Form 10-Q
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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Cornerstone OnDemand, Inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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13-4068197
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification No.)
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Registrant’s telephone number, including area code:
(310) 752-0200
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Class
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Outstanding as of May 3, 2013
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Common Stock
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51,033,310
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Page No.
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ITEM 1.
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Condensed Consolidated Financial Statements
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March 31,
2013 |
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December 31, 2012
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||||
Assets
|
|
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||||
Cash and cash equivalents
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$
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76,170
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|
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$
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76,442
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Accounts receivable, net
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37,228
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|
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47,528
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Deferred commissions
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10,913
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|
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9,354
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Prepaid expenses and other current assets
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9,443
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8,249
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Total current assets
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133,754
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|
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141,573
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Capitalized software development costs, net
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8,028
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7,007
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Property and equipment, net
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8,571
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7,947
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Intangible assets, net
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6,322
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6,887
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Goodwill
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8,193
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8,193
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Other assets, net
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251
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|
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227
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Total Assets
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$
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165,119
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$
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171,834
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Liabilities and Stockholders’ Equity
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||||
Liabilities:
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||||
Accounts payable
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$
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5,849
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$
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4,849
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Accrued expenses
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11,325
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|
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14,986
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Deferred revenue, current portion
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87,781
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87,759
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Capital lease obligations, current portion
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1,473
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|
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1,643
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Debt, current portion
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1,320
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|
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916
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Other liabilities
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3,455
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3,885
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Total current liabilities
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111,203
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114,038
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Other liabilities, non-current
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3,688
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3,592
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Deferred revenue, net of current portion
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2,753
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4,493
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Capital lease obligations, net of current portion
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937
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1,227
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Long-term debt, net of current portion
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3,170
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1,836
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Total liabilities
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121,751
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125,186
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Commitments and contingencies (Note 9)
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Stockholders’ Equity:
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Common stock, $0.0001 par value; 1,000,000 shares authorized, 50,976 and 50,689 shares issued and outstanding at March 31, 2013 and December 31, 2012
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5
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5
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Additional paid-in capital
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248,708
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242,767
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Accumulated deficit
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(205,975
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)
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(196,041
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)
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Accumulated other comprehensive income (loss)
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630
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(83
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)
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Total stockholders’ equity
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43,368
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46,648
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Total Liabilities and Stockholders’ Equity
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$
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165,119
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$
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171,834
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Three Months Ended
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||||||
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March 31,
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||||||
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2013
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2012
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Revenue
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$
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37,657
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$
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24,002
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Cost of revenue
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11,252
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6,844
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Gross profit
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26,405
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17,158
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Operating expenses:
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Sales and marketing
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23,010
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16,237
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Research and development
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4,419
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3,093
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General and administrative
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8,566
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5,954
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Amortization of certain acquired intangible assets
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251
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|
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—
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Total operating expenses
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36,246
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25,284
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Loss from operations
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(9,841
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)
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(8,126
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)
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Other income (expense):
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Interest expense
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(79
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)
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(143
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)
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Other, net
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(13
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)
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239
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Other income (expense), net
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(92
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)
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96
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Loss before income tax provision
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(9,933
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)
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(8,030
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)
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Income tax provision
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(1
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)
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(82
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)
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Net loss
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$
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(9,934
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)
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$
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(8,112
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)
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Net loss per share, basic and diluted
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$
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(0.20
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)
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$
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(0.16
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)
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Weighted average common shares outstanding, basic and diluted
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50,798
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49,384
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Three Months Ended
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||||||
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March 31,
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2013
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|
2012
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Net loss
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$
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(9,934
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)
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$
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(8,112
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)
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Foreign currency translation adjustment, net of tax
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713
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(156
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)
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Total comprehensive loss
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$
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(9,221
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)
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$
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(8,268
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)
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Three Months Ended
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||||||
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March 31,
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||||||
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2013
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|
2012
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Cash flows from operating activities:
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Net loss
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$
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(9,934
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)
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$
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(8,112
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)
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Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization
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2,124
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1,161
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Non-cash interest expense
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—
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68
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Unrealized foreign exchange loss (gain)
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286
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(201
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)
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Stock-based compensation expense
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3,999
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2,499
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Deferred income taxes
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(129
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)
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—
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Changes in operating assets and liabilities:
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Accounts receivable
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9,552
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9,225
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Deferred commissions
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(1,841
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)
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(279
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)
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Prepaid expenses and other assets
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(1,075
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)
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(269
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)
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Accounts payable
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1,248
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1,426
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Accrued expenses
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(3,277
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)
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(2,301
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)
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Deferred revenue
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(271
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)
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(362
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)
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Other liabilities
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(204
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)
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174
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Net cash provided by operating activities
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478
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3,029
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Cash flows from investing activities:
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Purchases of property and equipment
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(1,467
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)
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(46
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)
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Capitalized software costs
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(1,935
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)
|
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(1,264
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)
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Net cash used in investing activities
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(3,402
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)
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(1,310
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)
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Cash flows from financing activities:
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Proceeds from issuance of debt
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1,914
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|
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—
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Repayment of debt
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(361
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)
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(210
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)
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Principal payments under capital lease obligations
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(459
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)
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(449
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)
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Proceeds from stock option and warrant exercises
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1,726
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|
|
594
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Net cash provided by (used in) financing activities
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2,820
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(65
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)
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Effect of exchange rate changes on cash and cash equivalents
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(168
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)
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123
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Net (decrease) increase in cash and cash equivalents
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(272
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)
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1,777
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Cash and cash equivalents at beginning of period
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76,442
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|
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85,409
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Cash and cash equivalents at end of period
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$
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76,170
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|
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$
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87,186
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Supplemental cash flow information:
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Cash paid for interest
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$
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79
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|
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$
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75
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Cash paid for income taxes
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$
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166
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|
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$
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200
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Non-cash investing and financing activities:
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|
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Assets acquired under capital leases and other financing arrangements
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$
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88
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|
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$
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1,775
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Capitalized assets financed by accounts payable
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$
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559
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|
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$
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47
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Capitalized stock-based compensation
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$
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208
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|
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$
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87
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|
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Three Months Ended
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||||||
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March 31,
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||||||
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2013
|
|
2012
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||||
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Actual
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Pro Forma
|
||||
Revenues
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$
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37,657
|
|
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$
|
24,962
|
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Net loss
|
$
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(9,934
|
)
|
|
$
|
(7,417
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)
|
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Three Months Ended
|
||||||
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March 31,
|
||||||
|
2013
|
|
2012
|
||||
Net loss
|
$
|
(9,934
|
)
|
|
$
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(8,112
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)
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Weighted-average shares of common stock outstanding
|
50,798
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|
|
49,384
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|
||
Net loss per share – basic and diluted
|
$
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(0.20
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)
|
|
$
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(0.16
|
)
|
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March 31, 2013
|
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December 31, 2012
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||||||||||||||||||||
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Gross
Carrying
Amount
|
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Accumulated
Amortization
|
|
Net
Carrying
Amount
|
|
Gross
Carrying
Amount
|
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Accumulated
Amortization
|
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Net
Carrying
Amount
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||||||||||||
Developed technology
|
$
|
3,800
|
|
|
$
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(937
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)
|
|
$
|
2,863
|
|
|
$
|
3,800
|
|
|
$
|
(700
|
)
|
|
$
|
3,100
|
|
Customer relationships
|
2,400
|
|
|
(592
|
)
|
|
1,808
|
|
|
2,400
|
|
|
(441
|
)
|
|
1,959
|
|
||||||
Domains/trademarks/tradenames
|
320
|
|
|
(158
|
)
|
|
162
|
|
|
320
|
|
|
(118
|
)
|
|
202
|
|
||||||
Software license rights
|
1,654
|
|
|
(534
|
)
|
|
1,120
|
|
|
1,654
|
|
|
(459
|
)
|
|
1,195
|
|
||||||
Non-compete agreements
|
610
|
|
|
(241
|
)
|
|
369
|
|
|
610
|
|
|
(179
|
)
|
|
431
|
|
||||||
Total
|
$
|
8,784
|
|
|
$
|
(2,462
|
)
|
|
$
|
6,322
|
|
|
$
|
8,784
|
|
|
$
|
(1,897
|
)
|
|
$
|
6,887
|
|
2013
|
$
|
1,697
|
|
2014
|
2,078
|
|
|
2015
|
1,840
|
|
|
2016
|
555
|
|
|
2017
|
145
|
|
|
Thereafter
|
7
|
|
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Total
|
$
|
6,322
|
|
•
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Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access at the measurement date.
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•
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Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
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•
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Level 3 – Unobservable inputs.
|
|
March 31, 2013
|
|
December 31, 2012
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||||||||||||||||||||||||||||
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Fair Value
|
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Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
Cash equivalents
|
$
|
51,521
|
|
|
$
|
51,521
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51,521
|
|
|
$
|
51,521
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
|||||
Outstanding, December 31, 2012
|
6,610
|
|
|
$
|
12.49
|
|
|
8.2
|
|
$
|
112,899
|
|
Granted
|
536
|
|
|
33.58
|
|
|
|
|
|
|||
Exercised
|
(285
|
)
|
|
6.06
|
|
|
|
|
|
|||
Forfeited
|
(116
|
)
|
|
23.69
|
|
|
|
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|
|||
Outstanding, March 31, 2013
|
6,745
|
|
|
$
|
14.24
|
|
|
8.1
|
|
$
|
134,129
|
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
|||||
Exercisable at March 31, 2013
|
2,650
|
|
|
$
|
6.83
|
|
|
7.2
|
|
$
|
72,272
|
|
Vested and expected to vest at March 31, 2013
|
6,631
|
|
|
14.16
|
|
|
8.1
|
|
132,388
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Cost of revenue
|
$
|
428
|
|
|
$
|
491
|
|
Sales and marketing expense
|
1,667
|
|
|
478
|
|
||
Research and development expense
|
323
|
|
|
144
|
|
||
General and administrative expense
|
1,564
|
|
|
1,386
|
|
||
Total
|
$
|
3,982
|
|
|
$
|
2,499
|
|
ITEM 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
our ability to attract new clients;
|
•
|
the timing and rate at which we enter into agreements for our solutions with new clients;
|
•
|
the timing and duration of our client implementations, which is often outside of our direct control, and our ability to provide resources for client implementations and consulting projects;
|
•
|
the extent to which our existing clients renew their subscriptions for our solutions and the timing of those renewals;
|
•
|
the extent to which our existing clients purchase additional clouds or add incremental users;
|
•
|
the extent to which our clients request enhancements to underlying features and functionality of our solutions and the timing for us to deliver the enhancements to our clients;
|
•
|
changes in the mix of our sales between new and existing clients;
|
•
|
changes to the proportion of our client base that is comprised of enterprise or mid-sized organizations;
|
•
|
seasonal factors affecting the demand for our solutions;
|
•
|
the timing of our client implementations;
|
•
|
our ability to manage growth, including in terms of new clients, additional users and new geographies;
|
•
|
the timing and success of competitive solutions offered by our competitors;
|
•
|
changes in our pricing policies and those of our competitors; and
|
•
|
general economic and market conditions.
|
•
|
Revenues.
We generally recognize subscription revenue over the contract period, and as a result of our revenue recognition policy and the seasonality of when we enter into new client agreements, revenue from client agreements signed in the current period may not be fully reflected in the current period. As a result, revenue increases period over period are primarily from contracts that existed prior to the beginning of that period.
|
•
|
Bookings
. Under our revenue recognition policy, we generally recognize subscription revenue from our client agreements ratably over the terms of those agreements. For this reason, the major portion of our revenue for a period will be from client agreements signed in prior periods rather than from new business activity during the current period. In order to assess our business performance with a metric that more fully reflects current period business activity, we track bookings, which is a non-GAAP financial measure we define as the sum of revenue and the change in the deferred revenue balance for the period. We include changes in the deferred revenue balance to calculate bookings so it better reflects new business activity in the period as evidenced by prepayments or billings under our billing policies arising from acquisition of new clients, sales of additional clouds to existing clients, the addition of incremental users by existing clients and client renewals. Bookings are affected by our billing terms, and any changes in those billing terms may shift bookings between periods. Due to the seasonality of our sales, bookings growth is inconsistent from quarter to quarter throughout a calendar year. For a reconciliation of bookings to revenue, please see “
Results of Operations – Revenue and Metrics
.”
|
•
|
Number of clients
. We believe that our ability to expand our client base is an indicator of our market penetration and the growth of our business as we continue to invest in our direct sales teams and distributors. Our client count includes contracted clients for any combination of the four integrated clouds for our core solution as of the end of the period and excludes clients of our CSB and Cornerstone for Salesforce solutions.
|
•
|
Number of users.
Since our clients generally pay fees based on the number of users of our solutions within their organizations, we believe the total number of users is an indicator of the growth of our business. Our user count includes active users for our core solution and excludes users of our CSB and Cornerstone for Salesforce solutions.
|
•
|
Subscriptions to Our Solutions.
Clients pay subscription fees for access to our solutions for a specified period of time, typically three years for our core solution or monthly, annually, or three-year periods for our CSB and Cornerstone for Salesforce solutions. Fees are based on a number of factors, including the number of users having access to a solution. We generally recognize revenue from subscriptions ratably over the term of the agreements.
|
•
|
Consulting Services.
We offer our clients assistance in implementing our solutions and optimizing their use. Consulting services include application configuration, system integration, business process re-engineering, change management and training services. Services are billed either on a time-and-material or a fixed-fee basis. These services are generally purchased as part of a subscription arrangement and are typically performed within the first several months of the arrangement. Clients may also purchase consulting services at any other time. Our consulting services are performed by us directly or by third-party service providers we engage. Clients may also choose to perform these services themselves or engage their own third-party service providers. We generally recognize revenue from fixed fee consulting services using the proportional performance method over the period the services are performed and as time is incurred for time-and-material arrangements.
|
•
|
E-learning Content.
We resell third-party on-line training content, which we refer to as e-learning content, to our clients. We also host other e-learning content provided by our clients. We generally recognize revenue from the resale of e-learning content as it is delivered and recognize revenue from hosting as the hosting services are provided.
|
•
|
Sales and Marketing.
Sales and marketing expenses consist primarily of personnel and related expenses for our sales and marketing staff, including salaries, benefits, bonuses, stock-based compensation and commissions; costs of marketing and promotional events, corporate communications, online marketing, product marketing and other brand-building activities; and allocated overhead.
|
•
|
Research and Development.
Research and development expenses consist primarily of personnel and related expenses for our research and development staff, including salaries, benefits, bonuses and stock-based compensation; the cost of certain third-party service providers; and allocated overhead. Research and development costs, other than software development costs qualifying for capitalization, are expensed as incurred.
|
•
|
General and Administrative.
General and administrative expenses consist primarily of personnel and related expenses for administrative, legal, finance and human resource staffs, including salaries, benefits, bonuses and stock-based compensation; professional fees; insurance premiums; other corporate expenses; and allocated overhead. We expect our general and administrative expenses to increase as we continue to expand our operations.
|
•
|
Amortization of Certain Acquired Intangible Assets.
Amortization of certain acquired intangibles consists of amortization of Sonar acquisition-related intangibles including customer relationships, non-compete agreements, patents, trade names and trademarks. We also record amortization of developed technology and software license rights in cost of revenues.
|
•
|
Interest Expense.
Interest expense consists primarily of interest expense from borrowings under our credit facility and our promissory notes; capital lease payments; and amortization of debt discounts.
|
•
|
Other, Net.
Other, net consists of income and expense associated with fluctuations in foreign currency exchange rates and other non-operating expenses. We expect interest income (expense) and other income (expense) to vary depending on the movement in foreign currency exchange rates and the related impact on our foreign exchange gain (loss).
|
|
Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Revenue
|
$
|
37,657
|
|
|
$
|
24,002
|
|
Cost of revenue
|
11,252
|
|
|
6,844
|
|
||
Gross profit
|
26,405
|
|
|
17,158
|
|
||
Operating expenses:
|
|
|
|
||||
Sales and marketing
|
23,010
|
|
|
16,237
|
|
||
Research and development
|
4,419
|
|
|
3,093
|
|
||
General and administrative
|
8,566
|
|
|
5,954
|
|
||
Amortization of acquired intangibles
|
251
|
|
|
—
|
|
||
Total operating expenses
|
36,246
|
|
|
25,284
|
|
||
Loss from operations
|
(9,841
|
)
|
|
(8,126
|
)
|
||
Other income (expense):
|
|
|
|
||||
Interest income (expense)
|
(79
|
)
|
|
(143
|
)
|
||
Other, net
|
(13
|
)
|
|
239
|
|
||
Loss before income tax provision
|
(9,933
|
)
|
|
(8,030
|
)
|
||
Income tax provision
|
(1
|
)
|
|
(82
|
)
|
||
Net loss
|
$
|
(9,934
|
)
|
|
$
|
(8,112
|
)
|
|
At or For Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
Revenue (in thousands)
|
$
|
37,657
|
|
|
$
|
24,002
|
|
Bookings (in thousands)
|
$
|
35,939
|
|
|
$
|
23,959
|
|
Number of clients
|
1,317
|
|
|
891
|
|
||
Number of users (in thousands)
|
11,014
|
|
|
8,181
|
|
|
Deferred
Revenue
Balance
|
|
Three Months Ended
March 31, 2013
|
||||
Revenue
|
|
|
$
|
37,657
|
|
||
Deferred revenue at December 31, 2012
|
$
|
92,252
|
|
|
|
||
Deferred revenue at March 31, 2013
|
90,534
|
|
|
|
|||
Change in deferred revenue
|
|
|
|
(1,718
|
)
|
||
Bookings
|
|
|
$
|
35,939
|
|
||
|
Deferred
Revenue
Balance
|
|
Three Months Ended
March 31, 2012
|
||||
Revenue
|
|
|
$
|
24,002
|
|
||
Deferred revenue at December 31, 2011
|
$
|
55,880
|
|
|
|
||
Deferred revenue at March 31, 2012
|
55,837
|
|
|
|
|||
Change in deferred revenue
|
|
|
|
(43
|
)
|
||
Bookings
|
|
|
$
|
23,959
|
|
|
Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(dollars in thousands)
|
||||||
Cost of revenue
|
$
|
11,252
|
|
|
$
|
6,844
|
|
Gross profit
|
$
|
26,405
|
|
|
$
|
17,158
|
|
Gross margin
|
70
|
%
|
|
72
|
%
|
|
Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(dollars in thousands)
|
||||||
Sales and marketing
|
$
|
23,010
|
|
|
$
|
16,237
|
|
Percent of net revenue
|
61
|
%
|
|
68
|
%
|
|
Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(dollars in thousands)
|
||||||
Research and development
|
$
|
4,419
|
|
|
$
|
3,093
|
|
Percent of net revenue
|
12
|
%
|
|
13
|
%
|
|
Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(dollars in thousands)
|
||||||
General and administrative
|
$
|
8,566
|
|
|
$
|
5,954
|
|
Percent of net revenue
|
23
|
%
|
|
25
|
%
|
|
Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(dollars in thousands)
|
||||||
Amortization of certain acquired intangible assets
|
$
|
251
|
|
|
$
|
—
|
|
2013
|
$
|
1,697
|
|
2014
|
2,078
|
|
|
2015
|
1,840
|
|
|
2016
|
555
|
|
|
2017
|
145
|
|
|
Thereafter
|
7
|
|
|
Total
|
$
|
6,322
|
|
|
Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(dollars in thousands)
|
||||||
Interest expense
|
$
|
(79
|
)
|
|
$
|
(143
|
)
|
Other, net
|
(13
|
)
|
|
239
|
|
||
Total
|
$
|
(92
|
)
|
|
$
|
96
|
|
|
Three Months Ended
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(dollars in thousands)
|
||||||
Income tax provision
|
$
|
(1
|
)
|
|
$
|
(82
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2013
|
|
2012
|
||||
Net cash provided by operating activities
|
$
|
478
|
|
|
$
|
3,029
|
|
Net cash used in investing activities
|
(3,402
|
)
|
|
(1,310
|
)
|
||
Net cash provided by (used in) financing activities
|
2,820
|
|
|
(65
|
)
|
ITEM 3.
|
Quantitative and Qualitative Disclosures About Market Risks
|
ITEM 4.
|
Controls and Procedures
|
ITEM 1.
|
Legal Proceedings
|
ITEM 1A.
|
Risk Factors
|
•
|
the need to educate potential clients about the uses and benefits of our solutions;
|
•
|
the relatively long duration of the commitment clients make in their agreements with us;
|
•
|
the discretionary nature of potential clients’ purchasing and budget cycles and decisions;
|
•
|
the competitive nature of potential clients’ evaluation and purchasing processes;
|
•
|
evolving functionality demands of potential clients;
|
•
|
fluctuations in the talent management needs of potential clients;
|
•
|
announcements or planned introductions of new products by us or our competitors; and
|
•
|
lengthy purchasing approval processes of potential clients.
|
•
|
changes in billing cycles and the size of advance payments relative to overall contract value in client agreements;
|
•
|
the extent to which new clients are attracted to our solutions to satisfy their talent management needs;
|
•
|
the timing and rate at which we sign agreements with new clients;
|
•
|
our access to service providers when we outsource client service projects and our ability to manage the quality and completion of the related client implementations;
|
•
|
the timing and duration of our client implementations, which is often outside of our direct control, and our ability to provide resources for client implementations and consulting projects;
|
•
|
the extent to which we retain existing clients and satisfy their requirements;
|
•
|
the extent to which existing clients renew their subscriptions to our solutions and the timing of those renewals;
|
•
|
the extent to which existing clients purchase or discontinue the use of additional solutions and add or decrease the number of users;
|
•
|
the extent to which our clients request enhancements to underlying features and functionality of our solutions and the timing for us to deliver the enhancements to our clients;
|
•
|
the addition or loss of large clients, including through acquisitions or consolidations;
|
•
|
the number and size of new clients, as well as the number and size of renewal clients in a particular period;
|
•
|
the mix of clients between small, mid-sized and large organizations;
|
•
|
changes in our pricing policies or those of our competitors;
|
•
|
seasonal factors affecting demand for our solutions or potential clients’ purchasing decisions;
|
•
|
the financial condition and creditworthiness of our clients;
|
•
|
the amount and timing of operating expenses, including those related to the maintenance and expansion of our business, operations and infrastructure;
|
•
|
the timing and success of new product and service introductions by us;
|
•
|
the timing of expenses related to the development of new products and technologies, including enhancements to our solutions;
|
•
|
the timing and success of current and new competitive products and services by our competitors;
|
•
|
other changes in the competitive dynamics of our industry, including consolidation among competitors, clients or strategic partners;
|
•
|
our ability to manage our existing business and future growth, including in terms of additional clients, incremental users and new geographic regions;
|
•
|
expenses related to our data centers and the expansion of such data centers;
|
•
|
the effects of, and expenses associated with, acquisitions of third-party technologies or businesses and any potential future charges for impairment of goodwill resulting from those acquisitions;
|
•
|
general economic, industry and market conditions; and
|
•
|
various factors related to disruptions in our SaaS hosting network infrastructure, defects in our solutions, privacy and data security, and exchange rate fluctuations, each of which is described elsewhere in these risk factors.
|
•
|
unanticipated costs or liabilities associated with the acquisition;
|
•
|
incurrence of acquisition-related costs;
|
•
|
diversion of management’s attention from other business concerns;
|
•
|
harm to our existing relationships with distributors and clients as a result of the acquisition;
|
•
|
the potential loss of key employees;
|
•
|
the use of resources that are needed in other parts of our business; and
|
•
|
the use of substantial portions of our available cash to consummate the acquisition.
|
•
|
human error;
|
•
|
security breaches;
|
•
|
telecommunications outages from third-party providers;
|
•
|
computer viruses;
|
•
|
acts of terrorism, sabotage or other intentional acts of vandalism, including cyber attacks;
|
•
|
unforeseen interruption or damages experienced in moving hardware to a new location;
|
•
|
fire, earthquake, flood and other natural disasters; and
|
•
|
power loss.
|
•
|
lost or delayed market acceptance and sales of our solutions;
|
•
|
early termination of client agreements or loss of clients;
|
•
|
credits or refunds to clients;
|
•
|
product liability suits against us;
|
•
|
diversion of development resources;
|
•
|
injury to our reputation; and
|
•
|
increased maintenance and warranty costs.
|
•
|
unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions;
|
•
|
differing labor regulations;
|
•
|
regulations relating to data security and the unauthorized use of, or access to, commercial and personal information;
|
•
|
potential penalties or other adverse consequences for violations of anti-corruption, anti-bribery and other similar laws and regulations, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act.
|
•
|
greater difficulty in supporting and localizing our products;
|
•
|
changes in a specific country’s or region’s political or economic conditions;
|
•
|
challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, controls, policies, benefits and compliance programs;
|
•
|
limited or unfavorable intellectual property protection; and
|
•
|
restrictions on repatriation of earnings.
|
•
|
Selling to governmental entities can be more competitive, expensive and time consuming than selling to private entities;
|
•
|
Governmental entities may have significant leverage in negotiations, thereby enabling such entities to demand contract terms that differ from what we generally agree to in our standard agreements, including, for example, most favored nation clauses and terms allowing contract termination for convenience;
|
•
|
Government demand and payment for our solutions may be influenced by public sector budgetary cycles and funding authorizations, with funding reductions or delays having an adverse impact on public sector demand for our solutions; and
|
•
|
Government contracts are generally subject to audits and investigations, which we have no experience with, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from future government business.
|
•
|
our operating performance and the performance of other similar companies;
|
•
|
the overall performance of the equity markets;
|
•
|
developments with respect to intellectual property rights;
|
•
|
publication of unfavorable research reports about us or our industry or withdrawal of research coverage by securities analysts;
|
•
|
speculation in the press or investment community;
|
•
|
the size of our public float;
|
•
|
natural disasters or terrorist acts;
|
•
|
announcements by us or our competitors of significant contracts, new technologies, acquisitions, commercial relationships, joint ventures or capital commitments; and
|
•
|
global economic, legal and regulatory factors unrelated to our performance.
|
•
|
authorize “blank check” preferred stock, which could be issued by the board without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;
|
•
|
create a classified board of directors whose members serve staggered three-year terms;
|
•
|
specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of the board, the chief executive officer or the president;
|
•
|
establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;
|
•
|
provide that our directors may be removed only for cause;
|
•
|
provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;
|
•
|
specify that no stockholder is permitted to cumulate votes at any election of directors; and
|
•
|
require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents.
|
ITEM 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
ITEM 3.
|
Defaults Upon Senior Securities
|
ITEM 4.
|
Mine Safety Disclosures
|
ITEM 5.
|
Other Information
|
ITEM 6.
|
Exhibits
|
Cornerstone OnDemand, Inc.
|
(Registrant)
|
|
/s/ Adam L. Miller
|
Adam L. Miller
|
President and Chief Executive Officer
|
†
|
The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Cornerstone OnDemand, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
|
††
|
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not otherwise subject to liability under these sections.
|
1.
|
Recitals
.
|
2.
|
Option to Expand
. Section 1.5 of the Lease is hereby amended as follows:
|
3.
|
Right of First Offer
. The references at the end of the first paragraph of Section 1.6.1 to June 1, 2012, June 30, 2012, July 1, 2012 and December 1, 2014 are hereby amended to refer to December 1, 2012, December 31, 2012, January 1, 2013 and June 1, 2015, respectively.
|
4.
|
Miscellaneous
.
|
1.
|
Expansion Space
|
Period Following Expansion
Commencement Date
|
Annual Expansion Space
Base Rent
|
Monthly Installment
of Expansion Space Base
Rent
|
Monthly Rental Rate per Rentable Square Foot
(Rounded)
|
||||
Expansion Commencement Date - November 30, 2013
|
NA
|
$
|
61,742.69
|
|
$3.966
|
||
December 1, 2013 - November 30, 2014
|
$
|
763,143.36
|
|
$
|
63,595.28
|
|
$4.085
|
December 1, 2014 - November 30, 2015
|
$
|
786,121.68
|
|
$
|
65,510.14
|
|
$4.208
|
December 1, 2015 - November 30, 2016
|
$
|
809,660.52
|
|
$
|
67,471.71
|
|
$4.334
|
December 1, 2016 - November 30, 2017
|
$
|
833,946.60
|
|
$
|
69,495.55
|
|
$4.464
|
December 1, 2017 - November 30, 2018
|
$
|
858,979.92
|
|
$
|
71,581.66
|
|
$4.598
|
December 1, 2018 - January 31, 2019
|
NA
|
$
|
73,730.05
|
|
$4.736
|
Period Following Suite 450S
Commencement Date
|
Annual Suite
450S Base Rent
|
Monthly Installment
of Suite 450S
Base Rent
|
Monthly Rental Rate per Rentable Square Foot
(Rounded)
|
||||
October 1, 2013 - September 30, 2014
|
$
|
634,586.40
|
|
$
|
52,882.20
|
|
$4.200
|
October 1, 2014 - September 30, 2015
|
$
|
653,624.04
|
|
$
|
54,468.67
|
|
$4.326
|
October 1, 2015 - September 30, 2016
|
$
|
673,266.00
|
|
$
|
56,105.50
|
|
$4.456
|
October 1, 2016 - September 30, 2017
|
$
|
693,512.28
|
|
$
|
57,792.69
|
|
$4.590
|
October 1, 2017 - September 30, 2018
|
$
|
714,363.00
|
|
$
|
59,530.25
|
|
$4.728
|
October 1, 2018 - January 31, 2019
|
NA
|
$
|
61,318.17
|
|
$4.870
|
1.
|
|
I have reviewed this Quarterly Report on Form 10-Q of Cornerstone OnDemand, Inc.;
|
2.
|
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Adam L. Miller
|
Adam L. Miller
|
President and Chief Executive Officer
|
1.
|
|
I have reviewed this Quarterly Report on Form 10-Q of Cornerstone OnDemand, Inc.;
|
2.
|
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Perry A. Wallack
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Perry A. Wallack
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Chief Financial Officer
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/s/ Adam L. Miller
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Adam L. Miller
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President and Chief Executive Officer
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/s/ Perry A. Wallack
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Perry A. Wallack
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Chief Financial Officer
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