CSOD - Earnings call transcript Q4 2020 | Cornerstone OnDemand Inc

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Cornerstone OnDemand’s Q4 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your host, VP of Finance and Investor Relations, Jason Gold. Sir, please go ahead.

Jason Gold

Thank you very much and good afternoon, everyone and welcome to Cornerstone’s fourth quarter 2020 earnings call. our Officer, Officer, Chirag are our Saunders today Financial Chief Shah. me Chief Phil Executive and With In conjunction our with that’s located today’s call, we’ve the Relations published Investor section of website. on a presentation furnished Today’s press X-K. the in a to release Form SEC also was forward-looking performance, will but including, of and integration strategy, guidance; including the our include statements our future of not our the our achievement performance GAAP prospects. related of and Today’s and business, to, business Saba financial regarding efficiencies; statements, long-term discussion our limited expected our synergies and and into future operating overall cost non-GAAP our growth

from Forward-looking risks, forward-looking statements contained included involve factors well uncertainties other XX-Q in in These risks, are future periodic section as factor XX-K, the recent and as materially assumptions, with that most could statements subsequent results of filings those and well SEC. and actual our as uncertainties our as cause risk assumptions. differ the to

be and GAAP we unless to the to figures over measure With turn earnings is state today GAAP provided are non-GAAP The of like to as and All I’d presentation. release measures. in our is referring backdrop, financial the reconciliation Phil. During press non-GAAP we GAAP non-GAAP financial in information number. the discussed to call, will a that the both a call the

Phil Saunders

be new thanks joining the today. you, us to and thrilled Like for Jason everyone of you, of in XXXX. Thank we're year all

our and for the and First will us new hopeful being this and of of about year developing progress the COVID foremost, encouraged are families, vaccine communities. programs the we're to customers see bring employees, well what

we in we team our business, here our XXXX. our excited Cornerstone company gracefully, has given sheer feel, momentum, yet As aggressively as into the about and lean at we look QX is it the at execution

customers and we complex through nothing here our sheer our is integration, and awesome. the witnessed our taking have to short embraced the Our off responsibilities persevered people and I change have of acquisition say eyes have a and conviction significant I've to never while professionalism stakeholders.

Our and personally this team, numbers and me prove included, it. take the

from and we lot cash us, may share past unlock revenue per delivered quarter, of of of the earnings a turned execution a In million; income fourth over growth me $XX unlevered ahead of have and operating calls earnings measured company. flow are You GAAP now $X.XX; of continued while the and the more subscription believe power million; we we $XXX free starting for recall $XX million. couple and I corner to have of tone this earnings the of

We cash continued on to our generating Loan as accelerating operational our significant maintain our commitment flow. result, $XXX an debt by earlier million This B and additional achieving toward a quarter. this our Term to and excellence, debt paydown enabled us reducing journey

strong Our quite are believe of nature. results and output are all fundamental the several we factors in

outperformed large had driven performance top-line our Our And see points in we closing simply where opportunities good proof essence our our improved was months, new drove certainly success QX the Zone while on expansion, Win deeper We customer with work highly global competition. base, from more engagement focusing this were do coming the also in folks. while we as focus which encouraging. our the on here of to there's by

solutions. and we while bring our past properly efforts will of total offerings on calls, X% formalized for execute accelerate to our of customers to growth feel can our core serve have XXXX. we drive which during our in at market, to the and As to our this we've ARR, grew expect outlined earnings year around company's continued business, you the align the by innovation last in we call, past the have non-core Since we've XXXX we continued programs unique we nearly XX%

bottom-line our and of invested proud reduced of. performance, is We a results, we're top-line clear quite purpose with sense combination operated with ownership. driving the spend, something in Our business with

passionate winning we've with acquisition evolved and quarter. business that we factors now simultaneously you of these operational improvement. team and strategic you from it material perspective, and a a proposed run an have the a From employees our drive for can demonstrating outlining integrate to actively we business combine large to You how discussion proving

borne focus, is We've been increase growth and our and efficient and expanded on out to responsibility is value executing that customer Our leadership, market company's that profitability. of responsibility.

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and Our to Not we quarter, ongoing the best quarter the in development have content drive our we validates only beyond to and us the led harnessing which content the hyper-personalized about selling continued The we're strategy our for highs. did users. is our adoption our drives business our of a climbed integrating insights to merely customers history, engagement to of our extract further due sales during all-time it's in outcomes efforts with of content; curated offerings that customers' believe fourth surge of even that company's and investments usage more enhancements, content execution. to power for strategy excited customers data

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discussed would we're believe the realities tell, continue perhaps results, this our customers budgets now, these go-to-market be To transformation about execute yet motions we've calls, clear, plan more due mentioning be I As you earnings is tight what is be there pandemic. to excited we the these few past while far, to And than no that in we do potential ongoing not Thus initiatives. I and ever, We've to these people, we navigate the can unpredictable extended to realities cycles. the sales essential of denying COVID-XX. dynamics at to remiss our as there turbulent successfully navigated we various headwind continue are suspect, for their agile quite and and here over times. Cornerstone

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we heart As before. questions you and know, to ahead over we their customers to future. made We've of which so past unpacking enable XX improvements the has scores, information can CSAT, engage our I how technology in sat and in why managing the the customer XX% support cases people, excited strides more we our related channels by the answers about advanced improved made and we've approach. right, The customer leveraging in continued results dissatisfied quarter, days systems have evolving dialed only drive We've 'XX. the that by are in tremendous significant dare get the DSAT; say, processes and inspecting, not past improved team ever simplified that's are to and faster our improved into than a with the strides support to customers to planned

to our turning innovation Now initiatives.

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can we our core lane can excitement. when combination the innovation how our but that a consider how not the smaller you I experience, all our skills a on our LXP, real expertly of solutions, these our from employee focus into companies. premier the learning-only our micro-learning capabilities sense and competitors the an and progress [indiscernible] experience, believe sets and career curated The learning ERP capabilities hope only combine vendor larger are is singular forming both a also apart as So around us that our management we offering, see journey swim amazing is connected forthcoming you you with content

plans. We've we social momentum scalable of development this environments also initiatives. integrated our in ESG, global teams; discussed we stated were efficient In improvement regions Win is highly Win Zones and continued and data feel, our product rates cases a these overall mentioned new discussion, competition. and clear, than and Saba now our Zones; across governance-related SMB have and for environmental particular marching our simply last and in to Cornerstone. poised experienced notable what overall to the teams our aligned average Last Zone our we're our increased we've progress. where our go-to-market a To fourth list into but win solid Since more notable item initiatives. transformation quarter, and together; specific select we Win spend We're successful and proves And growth we to the on the are I'd efficiency. these our like here, concept done our the points is witnessed vertical a on programs we sizes business on company, we've and and successfully formalized motions do execute our to use have early profitability. two we be advanced as and measure. earlier, I in corporate deliver metrics as moment performance design we going of saw on each forward deal We

employee have and Cornerstone, and inside always to ever. us mind more are wellness top Here now than diversity of important been

published on to take To women disclosure our We best and XXXX. further, sorry, -- things environmental, and launched Comparably provide website recently the step work of the one as a governance own have sustainability by efforts. been very one first for best companies and for have we to recently recognized of balances Report begin we our in social work-life greater I'm companies our Corporate Sustainability

front exciting continued in for we remain to the passions progress make center teams' our communities and to business markets we in serve, we humanitarian and us. have commitment As the live

individual expand Our initiative anywhere anytime continues Cornerstone and charge. any and no positive training development Cares and offering usage, to impact at essential its

signed online Cornerstone We're with non-profit non-profit organizations anniversary committed the humanitarians its non-profit and enabling via We historic also of preparedness the XXX,XXX the the professionals to to free foundation have of development our X.X we year proud earned enrolled learning our remain flagship celebrated from its sector. effectiveness online humanitarian programs communities courses learners around and professional to previous our workers records. programs. The of up for Over in increase and and impact our world DisasterReady Foundation. shattering aid on XXth doing In million XXXX for over neighbors. all and initiatives passion XX,XXX certificates, countries and alone, global hope share NonprofitReady serve in these XXX can you and what super

know, has [indiscernible] something operations Financial the leading being we month taken of is multiple roles a of Accounting the up the how the earlier Chirag personally Interim sincere Officer to tackling and leader market appreciate have longtime with played, in depth CFO I'm that you and brings announced also our role. our role past that on a is Cornerstone he for Chirag's given activities. about, Chief teammate much As to this business say handle to Officer thank and company; I you expertise on months, the effort excited during me the putting crisp tireless of our This being Coughlin's Trish still in the several process. this I Chief while for Shah, Trish

Lastly, and directors now over valuable and two turn quite-fitting will and bring we evolve strategic the I'm that, value recently With to I Nancy me excited about Chirag. they company, Alvaro and Felicia Altobello to team. floor the added our as we've our in

Chirag Shah

Thank It's my you you, a with first Financial Cornerstone's call be earnings as all Chief to today Phil. on Officer. privilege of

Cornerstone as seat, both witnessing an for you look both of as to the and with perspective past of from thoughtful, than effectively to approach is believe never finance both operator critical enabling drive to and and achieve is workforce forward develop all that doubt no operating in opportunity know, to to many remotely been After years, to of By free a organizations prior experiences disciplined in capital the bringing the flow role. growth there mind and over today allocation, coming I the some speaking team the to events been sorts. the has it I my to margins. year significant improvements continuing learn As leaders has member a I've years, the more globe all CFO of a taking in the in while business also and while my compelling company annual cash

quarter. turn to let's fourth Now the

a all X.X% up million mentioned, had of strong $XX a aided ARR benefits. million pro by financial $XXX basis, forma we across of FX-related approximately Phil metrics. As was quarter year-over-year on

products As product we this the in Star have North we noted past, for several since ARR our business declining. is non-core core have there our

X.X% as category Our revenue grew as global ARR million, retail related count during exceeded and core well $XXX customer to $XXX from came benefiting some a in revenue good pandemic catch-up million. the ARR the at result QX, subscription of thresholds. linearity their increased e-commerce new product by year-over-year in whose QX very user significantly to contractual GAAP as a

also QX services strong. was revenue Our

backlog than services were which to a this of anticipated, operating able work resources the more gross margins. perform both using down professional rapid We and our burn Saba internal continued at and aided to clip

count sequentially total customers from fell Our X,XXX to by XX customer X,XXX.

product from we our However, an in last happened to saw excluding in of base, increase QX. similar non-core the number customers churn what quarter, customer

operational Moving initiatives discipline in of $XX is sustained the XX% we strong, million down multitude been income resulting operational margin. and the a operating of working output on. efficiency we of statement, during delivered income This a improvement outperformance operating QX, have

We deliver also cash which million us unlevered $XX and billings flow. collections QX, saw strong enabled in during free to

based B $X that markets. state capital the instrument million but Phil on in and million of Term was are is week current are committed on debt finalized principal of structure initial call strong I our and optimize point save earlier we the our will available this cash expires note to April, annual approximately protection $XXX and delevering just interest all expense. outstanding that looking Loan on the our also we early would mentioned us which Term Loan end toward options expeditiously the prudently of to our of Given B the instrument paydown proof position, at

that forward filings, net gross our on be customers year. of inclusive basis, sales review retention you will defining from and basis we'll a during dollar to incremental a you all have moved on going defining annual away As notice we the it

the calculation with we of this make our combination our Given more portfolio. Saba, also by to opportunity including customers took products within comprehensive all

the three recruiting signed churn Although our a we anticipated Bureau, one-time items year-over-year the the which churn pandemic-related support metric by of year-over-year was a With factors. on impacted pandemic. decline a non-core One, declined demonstrated the deal our by one-time the with predominantly And from following Census the in churn excluding of renewal one-year basis. our to completion said, U.S. the U.S. driven the rates, deal that core unusual XXXX had XXXX Two, or the basis, base. to severely improvement as customers in was such census. customer provided product concessions three, product concessions, on Census

now to Let's guidance. our turn

We expect to there, our bring in to to our near core get expecting accelerating products $XXX a into be XXXX are ending $XXX To just ARR the growth ARR year-over-year high-single-digits. of across or million million. we range growth our

$X our of the expect range in million a from revenue of full $XXX GAAP $XXX purchase million resulting which be XXXX million, to the subscription headwind Saba to accounts accounting the year for of We acquisition. approximately treatment

to subscription treatment. same and headwind of between due which GAAP the accounting expect million, $XXX million a for we $XXX $X approximately QX, For purchase million revenue accounts

which impacts revenue in I'd by QX As this retail range, the our revenue remind customer, the sequential of you look optics. at the you guidance QX catch-up change to like implied to QX e-commerce subscription from

of may XXXX, including cost both communicated million. anticipated expense sales expenses for you an last many we quarter and of operating envelope $XXX As of recall,

expect we've efficiency we reduce envelope million make. some ongoing result our of expense to initiatives, a incremental from million $XXX operational to $XXX in initiatives of As investments XXXX to elected net growth our

XXXX result, million, in non-GAAP expect our year in an of at operating to the a full would range $XXX.X the midpoint be to we of result As which $XXX operating of $XXX income million XX.X%. million margin

we $XX QX, to For between million. expect income $XX operating million and be our

unlevered our $XXX range XX.X%. $XXX flow million result margin at of an in which cash full the of midpoint of million, to cash million would free be year in expect $XXX to We free flow XXXX unlevered the

an and we related accounts As a acquisition, the said one-time the that activities were and for this cash integration be for for to forma than restructuring pro restructuring if to Saba unlevered $XX non-recurring reminder, flow or million the expectation cash outflows exclude outflows guidance work, one-time have higher in $XX integration assumed guidance. issued would assumed million acquisition-related differently, free we our cash

one-time So as cash unlevered excludes natural start $XX million with free we cash forma in flow you cash about feel free number the scale. as you flow outflows in that XXXX, think and XXXX that continues pro business should unlevered growth against expect the to

perspective Given XX% current flow mid-term progress find deck margins may and slides targets performance. billion are believe that and of referred in We've sight. strategy an additional financial previously issued our strong updated business exceed website we to on our cash IR free now as you'll trajectory, which and much what $X unlevered that ARR our in on provide we very

and beyond this CFO been above the and our of enough. call can't I transition demanding want so and team my few stretch express turning a graciously has weeks. to to with an over Jason Before a of of to onboarding Trish, due the work to operator, the these them group the to finance new take extremely seamless of back gratitude rest moment thank efforts past balancing the I for My

Operator

of line Our first Instructions] Needham. question comes the Berg from of Scott [Operator

open. is line Your

Scott Berg

like say Hi, quarter very group, I'd welcome guess Phil congrats better to comment. and is a on and good to the probably back a but I Chirag, Chirag welcome

Chirag Shah

you Thank it. Scott. I appreciate

Scott Berg

in in in Obviously the first, some me. Yes. and the $X probably with XX% the of growth your is couple to XX% margins. point of billion next level talk but here, guidance years, I Chirag, in free very ARR last flow that sight the couple the for years. the rate start cash cash a where you target the confidence guess a pushes that let's at the $X about unlevered flow free billion and over given comment, kind and with guys have into get close of here of outlined unlevered next us 'XX you about kind couple there margin, are

Chirag Shah

one-time talked get a Sure. this I would I very expenses, the on Well, were to million, restructuring close integration add year. is Scott, in forma our pro XX% if basis, to mean, you guidance, $XXX back to the if $XX midpoint you at which about, and million that

more And after. able next continue to year so we going to expect business, very we're near that the be to XX% as or to the future, we get the year scale in or

on So well-positioned a for on this basis obviously, we're very that, pro year. forma we where are based

soon. just so And scaling, will we business as there the keep get

Scott Berg

Thank Phil, I do of there And it. the you did this Got out seeing you modules some know and product subsiding you that see follow-up persist from are Helpful. environment I those about product headwinds is you because set a you. year CCA look for you a something early, remarks, maybe entire you your if longer? solution then, the it's ball, and today. if guess, maybe the across through is the quarter out on or demand set there or pre-scripted of a kind think crystal it there about at for end headwinds cycle certain some the headwinds is probably bookings the can demand talked had perspective, the there, out in talk good of you still

Phil Saunders

pandemic. obvious we reasons, what stopping challenges we're is starting a was it seeing the that performance strong the conflicting the all cycle we and Thanks due I do question in tight, for to thanks really earnings saw think Scott. for we're the demand, mean, believe also because for in comment sale I I while I for can witness and and to script I balanced. important seeing and be essential made And of really joining. Hey, budgets thought QX. that the being

as by gain, well, wanted message, and large, that that, And so say apple what have pandemic I would it to as through I would a and balance vaccine hard will that we're seeing, a that happen. in why that, program get I will it, [indiscernible] things magic we on, the in leave don't be go all but do that which to we're and out some but think I I ease, Scott, about included Scott. and because, is

Scott Berg

the Great. I'll taking my questions. for Thanks pass baton.

Operator

you. Thank

of Our next Lenschow the comes question from Raimo line of Barclays.

Your line is open.

Raimo Lenschow

Congrats from me as well and to connect on a Chirag, great good QX again.

And Let's competitive start with you what a seeing Phil, Phil. operating, like -- kind a -- now terms like with, kind [throw players the the etc., a but kind down? that then for follow-up combined seeing has as for customer are of, going with have now like in to, -- etc., of, in front] kind everyone are like, ERP settled of, Chirag, like I year, first engagement, what everything of question kind have have of, is, you dynamic and, a of, entity, of initially you that sales because around, please. terms cycle,

Phil Saunders

business. competitors too It's that to that compliment. ERP large now from the you for been continue would operating almost back Sure competitive same see I our perspective end six the months let of Well time years plus nine and go we only of have. the a me the but don't in for motions compliment, say the thank we fast.

I soon. go I going anytime will and continue think think frankly does that away think to don't continue it's it I So

compete that. so and living more be or together think capabilities but of we would that and we'll I'm ERP the early terms Saba them So of we to better about Cornerstone I with any obviously arsenal a with our say worried how not see say thoughtful it's in opportunity competition. I as in

In fact given that looking of their with payroll existing would that technologies for companies their literally I and the and think transformations are are best that people's people given can co-exist transformation in say COVID ERP and other. I solutions the importance

I the further don't in past So than that change to I expect sense we really forward. don't markedly and have competition any going

Raimo Lenschow

it the you. you to a then, are And perfect. can we from the puts kind don't levels you to I net takes you are but talk at Okay, what Chirag, and you're, retention over Did missed about there? gross think of, about on and I if mentioned the presentation, -- numbers. that know bit Thank we little need moving in

Chirag Shah

a in XXXX. Yes, retention The above which reasons so, was above I were one-time. Census were XXX% basis U.S. Raimo, on net also that by impacted deal a one-time base. churn significant our to to We in impacted provided the that The churn our customers we XXX% for mentioned product were concessions that number. significant from below did number, on net in had pandemic retention we Bureau, on dipped basis the retention combined net XXXX. that as pretty a non-core impact customer mostly Again, our

XXXX grow beyond the some are continue most with. as expect items that and and the that XXXX lifted to of focus had on and in the experienced business success in number improve we have areas we one-time to that We these product we

Raimo Lenschow

perfect. Okay,

like? you sure. quite XXX% would above, the assume That you not at do -- what -- core, but didn't some -- So do -- been and I'm above did have would what's core that's the I -- math a but around

Chirag Shah

core the renewal year-over-year. Yes, improved rate

So clients in of the rate improvement -- that available-to-renew we of had the products. renewal had our the core we XXXX, in an

Raimo Lenschow

done. you. great hear. That's to Thank Well

Operator

Thank you.

line of D.A. from Jalaria the Davidson. next question Rishi comes of Our

Your question please.

Rishi Jalaria

next margins year. the so zero including and of with thinking And, questions. operating sustainability I've assumptions of a you I for outlook wanted effectively Hey, us the about having to sense got you you. taking start guys. the into baked how during for OpEx you're T&E some working follow-up. much maybe next Thanks looking the are? got And Chirag, what Can that give cost pandemic, savings with my a maybe to your forward for year

Chirag Shah

travel return expect Obviously, some absolutely. at to year. the during we Yes, do point

modeled in optimize that a have us for guidance expense also We believe for additional perspective. the our to real year. to spend we margin year, opportunities are from our operating So operating estate there our for do the guidance

time incremental some COVID-related is expense spending much on conservative we'll relation to this portfolio as some have be realize a year, in being additional normal so that that that, to benefit of of opportunities addition expense We expense are kind travel, realize have, for we And of additional won't benefit we generally, to believe to this overall some for we'll still -- going as did last are to some that areas within also there the something us in we that's So that our we improvements assuming and but this particularly year year, in last we us return got more savings year. in year, state. from.

Rishi Jalaria

wanted Great, to I the that's number. helpful. back to NRR, circle net disclosure the retention on rate new Then

a improved talked, trending You fare to the factors, about Chirag, that from actually expansions are side expansions maybe few how thinking equation how last going and year. during XXXX been about the how and of absent on How relative that -- we should be churn forward is how Thanks. here? one-time did

Chirag Shah

his as generally, a But, were relation obviously piece drove that success combined in Phil core have the and XXXX. base had a a content in of mean, a remarks, Yes, just talked done we mean, I expansions of in during that. we was strong to proposition. of prepared Content better of it. our a about nice selling value so product selling I with job, XXXX piece lot

both our XXXX. some and -- within the in that organization we success with client selling to our and continue sales terms processing in have Cornerstone in saw we So upselling good success definitely of clients

continue. We that to expect

Rishi Jalaria

Yes. you. Wonderful. Thank

Operator

you. Thank

of Our Please JMP next question comes Walravens Securities. go from Patrick ahead.

Patrick Walravens

thank great, of for actually each have one you. you. Oh, I

us didn't and everyone's first. there So investors this benefit customers understand the why is can't just budgets -- among at Can Because there in at your is maybe I'll should some beneficiary. minute, wait you prospects sense with go a COVID? be you that, help person learning and more that is from distance learning train just you it like home, seems it a

Phil Saunders

everything perspective; across to hey talent you. performance to so or development how learning Listen of that think of Pat onboarding first see but well. have the we professionals from working a are have and I I to HR on. you with learning succession all variety of you're management people benefit to nice the budgets recruiting hope

of any different. capabilities. money was ask providing people content your into already point and well budgets So learning of about you lot those one for or inside XXXX a sure that customers going a attention specific by answer our and the development learning going development of L&D particular was but lot that way to we've were put in dial the and be of mentioned of any persona would buyer if when alive content aside as you arenas providing one areas people would well other our to the but content the as of content engagement On was

either. had was say surged So it budgets it not that we getting not a, would cut the but learning serve learning yes specifically XXXX. goes beyond in I

Patrick Walravens

Chirag And Okay. then congratulations.

So -

Chirag Shah

you, Thank pat.

Patrick Walravens

years. Been can't I there XX Congratulations. -- great. that's

So, years, look, your there at you've I looked it's that XX LinkedIn, already believe can't and been I been long. back went

the of business between CEO versus before? for differences combination think was the what most to Phil Saba understand are investors as do what today, like it with So the and the the you important

Chirag Shah

things And has and the of a how there own his question, got are I number changed. to for philosophy mostly, of I are a Yes, I business. a think have the result operate that it's scale Phil think mean, good Pat. changes

is that lot on make based of make focused So that leveraging I our got data decisions we're data a there business so we're every decision-making. on And we different characterize decision day. a is is, we've we're Right? data-driven which objective the very and data we business the now, way Every of. how would again has, a big single are to that lot sort of today

maximize sort we're the we're and at that in ability and we're capital. and as Phil that Right? Secondarily, Zones at in our of we're the years investing us. as of invest I we're these us for And while the the things less we're that run -- just we've then context growth Right? we're is more still also, invest. disciplined transitioned lot sense are for picking picking not a our but reached, talked not try business all where about become would really really, optimally of across Win we've for priority continuing maintaining effectively over a it team think on focus good good has investments. focus So very is to in and focused allocate things we scale we to We're important we I to makes former the investing the in investing big latter. much say, accountability to the to the

every we There prudently So do have we can opportunity an but very years seize incredible a for are opportunity, to in in but to we we that so our the aligned the we for business accountability right space with is case want come. every we're that And case, requires make investment with believe chance still and and to looking we that business growth. strong that. get looking

Patrick Walravens

you Thank Great. right. both. All

Operator

Thank you.

question of Sachs. Chris comes Goldman Merwin next Our from

Your question please.

Unidentified Analyst

Hi, there to bit environment adoption Thanks Kevin was last can Phil, different Japan trends I about softness this call in for out the for on demand talk in across some areas? Chris. quarter. my a question. Anything taking of internationally? know is you the terms

Phil Saunders

a I glad but of Japan and across genericized achievements. so Yes, have that. North of saw is nice about and a make saw high sort did finish. it, bounce sure, to. surges mention all sorry APAC, and We all so Kevin, it EMEA strong back goes, answer The year-end and America I

They're a from of Right? our -- benefits verticals, combination across and was we verticals, So all performing all higher-ed that governments, geos. teams teams cycles saw I to state our across local just well well across our the the as as our cycles seeing sector, healthcare sales our in would vertical have our we up. sales vertical federal we're are sector, say, and surge

verticals, say team, would across as the Q I well Kevin, performance our including that, areas your to geo-wise, quarter. So -- fourth all strong in answer a question, SMB in the as

Unidentified Analyst

lot a Great. Phil. Thanks

Operator

Instructions] [Operator Mark Morgan. of Our the next Please go question Murphy ahead. from line comes of JP

Unidentified Analyst

Coss streamlining R&D some Chief reallocating changes areas? Officer resources teams, of afternoon. did you outperformance? looking thousand or subsequently if a the much outperformance Chirag, think of then the it's Mark of subscription in this of terms can good couple revenue Product contribute a the you up. other dollars I catching due seats to Matt for more of Phil, adding one kind making This for on about Just customer your is new significant. talk Murphy. How to of something behalf was mentioned And hundred Hi, more some is in and or investing

Phil Saunders

a I'll go and question Thanks, Matt, it's first. for good question. the

a aligned you're that very, with active that that benefits would say R&D. leveraging make is anything seeing and And have actually] of we capital are frankly the of business investments, having decisions, Product We you of been is, one -- and Officer, plans Chief more -- that think he's proper of. aware course, incredibly [Chirag the I than covered, very cases. I some allocating new business and we data to items how that about know

all than Matt, of alignment functions. is So those also the just various between are all very, clear. that, very sheer more But our

kind we right. when the but it every we while with aligned and there go-to-market like that would product in traditional, going with that to is, fundamental think yet, a alignment innovate. So better, make are of sort stuff our aligned company of we're building this products say but existing decisions not perfect launch, strategy, progress And tremendous, we that the it gets sounds made not and have let's and with then team R&D and I tremendous making products serve driving data-driven we've product

good last XXX So the about I progress over days. feel the really

Chirag Shah

as from customer structure was we them the e-commerce million like do or as that QX go dollars don't customers, to actually, a the for with customer, revenue relation that most where they in contract bit unusual several we users is material. And build added Yes. contract, the over for building was they year it it and year catch-up The have like of given course a all over users that's don't us them for QX. at end them why the of the But we in the contract us add the that. course of year. has hit Their other structures specifically, that are retail

So it's really a thing. one-time

Unidentified Analyst

very you much. Thank

Operator

Thank you.

Bachman Our question Keith comes of next BMO. from

is Your line open.

Keith Bachman

much very thank results. strong I if could. had Hi, you the two and I questions, on congratulations

growth of then, what's new logos? more B, an piece the the key terms first Could guiding core it what's the ARR Is that up-sell? 'XX. there by to The drivers cross-sell, importantly, to you there or talk that inorganic that high-single-digits piece is growth? of most in little is is bit A, ARR for And of organic driven that? you're about to part or a

Phil Saunders

core and XXX% it's don't To to if we growth jump are yes, Keith, cover I'll it property, organic. ARR, and absolutely a take a quick Chirag stab at will I on it point in. single-digit your driving

point look foundational. customer ARR no It's is growth, that Right? there core when -- inorganic nothing second So number. obviously, house. retention. We very -- overall with, we And in it's non at is, our start

not and our good $XXX -- why want because that's a about we do business. make obviously and million-plus hear customer much a on we to so are sure experience, of with logos Win new happy, up-sell, focus So last making both terms that that's sure cross-sell an very, Zone. business of our yes, you big retention support And in base as but renewals capabilities part Then with a so capabilities. them definitely more more very least, providing job users growth once and clear expand is to of, they driving new

I'll has thoughts. he three it if is So to combination really other And pass the Keith. of it Chirag, things, those over any

Chirag Shah

Yes, Phil. covered generally, I it you mean,

I only mentioned base. Keith, the I I we that we're think my product expecting say, growth in would core from script, thing are is accelerating expecting, as our

to And number be to primary is the year. for driver so going that to expecting that to we're a this us get

Keith Bachman

Okay. Well, a probably Chirag, follow-up bit. relates my little you to

flow? or changes flow as strong the inclusion meaningful resulting sheet anticipate even balance and/or as that the Thank be bit a you consequence little You're generating to of the sheet you. cash the cash even would with over this thinking $XX free about How the look or other to out balance beyond any comments 'XX the unfold next, of free this million. you a should How from cash anticipate generate we year flow period?

Chirag Shah

that's well, as mean, I focused we're something on course Yes, the to delevering, to obviously of over cash as we're to very focused continue so that I on the be our continues build. year mentioned, going

at the expires the script, protection, that mentioned also Loan my I a have of in end B. April Term as call We on

on the going cash XXXX markets one-time do million in plus expectation I to pro are we're top for integration $XX debt talked based be assuming we that be in our that and flow within to are. restructuring again, the number, that into And of and that. that we again all available as about viewed to should on, XXXX, the So based which activities believe non-recurring be where growth some relation forma on looking XXXX guidance would guidance options

be meaningful that expect do growth So in in we again XXXX there'll beyond. cash and flow

Unidentified Analyst

right. thanks. Congratulations. Many Okay. All

Operator

Thank you.

question of Mizuho. next Siti Panigrahi from comes Our

Your line is open.

Unidentified Analyst

Siti. quickly Congrats this quarter, I on up great Keith's to is for want on question. on follow guys. a Michael Hi,

ARR, while $XX $XX can to value Would and strategic million in happen at accounted the see going strategic for in of $XX in dynamic million. Looking any XXXX, was the that that there of declined I incremental million XXXX? million migration $XX core is in of ARR incremental fees that be same

Phil Saunders

you it? want to me and just pass then take start want or do Chirag, to you it you to

Chirag Shah

you Go happy can I'm now. start ahead, Phil, to...

Phil Saunders

us. one right, we important continue Sure. to of and was the happens ARR exact I you three so and Mike, right? them as to book our think keep ARR, tell they numbers part would stay for Either of I business non-core and But have course. things mean, which you, I they're is customers, to that of the customers, of happy I don't obviously that

And non-core so still is -- item that development is in we core development that last, people course, those programs, third of who paths we them we've and some invested the buyers, talent that the frictionless customers want on of migration The to get a other active not a are grow a platforms. or we platforms from question have that come provide solutions core to -- and to for core as growth non-core. us. to it's as of ARR result certainly but we non-core ARR yes, number notable win Mike, I specifically, XXXX But of will much can answer your that's some was think don't a moving, lose. as buyers, number,

Unidentified Analyst

– then and Understand

Chirag Shah

we add ] that already seen to in programs our only I'd have thing migration with XXXX. the is that Just success

trying we're, and that we'll that in as something ARR XXXX we much is that more be into of So non-core to obviously, can. investing save as

buyers qualified are talent potential As Phil Cornerstone. said, are for -- management is it all these buyers that

outside So of them else to risk product cases after there we're in our non-core a the proactively keep think going is we to customers portfolio, every are one trying of that something that move them us. to where and with going those

Unidentified Analyst

more to Understood. or XXXX assume it Got into you. quick migration it. those the you expect follow-up. do fair as Thank it migration And saw in investments programs? to then trends in those Is a continue pertains will you XXXX, XXXX in contribution given

Chirag Shah

our we happen. have I a more didn't we're XXXX would of would mean, have that those migrations generally expect full make have Obviously, migration migration a year full just in I Yes. efforts contribution because going year trying to XXXX. we of to

happen months have sort We these we we to how that because six feel that know do we past of nice and replicate XXXX. can over of track we we do and of a know So gotten migrations we've making these effectively terms that, virtue forward. like record in approach success to should by how those customers, them, just can in of going more

Unidentified Analyst

Thank you.

Operator

the call to like turn back remarks. you. to over Gold for Sir? I'd Thank this Jason time closing At

Jason Gold

hand actually it I'll for think I to Phil those remarks.

Phil Saunders

really but it. you successful, here. quarter successful passionate is we're a hope for makes hugely Thanks proof good we're you another glad I'll building close. Jason for call. us. Sure, quarter No sense about for Everyone what thanks, to appreciate about nearly excited I that and point joining spending here. be one the we're Thanks, We really We're thanks it. certainly what Latif. with doing hour an get

your again our of day. company. your interest in your And thanks and wonderful So rest with attention have for a that,

Operator

conference Ladies concludes and this for gentlemen you participating. Thank today's call.

You may now disconnect.

Cornerstone OnDemand (CSOD) 17 Feb 212020 Q4 Earnings call transcript