Billion Dollar Unicorns: Cornerstone OnDemand Faces Intense Competition

According to a Market Research Future report published earlier this year, the global talent management software market is estimated to grow 16% annually over the next few years to become a $16 billion industry by 2023. Billion Dollar Unicorn  Cornerstone OnDemand (Nasdaq: CSOD) is among the leading players in the sector. I had met with its founder and CEO Adam Miller a few years ago. A lot has happened since then.

Cornerstone OnDemand’s Offerings

Cornerstone OnDemand was founded in 1999 and was earlier named CyberU. Initially, the company was set up as a metamediary between the buyers and sellers of education. It was going to offer solutions for individuals, S&B, and large enterprises. But the timing did not work out for the initiative. By 2000, the dot-com bubble burst, and the company pivoted to focus on large enterprises and the online training segment. It started aggregating online training courses and when it had collated a thousand training titles, its leadership approached acquaintances in large enterprises to offer their organizations access to quality content at discounted prices.

Cornerstone relied heavily on customer feedback and demand. Its customers were asking for performance management, succession planning, and talent management training sessions. It listened to their needs and built content and capabilities around them. By 2001, the company was servicing its enterprise clients.

Today, Cornerstone’s offerings help companies like Walgreens, Starwood Hotels & Resorts, and Xerox to address critical talent requirements. It manages the end-to-end cycle of helping organizations identify, hire, integrate, manage, and help grow its talent. It helps to connect employees and identify expertise so that people can do their jobs better at any given moment.

Cornerstone OnDemand’s Financials

Cornerstone operates on a SaaS model and charges its customers a subscription for access to its services. For the recently reported quarter, its revenues were up 19% to $132.7 million. During the quarter, it adopted a new revenue recognition accounting standard Accounting Standards Codification 606 under which revenues would have come in at $133.1 million. It ended the quarter with a non-GAAP net income of $9 million, or a $0.14 diluted net income per share. It ended the quarter with 3,280 clients and 36 million users globally.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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