboarding. Individual feature applications include:
o Recruitment Management: gives customers the ability to
assess and compile potential candidates.
o Sourcing: helps customers uncover the best potential
employees by linking candidates to current employees (for
personal feedback) through social networks, job boards, and
talent communities.
o Screening & Assessment: gives customers the ability to easily
locate external talent by separating potential candidates with
certification tests, skills tests, and quantitative ranking
systems.
o Talent Pipeline: allows customer organizations to effectively
build strong candidate pipelines for future openings by
creating blended talent pools with internal and external
candidates while increasing communication and engagement
in online talent pools.
Learning Cloud: allows customer organizations to effectively train
new employees or employees in new positions with instructor led
training, e-learning sessions, and virtual classroom sessions. Benefits to
Cornerstone OnDemands Learning Cloud include management of
local and global compliance programs, access to tens of thousands of
training programs, automation of various onboarding processes, and
cost metric reporting. Individual feature applications include:
o Learning Management: Cornerstone OnDemands Learning
Content Management System (LCMS) gives customers the
ability to create detailed, media-rich courses and learning

UOIG 2
University of Oregon Investment Group April 19th, 2013
content without the need for expensive prior programming
knowledge.
o Instructor Led Training: automates event planning, provider
management, virtual classroom integration, and registration in
order to educate new employees in a personal, face-to-face
setting.
o Social Collaboration: gives customers a thorough employee
collaboration platform through business social networking.
This allows employees to take an active role in company
development by contributing to online groups and
communities within the business.
o Compliance & Certification Management: manages and
automates the administrative processes in ensuring company
compliance with its latest regulatory requirements.
Performance Cloud: allows customer organizations to measure
individual, departmental, and organizational performance levels in
order to align individual goals with organizational strategies. Individual
feature applications include:
o Performance Management: allows customer organizations to
easily align company-wide initiatives with individual goals by
managing individual goals, as well as providing social reviews
and performance appraisals.
o Skills & Competency Management: Employs custom build
competency models to easily identify skill gaps within
customer organizations in order to plan necessary training.
o Succession Management: allows for identification and
development of a customers internal talent pool in order to
map out succession scenarios for any given position within the
organization.
o Compensation Management: manages all aspects of employee
compensation levels including salary, potential increases,
market based adjustments, and benefits.
Extended Enterprise Cloud: allows customer organizations to
continue to extend the benefits of talent management past their internal
workforces onto their extended partners, resellers, suppliers,
distributors, and customers to ensure high levels of competency all the
way through a customers supply chain. Individual feature applications
include:
o Learning Management: gives customers the ability to create
detailed, media-rich courses and learning content intended for
extended network employees.
o Social Collaboration: through the use of social networks,
blogs, and online communities, social collaboration offers
extended network access to areas of relevance to customer
organizations.
o eCommerce: allows customer organizations to charge their
extended networks for their talent management offerings.

UOIG 3
 University of Oregon Investment Group April 19th, 2013
o Certification Management: gives customers the ability to
create certification programs to ensure extended network
competency and increase revenues of channel partners.

Consulting Services
Cornerstone OnDemand supplements its software offerings with supportive
consulting services. Consulting services include all implementation of the
Cornerstone OnDemand solution: installation, configuration, systems
integration, and training. These services are typically delivered within the first
fiscal quarter of signing a new contract. In addition, Cornerstone OnDemands
consulting services include maintenance and technical support inquiries.

Strategic Positioning
Sales & Marketing
Since the companys inception in 1999, Cornerstone OnDemand has invested
heavily in Sales & Marketing in order to grow the Cornerstone OnDemand
brand and generate strong revenue growth. Cornerstone OnDemand markets and
sells its products through a direct sales force as well as indirectly through a
domestic and international network of resellers. The companys platform is
compatible with many different industries, but contains specific offerings
Dollar Retention Rate targeted towards certain verticals as needed. Cornerstone OnDemand employs
100.0% 95.8% 94.9% 94.3% target market specific sales teams based on target size and region.
95.0%
90.0%
85.0% Research & Development
80.0%
75.0%
As a provider of SaaS based talent management software solutions, Cornerstone
70.0% OnDemands success is heavily reliant on its ability to stay ahead of
65.0% technological advances and keep its software offerings current and up to date.
60.0% While the company will undoubtedly continue to invest in research and
55.0%
development, the scalability of the SaaS model will allow for reduced research
50.0%
2010 2011 2012 and development costs as a percentage of revenue. The companys development
strategy in combination with its SaaS based delivery model allow for frequent
(quarterly or more) releases of new and updated software features.

Business Growth Strategies

Cornerstone OnDemand markets and sells its SaaS based talent management
platform through a direct sales force and through key reseller agreements. While
12000
the companys direct sales force is strong in North America, key reselling
Clients & Users 10,558 agreements allow the company to expand its presence internationally. Recently,
10000 the company has noted the public sector as a domestic market with significant
8000 7,512 growth potential.

6000 4,928 Organic Growth

4000 Client Retention
2000 1237
Cornerstone OnDemand has demonstrated a strong ability to retain current
805
481 clients as the company consistently sees above industry average customer
0 satisfaction rates with its overall offering. Since 2002, the company has
2010 2011 2012
averaged a 95% annual dollar retention rate and has stated an objective to
Number of Clients Number of Users increase or maintain such high rates.

UOIG 4
University of Oregon Investment Group April 19th, 2013
Strategic Resellers
In order to grow the companys presence internationally, Cornerstone
OnDemand has established a strong partnering strategy. It has signed reseller
agreements with international players such as Affiliated Computer Services,
Appirio, and ADP. In addition, it has signed with regional distributors such as
BSI Tecnologia in Brazil, CDP Group in China, Comms Learning Limited in the
United Kingdom, Infosys Limited in India, T2 Optimise PTY in Asia Pacific,
and many more. The company has stated it as a goal to continue to expand and
strengthen its strategic reseller agreements. This leaves much room to grow
because total foreign revenue in 2012 was a modest 30.6% of total revenues.

With strong client retention rates and effective strategic reseller agreements,
Cornerstone OnDemands growth has primarily been organic.

Acquisitions
On April 5th, 2012, Cornerstone OnDemand completed an acquisition of Sonar
Limited, a SaaS based talent management provider from New Zealand. Because
Sonar Limited had a focus on the SMB segments, this acquisition allowed
Cornerstone OnDemand to expand its presence in smaller business markets,
rebranding the solution as Cornerstone Small Business solution.

Industry
Overview
Talent management is a subsector of the overall human capital management
(HCM) industry. While HCM offerings are concerned with every aspect
pertaining to managing a companys work force, talent management is
specifically concerned with the gathering, training, and career planning of a
firms talent.

With increased globalization and competition between firms, HR professionals

are facing rising pressure to evaluate, develop, and retain top talent. Until
recently, HR employees were forced to purchase and deal with multiple aspects
of talent management separately if they wanted adequate software to aid in the
process. As a result, integrated talent management suites have emerged as a
solution to HR employees frustrations with the high cost and effort involved in
the talent management process.

Due to the cost and effort savings resulting from purchasing multiple
applications simultaneously from a SaaS vendor, full suite vendors with a SaaS
offering are leading the talent management market.

The primary offerings in talent management can be further broken down into
recruiting and staffing, learning and development, performance management,
and career planning:

Recruiting and Staffing: involves all the processes pertaining to the

hiring process. Firms will use these applications to automate job
listings, filter through potential applicants, source potential candidates
with internal workers, and build a pipeline of solid applicants for future
openings.
Learning and Development: involves all the processes pertaining to
thorough employee onboarding through face to face training, online
training, and social collaboration. Such onboarding applications aim to
accelerate time to productivity.

UOIG 5
University of Oregon Investment Group April 19th, 2013
Performance Management: involves all the processes pertaining to
management of current employee involvement and alignment of
individual goals with corporate initiatives. Such applications include
compensation management, skill assessments, and quantifiable
performance reviews.
Career Planning: involves all the processes pertaining to the collection
of individual goals, succession planning, and individual career
mapping. Businesses employ such software to ensure employee
satisfaction with their current jobs and where they are headed.

Competition
Cornerstone OnDemand competes in the market for talent management, a
market that is highly competitive, rapidly evolving, and very fragmented. While
there is much competition in specific niche offerings, Cornerstone OnDemand
has stated that it primarily competes as a comprehensive, fully integrated talent
management suite. Most of the companys competitors have multiple versions of
hosted or on-premise solutions.

Leadership Position Recognition

Cornerstone OnDemand has been recognized as a market leader in multiple third
party research reports from Gartner, Forrester, and IDC. Gartner defines talent
management suites as integrated set(s) of applications, including workforce
planning, talent acquisition, performance appraisal/assessment, goals
management, career development, succession management, learning
management, and compensation management. Each business is assessed on its
ability to execute (current offering assessment) and completeness of vision (plan
for future assessment) and ranked accordingly. In Gartners Magic Quadrant
for Talent Management Suites, the report notes how Cornerstone OnDemands
performance management, succession management and learning functionalities
are best in class.

Competitive Landscape
Due to the fact that Cornerstone OnDemands target market is enterprise
businesses, the company competes primarily with two types of talent
management providers: diversified software providers, and SaaS based talent
management providers.

Diversified Software Providers

IBM: In December 2012, IBM entered the talent management space
with its acquisition of Kenexa. Prior to being acquired by IBM, Kenexa
was a publically traded talent management provider with a focus on
recruitment. Kenexas platform is best suited for enterprise businesses
and is being integrated into IBMs Smarter Workforce platform.
Oracle: Oracle entered the market for talent management in December
2004 with its hostile takeover of PeopleSoft and extended its talent
management offerings with another acquisition of Taleo in February
2012. The software acquired in such buyouts are bundled into three
primary offerings: Oracle E-Business Suite, Oracle PeopleSoft HCM,
and Oracle Talent Cloud. Oracle offers both on-premise and SaaS
based talent management solutions.
SAP: SAP offers on-premise HCM capabilities in its broader ERP SAP
Business Suite and recently expanded its talent management offerings
to support the cloud with its acquisition of SuccessFactors in February

UOIG 6
 University of Oregon Investment Group April 19th, 2013
2012. Prior to the acquisition, SuccessFactors was publically held and
targeted enterprise businesses.

SaaS Based Talent Management Providers

Halogen Software: Halogen Software is a privately held talent
management provider based out of Ottawa, Canada. With a strong
presence in North America, the U.K., and Australia, Halogen primarily
offers its solutions through SaaS based deployment (approximately
80%). Halogen targets mid-size to enterprise businesses.
Lumesse: Lumesse was founded in 1996 and is based out of the U.K.
Originally, the company had a strong focus on e-recruitment but has
recently expanded its offerings through strategic acquisitions. Lumesse
is a leading vendor in the European talent management markets and has
a growing presence in Asia.
Peoplefluent: Peoplefluent was founded in 1997 and is headquartered
in Raleigh, North Carolina. The company is privately held by the
private equity firm Bedford Funding. Originally, the company had a
strong focus in recruiting and compensation management, but has
recently taken steps to add learning management and social HCM
functionalities. More than 80% of the firms revenue comes from North
America.
Saba Software: Saba Software is based out of Redwood Shores, CA
and is one of the few publically traded SaaS talent management
providers. The company has more than 2,100 customers worldwide and
has reported annual revenues in excess of $130 million. Saba has a
strong focus on learning, performance, and succession management.
Recently, the companys stock price has taken a hit due to an SEC
inquiry.
SilkRoad: SilkRoad is a privately held talent management vendor
based out of Chicago, Illinois. The company targets mid-market
customers and has expanded its offerings through acquisitions.
SilkRoad has approximately 2,000 customers and over 400 employees.
SumTotal Systems: SumTotal Systems was founded in 1985 and is
based out of Gainesville, FL. The company has operations in North
America, Europe, and the Asia-Pacific regions and has grown primarily
through acquisitions of companies such as Softscape, GeoLearning, and
Accero. Customers cite the company for having very strong offerings in
learning, performance, and succession management.

Market Opportunity
Market Size
Market Size ($B) Cornerstone OnDemand participates in the market for talent management
6.0 5.4 solutions, one that, in our opinion, is very underpenetrated. While businesses
5.0 4.7 have been forced to manage their internal talent for many years prior to the
4.0 recognition of talent management as a defined market, talent management has
4.0 emerged in recent decades and is seeing increased acceptance as a necessary
3.3
3.0 function. According to research compiled by Deloitte, the market for talent
management grew 22% to approximately $4 billion in 2012.
2.0

1.0 Market Growth

0.0 According to Forrester Research, the market for talent management is projected
2011 2012 2013 2014
to grow at a CAGR of 16.5% through 2014. Growth in talent management is the
highest growing sector within the overall HCM market.

UOIG 7
 University of Oregon Investment Group April 19th, 2013
Management and Employee Relations
Adam Miller Founder & CEO
Adam Miller founded Cornerstone OnDemand in 1999 and has served as
President and Chief Executive Officer ever since. He is a member of the board
of directors and heavily involved in sales, strategy, and daily operations at
Cornerstone. Prior to the founding of Cornerstone, Miller worked as an
investment banker for Schroders Plc. He attended University of Pennsylvania
where he received a B.S. in business. He went on to receive his M.B.A. and his
J.D. from UCLA. Miller has earned his C.P.A. and his Series 7 certifications.
His salary for 2012 was $411,233 with a total compensation of around $964,000

Perry Wallack Chief Financial Officer

Perry A. Wallack co-founded the company in 1999 and began his career at
Cornerstone OnDemand as the Vice President of Finance. Prior to working at
Cornerstone, Wallack worked from 1992-1998 as a business manager for Grant,
Tani, Barnish, and Almant, Inc, a business management firm. He received a
B.A. in Economics from University of Michigan and earned his C.P.A. in 1996.
His total estimated compensation for 2012 was $552,000

Mark Goldin Chief Technology Officer

Mark Goldin has been serving as Cornerstone OnDemands Chief Technology
Officer since June 2010. Prior to joining Cornerstone, Golding has held several
jobs for multiple companies including Chief Technology officer at
DestinationRX, INC., Chief Operations and Technology Officer at Green Dot
Corporation, and Senior Vice President at Thomson Elite.

Vincent Belliveau Senior Vice President & Manager of EMEA

Vincent Belliveau has been serving as the Manager of Europe, Middle East and
Africa (EMEA) since June 2007. Prior to working at Cornerstone OnDemand,
Belliveau worked as the North East Europe Director of Master Data
Management for Business Machines Corporation, a technology services
company. Prior to that position, Belliveau was a Business Analyst at McKinsey
and Company. He earned his Commerce Baccalaureate from McGill University,
where he majored in Accounting and Finance.

Management Guidance
2012 Guidance vs. Actuals Cornerstone OnDemand has a history of giving conservative guidance, allowing
Guidance Actual the company to consistently land within the guided range. For example,
Revenue $117-118 M $117.9 M Cornerstone OnDemand guided a 2012 revenue range of $117-118 million and
had an actual result of $117.9. In addition, the company guided a 2012 net loss
Net Loss $15.5-17.5 M $16 M
range of $15.5-17.5 million and had an actual result of approximately $16
million. The company only guides in non-gaap figures and updates its annual
guidance throughout the year.

Portfolio Strategy
The UOIG currently holds no shares of Cornerstone OnDemand in any portfolio
and has no history of doing so. We recommend a buy for all three portfolios, as
we see long term value as talent management gains increasing acceptance as a
necessary business function. We also see short term value in the companys
strong ability to manage robust growth, market leadership position, and ability
to continue signing new contracts.

UOIG 8
 University of Oregon Investment Group April 19th, 2013
Recent News
Cornerstone OnDemand Expands Presence in Public Sector to Drive
Continued Momentum
Business Wire March 28th, 2013
Cornerstone OnDemand cites its growth in the public sector market and sees
opportunity to capture more market share as a result of the public sectors
growing need for talent management strategies. Cornerstone OnDemand serves
organizations in the public sector such as contractors of the government, state
and local government, as well as K-12 and higher education. This opportunity is
driven by government-led initiatives such as Cloud First and FedRAMP,
which aim to create cost reductions.

Cornerstone OnDemand Revolutionizes Sales Enablement with the Launch

of Cornerstone for Salesforce
Business Wire February 12th, 2013
Cornerstone OnDemand announced the availability and launch of Cornerstone
for Salesforce, an integrated offering with salesforce.com CRM software that
embeds learning management directly into the Salesforce Platform. Leading
companies such as LinkedIn, Box, and Medtronic employ Cornerstone for
Salesforce in order to tailor training programs for their sales and service
organizations to provide seamless access to sales enablement and just-in-time
training, all from within Salesforce.

Cornerstone OnDemand Ranked Among Fastest Growing Companies in

North America by Deloittes 2012 Technology Fast 500
Business Wire November 15th, 2012
Cornerstone OnDemand was listed among Deloittes 2012 Technology Fast 500,
a list of the fastest growing technology companies in North America. The list
includes companies from a variety of industries including technology , media,
telecommunications, life sciences, and clean technology companies. The
companies on this list range from 128% to 279,684% revenue growth from the
years 2007 to 2011. During this time period, the company was cited for its 588%
revenue growth.

Catalysts
Upside
Several notable trends are working in Cornerstone OnDemands favor:
1) increasing pressure on businesses to cut costs with technological
advances, 2) increased adoption of cloud-hosted, SaaS based software
Bookings ($M) as a cost saving deployment method, and 3) with increasing
competition and globalization, firms are facing growing pressure to
180,000
160,000
154,286 retain, attract, and develop talented individuals.
140,000 Cornerstone OnDemand has established an effective growth strategy by
120,000 aggressively increasing sales head counts while leveraging key reseller
97,584
100,000 agreements and alliances. Notable resellers include Appirio, ADP, and
80,000
60,919 T2 Optimise PTY. Notable alliances include ADP, salesforce.com, and
60,000
34,467
Workday.
40,000
20,000
15,019
24,857
Cornerstone OnDemand participates in the market for talent
- management, one that is seeing high, double-digit growth currently and
2007 2008 2009 2010 2011 2012 for coming years.
Cornerstone OnDemand continues to prove its ability to sign new
contracts with a five year bookings CAGR of 59%.

UOIG 9
University of Oregon Investment Group April 19th, 2013
Other notable positives:
o The competency of Cornerstone OnDemands offering is
shown in the enterprise customers it attracts: BMW AG, ADP,
Barclays Bank PLC, Anheuser-Busch, Liberty Mutual
Insurance, etc.
o Cornerstone OnDemands SaaS, subscription based business
model is recession proof: its solution benefits businesses in
search of cost cutting initiatives.
o Cornerstone OnDemand has an exceptional management team
with diversified experiences, allowing the company to develop
the only 100% organically built talent management solution.

Downside
Cornerstone OnDemands customers report that the vendor is currently
behind other talent management suite in mobile capability offerings.
Competition: the talent management market is highly competitive,
rapidly evolving, and fragmented. The companys success will depend
on its ability to advance its offerings in accordance with demand.
Cornerstone OnDemand is growing at significant rates. The companys
success will depend on its ability to manage this growth.
Changes to the regulatory environment could increase the costs
involved in offering talent management solutions or negatively impact
usability.

Comparable Analysis
When screening for comparable companies, we searched for companies with
similar growth, business models, risks, size, and products, all in conjunction
with each other. Finding companies with similar growth was prioritized above
others but doing so was difficult due to Cornerstone OnDemands significantly
high revenue growth.

We chose to weight both EV/Revenue and EV/Gross Profit at 50% to

encompass the companys ability to compete on its ability to generate top line
revenue and maintain a healthy gross margin. Cornerstone OnDemand is at a
stage of high growth and negative cash flow, making revenue growth the most
important factor for the next couple of years. We decided to weight EV/Gross
Profit as well because gross margins are an important indicator of cost
management as the company becomes increasingly established.

Workday (30%)
Workday, Inc. provides enterprise cloud-based applications for enterprises in
the United States and internationally. It offers applications for customers to
manage critical business functions that enable them to optimize their financial
and human capital resources. The company provides Workday Human Capital
Management (HCM), a human resources and talent management application to
help organize, staff, compensate, and develop a distributed workforce; Workday
Payroll, a payroll application that allows customers to group employees, manage
calculation rules, and pay employees; and Workday Financial Management, an
unified application to manage financial processes for organizations. Workday,
Inc. was founded in 2005 and is headquartered in Pleasanton, California.
-Yahoo Finance

Workday received the highest weighting of thirty percent due to multiple

factors. Workdays growth rate is the most similar to Cornerstone OnDemand.

UOIG 10
University of Oregon Investment Group April 19th, 2013
They offer similar products and have a partnership agreement with Cornerstone,
leading to both companies being susceptible to the same risks, which is evident
in their betas. Workday is unprofitable and has a similar capital structure as
Cornerstone OnDemand. Both companies have the same revenue model and
offer their products through a SaaS deployment method.

Ultimate Software Group (30%)

The Ultimate Software Group, Inc. designs, develops, and markets cloud-based
human capital management software-as-a-service solutions to businesses across
various industries in the United States and Canada. The company offers UltiPro
as two solution suits, including UltiPro Enterprise for companies with more than
1,000 employees, and UltiPro Workplace for companies with 1,000 or fewer
employees. Its UltiPro software solution offers cloud-based functionality to
manage the employment life cycle from recruitment to retirement. The company
was founded in 1990 and is headquartered in Weston, Florida.
-Yahoo Finance

The Ultimate Software Group also received a thirty percent weighting. The
company offers products in the human capital management industry, which is
exposed to the same risks as companies in the talent management industry. The
Ultimate Software Group and Cornerstone OnDemand have similar capital
structures and betas. Both companies offer their products through SaaS
deployment lending to similar business models. Out of all the comparable
companies, The Ultimate Software Group is the most similar in size.

Salesforce.com (15%)
Salesforce.com provides enterprise cloud computing solutions to various
businesses and industries worldwide. Its service offerings include Sales Cloud,
which enables companies to grow their sales pipelines, close deals, improve
sales productivity, and gain business insights. Salesforce.com sells and markets
its services on subscription basis primarily through its direct sales force
comprising telephone sales personnel, as well as through global consulting
firms, systems integrators, and regional partners. The company was founded in
1999 and is headquartered in San Francisco, California.
-Yahoo Finance

Salesforce.com is weighed at fifteen percent. While Salesforce.com has been an

established business for longer and is larger than Cornerstone OnDemand, both
companies offer similar products, have comparable revenue growth and business
models. It should be noted that Cornerstone OnDemands software is integrated
in the Salesforce.com product, meaning the companies share risks.

Netsuite (15%)
NetSuite Inc. provides cloud-based financials/enterprise resource planning
(ERP) software suites in the United States and internationally. It offers NetSuite,
a single platform for financials/ERP, customer relationship management (CRM),
professional services automation (PSA), and e-commerce capabilities that
automate processes across departments. The company sells its products directly
through professionals to medium-sized businesses and divisions of companies;
and indirectly through its relationships with channel partners. It serves
companies operating in various industries, including distribution and wholesale;
professional, consulting, and other services; computer software; e-commerce
and retail; manufacturing; computer and IT services; telecommunications
services; financial services; healthcare services; and education. The company
was founded in 1998 and is headquartered in San Mateo, California.

UOIG 11
University of Oregon Investment Group April 19th, 2013
-Yahoo Finance

Netsuite is weighted at fifteen percent mainly due to their similar growth over
the next two years. They have similar betas and are both unprofitable
companies. They both offer their products through SaaS based deployment, and
have similar business models. Their product offering, however, is slightly
different from Cornerstone OnDemand.

Splunk (10%)
Splunk, Inc. provides software solutions that provide real-time operational
intelligence. It offers Splunk, an engine that collects, indexes, and harnesses
machine data generated by physical, virtual or in the cloud IT infrastructure; and
Splunk Storm, a cloud version of Splunk to analyze cloud based applications.
The company also provides services, such as implementation, system health
optimization and best practices review, deployment workshop, upgrade, and
augmentation for administration and development. In addition, its solutions
include operational intelligence, application management, IT operations
management, security and compliance, business analytics, cloud, and Microsoft.
The company serves cloud and online services, education, energy and utilities,
financial services and insurance, government, healthcare, manufacturing, media,
retail, technology, telecommunications, and travel and leisure industries. Splunk,
Inc. was founded in 2005 and is based in San Francisco, California.
-Yahoo Finance

Splunk received only a ten percent weighting mainly because its business model
is slightly different from Cornerstone OnDemand: instead of subscription
contractual revenue, they sell their products through licenses. However, they are
also unprofitable, have a similar beta, and are seeing growth rates that are close
to Cornerstone OnDemands.

Discounted Cash Flow Analysis

Revenue Model
Cornerstone OnDemand did not break up its revenue model into different line
items. The company recognizes revenue from subscriptions to its services,
consulting services, and E-learning content; however management refuses to
indicate what portion of revenue comes from each service. In our talks with the
companys investor relations, we were informed that roughly 80% of the
companys revenue is derived from subscription fees while the remaining 20%
is derived from supportive professional services. Thus, we were forced to
project total revenue. We recognize that the current growth rate of Cornerstone
OnDemand is not sustainable, so we looked at technology companies that have
experienced this type of growth in the past, giving us an idea of future revenue
growth. Industry growth was also a factor when projected annual revenue
growth in the upcoming years.

Cost of Goods Sold

The costs of goods sold is primarily the costs related to hosting the solution,
which includes network infrastructure, IT support, training services, overhead,
etc. We expect Cornerstone OnDemands gross margins to increase to around
80%, which is common for cloud based companies. Typical SaaS companies see
their cost of goods sold lower over time as a percentage of revenue.

UOIG 12
 University of Oregon Investment Group April 19th, 2013
Selling & Marketing
Selling and marketing expenses are primarily personal expenses that relate to the
sales staff, including bonuses, benefits, costs of promotional events, online
marketing, and salaries. As the business is growing at a rapid rate we can expect
this expense to remain a significant percentage of revenue. We looked at more
established companies who have gone through similar growth to Cornerstone
OnDemand to estimate what marketing expenses will be as a percentage of
revenue in the future.

Research and Development

Research and development consists of the expenses allocated to the research and
development staff including benefits, salaries, cost of third-party service
providers, and allocated overhead. Research and development will remain more
or less constant as Cornerstone OnDemand grows due to the need of improving
current products and innovating new products.

General and Administrative

General and administrative expenses are primarily related to administrative,
legal, and human resource staffs. These include salaries, benefits, bonuses,
professional fees, and overhead. We expect general and administrative expenses
Terminal Growth Rate Terminal Growth Rate
to decrease over time as a percentage of revenue after looking at the current
38 2.0% 2.5% 3.0% 3.5% 4.0%
1.38 47.80 47.80 47.80 47.80 47.80
expense of more established companies.
Adjusted Beta

1.48 42.37 42.37 42.37 42.37 42.37

1.58 37.81 37.81 37.81 37.81 37.81 Depreciation and Amortization
1.68 33.94 33.94 33.94 33.94 33.94 Cornerstone OnDemand did not break out a depreciation and amortization
1.78 30.63 30.63 30.63 30.63 30.63 expense in their income statement. We had to calculate the amount of
depreciation that was included in each of the operating expenses, subtract the
amount from each individual line item, and then include the total amount in a
new depreciation and amortization expense. Due to the scalability benefits of
Cornerstone OnDemand being a SaaS business, depreciation will be low as a
percent of revenue into perpetuity.

Tax Rate
The tax rate for Cornerstone OnDemand is difficult to calculate because it is
nearing profitability. Management does not give projections on the tax rate so
we looked at similar companies who have become profitable. After looking at
comparable companies we decided that we will gradually increase our tax rate to
reach thirty percent at perpetuity.

Beta
Cornerstone OnDemand Beta Calculations We ran multiple regressions to estimate Cornerstone OnDemands beta: a 1 year
Beta Standard Deviation Weighting weekly, a 2 year daily, and a 2 year monthly. All were regressed against the
1 Year Weekly 0.87 0.33 10% S&P 500. We chose a 70% weight on the 2 year monthly because we felt that it
2 Year Daily 1.12 0.10 20% best encompassed the risk of the company compared to the overall market. We
2 Year Monthly 1.82 0.33 70% believe that the weighted average beta of 1.58 represents a conservative estimate
Weighted Average Beta 1.58 of the companys risk.

WACC
Cornerstone OnDemands percent equity is nearly 100%. Thus, the cost of
equity played an overarching role in determining the weighted average cost of
capital. With a high, conservative beta, we obtained a WACC of 10.94%. We
believe that such a high WACC represents a conservative estimate of the
companys discount rate and adds credibility to our DCF.

UOIG 13
 University of Oregon Investment Group April 19th, 2013

Recommendation
In computing our final price target, we chose a 60% and 40% weightings on our
comparables and DCF, respectively. We chose a slightly higher weighting on
the comparables because valuing a cash flow negative company using a DCF
Multiple Implied Price Weight requires many more projections and assumptions than the comparables.
Comparable Analysis $ 52.09 60%
Discounted Cash Flow $ 36.38 40%
In conclusion, we recommend a buy for all three portfolios for Cornerstone
Price Target $45.81
Current Price $33.19
OnDemand based on qualitative factors and a final undervaluation of 38.01%,
Undervalued 38.01% resulting in a final price target of $45.81. We believe that Cornerstone
OnDemand will continue to generate strong revenue growth which will lead to
cash flow positivity and GAAP profitability in 2016. The company is a
recognized leader in the talent management space and will continue to dominate
due to its strong leadership team and its well reviewed, deeply functional talent
management platform.

UOIG 14
 University of Oregon Investment Group April 19th, 2013
Appendix 1 Comparables Analysis
Forward Comparable Analysis: 2013 CSOD WDAY ULTI CRM N SPLK
Cornerstone Ultimate
($ in thousands) OnDemand Workday Software Group Salesforce.com Netsuite Splunk
Stock Characteristics Max Min Median Weight Avg. 30% 30% 15% 15% 10%
Current Price $170.39 $33.19 $69.63 $88.96 $33.19 $60.00 $97.65 $170.39 $79.25 $42.14
Beta 1.60 $1.36 1.56 1.49 1.58 1.52 1.36 1.53 1.58 1.60
Size
Short-Term Debt 12,008 0 458 4,493 916 12,008 2,968 0 0 0
Long-Term Debt 12,972 0 2,153 5,440 1,836 12,972 2,469 0 5,386 0
Cash and Cash Equivalent 790,339 68,040 229,592 424,812 76,442 790,339 68,040 747,245 185,859 273,324
Non-Controlling Interest 0 0 0 0 0 0 0 0 0 0
Preferred Stock 0 0 0 0 0 0 0 0 0 0
Diluted Basic Shares 185,342 29,003 91,898 109,821 53,384 185,342 29,003 155,957 74,899 108,896
Market Capitalization 26,573,509 1,771,805 5,262,321 9,521,074 1,771,805 11,120,501 2,832,153 26,573,509 5,935,756 4,588,885
Enterprise Value 25,826,264 1,698,115 5,035,422 9,106,196 1,698,115 10,355,142 2,769,550 25,826,264 5,755,283 4,315,561
Growth Expectations
% Revenue Growth 2013E 58% 23% 33% 36% 55% 58% 23% 27% 30% 36%
% Revenue Growth 2014E 51% 23% 30% 33% 47% 51% 23% 24% 27% 32%
% EBITDA Growth 2013E 94% -48% 9% 7% 0% -48% 31% 18% 0% 94%
% EBITDA Growth 2014E 230% 6% 24% 40% 13% 6% 22% 27% 28% 230%
% EPS Growth 2013E 72% -3% 29% 34% -3% 39% 37% 21% 3% 72%
% EPS Growth 2014E 61% 0% 17% 25% 6% 6% 33% 28% 61% 0%
Profitability Margins
Gross Margin 90% 59% 73% 68% 74% 61% 59% 81% 72% 90%
EBIT Margin 17% -30% 3% (1%) (18%) (30%) 17% 12% 6% 0%
EBITDA Margin 20% -25% 6% 3% (14%) (25%) 20% 18% 9% 2%
Net Margin 6% -33% (3%) (9%) (18%) (33%) 6% 1% (3%) (3%)
Credit Metrics
Interest Expense $1,363 $0 $250 $544 $600 $1,363 $400 $0 $100 $0
Debt/EV 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Leverage Ratio 0.1 (0.2) 0.0 (0.0) (0.1) (0.2) 0.1 0.0 0.1 0.0
Interest Coverage Ratio 376.0 (80.0) 83.1 94.6 (41.1) (80.0) 207.3 NA 376.0 NA
Operating Results
Revenue $3,869,000 $182,767 $405,500 $920,150 $182,767 $432,200 $409,400 $3,869,000 $401,600 $270,800
Gross Profit $3,128,000 $134,334 $252,600 $687,665 $134,334 $262,000 $240,600 $3,128,000 $289,100 $243,200
EBIT $476,000 ($129,300) $11,900 $57,000 ($32,898) ($129,300) $69,500 $476,000 $23,200 $600
EBITDA $679,000 ($109,000) $21,700 $100,240 ($24,674) ($109,000) $82,900 $679,000 $37,600 $5,800
Net Income $44,000 ($144,500) ($9,600) ($31,300) ($32,240) ($144,500) $26,400 $44,000 ($11,000) ($8,200)
Capital Expenditures $220,000 $5,057 $18,600 $55,665 $5,057 $41,200 $23,100 $220,000 $14,100 $12,600
Multiples
EV/Revenue 24.0x 6.7x 11.8x 14.0x 9.3x 24.0x 6.8x 6.7x 14.3x 15.9x
EV/Gross Profit 39.5x 8.3x 15.2x 21.3x 12.6x 39.5x 11.5x 8.3x 19.9x 17.7x
Multiple Implied Price Weight
EV/Revenue $ 49.18 50%
EV/Gross Profit $ 55.00 50%
Price Target $52.09
Current Price $33.19
Undervalued 56.95%

UOIG 15
 University of Oregon Investment Group April 19th, 2013
Appendix 2 Discounted Cash Flows Analysis
Discounted Cash Flow Analysis
($ in thousands) 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Total Revenue $ 29,322 $ 43,731 $ 73,022 $ 117,914 $ 182,767 $ 268,667 $ 381,507 $ 518,850 $ 695,259 $ 903,836 $ 1,147,872 $ 1,423,362 $ 1,679,567 $ 1,914,706 $ 2,106,176 $ 2,274,671
% YoY Growth 49% 49% 67% 61% 55% 47% 42% 36% 34% 30% 27% 24% 18% 14% 10% 8%
Cost of Goods Sold 8,354 13,615 20,429 33,128 48,433 69,853 97,284 129,712 176,596 216,921 275,489 327,373 386,300 411,662 421,235 443,561
% Revenue 28% 31% 28% 28% 27% 26% 26% 25% 25% 24% 24% 23% 23% 22% 20% 20%
Gross Profit 20,968 30,116 52,593 84,786 134,334 198,814 284,223 389,137 518,663 686,916 872,383 1,095,988 1,293,266 1,503,044 1,684,941 1,831,110
Gross Margin 72% 69% 72% 72% 74% 74% 75% 75% 75% 76% 76% 77% 77% 79% 80% 81%
Selling & Marketing 18,186 26,823 43,932 70,453 105,091 146,424 194,569 243,859 315,647 397,688 498,750 604,217 680,224 756,309 810,878 853,001
% Revenue 62% 61% 60% 60% 58% 55% 51% 47% 45% 44% 43% 42% 41% 40% 39% 38%
Research & Development 2,688 5,341 9,741 14,257 19,191 26,867 38,151 51,885 69,526 93,999 119,953 142,336 159,559 181,897 200,087 216,094
% Revenue 9% 12% 13% 12% 11% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%
General & Administrative 4,168 8,156 14,514 24,816 34,726 47,017 61,041 77,827 97,336 126,537 149,223 177,920 201,548 220,191 221,149 227,467
% Revenue 14% 19% 20% 21% 19% 18% 16% 15% 14% 14% 13% 13% 12% 12% 11% 10%
Depreciation & Amortization 1,286 2,636 3,714 7,037 8,225 9,403 5,723 5,188 6,953 9,038 11,479 14,234 16,796 15,318 21,062 18,197
% Revenue 4% 6% 5% 6% 5% 4% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1%
Earnings Before Interest & Taxes (5,360) (12,840) (19,307) (31,777) (32,898) (30,897) (15,260) 10,377 29,201 59,653 92,978 157,281 235,139 329,329 431,766 516,350
EBIT Margin -18% -29% -26% -27% -18% -12% -4% 2% 4% 7% 8% 11% 14% 17% 21% 23%
Other expense (income), net 2,960 35,393 44,412 402 0 0 0 0 0 0 0 0 0 0 0 0
% Revenue 10% 81% 61% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Earnings Before Taxes (8,320) (48,233) (63,719) (32,179) (32,898) (30,897) (15,260) 10,377 29,201 59,653 92,978 157,281 235,139 329,329 431,766 516,350
% Revenue -28% -110% -87% -27% -18% -12% -4% 2% 4% 7% 8% 11% 14% 17% 21% 23%
Less Taxes (Benefits) 72 137 181 (789) (658) (618) (305) 519 2,044 4,176 9,298 15,728 35,271 72,452 116,577 154,905
Tax Rate 1% 0% 0% -2% 2% 2% 2% 5% 7% 7% 10% 10% 15% 22% 27% 30%
Net Income (8,392) (48,370) (63,900) (31,390) (32,240) (30,279) (14,955) 9,858 27,157 55,477 83,680 141,553 199,868 256,877 315,189 361,445
Net Margin -29% -111% -88% -27% -18% -11% -4% 2% 4% 6% 7% 10% 12% 13% 15% 16%
Add Back: Depreciation and Amortization 1,286 2,636 3,714 7,037 8,225 9,403 5,723 5,188 6,953 9,038 11,479 14,234 16,796 15,318 21,062 18,197
Add Back: Interest Expense*(1-Tax Rate) 653 1,113 885 453 0 0 0 0 0 0 0 0 0 0 0 0
Operating Cash Flow (6,453) (44,621) (59,301) (23,900) (24,016) (20,875) (9,232) 15,047 34,109 64,516 95,159 155,787 216,664 272,195 336,251 379,643
% Revenue -22% -102% -81% -20% -13% -8% -2% 3% 5% 7% 8% 11% 13% 14% 16% 17%
Current Assets 22,304 32,142 126,845 141,573 181,114 244,745 324,647 434,192 584,684 739,301 927,732 1,141,684 1,319,265 1,503,962 1,638,057 1,780,475
% Revenue 76% 73% 174% 120% 99% 91% 85% 84% 84% 82% 81% 80% 79% 79% 78% 78%
Current Liabilities 26,631 45,998 67,089 114,038 171,220 242,032 328,823 435,737 578,603 724,450 913,738 1,129,422 1,315,285 1,509,234 1,640,409 1,773,554
% Revenue 91% 105% 92% 97% 94% 90% 86% 84% 83% 80% 80% 79% 78% 79% 78% 78%
Net Working Capital (4,327) (13,856) 59,756 27,535 9,894 2,712 (4,176) (1,545) 6,081 14,851 13,995 12,262 3,980 (5,272) (2,351) 6,921
% Revenue -15% -32% 82% 23% 5% 1% -1% 0% 1% 2% 1% 1% 0% 0% 0% 0%
Change in Working Capital 3,765 (9,529) 73,612 (32,221) (17,641) (7,182) (6,888) 2,630 7,626 8,770 (857) (1,733) (8,282) (9,252) 2,921 9,272
Capital Expenditures 1,599 2,898 3,806 7,153 5,057 4,118 5,256 6,864 8,981 9,815 11,118 12,508 14,848 16,368 18,884 23,841
Unlevered Free Cash Flow (11,817) (37,990) (136,719) 1,168 (11,432) (17,811) (7,600) 5,552 17,502 45,931 84,897 145,012 210,098 265,079 314,446 346,529
Discounted Free Cash Flow (10,306) (14,475) (5,568) 3,667 10,420 24,650 41,074 63,245 82,603 93,951 100,467 99,809

Intermediate Growth Cash Flows

2025E 2026E 2027E 2028E
CF 374,252 400,449 424,476 441,456
Discounted CF 97,173 93,731 89,566 83,971
Growth 8% 7% 6% 4%

EBITDA (4,074) (10,204) (15,593) (24,740) (24,674) (21,493) (9,538) 15,565 36,153 68,692 104,456 171,515 251,935 344,647 452,828 534,548
EBITDA Margin -14% -23% -21% -21% -14% -8% -3% 3% 5% 8% 9% 12% 15% 18% 22% 24%
EBITDA Growth 150% 53% 59% 0% 13% 56% -263% 132% 90% 52% 64% 47% 37% 31% 18%

UOIG 16
 University of Oregon Investment Group April 19th, 2013
Appendix 3 Discounted Cash Flows Analysis Assumptions

Discounted Free Cash Flow Assumptions Considerations

Tax Rate 30.00% Terminal Growth Rate 3.00%
Risk Free Rate 1.78% Terminal Value 5,734,203
Beta 1.58 PV of Terminal Value 1,090,722
Market Risk Premium 5.79% Sum of PV Free Cash Flows 853,978
% Equity 99.84% Firm Value 1,944,700
% Debt 0.16% Total Debt 2,752
Cost of Debt 5.20% Cash & Cash Equivalents 76,442
CAPM 10.94% Market Capitalization 1,941,948
WACC 10.93% Fully Diluted Shares 53,384
Implied Price $36.38
Current Price $33.19
Undervalued 9.60%

Appendix 4 Revenue Model

Revenue Model

($ in thousands) 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E

Total Revenue $29,322 $43,731 $73,022 $117,914 $182,767 $268,667 $381,507 $518,850 $695,259 $903,836 $1,147,872 $1,423,362 $1,679,567 $1,914,706 $2,106,176 $2,274,671

% Growth 49% 49% 67% 61% 55% 47% 42% 36% 34% 30% 27% 24% 18% 14% 10% 8%

UOIG 17
 University of Oregon Investment Group April 19th, 2013
Appendix 5 Working Capital Model
Working Capital Model
($ in thousands) 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E
Total Revenue $29,322 $43,731 $73,022 $117,914 $182,767 $268,667 $381,507 $518,850 $695,259 $903,836 $1,147,872 $1,423,362 $1,679,567 $1,914,706 $2,106,176 $2,274,671

Current Assets
Cash and cash equivalents 8,061 7,067 85,409 76,442 82,245 104,780 133,528 174,852 236,388 286,516 355,840 434,125 487,074 555,265 600,260 659,654
% of Revenue 27% 16% 117% 65% 45% 39% 35% 34% 34% 32% 31% 31% 29% 29% 29% 29%
Accounts Receivable 12,075 20,876 34,110 47,528 75,110 110,411 156,784 212,643 285,723 371,440 468,583 579,456 681,030 776,374 848,241 916,100
% of Revenue 41% 48% 47% 40% 41% 41% 41% 41% 41% 41% 41% 41% 41% 41% 40% 40%
Days Sales Outstanding 150 174 170 148 150 150 150 150 150 150 149 149 148 148 147 147
Deferred commisions 1,445 2,330 3,537 9,354 12,794 16,120 19,075 25,942 34,763 45,192 57,394 71,168 83,978 95,735 105,309 113,734
% of Revenue 5% 5% 5% 8% 7% 6% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
Prepaid expenses and other assets 723 1,869 3,789 8,249 10,966 13,433 15,260 20,754 27,810 36,153 45,915 56,934 67,183 76,588 84,247 90,987
% of Revenue 2% 4% 5% 7% 6% 5% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4%
Total Current Assets 22,304 32,142 126,845 141,573 181,114 244,745 324,647 434,192 584,684 739,301 927,732 1,141,684 1,319,265 1,503,962 1,638,057 1,780,475
% of Revenue 76% 73% 174% 120% 99% 91% 85% 84% 84% 82% 81% 80% 79% 79% 78% 78%
Long Term Assets
Net PP&E Beginning 1,018 2,229 3,976 3,663 7,947 9,979 10,832 13,034 17,007 22,542 29,393 37,460 47,084 58,357 71,840 86,884
Capital Expenditures 1,599 2,898 3,806 7,153 5,057 4,118 5,256 6,864 8,981 9,815 11,118 12,508 14,848 16,368 18,884 23,841
Depreciation and Amortization (388) (1,151) (4,119) (2,869) (3,025) (3,265) (3,054) (2,891) (3,446) (2,964) (3,051) (2,884) (3,575) (2,885) (3,840) (6,457)
Net PP&E Ending 2,229 3,976 3,663 7,947 9,979 10,832 13,034 17,007 22,542 29,393 37,460 47,084 58,357 71,840 86,884 104,268
Total Current Assets & Net PP&E 24,533 36,118 130,508 149,520 191,093 255,577 337,681 451,199 607,226 768,694 965,192 1,188,768 1,377,622 1,575,802 1,724,941 1,884,743
% of Revenue 8% 9% 5% 7% 5% 4% 3% 3% 3% 3% 3% 3% 3% 4% 4% 5%
Current Liabilities
Accounts Payable 1,505 4,554 3,834 4,849 9,289 13,397 18,657 24,808 33,868 41,601 52,834 62,612 74,085 78,949 80,785 85,066
Days Payable Outstanding 66 122 69 54 70 70 70 70 70 70 70 70 70 70 70 70
% of Revenue 5% 10% 5% 4% 5% 5% 5% 5% 5% 5% 5% 5% 4% 5% 5% 5%
Accrued Expenses 3,619 6,556 8,039 14,986 25,587 34,927 41,966 51,885 69,526 81,345 103,308 128,103 134,365 153,176 168,494 181,974
% of Revenue 12% 15% 11% 13% 14% 13% 11% 10% 10% 9% 9% 9% 8% 8% 8% 8%
Deferred revenue, current portion 18,726 32,745 52,338 87,759 129,764 188,067 263,240 352,818 469,300 596,532 751,856 932,302 1,100,116 1,270,407 1,385,864 1,501,283
% of Revenue 64% 75% 72% 74% 71% 70% 69% 68% 68% 66% 66% 66% 66% 66% 66% 66%
Capital lease obligations, current portion 694 1,369 1,617 1,643 1,828 2,149 2,289 2,594 2,781 1,808 2,296 2,135 2,519 2,872 2,106 2,275
% of Revenue 2% 3% 2% 1% 1% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0%
Debt, current portion 2,014 14 265 916 1,097 806 763 1,038 1,391 904 1,148 1,423 1,680 1,915 1,053 1,137
% of Revenue 7% 0% 0% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Other Liabilities 73 760 996 3,885 3,655 2,687 1,908 2,594 1,738 2,260 2,296 2,847 2,519 1,915 2,106 1,820
% of Revenue 0% 2% 1% 3% 2% 1% 1% 1% 0% 0% 0% 0% 0% 0% 0% 0%
Total Current Liabilities 26,631 45,998 67,089 114,038 171,220 242,032 328,823 435,737 578,603 724,450 913,738 1,129,422 1,315,285 1,509,234 1,640,409 1,773,554
% of Revenue 91% 105% 92% 97% 94% 90% 86% 84% 83% 80% 80% 79% 78% 79% 78% 78%

Appendix 8 Sources
Sources
Cornerstone OnDemand Investor Relations Gartner SEC Filings
Cornerstone OnDemand investor presentations Forrester
Press releases IDC
Earnings call transcripts Deloitte
Factset Yahoo Finance

UOIG 18