☒
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ANNUAL 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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Delaware
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13-4068197
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.0001 per share
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CSOD
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Nasdaq Stock Market LLC
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(Nasdaq Global Select Market)
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page No.
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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Item 1.
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Business
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•
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Our Recruiting suite helps organizations to attract, hire, and onboard the right employees;
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•
|
Our Learning suite provides robust, modern learning management software designed to scale with the organization. Cornerstone Learning comprehensively supports compliance, knowledge sharing, and employee-driven development training to close skills gaps. Our content offering delivers fresh, modern content, fueling employee curiosity, and inspiring growth;
|
•
|
Our Performance suite provides tools to manage goal setting, performance reviews, competency assessments, development plans, continuous feedback, compensation management, and succession planning; and
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•
|
Our HR suite provides an aggregated view of all employee data with workforce planning, self-service management, and compliance reporting capabilities resulting in more accurate data.
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•
|
Comprehensive Functionality. Our solution provides a comprehensive approach to people development by offering products to address all stages of the employee lifecycle: recruiting, onboarding, learning, performance, succession, compensation, enterprise social collaboration, and HR administration processes. Employees use our solution throughout their careers to engage in performance processes such as goal management, performance reviews, continuous feedback, competency assessments, and compensatory reviews; to complete job-specific and compliance-related training; to evaluate potential career changes, development plans or succession processes; and to connect and collaborate with co-workers by leveraging enterprise social networking tools. Employee managers and HR managers use our solution to perform their people development administrative responsibilities effectively throughout their employees’ careers. We believe our comprehensive, unified solution enables our customers to align their people development processes and practices with their broader strategic goals.
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•
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Flexible and Highly Configurable. Our solution offers substantial configurability that allows our customers to match the use of our software with their specific business processes and workflows. We also provide web services to facilitate the importing and exporting of data to and from other customer systems, such as enterprise resource planning and human resource information system solutions. Our customers can configure various features, functions and work flows in our solution by business unit, division, department, region, location, job position, pay grade, cost center, or self-defined organizational unit. Our customers are able to adjust features to configure specific processes, such as performance review workflows or training approvals, to match their existing or desired practices. This high level of configurability means that custom coding projects generally are not required to meet the diverse needs of our customers.
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•
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Easy-to-Use, Personalized User Interface. Our solution employs an intuitive user interface and may be personalized for the end user, typically based on position, division, pay grade, location, manager and particular use of the solution. This ease of use limits the need for end-user training, which we believe increases user adoption rates and usage.
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•
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Software-as-a-Service Solution Lowers the Total Cost of Ownership and Speeds Delivery. Our solution is accessible through a standard web browser and does not require the large investments in implementation time, personnel, hardware, and consulting that are typical of hosted or on-premise solutions. With a single code base to maintain, we are able to release improved functionality on a quarterly basis. This is a more rapid pace than most hosted or on-premise solution providers can afford to deliver.
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•
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Scalable to Meet the Needs of Organizations. Our solution has been used by Fortune 100 companies since 2001. While the complex needs of these global corporations required us to build a solution that can scale to support large, geographically-distributed employee bases, our solution is capable of supporting deployments of various sizes.
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•
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Insights and Predictive Analysis. Our solution leverages technology powered by a highly refined machine learning system for people development. We also offer a large network of shared talent data. This enables leaders to answer critical questions about how to better hire, manage, retain, and reward talent with dashboards that can be drilled down to individual employees. Enhanced by additional Cornerstone suite usage, these insights allow organizations to manage their people development process proactively and be strategic with initiatives that affect thousands of employees across many groups and locations.
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•
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Continued Innovation through Collaborative Product Development. We work collaboratively with our customers on an ongoing basis to develop almost every part of our solution. The vast majority of our thousands of software features were designed using feedback from existing and prospective customers based on their specific functional requests.
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•
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Focus on Data Privacy and Security. We have designed our solution to meet certain rigorous industry and jurisdictional security standards and to help assure customers that their sensitive data is protected across the system. We use commercially reasonable methods and technology designed to ensure high levels of security by logically segregating each customer’s data from the data of other customers and by enforcing a consistent approach to roles and rights within the system. These restrictions limit system access to only those individuals authorized by our customers. We also employ multiple standard technologies, protocols and processes to monitor, test and certify the security of our infrastructure continuously.
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•
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Focus on Customer Success, Retention, and Growth. We believe focusing on our customers’ success will lead to our own success. We have developed a Customer Success Framework that governs our operating model. Since 2002, we have averaged annual gross dollar retention rates of approximately 95%. At the same time, in recent years, we have seen a decline in our annual gross dollar retention rate, which was 90% in the most recent period. We strive to maintain our strong retention rates by continuing to provide our customers with high levels of service, support, and increasing functionality.
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•
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Sell Additional Products to Existing Customers. We believe there is a significant growth opportunity in selling additional functionality to our existing customers. Many customers have added functionality subsequent to their initial deployments as they recognize the benefits of our unified solution. With our expanding product portfolio functionality, we believe significant upsell opportunity remains within our existing customer base.
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•
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Invest in Direct Sales in North America. We believe that the market for people development is large and remains significantly underpenetrated. In particular, content and recruiting provide an opportunity to increase our recurring sales to both new and existing customers. Additionally, we believe the small and medium-sized business (“SMB”) market represents a very large and underpenetrated opportunity.
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•
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Continue to Invest in Our International Operations. We believe a substantial opportunity exists to continue to grow sales of our solution internationally. We intend to grow our Europe, Middle East and Africa (“EMEA”) and Asia-Pacific and Japan (“APJ”) operations. As of December 31, 2019, we had approximately 900 customers in EMEA and over 200 customers in APJ.
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•
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Grow Our Cornerstone Content Anytime Sales. We believe there is a significant market opportunity for developing employees throughout their careers with modern, fresh e-learning content. Our Content Anytime subscription offering provides access to industry leading content which we believe will increase user engagement on our solution. Our content partners for Content Anytime include industry leaders as well as regional, functional and vertically-focused online training providers. In addition, we have agreements with providers of specific competency models for use by our customers directly in our people development solution. We intend to enter into additional license agreements to continue providing the best content available for our customers.
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•
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Expand the Ecosystem. During 2018, we migrated a sizable portion of our implementation services to our partners. We have also expanded in recent years our relationships with various third-party consulting firms to deliver the successful implementation of our solution and to optimize our customers’ use of our solution during the terms of their engagements. Our partner strategy and experience includes certifications and curricula developed to ensure successful delivery by our partners and continued high customer satisfaction. We believe we have a significant opportunity to leverage these third-parties interested in building or expanding their businesses to increase our market penetration.
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•
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Customer executives who interact with executive-level sponsors and human resources executives at a customer and are focused on the overall relationship, including sales to existing customers;
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•
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Customer success managers who work directly with executive-level sponsors and human resources executives at our customers to maximize the value of their investment in our people development solution; and
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•
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Product specialists who interact with customer administrators and are focused on features and functions of our people development solution.
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•
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Demand Generation. Our demand generation activities include targeted account-based marketing, lead generation through email and direct mail campaigns, participation in industry events, securing event speaking opportunities, and online marketing, including both search engine marketing and organic search engine optimization online marketing.
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•
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Corporate Marketing. We market to our customers by leveraging product marketing, customer success stories, thought leadership content and brand awareness advertising campaigns. Additionally, we host product advisory communities and executive advisory councils; we also co-market with our strategic distributors, including joint press announcements and demand generation activities.
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•
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Marketing Communications. We undertake media relations, corporate communications, industry analyst relations activities, customer advocacy, and social media outreach.
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•
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the level of integration of our product offerings within our people development solution;
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•
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the breadth and depth of our product functionality;
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•
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the flexibility and configurability of our product offerings to meet the changing content and workflow requirements of our customers’ business units;
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•
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the quality of our service and focus on customer success;
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•
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our ability to provide scalability and flexibility for large and complex global deployments; and
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•
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the ease of use of our product offerings and overall user experience.
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•
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changes in billing terms and collection cycles in customer agreements;
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•
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the extent to which new customers are attracted to our products to satisfy their people development needs;
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•
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the timing and rate at which we sign agreements with new customers;
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•
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our access to service providers and partners when we outsource customer service projects;
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•
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our ability to manage the quality and completion of the customer implementations performed by partners;
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•
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the timing and duration of our customer implementations, which is often outside of our direct control;
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•
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our ability to provide, or partner with effective partners to provide, resources for customer implementations and consulting projects;
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•
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the extent to which we retain existing customers and satisfy their requirements;
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•
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the extent to which existing customers renew their subscriptions to our products and the timing of those renewals;
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•
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the extent to which existing customers purchase or discontinue the use of additional products and add or decrease the number of users;
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•
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the extent to which our customers request enhancements to underlying features and functionality of our products, and the timing of our delivery of these enhancements to our customers;
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•
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the addition or loss of large customers, including through acquisitions or consolidations;
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•
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the number and size of new customers, as well as the number and size of renewal customers in a particular period;
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•
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the mix of customers among large, mid-sized, and small organizations;
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•
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changes in our pricing policies or those of our competitors;
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•
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seasonal factors affecting demand for our products or potential customers’ purchasing decisions;
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•
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the financial condition and creditworthiness of our customers;
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•
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the amount and timing of our operating expenses, including those related to the maintenance, expansion, and restructuring of our business, operations, and infrastructure;
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•
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changes in the operational efficiency of our business;
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•
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the timing and success of our new product and service introductions;
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•
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the timing of expenses of the development of new products and technologies, including enhancements to our products;
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•
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our ability to aggregate large data sets into meaningful insights to drive increased demand for our products;
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•
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continued strong demand for people development in the US and globally;
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•
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the success of current and new competitive products and services by our competitors;
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•
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other changes in the competitive dynamics of our industry, including consolidation among competitors, customers, or strategic partners;
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•
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our ability to manage our existing business and future growth, including in terms of additional headcount, additional customers, incremental users, and new geographic regions;
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•
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expenses related to our network and data centers, and the expansion of such networks and data centers;
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•
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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;
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•
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equity issuances, including as consideration in acquisitions or due to the conversion of our outstanding convertible notes due 2021 (the “Convertible Notes”);
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•
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business disruptions, costs and events related to shareholder activism;
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•
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legal or political changes in local or foreign jurisdictions that decrease demand for, or restrict our ability to sell or provide, our products;
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•
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fluctuations in foreign currency exchange rates, including any fluctuation caused by uncertainties relating to UK’s exit from the EU, commonly referred to as Brexit;
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•
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general economic, industry, and market conditions; and
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•
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various factors related to disruptions in our SaaS hosting network infrastructure, defects in our products, privacy and data security considerations, and exchange rate fluctuations, each of which is described elsewhere in these risk factors.
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•
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human error;
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•
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security breaches;
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•
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telecommunications outages from third-party providers;
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•
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computer viruses;
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•
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acts of terrorism, sabotage or other intentional acts of vandalism, including cyber attacks;
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•
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unforeseen interruption or damages experienced in moving hardware to a new location;
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•
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fire, earthquake, flood, and other natural disasters; and
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•
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power loss.
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•
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lost or delayed market acceptance and sales of our products;
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•
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early termination of customer agreements or loss of customers;
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•
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credits or refunds to customers;
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•
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product liability suits against us;
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•
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diversion of development resources;
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•
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injury to our reputation; and
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•
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increased maintenance and warranty costs.
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•
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the need to educate potential customers about the uses and benefits of our products;
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•
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the relatively long duration of the commitment customers make in their agreements with us;
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•
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the discretionary nature of potential customers’ purchasing and budget cycles and decisions;
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•
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the competitive nature of potential customers’ evaluation and purchasing processes;
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•
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the lengthy purchasing approval processes of potential customers;
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•
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the evolving functionality demands of potential customers;
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•
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fluctuations in the people development needs of potential customers; and
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•
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announcements or planned introductions of new products by us or our competitors.
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•
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unanticipated costs or liabilities associated with the acquisition;
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•
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incurrence of acquisition-related costs;
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•
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diversion of management’s attention from other business concerns;
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•
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harm to our existing relationships with partners, distributors, and customers, including as a result of competing in the markets in which such parties operate;
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•
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the potential loss of key employees and customers;
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•
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exposure to claims and disputes by third parties, including intellectual property claims and disputes;
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•
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the use of resources that might be used in other parts of our business; and
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•
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the use of substantial portions of our available cash to consummate the acquisition.
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•
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unexpected changes in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions;
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•
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differing labor regulations;
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•
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regulations relating to data security and the unauthorized use of, or access to, commercial and personal information;
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•
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potential penalties or other adverse consequences for violations of anti-corruption, anti-bribery, and other similar laws and regulations, including the US Foreign Corrupt Practices Act (“FCPA”) and the UK Bribery Act;
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•
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greater difficulty in supporting and localizing our products;
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•
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unrest and/or changes in a specific country’s or region’s social, political, legal, health or economic conditions;
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•
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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;
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•
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currency exchange rate fluctuations including any fluctuations caused by uncertainties following Brexit;
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•
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limited or unfavorable intellectual property protection;
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•
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competition with companies or other services that understand local markets better than we do;
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•
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increased financial accounting and reporting burdens, and complexities associated with implementing and maintaining adequate internal controls; and
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•
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restrictions on repatriation of earnings.
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•
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Selling to governmental entities can be more competitive, expensive and time-consuming than selling to private entities, often requiring significant upfront time and expense without any assurance that these efforts will generate a sale;
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•
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Government certification requirements may change, or we may lose one or more government certifications, such as the Federal Risk and Authorization Management Program, and in doing so restrict our ability to sell into the government sector until we have attained revised certificates;
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•
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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;
|
•
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Government demand and payment for our products 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 products; and
|
•
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Government contracts are generally subject to audits and investigations, which we have limited experience with, potentially resulting in 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.
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•
|
our operating performance and the performance of other similar companies;
|
•
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the financial or non-financial metric projections we provide to the public, including the failure of the projections to meet the expectations of securities analysts or investors, and any changes in these projections or our failure to meet or exceed these projections;
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•
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the overall performance of the equity markets;
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•
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developments with respect to intellectual property rights;
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•
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publication of unfavorable research reports about us or our industry or withdrawal of research coverage by securities analysts;
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•
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speculation in the press or investment community;
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•
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the size of our public float;
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•
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natural disasters, outbreaks of pandemic diseases, or terrorist acts;
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•
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actual or perceived data security incidents that we or our service providers may suffer;
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•
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announcements by us or our competitors of significant contracts, new technologies, acquisitions, commercial relationships, joint ventures or capital commitments; and
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•
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global economic, legal, and regulatory factors unrelated to our performance.
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•
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authorize “blank check” preferred stock, which could be issued by the board of directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our common stock;
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•
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create a classified board of directors whose members serve staggered three-year terms, until the 2021 annual meeting of stockholders, at which point all directors will be elected for a one-year term;
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•
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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;
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•
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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;
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•
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provide that our directors may be removed only for cause until the 2021 annual meeting of stockholders when all directors may be removed either with or without cause;
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•
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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;
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•
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specify that no stockholder is permitted to cumulate votes at any election of directors; and
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•
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require supermajority votes of the holders of our common stock to amend specified provisions of our charter documents.
|
Item 1B.
|
Unresolved Staff Comments
|
Item 2.
|
Properties
|
Item 3.
|
Legal Proceedings
|
Item 4.
|
Mine Safety Disclosure
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
12/31/2018
|
|
12/31/2019
|
||||||||||||
Cornerstone OnDemand
|
$
|
100.00
|
|
|
$
|
98.10
|
|
|
$
|
120.20
|
|
|
$
|
100.37
|
|
|
$
|
143.27
|
|
|
$
|
166.34
|
|
Nasdaq Global Market Index
|
100.00
|
|
|
99.99
|
|
|
96.13
|
|
|
119.95
|
|
|
112.21
|
|
|
154.70
|
|
||||||
Nasdaq Computer & Data Processing Index
|
100.00
|
|
|
106.24
|
|
|
119.28
|
|
|
165.52
|
|
|
159.43
|
|
|
239.67
|
|
|
Total Number of Shares Repurchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs1
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Programs1
|
||||||
October 1-31, 2019
|
163
|
|
|
$
|
54.13
|
|
|
163
|
|
|
$
|
127,644
|
|
November 1-30, 2019
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
127,644
|
|
December 1-31, 2019
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
127,644
|
|
|
163
|
|
|
|
|
|
163
|
|
|
|
|
1
|
|
In August 2019, the board of directors authorized a $150.0 million share repurchase program. The 2019 Share Repurchase Program will terminate when the aggregate cost of shares repurchased under the program reaches $150.0 million. Share repurchases may be executed through various means, including, without limitation, open market transactions, privately negotiated transactions or otherwise.
|
Item 6.
|
Selected Financial Data
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||
Consolidated statements of operations data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
|
$
|
423,124
|
|
|
$
|
339,651
|
|
Cost of revenue
|
149,215
|
|
|
144,349
|
|
|
142,867
|
|
|
135,752
|
|
|
109,864
|
|
|||||
Gross profit
|
427,308
|
|
|
393,542
|
|
|
339,118
|
|
|
287,372
|
|
|
229,787
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales and marketing
|
227,733
|
|
|
224,635
|
|
|
240,271
|
|
|
225,781
|
|
|
207,626
|
|
|||||
Research and development
|
101,151
|
|
|
76,981
|
|
|
61,975
|
|
|
46,977
|
|
|
40,991
|
|
|||||
General and administrative
|
86,491
|
|
|
90,749
|
|
|
84,589
|
|
|
70,956
|
|
|
49,877
|
|
|||||
Restructuring
|
—
|
|
|
8,946
|
|
|
1,539
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
415,375
|
|
|
401,311
|
|
|
388,374
|
|
|
343,714
|
|
|
298,494
|
|
|||||
Income (loss) from operations
|
11,933
|
|
|
(7,769
|
)
|
|
(49,256
|
)
|
|
(56,342
|
)
|
|
(68,707
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income (expense) and other, net
|
(13,297
|
)
|
|
(23,478
|
)
|
|
(10,333
|
)
|
|
(9,288
|
)
|
|
(15,628
|
)
|
|||||
Loss before income tax provision
|
(1,364
|
)
|
|
(31,247
|
)
|
|
(59,589
|
)
|
|
(65,630
|
)
|
|
(84,335
|
)
|
|||||
Income tax provision
|
(2,690
|
)
|
|
(2,595
|
)
|
|
(1,746
|
)
|
|
(1,207
|
)
|
|
(1,181
|
)
|
|||||
Net loss
|
$
|
(4,054
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(61,335
|
)
|
|
$
|
(66,837
|
)
|
|
$
|
(85,516
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(1.07
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(1.58
|
)
|
Weighted average common shares outstanding, basic and diluted
|
60,086
|
|
|
58,159
|
|
|
57,262
|
|
|
55,595
|
|
|
54,171
|
|
|
At December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Consolidated balance sheet data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
215,907
|
|
|
$
|
183,596
|
|
|
$
|
393,576
|
|
|
$
|
83,300
|
|
|
$
|
107,691
|
|
Short-term and long-term investments
|
261,771
|
|
|
205,982
|
|
|
266,500
|
|
|
259,837
|
|
|
201,088
|
|
|||||
Property and equipment, net
|
36,526
|
|
|
77,254
|
|
|
20,817
|
|
|
23,962
|
|
|
27,021
|
|
|||||
Operating right-of-use assets
|
72,944
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Working capital, excluding deferred revenue, current portion1
|
512,190
|
|
|
484,468
|
|
|
449,874
|
|
|
419,408
|
|
|
334,664
|
|
|||||
Total assets
|
966,101
|
|
|
818,226
|
|
|
967,190
|
|
|
623,629
|
|
|
561,545
|
|
|||||
Deferred revenue, current and non-current portion
|
346,467
|
|
|
325,801
|
|
|
326,163
|
|
|
282,332
|
|
|
252,139
|
|
|||||
Debt, current and non-current portion
|
293,174
|
|
|
288,967
|
|
|
533,193
|
|
|
238,432
|
|
|
232,583
|
|
|||||
Operating lease liabilities, current and non-current portion
|
74,430
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total stockholders’ equity
|
158,482
|
|
|
65,243
|
|
|
22,120
|
|
|
26,963
|
|
|
7,822
|
|
1
|
|
Working capital is defined as total current assets minus total current liabilities.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Our Recruiting suite helps organizations to attract, hire, and onboard the right employees;
|
•
|
Our Learning suite provides robust, modern learning management software designed to scale with the organization. Cornerstone Learning comprehensively supports compliance, knowledge sharing, and employee-driven development training to close skills gaps. Our content offering delivers fresh, modern content, fueling employee curiosity, and inspiring growth;
|
•
|
Our Performance suite provides tools to manage goal setting, performance reviews, competency assessments, development plans, continuous feedback, compensation management, and succession planning; and
|
•
|
Our HR suite provides an aggregated view of all employee data with workforce planning, self-service management, and compliance reporting capabilities resulting in more accurate data.
|
•
|
Focus on Customer Success, Retention, and Growth. We believe focusing on our customers’ success will lead to our own success. We have developed a Customer Success Framework that governs our operating model. Since 2002, we have averaged annual gross dollar retention rates of approximately 95%. At the same time, in recent years, we have seen a decline in our annual gross dollar retention rate, which was 90% in the most recent period. We strive to maintain our strong retention rates by continuing to provide our customers with high levels of service, support, and increasing functionality.
|
•
|
Sell Additional Products to Existing Customers. We believe there is a significant growth opportunity in selling additional functionality to our existing customers. Many customers have added functionality subsequent to their initial deployments as they recognize the benefits of our unified solution. With our expanding product portfolio functionality, we believe significant upsell opportunity remains within our existing customer base.
|
•
|
Invest in Direct Sales in North America. We believe that the market for people development is large and remains significantly underpenetrated. In particular, content and recruiting provide an opportunity to increase our recurring sales to both new and existing customers. Additionally, we believe the small and medium-sized business (“SMB”) market represents a very large and underpenetrated opportunity.
|
•
|
Continue to Invest in Our International Operations. We believe a substantial opportunity exists to continue to grow sales of our solution internationally. We intend to grow our EMEA and APJ operations. As of December 31, 2019, we had approximately 900 customers in EMEA and over 200 customers in APJ.
|
•
|
Grow Our Cornerstone Content Anytime Sales. We believe there is a significant market opportunity for developing employees throughout their careers with modern, fresh e-learning content. Our Content Anytime subscription offering provides access to industry leading content which we believe will increase user engagement on our solution. Our content partners for Content Anytime include industry leaders as well as regional, functional, and vertically-focused online training providers. In addition, we have agreements with providers of specific competency models for use by our customers directly in our people development solution. We intend to enter into additional license agreements to continue providing the best content available for our customers.
|
•
|
Expand the Ecosystem. During 2018, we migrated a sizable portion of our implementation services to our partners. We have also expanded in recent years our relationships with various third-party consulting firms to deliver the successful implementation of our solution and to optimize our customers’ use of our solution during the terms of their engagements. Our partner strategy and experience includes certifications and curricula developed to ensure successful delivery by our partners and continued high customer satisfaction. We believe we have a significant opportunity to leverage these third-parties interested in building or expanding their businesses to increase our market penetration.
|
•
|
Revenue. Revenue consists primarily of subscription revenue and professional service revenue. We generally recognize revenue over the delivery period. Because of the seasonality of our business and the timing of when we enter into new customer agreements, revenue from customer agreements signed in the current period may not be fully reflected in the current period.
|
•
|
Subscription revenue. Subscription revenue represents subscriptions to our people development solution, content subscriptions, and related support sold on a recurring basis.
|
•
|
Annual recurring revenue. In order to assess our business performance with a metric that reflects our transition to a more subscription-based (or recurring revenue) business model, we track annual recurring revenue, a non-GAAP financial measure, which we define as the annualized recurring value of all active contracts at the end of a reporting period. We believe this metric is useful to investors, in evaluating our ongoing operational performance and trends, and in comparing our financial measures with other companies in the same industry. However, it is important to note that other companies, including companies in our industry, may calculate annual recurring revenue differently or not at all, which may reduce its usefulness as a comparative measure.
|
•
|
Free cash flow. We define free cash flow, a non-GAAP financial measure, as cash provided by operating activities minus capital expenditures and capitalized software costs. We present this metric because it is a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet.
|
•
|
Annual dollar retention rate. We define annual dollar retention rate, a non-GAAP financial measure, as the percentage of annual recurring revenue from all customers on the first day of a fiscal year that is retained from those same customers on the last day of that same fiscal year. Accordingly, this percentage excludes all annual recurring revenue from new customers added during the fiscal year. Furthermore, incremental sales during the fiscal year to customers included in the calculation are only counted to the extent those sales offset any decreases in annual recurring revenue from the original amount on the first day of our fiscal year. Therefore, the annual dollar retention rate can never exceed 100%. This ratio excludes the annual recurring revenue from customers of our Cornerstone for Salesforce, Cornerstone PiiQ, Grovo, and Workpop products. We believe that our annual dollar retention rate is an important metric to measure the long-term value of customer agreements and our ability to retain our customers.
|
•
|
Constant currency results. We present constant currency information, a non-GAAP financial measure, to provide a framework for assessing how our underlying business performed excluding the effect of foreign currency fluctuations. Due to our legal and operating structure, our international revenues are favorably impacted as the US dollar weakens relative to the British pound and euro, and unfavorably impacted as the US dollar strengthens relative to the British pound and euro. We believe the presentation of results on a constant currency basis in addition to reported results helps improve the ability to understand our performance because they exclude the effects of foreign currency volatility that are not indicative of our core operating results. To present this information, current period results for entities reporting in British pounds and euros are translated into US dollars at the prior period exchange rates as opposed to the actual exchange rates in effect for the current period. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP. Results on a constant currency basis, as we present them, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with GAAP.
|
•
|
Number of customers. We believe that our ability to expand our customer 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 customer count includes contracted customers for our enterprise people development solution as of the end of the period and excludes customers of our Cornerstone for Salesforce, PiiQ, Grovo, and Workpop products. In 2019, our number of customers grew approximately 5%.
|
•
|
Subscriptions to Our Products and Other Offerings on a Recurring Basis. Customers pay subscription fees for access to our enterprise people development solution, other products, and support on a recurring basis. Fees are based on a number of factors, including the number of products purchased, which may include e-learning content, and the number of users having access to a product. We generally recognize revenue from subscriptions ratably over the term of the agreements beginning on the date the subscription service is made available to the customer. Subscription agreements are typically three years, billed annually in advance, and non-cancelable, with payment due within 30 days of the invoice date.
|
•
|
Professional Services and Other. We offer our customers and implementation partners assistance in implementing our products and optimizing their use. Professional services include application configuration, system integration, business process re-engineering, change management, and training services. Services are generally billed upfront on a fixed fee basis and to a lesser degree on a time-and-material basis. These services are generally purchased as part of a subscription arrangement and are typically performed within the first several months of the arrangement. Customers may also purchase professional services at any other time. We generally recognize revenue from fixed fee professional services contracts as services are performed based on the proportion performed to date relative to the total expected services to be performed. Revenue associated with time-and-material contracts are recorded as such time and materials are incurred.
|
•
|
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 staff, including salaries, benefits, bonuses, and stock-based compensation; professional fees; insurance premiums; other corporate expenses; and allocated overhead.
|
•
|
Restructuring. Restructuring consists of stock-based compensation, payroll-related costs, such as severance, outplacement costs and continuing healthcare coverage, associated with employee terminations.
|
•
|
Interest Income. Interest income consists primarily of interest income from investment securities. We expect interest income to vary depending on the level of our investments in marketable securities, which include corporate bonds, agency bonds, US treasury securities, and commercial paper.
|
•
|
Interest Expense. Interest expense consists primarily of interest expense from our convertible notes, accretion of debt discount, and amortization of debt issuance costs.
|
•
|
Other, Net. Other, net consists of income and expense associated with fluctuations in foreign currency exchange rates, fair value adjustments to strategic investments, and other non-operating expenses. We expect other income (expense) to vary depending on the movement in foreign currency exchange rates and the related impact on our foreign exchange gain (loss).
|
|
Year Ended
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
Cost of revenue
|
149,215
|
|
|
144,349
|
|
|
142,867
|
|
|||
Gross profit
|
427,308
|
|
|
393,542
|
|
|
339,118
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing
|
227,733
|
|
|
224,635
|
|
|
240,271
|
|
|||
Research and development
|
101,151
|
|
|
76,981
|
|
|
61,975
|
|
|||
General and administrative
|
86,491
|
|
|
90,749
|
|
|
84,589
|
|
|||
Restructuring
|
—
|
|
|
8,946
|
|
|
1,539
|
|
|||
Total operating expenses
|
415,375
|
|
|
401,311
|
|
|
388,374
|
|
|||
Income (loss) from operations
|
11,933
|
|
|
(7,769
|
)
|
|
(49,256
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest income
|
8,178
|
|
|
7,796
|
|
|
2,951
|
|
|||
Interest expense
|
(21,559
|
)
|
|
(28,176
|
)
|
|
(14,762
|
)
|
|||
Other, net
|
84
|
|
|
(3,098
|
)
|
|
1,478
|
|
|||
Other expense, net
|
(13,297
|
)
|
|
(23,478
|
)
|
|
(10,333
|
)
|
|||
Loss before income tax provision
|
(1,364
|
)
|
|
(31,247
|
)
|
|
(59,589
|
)
|
|||
Income tax provision
|
(2,690
|
)
|
|
(2,595
|
)
|
|
(1,746
|
)
|
|||
Net loss
|
$
|
(4,054
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(61,335
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
Subscription revenue
|
$
|
542,968
|
|
|
$
|
473,052
|
|
|
$
|
396,764
|
|
Annual recurring revenue
|
$
|
575,000
|
|
|
$
|
510,000
|
|
|
$
|
439,000
|
|
Free cash flow
|
$
|
72,847
|
|
|
$
|
49,843
|
|
|
$
|
39,839
|
|
Annual dollar retention rate
|
90.3
|
%
|
|
92.8
|
%
|
|
93.5
|
%
|
|||
Number of customers
|
3,698
|
|
|
3,535
|
|
|
3,250
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
Foreign exchange effect on current period revenue using prior year rates
|
7,077
|
|
|
(5,291
|
)
|
|
5,865
|
|
|||
Constant currency revenue
|
$
|
583,600
|
|
|
$
|
532,600
|
|
|
$
|
487,850
|
|
Revenue growth
|
7.2
|
%
|
|
11.6
|
%
|
|
13.9
|
%
|
|||
Constant currency revenue growth
|
8.5
|
%
|
|
10.5
|
%
|
|
15.3
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Subscription revenue
|
$
|
542,968
|
|
|
$
|
473,052
|
|
|
$
|
396,764
|
|
Percentage of subscription revenue to total revenue
|
94.2
|
%
|
|
87.9
|
%
|
|
82.3
|
%
|
|||
Professional services revenue
|
$
|
33,555
|
|
|
$
|
64,839
|
|
|
$
|
85,221
|
|
Percentage of professional services to total revenue
|
5.8
|
%
|
|
12.1
|
%
|
|
17.7
|
%
|
|||
Total revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue for United States
|
$
|
375,713
|
|
|
$
|
343,205
|
|
|
$
|
313,729
|
|
Percentage of total revenue for United States
|
65.2
|
%
|
|
63.8
|
%
|
|
65.1
|
%
|
|||
Revenue for all other countries
|
$
|
200,810
|
|
|
$
|
194,686
|
|
|
$
|
168,256
|
|
Percentage of total revenue for all other countries
|
34.8
|
%
|
|
36.2
|
%
|
|
34.9
|
%
|
|||
Total revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Annual recurring revenue
|
$
|
575,000
|
|
|
$
|
510,000
|
|
|
$
|
439,000
|
|
Foreign exchange effect on current period annual recurring revenue using prior year rates
|
1,274
|
|
|
7,620
|
|
|
n/a
|
|
|||
Constant currency annual recurring revenue
|
$
|
576,274
|
|
|
$
|
517,620
|
|
|
n/a
|
|
|
Annual recurring revenue growth
|
12.7
|
%
|
|
16.2
|
%
|
|
n/a
|
|
|||
Constant currency annual recurring revenue growth
|
13.0
|
%
|
|
17.9
|
%
|
|
n/a
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Reconciliation of free cash flow:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
115,549
|
|
|
$
|
90,253
|
|
|
$
|
67,510
|
|
Capital expenditures
|
(18,034
|
)
|
|
(14,895
|
)
|
|
(7,100
|
)
|
|||
Capitalized software costs
|
(24,668
|
)
|
|
(25,515
|
)
|
|
(20,571
|
)
|
|||
Free cash flow
|
$
|
72,847
|
|
|
$
|
49,843
|
|
|
$
|
39,839
|
|
Free cash flow margin
|
12.6
|
%
|
|
9.3
|
%
|
|
8.3
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(dollars in thousands)
|
||||||||||
Cost of revenue
|
$
|
149,215
|
|
|
$
|
144,349
|
|
|
$
|
142,867
|
|
Gross profit
|
$
|
427,308
|
|
|
$
|
393,542
|
|
|
$
|
339,118
|
|
Gross margin
|
74.1
|
%
|
|
73.2
|
%
|
|
70.4
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(dollars in thousands)
|
||||||||||
Sales and marketing
|
$
|
227,733
|
|
|
$
|
224,635
|
|
|
$
|
240,271
|
|
Percent of revenue
|
39.5
|
%
|
|
41.8
|
%
|
|
49.9
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(dollars in thousands)
|
||||||||||
Research and development
|
$
|
101,151
|
|
|
$
|
76,981
|
|
|
$
|
61,975
|
|
Percent of revenue
|
17.5
|
%
|
|
14.3
|
%
|
|
12.9
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(dollars in thousands)
|
||||||||||
General and administrative
|
$
|
86,491
|
|
|
$
|
90,749
|
|
|
$
|
84,589
|
|
Percent of revenue
|
15.0
|
%
|
|
16.9
|
%
|
|
17.6
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Interest income
|
$
|
8,178
|
|
|
$
|
7,796
|
|
|
$
|
2,951
|
|
Interest expense
|
(21,559
|
)
|
|
(28,176
|
)
|
|
(14,762
|
)
|
|||
Other, net
|
84
|
|
|
(3,098
|
)
|
|
1,478
|
|
|||
Other expense, net
|
$
|
(13,297
|
)
|
|
$
|
(23,478
|
)
|
|
$
|
(10,333
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Income tax provision
|
$
|
(2,690
|
)
|
|
$
|
(2,595
|
)
|
|
$
|
(1,746
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
115,549
|
|
|
$
|
90,253
|
|
|
$
|
67,510
|
|
Net cash used in investing activities
|
(97,727
|
)
|
|
(20,876
|
)
|
|
(36,666
|
)
|
|||
Net cash provided by (used in) financing activities
|
14,775
|
|
|
(278,016
|
)
|
|
276,852
|
|
|
|
|
Payments Due by Period
|
||||||||||||||||
|
Total
|
|
Less than 1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5 Years
|
||||||||||
Long-term debt obligations including interest
|
$
|
334,500
|
|
|
$
|
17,250
|
|
|
$
|
317,250
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating lease obligations
|
82,895
|
|
|
9,434
|
|
|
47,410
|
|
|
15,226
|
|
|
10,825
|
|
|||||
Software subscription and other contractual obligations
|
18,726
|
|
|
12,371
|
|
|
6,355
|
|
|
—
|
|
|
—
|
|
|||||
|
$
|
436,121
|
|
|
$
|
39,055
|
|
|
$
|
371,015
|
|
|
$
|
15,226
|
|
|
$
|
10,825
|
|
1)
|
Identification of the contract, or contracts, with a customer
|
2)
|
Identification of all performance obligations in the contract
|
3)
|
Determination of the transaction price
|
4)
|
Allocation of the transaction price to the performance obligations in the contract
|
5)
|
Recognition of revenue as we satisfy a performance obligation
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
|
|
PAGE
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
215,907
|
|
|
$
|
183,596
|
|
Short-term investments
|
201,579
|
|
|
204,732
|
|
||
Accounts receivable, net
|
131,105
|
|
|
125,300
|
|
||
Deferred commissions, current portion
|
33,215
|
|
|
25,531
|
|
||
Prepaid expenses and other current assets
|
30,512
|
|
|
34,940
|
|
||
Total current assets
|
612,318
|
|
|
574,099
|
|
||
Capitalized software development costs, net
|
50,023
|
|
|
45,416
|
|
||
Property and equipment, net
|
36,526
|
|
|
77,254
|
|
||
Operating right-of-use assets
|
72,944
|
|
|
—
|
|
||
Deferred commissions, net of current portion
|
74,563
|
|
|
55,450
|
|
||
Long-term investments
|
60,192
|
|
|
1,250
|
|
||
Intangible assets, net
|
9,440
|
|
|
13,867
|
|
||
Goodwill
|
47,453
|
|
|
47,453
|
|
||
Other assets, net
|
2,642
|
|
|
3,437
|
|
||
Total assets
|
$
|
966,101
|
|
|
$
|
818,226
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
3,803
|
|
|
$
|
11,921
|
|
Accrued expenses
|
78,075
|
|
|
70,065
|
|
||
Deferred revenue, current portion
|
339,522
|
|
|
312,526
|
|
||
Operating lease liabilities, current portion
|
7,235
|
|
|
—
|
|
||
Other liabilities
|
11,015
|
|
|
7,645
|
|
||
Total current liabilities
|
439,650
|
|
|
402,157
|
|
||
Convertible notes, net
|
293,174
|
|
|
288,967
|
|
||
Deferred revenue, net of current portion
|
6,945
|
|
|
13,275
|
|
||
Operating lease liabilities, net of current portion
|
67,195
|
|
|
—
|
|
||
Facility financing obligation
|
—
|
|
|
46,100
|
|
||
Other liabilities, non-current
|
655
|
|
|
2,484
|
|
||
Total liabilities
|
807,619
|
|
|
752,983
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.0001 par value; 1,000,000 shares authorized, 61,038 and 58,886 shares issued and outstanding at December 31, 2019 and 2018, respectively
|
6
|
|
|
6
|
|
||
Additional paid-in capital
|
682,717
|
|
|
585,387
|
|
||
Accumulated deficit
|
(524,680
|
)
|
|
(520,626
|
)
|
||
Accumulated other comprehensive income
|
439
|
|
|
476
|
|
||
Total stockholders’ equity
|
158,482
|
|
|
65,243
|
|
||
Total liabilities and stockholders’ equity
|
$
|
966,101
|
|
|
$
|
818,226
|
|
|
Years Ended
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
Cost of revenue
|
149,215
|
|
|
144,349
|
|
|
142,867
|
|
|||
Gross profit
|
427,308
|
|
|
393,542
|
|
|
339,118
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Sales and marketing
|
227,733
|
|
|
224,635
|
|
|
240,271
|
|
|||
Research and development
|
101,151
|
|
|
76,981
|
|
|
61,975
|
|
|||
General and administrative
|
86,491
|
|
|
90,749
|
|
|
84,589
|
|
|||
Restructuring
|
—
|
|
|
8,946
|
|
|
1,539
|
|
|||
Total operating expenses
|
415,375
|
|
|
401,311
|
|
|
388,374
|
|
|||
Income (loss) from operations
|
11,933
|
|
|
(7,769
|
)
|
|
(49,256
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest income
|
8,178
|
|
|
7,796
|
|
|
2,951
|
|
|||
Interest expense
|
(21,559
|
)
|
|
(28,176
|
)
|
|
(14,762
|
)
|
|||
Other, net
|
84
|
|
|
(3,098
|
)
|
|
1,478
|
|
|||
Other expense, net
|
(13,297
|
)
|
|
(23,478
|
)
|
|
(10,333
|
)
|
|||
Loss before income tax provision
|
(1,364
|
)
|
|
(31,247
|
)
|
|
(59,589
|
)
|
|||
Income tax provision
|
(2,690
|
)
|
|
(2,595
|
)
|
|
(1,746
|
)
|
|||
Net loss
|
$
|
(4,054
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(61,335
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(1.07
|
)
|
Weighted average common shares outstanding, basic and diluted
|
60,086
|
|
|
58,159
|
|
|
57,262
|
|
|
Years Ended
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net loss
|
$
|
(4,054
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(61,335
|
)
|
Other comprehensive income, net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
(441
|
)
|
|
(210
|
)
|
|
(3,795
|
)
|
|||
Net change in unrealized gains (losses) on investments
|
404
|
|
|
469
|
|
|
(434
|
)
|
|||
Other comprehensive (loss) income, net of tax
|
(37
|
)
|
|
259
|
|
|
(4,229
|
)
|
|||
Total comprehensive loss
|
$
|
(4,091
|
)
|
|
$
|
(33,583
|
)
|
|
$
|
(65,564
|
)
|
|
Common
Stock
|
|
Additional
Paid-In
Capital
(Deficit)
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Total
|
|||||||||||||
|
Shares
|
|
Par
Value
|
|
||||||||||||||||||
Balance as of December 31, 2016
|
56,516
|
|
|
$
|
6
|
|
|
$
|
476,230
|
|
|
$
|
(453,719
|
)
|
|
$
|
4,446
|
|
|
$
|
26,963
|
|
Issuance of common stock upon the exercise of options
|
414
|
|
|
—
|
|
|
6,777
|
|
|
—
|
|
|
—
|
|
|
6,777
|
|
|||||
Vesting of restricted stock units
|
1,035
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares issued under employee stock purchase plan
|
182
|
|
|
—
|
|
|
5,621
|
|
|
—
|
|
|
—
|
|
|
5,621
|
|
|||||
Repurchases of common stock
|
(635
|
)
|
|
—
|
|
|
(22,599
|
)
|
|
—
|
|
|
—
|
|
|
(22,599
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
70,922
|
|
|
—
|
|
|
—
|
|
|
70,922
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(61,335
|
)
|
|
—
|
|
|
(61,335
|
)
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,229
|
)
|
|
(4,229
|
)
|
|||||
Balance as of December 31, 2017
|
57,512
|
|
|
$
|
6
|
|
|
$
|
536,951
|
|
|
$
|
(515,054
|
)
|
|
$
|
217
|
|
|
$
|
22,120
|
|
Issuance of common stock upon the exercise of options
|
1,474
|
|
|
—
|
|
|
47,816
|
|
|
—
|
|
|
—
|
|
|
47,816
|
|
|||||
Vesting of restricted stock units
|
1,370
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares issued under employee stock purchase plan
|
181
|
|
|
—
|
|
|
6,422
|
|
|
—
|
|
|
—
|
|
|
6,422
|
|
|||||
Repurchase of common stock
|
(1,651
|
)
|
|
—
|
|
|
(77,401
|
)
|
|
—
|
|
|
—
|
|
|
(77,401
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
71,599
|
|
|
—
|
|
|
—
|
|
|
71,599
|
|
|||||
Cumulative effect of accounting change
|
—
|
|
|
—
|
|
|
—
|
|
|
28,270
|
|
|
—
|
|
|
28,270
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,842
|
)
|
|
—
|
|
|
(33,842
|
)
|
|||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
259
|
|
|
259
|
|
|||||
Balance as of December 31, 2018
|
58,886
|
|
|
$
|
6
|
|
|
$
|
585,387
|
|
|
$
|
(520,626
|
)
|
|
$
|
476
|
|
|
$
|
65,243
|
|
Issuance of common stock upon the exercise of options
|
947
|
|
|
—
|
|
|
34,332
|
|
|
—
|
|
|
—
|
|
|
34,332
|
|
|||||
Vesting of restricted stock units
|
1,440
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Shares issued under employee stock purchase plan
|
182
|
|
|
—
|
|
|
8,077
|
|
|
—
|
|
|
—
|
|
|
8,077
|
|
|||||
Repurchase of common stock
|
(417
|
)
|
|
—
|
|
|
(22,356
|
)
|
|
—
|
|
|
—
|
|
|
(22,356
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
77,277
|
|
|
—
|
|
|
—
|
|
|
77,277
|
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,054
|
)
|
|
—
|
|
|
(4,054
|
)
|
|||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
(37
|
)
|
|||||
Balance as of December 31, 2019
|
61,038
|
|
|
$
|
6
|
|
|
$
|
682,717
|
|
|
$
|
(524,680
|
)
|
|
$
|
439
|
|
|
$
|
158,482
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
||||||
Net loss
|
$
|
(4,054
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(61,335
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
41,599
|
|
|
35,260
|
|
|
35,377
|
|
|||
Accretion of debt discount and amortization of debt issuance costs
|
4,207
|
|
|
8,929
|
|
|
9,833
|
|
|||
(Accretion) amortization of purchased investment premium or discount, net
|
(957
|
)
|
|
(160
|
)
|
|
1,135
|
|
|||
Net foreign currency and other gain
|
(629
|
)
|
|
(440
|
)
|
|
(2,461
|
)
|
|||
Stock-based compensation expense
|
72,430
|
|
|
66,557
|
|
|
65,924
|
|
|||
Write-off of capitalized software
|
—
|
|
|
—
|
|
|
1,339
|
|
|||
Deferred income taxes
|
61
|
|
|
123
|
|
|
52
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(5,554
|
)
|
|
27,199
|
|
|
(14,317
|
)
|
|||
Deferred commissions
|
(27,241
|
)
|
|
(15,316
|
)
|
|
(5,249
|
)
|
|||
Prepaid expenses and other assets
|
12,834
|
|
|
(11,443
|
)
|
|
(2,704
|
)
|
|||
Accounts payable
|
(8,759
|
)
|
|
(5,496
|
)
|
|
(6,820
|
)
|
|||
Accrued expenses
|
8,428
|
|
|
9,291
|
|
|
8,530
|
|
|||
Deferred revenue
|
19,635
|
|
|
10,803
|
|
|
35,829
|
|
|||
Other liabilities
|
3,549
|
|
|
(1,212
|
)
|
|
2,377
|
|
|||
Net cash provided by operating activities
|
115,549
|
|
|
90,253
|
|
|
67,510
|
|
|||
Cash flows from investing activities
|
|
|
|
|
|
||||||
Purchases of marketable investments
|
(282,426
|
)
|
|
(125,109
|
)
|
|
(321,913
|
)
|
|||
Purchases of non-marketable investments
|
(9,000
|
)
|
|
—
|
|
|
(1,500
|
)
|
|||
Maturities of investments
|
236,401
|
|
|
185,733
|
|
|
314,418
|
|
|||
Capital expenditures
|
(18,034
|
)
|
|
(14,895
|
)
|
|
(7,100
|
)
|
|||
Capitalized software costs
|
(24,668
|
)
|
|
(25,515
|
)
|
|
(20,571
|
)
|
|||
Cash paid for acquisitions, net of cash acquired
|
—
|
|
|
(41,090
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(97,727
|
)
|
|
(20,876
|
)
|
|
(36,666
|
)
|
|||
Cash flows from financing activities
|
|
|
|
|
|
||||||
Payments of debt issuance costs and proceeds from convertible notes
|
—
|
|
|
(152
|
)
|
|
285,077
|
|
|||
Repayment of debt
|
—
|
|
|
(253,000
|
)
|
|
—
|
|
|||
Proceeds from employee stock plans
|
42,600
|
|
|
54,402
|
|
|
12,509
|
|
|||
Repurchases of common stock
|
(22,356
|
)
|
|
(79,266
|
)
|
|
(20,734
|
)
|
|||
Payment of tax withholdings for employee stock plans
|
(5,469
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
14,775
|
|
|
(278,016
|
)
|
|
276,852
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(286
|
)
|
|
(1,341
|
)
|
|
2,580
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
32,311
|
|
|
(209,980
|
)
|
|
310,276
|
|
|||
Cash and cash equivalents at beginning of period
|
183,596
|
|
|
393,576
|
|
|
83,300
|
|
|||
Cash and cash equivalents at end of period
|
$
|
215,907
|
|
|
$
|
183,596
|
|
|
$
|
393,576
|
|
Supplemental cash flow data
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
17,356
|
|
|
$
|
13,628
|
|
|
$
|
3,841
|
|
Cash paid for income taxes
|
1,704
|
|
|
1,859
|
|
|
2,243
|
|
|||
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Assets acquired under capital leases and other financing arrangements
|
$
|
1,276
|
|
|
$
|
47,070
|
|
|
$
|
3,467
|
|
Capitalized assets financed by accounts payable and accrued expenses
|
490
|
|
|
1,566
|
|
|
1,829
|
|
|||
Capitalized stock-based compensation
|
4,847
|
|
|
5,042
|
|
|
4,998
|
|
1.
|
ORGANIZATION
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
December 31, 2018
|
||||||||||
|
As Previously Reported
|
|
Adjustment
|
|
As Revised
|
||||||
Deferred commissions, current portion
|
$
|
24,467
|
|
|
$
|
1,064
|
|
|
$
|
25,531
|
|
Total current assets
|
573,035
|
|
|
1,064
|
|
|
574,099
|
|
|||
Deferred commissions, net of current portion
|
45,444
|
|
|
10,006
|
|
|
55,450
|
|
|||
Total assets
|
807,156
|
|
|
11,070
|
|
|
818,226
|
|
|||
|
|
|
|
|
|
||||||
Accrued expenses
|
68,331
|
|
|
1,734
|
|
|
70,065
|
|
|||
Total current liabilities
|
400,423
|
|
|
1,734
|
|
|
402,157
|
|
|||
Accumulated deficit
|
(529,962
|
)
|
|
9,336
|
|
|
(520,626
|
)
|
|||
Total stockholders’ equity
|
55,907
|
|
|
9,336
|
|
|
65,243
|
|
|||
Total liabilities and stockholders’ equity
|
807,156
|
|
|
11,070
|
|
|
818,226
|
|
1)
|
Identification of the contract, or contracts, with a customer
|
2)
|
Identification of all performance obligations in the contract
|
3)
|
Determination of the transaction price
|
4)
|
Allocation of the transaction price to the performance obligations in the contract
|
5)
|
Recognition of revenue as the Company satisfies a performance obligation
|
•
|
personnel and related expenses, including stock-based compensation;
|
•
|
expenses for network-related infrastructure and IT support;
|
•
|
delivery of contracted professional services and ongoing customer support staff;
|
•
|
payments to external service providers contracted to perform implementation services;
|
•
|
depreciation of data centers and amortization of capitalized software costs, developed technology software license rights, content and licensing fees, and referral fees.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance, January 1
|
$
|
2,429
|
|
|
$
|
7,478
|
|
|
$
|
3,532
|
|
Additions and adjustments
|
1,074
|
|
|
1,691
|
|
|
7,680
|
|
|||
Write-offs
|
(2,128
|
)
|
|
(6,740
|
)
|
|
(3,734
|
)
|
|||
Ending balance, December 31
|
$
|
1,375
|
|
|
$
|
2,429
|
|
|
$
|
7,478
|
|
•
|
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that management has the ability to access at the measurement date.
|
•
|
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
|
•
|
Level 3 – Unobservable inputs.
|
•
|
The recognition of additional operating lease liabilities of $82.5 million and corresponding operating ROU assets of $80.5 million. These represent the operating leases existing as of the effective date which have a lease term of greater than 12 months. The operating ROU assets were recorded net of a $2.0 million reclassification of other accrued liabilities and prepaid expenses representing previously deferred or prepaid rent and lease incentives.
|
•
|
The de-recognition of previously recorded facility financing obligations of $46.1 million and related plant, property, and equipment assets of $46.1 million from a build-to-suit lease arrangement for which construction was complete and the Company was leasing the constructed asset but previously did not qualify for sale accounting. The lease for this facility was treated as an operating lease upon the adoption of ASU 2016-02 and was included in the operating lease liabilities and ROU assets recorded on adoption.
|
|
Fair Value
|
||
Cash and cash equivalents
|
$
|
115
|
|
Other assets
|
68
|
|
|
Intangible assets - developed technology
|
7,500
|
|
|
Goodwill
|
10,525
|
|
|
Total purchase price
|
$
|
18,208
|
|
|
Fair Value
|
||
Cash and cash equivalents
|
$
|
508
|
|
Accounts receivable
|
761
|
|
|
Property and equipment, net
|
51,967
|
|
|
Other current and non-current assets
|
1,001
|
|
|
Intangible assets - content library
|
4,700
|
|
|
Intangible assets - developed technology
|
2,500
|
|
|
Goodwill
|
11,034
|
|
|
Facility financing obligation
|
(46,100
|
)
|
|
Accounts payable, accrued expenses, and other liabilities, current and non-current
|
(3,465
|
)
|
|
Net assets acquired
|
$
|
22,906
|
|
4.
|
NET LOSS PER SHARE
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net loss
|
$
|
(4,054
|
)
|
|
$
|
(33,842
|
)
|
|
$
|
(61,335
|
)
|
Weighted-average shares of common stock outstanding
|
60,086
|
|
|
58,159
|
|
|
57,262
|
|
|||
Net loss per share — basic and diluted
|
$
|
(0.07
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
(1.07
|
)
|
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Options to purchase common stock, restricted stock units and performance-based restricted stock units
|
8,359
|
|
|
9,869
|
|
|
10,143
|
|
Shares issuable pursuant to employee stock purchase plan
|
94
|
|
|
97
|
|
|
114
|
|
Convertible notes
|
7,143
|
|
|
7,143
|
|
|
11,825
|
|
Common stock warrants
|
—
|
|
|
936
|
|
|
4,682
|
|
Total shares excluded from net loss per share
|
15,596
|
|
|
18,045
|
|
|
26,764
|
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
67,818
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,818
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
126,075
|
|
|
—
|
|
|
—
|
|
|
126,075
|
|
||||
Corporate bonds
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
||||
Agency bonds
|
6,485
|
|
|
1
|
|
|
—
|
|
|
6,486
|
|
||||
Commercial paper
|
9,609
|
|
|
—
|
|
|
(1
|
)
|
|
9,608
|
|
||||
Certificates of deposit
|
171
|
|
|
—
|
|
|
—
|
|
|
171
|
|
||||
US treasury securities
|
4,749
|
|
|
—
|
|
|
—
|
|
|
4,749
|
|
||||
Total cash equivalents
|
148,089
|
|
|
1
|
|
|
(1
|
)
|
|
148,089
|
|
||||
Total cash and cash equivalents
|
215,907
|
|
|
1
|
|
|
(1
|
)
|
|
215,907
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
103,130
|
|
|
110
|
|
|
(7
|
)
|
|
103,233
|
|
||||
Agency bonds
|
3,966
|
|
|
2
|
|
|
—
|
|
|
3,968
|
|
||||
US treasury securities
|
50,703
|
|
|
62
|
|
|
(1
|
)
|
|
50,764
|
|
||||
Commercial paper
|
23,827
|
|
|
1
|
|
|
—
|
|
|
23,828
|
|
||||
Certificates of deposit
|
3,936
|
|
|
2
|
|
|
(1
|
)
|
|
3,937
|
|
||||
Asset-backed securities
|
15,837
|
|
|
12
|
|
|
—
|
|
|
15,849
|
|
||||
Total short-term investments
|
201,399
|
|
|
189
|
|
|
(9
|
)
|
|
201,579
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
19,407
|
|
|
12
|
|
|
(4
|
)
|
|
19,415
|
|
||||
US treasury securities
|
19,300
|
|
|
25
|
|
|
—
|
|
|
19,325
|
|
||||
Asset-backed securities
|
11,693
|
|
|
10
|
|
|
(1
|
)
|
|
11,702
|
|
||||
Strategic investments
|
9,750
|
|
|
—
|
|
|
—
|
|
|
9,750
|
|
||||
Total long-term investments
|
$
|
60,150
|
|
|
$
|
47
|
|
|
$
|
(5
|
)
|
|
$
|
60,192
|
|
|
Amortized Cost
|
|
Unrealized Gains
|
|
Unrealized Losses
|
|
Fair Value
|
||||||||
Current assets:
|
|
|
|
|
|
|
|
||||||||
Cash
|
$
|
54,275
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
54,275
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
129,321
|
|
|
—
|
|
|
—
|
|
|
129,321
|
|
||||
Total cash equivalents
|
129,321
|
|
|
—
|
|
|
—
|
|
|
129,321
|
|
||||
Total cash and cash equivalents
|
183,596
|
|
|
—
|
|
|
—
|
|
|
183,596
|
|
||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate bonds
|
58,115
|
|
|
—
|
|
|
(82
|
)
|
|
58,033
|
|
||||
US treasury securities
|
138,826
|
|
|
—
|
|
|
(100
|
)
|
|
138,726
|
|
||||
Commercial paper
|
7,973
|
|
|
—
|
|
|
—
|
|
|
7,973
|
|
||||
Total short-term investments
|
204,914
|
|
|
—
|
|
|
(182
|
)
|
|
204,732
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Strategic investments
|
1,250
|
|
|
—
|
|
|
—
|
|
|
1,250
|
|
||||
Total long-term investments
|
$
|
1,250
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,250
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accounted for at cost, adjusted for observable price changes
|
$
|
1,750
|
|
|
$
|
1,250
|
|
Accounted for using the equity method
|
8,000
|
|
|
—
|
|
||
Total non-marketable investments
|
$
|
9,750
|
|
|
$
|
1,250
|
|
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
Weighted Average Useful Life (years)
|
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
|
Gross
Carrying Amount |
|
Accumulated
Amortization |
|
Net
Carrying Amount |
||||||||||||
Developed technology
|
3.1
|
|
$
|
39,984
|
|
|
$
|
(34,268
|
)
|
|
$
|
5,716
|
|
|
$
|
39,984
|
|
|
$
|
(30,817
|
)
|
|
$
|
9,167
|
|
Content library
|
5.5
|
|
4,700
|
|
|
(976
|
)
|
|
3,724
|
|
|
4,700
|
|
|
—
|
|
|
4,700
|
|
||||||
Total
|
|
|
$
|
44,684
|
|
|
$
|
(35,244
|
)
|
|
$
|
9,440
|
|
|
$
|
44,684
|
|
|
$
|
(30,817
|
)
|
|
$
|
13,867
|
|
2020
|
$
|
4,188
|
|
2021
|
3,236
|
|
|
2022
|
855
|
|
|
2023
|
855
|
|
|
2024
|
306
|
|
|
Estimated remaining amortization expense
|
$
|
9,440
|
|
7.
|
OTHER BALANCE SHEET AMOUNTS
|
|
Useful Life
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||||
Computer equipment and software
|
3 – 5 years
|
|
$
|
57,474
|
|
|
$
|
52,055
|
|
Furniture and fixtures
|
7 years
|
|
6,096
|
|
|
4,367
|
|
||
Leasehold improvements
|
2 – 6 years
|
|
22,800
|
|
|
9,987
|
|
||
Renovation in progress
|
n/a
|
|
8
|
|
|
1,984
|
|
||
Build-to-suit property
|
25 years
|
|
—
|
|
|
51,058
|
|
||
Total property and equipment, gross
|
|
|
86,378
|
|
|
119,451
|
|
||
Less: accumulated depreciation and amortization
|
|
|
(49,852
|
)
|
|
(42,197
|
)
|
||
Total property and equipment, net
|
|
|
$
|
36,526
|
|
|
$
|
77,254
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Accrued compensation
|
$
|
33,626
|
|
|
$
|
31,799
|
|
Accrued commissions
|
18,834
|
|
|
15,590
|
|
||
Other accrued expenses
|
16,990
|
|
|
14,051
|
|
||
Accrued interest
|
8,625
|
|
|
8,625
|
|
||
Total accrued expenses
|
$
|
78,075
|
|
|
$
|
70,065
|
|
8.
|
FAIR VALUE OF FINANCIAL INSTRUMENTS
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||||||||||
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||||||||
Cash equivalents
|
$
|
148,089
|
|
|
$
|
148,089
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
129,321
|
|
|
$
|
129,321
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Certificate of deposit
|
3,937
|
|
|
3,937
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Corporate bonds
|
122,648
|
|
|
—
|
|
|
122,648
|
|
|
—
|
|
|
58,033
|
|
|
—
|
|
|
58,033
|
|
|
—
|
|
||||||||
Agency bonds
|
3,968
|
|
|
—
|
|
|
3,968
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
US treasury securities
|
70,089
|
|
|
—
|
|
|
70,089
|
|
|
—
|
|
|
138,726
|
|
|
—
|
|
|
138,726
|
|
|
—
|
|
||||||||
Commercial paper
|
23,828
|
|
|
—
|
|
|
23,828
|
|
|
—
|
|
|
7,973
|
|
|
—
|
|
|
7,973
|
|
|
—
|
|
||||||||
Asset-backed securities
|
27,551
|
|
|
—
|
|
|
27,551
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
|
$
|
400,110
|
|
|
$
|
152,026
|
|
|
$
|
248,084
|
|
|
$
|
—
|
|
|
$
|
334,053
|
|
|
$
|
129,321
|
|
|
$
|
204,732
|
|
|
$
|
—
|
|
9.
|
DEBT AND OTHER FINANCING ARRANGEMENTS
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Principal amount
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Unamortized debt discount
|
(2,691
|
)
|
|
(4,348
|
)
|
||
Net carrying amount before unamortized debt issuance costs
|
297,309
|
|
|
295,652
|
|
||
Unamortized debt issuance costs
|
(4,135
|
)
|
|
(6,685
|
)
|
||
Net carrying value
|
$
|
293,174
|
|
|
$
|
288,967
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Contractual interest expense
|
$
|
17,250
|
|
|
$
|
19,147
|
|
|
$
|
4,897
|
|
Amortization of debt issuance costs
|
2,550
|
|
|
3,086
|
|
|
1,472
|
|
|||
Accretion of debt discount
|
1,657
|
|
|
5,843
|
|
|
8,360
|
|
|||
Total
|
$
|
21,457
|
|
|
$
|
28,076
|
|
|
$
|
14,729
|
|
10.
|
STOCKHOLDERS’ EQUITY
|
Period
|
2019
|
|
2018
|
|
2017
|
||||||
Total shares repurchased
|
417
|
|
|
1,651
|
|
|
635
|
|
|||
Total cost of repurchased shares1
|
$
|
22,356
|
|
|
$
|
77,401
|
|
|
$
|
22,599
|
|
1
|
52,551 shares were repurchased and settled in the fourth quarter of 2017. Cash of $1.9 million owed for these shares was not paid until the first quarter of 2018.
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value1
|
|||||
Outstanding, December 31, 2018
|
3,828
|
|
|
$
|
32.41
|
|
|
4.1
|
|
$
|
70,436
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(947
|
)
|
|
36.21
|
|
|
|
|
|
|||
Forfeited
|
(30
|
)
|
|
49.43
|
|
|
|
|
|
|||
Outstanding, December 31, 2019
|
2,851
|
|
|
$
|
30.97
|
|
|
3.1
|
|
78,580
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2019
|
2,844
|
|
|
$
|
30.97
|
|
|
3.1
|
|
$
|
78,453
|
|
Vested and expected to vest at December 31, 2019
|
2,849
|
|
|
$
|
30.97
|
|
|
3.1
|
|
$
|
78,575
|
|
1
|
|
Based on the Company’s closing stock price of $58.55 on December 31, 2019 and $50.43 on December 31, 2018.
|
|
Number of Shares
|
|
Weighted-
Average Grant Date
Fair Value
|
|||
Unvested shares at December 31, 2018
|
4,117
|
|
|
$
|
41.94
|
|
Granted
|
1,589
|
|
|
55.69
|
|
|
Forfeited
|
(510
|
)
|
|
45.72
|
|
|
Vested
|
(1,440
|
)
|
|
40.61
|
|
|
Unvested shares at December 31, 2019
|
3,756
|
|
|
$
|
47.76
|
|
1
|
|
Assumes maximum achievement of the specified financial targets.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Options
|
$
|
608
|
|
|
$
|
4,839
|
|
|
$
|
13,946
|
|
RSUs
|
66,880
|
|
|
53,164
|
|
|
44,149
|
|
|||
PRSUs
|
7,468
|
|
|
5,512
|
|
|
11,229
|
|
|||
ESPP
|
2,321
|
|
|
1,857
|
|
|
1,598
|
|
|||
Restructuring
|
—
|
|
|
6,227
|
|
|
—
|
|
|||
Less: capitalized stock-based compensation
|
(4,847
|
)
|
|
(5,042
|
)
|
|
(4,998
|
)
|
|||
Total
|
$
|
72,430
|
|
|
$
|
66,557
|
|
|
$
|
65,924
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of revenue
|
$
|
6,282
|
|
|
$
|
4,218
|
|
|
$
|
4,904
|
|
Sales and marketing
|
27,780
|
|
|
24,440
|
|
|
28,521
|
|
|||
Research and development
|
16,003
|
|
|
11,800
|
|
|
9,630
|
|
|||
General and administrative
|
22,365
|
|
|
19,872
|
|
|
22,869
|
|
|||
Restructuring
|
—
|
|
|
6,227
|
|
|
—
|
|
|||
Total
|
$
|
72,430
|
|
|
$
|
66,557
|
|
|
$
|
65,924
|
|
12.
|
INCOME TAXES
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
3,188
|
|
|
$
|
(21,174
|
)
|
|
$
|
(32,853
|
)
|
Foreign
|
(4,552
|
)
|
|
(10,073
|
)
|
|
(26,736
|
)
|
|||
Loss before provision for income taxes
|
$
|
(1,364
|
)
|
|
$
|
(31,247
|
)
|
|
$
|
(59,589
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current income tax provision:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
State
|
225
|
|
|
204
|
|
|
114
|
|
|||
Foreign
|
2,467
|
|
|
2,514
|
|
|
1,580
|
|
|||
Total current income tax provision
|
2,692
|
|
|
2,718
|
|
|
1,694
|
|
|||
Deferred income tax benefit:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
State
|
—
|
|
|
—
|
|
|
—
|
|
|||
Foreign
|
(2
|
)
|
|
(123
|
)
|
|
52
|
|
|||
Total deferred income tax benefit
|
(2
|
)
|
|
(123
|
)
|
|
52
|
|
|||
Total income tax provision
|
$
|
2,690
|
|
|
$
|
2,595
|
|
|
$
|
1,746
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
US Federal tax benefit at statutory rates
|
$
|
(286
|
)
|
|
$
|
(6,562
|
)
|
|
$
|
(20,260
|
)
|
State income taxes, net of federal tax benefit
|
240
|
|
|
(248
|
)
|
|
(806
|
)
|
|||
Foreign rate differential
|
2,883
|
|
|
2,764
|
|
|
5,220
|
|
|||
Stock based compensation
|
(1,261
|
)
|
|
3,029
|
|
|
3,182
|
|
|||
Other permanent differences
|
479
|
|
|
280
|
|
|
(494
|
)
|
|||
Deferred adjustments / US rate change
|
(442
|
)
|
|
1,430
|
|
|
7,811
|
|
|||
Other
|
(190
|
)
|
|
130
|
|
|
262
|
|
|||
Valuation allowance
|
1,267
|
|
|
1,772
|
|
|
6,831
|
|
|||
Total income tax provision
|
$
|
2,690
|
|
|
$
|
2,595
|
|
|
$
|
1,746
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Accrued expenses
|
$
|
2,427
|
|
|
$
|
2,353
|
|
Long-lived intangible assets and fixed assets - basis difference
|
25,178
|
|
|
22,947
|
|
||
Net operating loss carryforwards
|
81,575
|
|
|
82,017
|
|
||
Stock-based compensation
|
15,398
|
|
|
15,172
|
|
||
Operating lease liabilities
|
17,281
|
|
|
—
|
|
||
Deferred revenue
|
3,258
|
|
|
2,861
|
|
||
Other
|
5,100
|
|
|
4,557
|
|
||
Total deferred tax assets
|
150,217
|
|
|
129,907
|
|
||
Valuation allowance
|
(116,915
|
)
|
|
(117,058
|
)
|
||
Deferred tax assets, net of valuation allowance
|
33,302
|
|
|
12,849
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Prepaid expenses and deferred commissions
|
(14,502
|
)
|
|
(10,831
|
)
|
||
Operating right-of-use assets
|
(16,960
|
)
|
|
—
|
|
||
Other
|
(795
|
)
|
|
(976
|
)
|
||
Total deferred tax liabilities
|
(32,257
|
)
|
|
(11,807
|
)
|
||
Net deferred tax assets
|
$
|
1,045
|
|
|
$
|
1,042
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Balance at January 1
|
$
|
1,402
|
|
|
$
|
1,271
|
|
|
$
|
276
|
|
Increases for tax positions related to the current year
|
—
|
|
|
131
|
|
|
995
|
|
|||
Decreases for tax positions related to the current year
|
(1,402
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at December 31
|
$
|
—
|
|
|
$
|
1,402
|
|
|
$
|
1,271
|
|
13.
|
COMMITMENTS AND CONTINGENCIES
|
14.
|
LEASES
|
|
Year Ended December 31,
|
||
|
2019
|
||
Operating lease cost
|
$
|
15,209
|
|
Sublease income
|
(3,744
|
)
|
|
Net lease cost
|
$
|
11,465
|
|
|
Year Ended December 31,
|
||
|
2019
|
||
Cash paid for operating leases
|
$
|
19,524
|
|
Right-of-use assets obtained in exchange for lease obligations
|
86,120
|
|
|
December 31
|
||
|
2019
|
||
Operating lease right-of-use assets
|
$
|
72,944
|
|
Operating lease liabilities (current and non-current)
|
$
|
74,430
|
|
Weighted-average remaining lease term
|
6 years
|
|
|
Weighted-average incremental borrowing rate
|
3.3
|
%
|
|
Operating Leases
|
||
2019
|
$
|
11,576
|
|
2020
|
14,162
|
|
|
2021
|
14,277
|
|
|
2022
|
14,823
|
|
|
2023
|
14,710
|
|
|
Thereafter
|
17,961
|
|
|
Total minimum lease payments
|
$
|
87,509
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Subscription revenue
|
$
|
542,968
|
|
|
$
|
473,052
|
|
|
$
|
396,764
|
|
Professional services revenue
|
33,555
|
|
|
64,839
|
|
|
85,221
|
|
|||
Total revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
United States
|
$
|
375,713
|
|
|
$
|
343,205
|
|
|
$
|
313,729
|
|
All other countries
|
200,810
|
|
|
194,686
|
|
|
168,256
|
|
|||
Total revenue
|
$
|
576,523
|
|
|
$
|
537,891
|
|
|
$
|
481,985
|
|
|
|
December 31,
|
||||||
|
|
2019
|
|
2018
|
||||
United States
|
|
$
|
26,479
|
|
|
$
|
69,550
|
|
United Kingdom
|
|
4,287
|
|
|
3,558
|
|
||
All other countries
|
|
5,760
|
|
|
4,146
|
|
||
Total property and equipment, net
|
|
$
|
36,526
|
|
|
$
|
77,254
|
|
17.
|
401(K) SAVINGS PLAN
|
18.
|
RELATED PARTY TRANSACTIONS
|
19.
|
SELECTED QUARTERLY DATA (UNAUDITED)
|
|
Quarter Ended
|
||||||||||||||||||||||||||||||
|
(in thousands, except per share data)
|
||||||||||||||||||||||||||||||
|
Mar. 31,
2018 |
|
June 30,
2018 |
|
Sept. 30,
2018 |
|
Dec. 31,
2018 |
|
Mar. 31,
2019 |
|
June 30,
2019 |
|
Sept. 30,
2019 |
|
Dec. 31,
2019 |
||||||||||||||||
Revenue
|
$
|
133,113
|
|
|
$
|
132,517
|
|
|
$
|
134,014
|
|
|
$
|
138,247
|
|
|
$
|
140,117
|
|
|
$
|
141,860
|
|
|
$
|
144,952
|
|
|
$
|
149,594
|
|
Gross profit
|
96,093
|
|
|
96,152
|
|
|
97,843
|
|
|
103,454
|
|
|
106,422
|
|
|
101,673
|
|
|
107,785
|
|
|
111,428
|
|
||||||||
(Loss) income from operations
|
(8,846
|
)
|
|
(3,095
|
)
|
|
1,574
|
|
|
2,598
|
|
|
1,231
|
|
|
(3,594
|
)
|
|
3,713
|
|
|
10,583
|
|
||||||||
Net (loss) income
|
$
|
(16,216
|
)
|
|
$
|
(12,007
|
)
|
|
$
|
(2,447
|
)
|
|
$
|
(3,173
|
)
|
|
$
|
(3,464
|
)
|
|
$
|
(8,805
|
)
|
|
$
|
(1,217
|
)
|
|
$
|
9,432
|
|
Net (loss) income per share, basic
|
$
|
(0.28
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.16
|
|
Net (loss) income per share, diluted
|
$
|
(0.28
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.15
|
|
20.
|
SUBSEQUENT EVENTS
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of our consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of our management and board of directors; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of any unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
1.
|
Consolidated Financial Statements:
|
2.
|
Financial Statement Schedules:
|
3.
|
Exhibits:
|
|
Exhibit Description
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
3.1
|
8-K
|
|
001-35098
|
|
3.1
|
|
June 20, 2018
|
|
3.2
|
8-K
|
|
001-35098
|
|
3.2
|
|
June 20, 2018
|
|
4.1
|
8-K
|
|
001-35098
|
|
4.1
|
|
June 17, 2013
|
|
4.2
|
8-K
|
|
001-35098
|
|
4.1
|
|
December 8, 2017
|
|
4.3
|
|
|
|
|
|
|
|
|
10.1*
|
S-1/A
|
|
333-169621
|
|
10.1
|
|
December 17, 2010
|
|
10.2*
|
S-1
|
|
333-169621
|
|
10.2
|
|
September 29, 2010
|
|
10.3*
|
S-1
|
|
333-169621
|
|
10.3
|
|
September 29, 2010
|
|
10.3A*
|
S-1/A
|
|
333-169621
|
|
10.3A
|
|
December 17, 2010
|
|
10.4*
|
8-K
|
|
001-35098
|
|
10.1
|
|
June 14, 2019
|
|
10.5*
|
S-1/A
|
|
333-169621
|
|
10.5
|
|
December 17, 2010
|
|
10.6*
|
S-1/A
|
|
333-169621
|
|
10.6
|
|
November 9, 2010
|
|
10.7*
|
S-1
|
|
333-169621
|
|
10.11
|
|
September 29, 2010
|
|
10.8*
|
10-Q
|
|
001-35098
|
|
10.1
|
|
August 5, 2016
|
|
10.9*
|
S-1/A
|
|
333-169621
|
|
10.9
|
|
November 9, 2010
|
|
Exhibit Description
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
10.10A*
|
10-Q
|
|
001-35098
|
|
10.1
|
|
May 6, 2016
|
|
10.10B*
|
10-Q
|
|
001-35098
|
|
10.1
|
|
May 5, 2017
|
|
10.11*
|
10-K
|
|
001-35098
|
|
10.11
|
|
February 27, 2018
|
|
10.12*
|
S-1/A
|
|
333-169621
|
|
10.10
|
|
February 11, 2011
|
|
10.13A*
|
10-Q
|
|
001-35098
|
|
10.2
|
|
August 7, 2014
|
|
10.13B*
|
10-Q
|
|
001-35098
|
|
10.2
|
|
May 8, 2015
|
|
10.13C*
|
10-Q
|
|
001-35098
|
|
10.2
|
|
May 6, 2016
|
|
10.13D*
|
10-Q
|
|
001-35098
|
|
10.2
|
|
May 5, 2017
|
|
10.13E*
|
10-Q
|
|
001-35098
|
|
10.4
|
|
August 7, 2018
|
|
10.13F*
|
10-K
|
|
001-35098
|
|
10.13F
|
|
February 26, 2019
|
|
10.14*
|
10-K
|
|
001-35098
|
|
10.14
|
|
February 27, 2018
|
|
10.15*
|
10-Q
|
|
001-35098
|
|
10.1
|
|
May 8, 2018
|
|
10.16*
|
10-Q
|
|
001-35098
|
|
10.4
|
|
August 7, 2013
|
|
10.17*
|
10-K
|
|
001-35098
|
|
10.16
|
|
February 27, 2018
|
|
10.18*
|
10-Q
|
|
001-35098
|
|
10.1
|
|
August 5, 2019
|
|
10.19*
|
8-K
|
|
001-35098
|
|
n/a
|
|
March 9, 2017
|
|
10.20*
|
8-K
|
|
001-35098
|
|
n/a
|
|
March 2, 2018
|
|
10.21*
|
10-Q
|
|
001-35098
|
|
10.1
|
|
May 7, 2019
|
|
10.22
|
S-1
|
|
333-169621
|
|
10.17
|
|
September 29, 2010
|
|
10.23
|
S-1
|
|
333-169621
|
|
10.18
|
|
September 29, 2010
|
|
10.24
|
10-K
|
|
001-35098
|
|
10.16
|
|
March 6, 2012
|
|
10.25
|
10-Q
|
|
001-35098
|
|
10.1
|
|
May 9, 2013
|
|
10.26
|
10-Q
|
|
001-35098
|
|
10.2
|
|
May 9, 2013
|
|
10.27
|
10-Q
|
|
001-35098
|
|
10.1
|
|
August 7, 2018
|
|
10.28
|
10-Q
|
|
001-35098
|
|
10.2
|
|
August 7, 2018
|
|
Exhibit Description
|
Incorporated by Reference
|
||||||
Exhibit
Number
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
10.29
|
10-Q
|
|
001-35098
|
|
10.3
|
|
August 7, 2018
|
|
10.30
|
10-K
|
|
001-35098
|
|
10.24
|
|
February 27, 2018
|
|
21.1
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
|
|
|
|
|
24.1
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
32.1†
|
|
|
|
|
|
|
|
|
32.2†
|
|
|
|
|
|
|
|
|
101.INS
|
Inline XBRL Instance Document (this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
|
|
|
|
|
|
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
101.LAB
|
InlineXBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
|
|
|
|
|
|
*
|
Indicates a management contract or compensatory plan or arrangement.
|
†
|
The certifications attached as Exhibit 32.1 and 32.2 that accompany this Annual Report on Form 10-K, 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 Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
|
Item 16.
|
Form 10-K Summary
|
|
CORNERSTONE ONDEMAND, INC.
|
|
|
|
|
|
By:
|
/s/ Adam L. Miller
|
|
Name:
|
Adam L. Miller
|
|
Title:
|
Chief Executive Officer
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ Adam L. Miller
|
|
Chief Executive Officer and Director (principal executive officer)
|
February 25, 2020
|
Adam L. Miller
|
|
|
|
|
|
|
|
/s/ Brian L. Swartz
|
|
Chief Financial Officer (principal financial officer)
|
February 25, 2020
|
Brian L. Swartz
|
|
|
|
|
|
|
|
/s/ Trish Coughlin
|
|
Chief Accounting Officer (principal accounting officer)
|
February 25, 2020
|
Trish Coughlin
|
|
|
|
|
|
|
|
/s/ Elisa Steele
|
|
Chair of the Board of Directors
|
February 25, 2020
|
Elisa Steele
|
|
|
|
|
|
|
|
/s/ Dean Carter
|
|
Director
|
February 25, 2020
|
Dean Carter
|
|
|
|
|
|
|
|
/s/ Robert Cavanaugh
|
|
Director
|
February 25, 2020
|
Robert Cavanaugh
|
|
|
|
Signature
|
|
Title
|
Date
|
|
|
|
|
/s/ Richard Haddrill
|
|
Director
|
February 25, 2020
|
Richard Haddrill
|
|
|
|
|
|
|
|
/s/ Joseph Osnoss
|
|
Director
|
February 25, 2020
|
Joseph Osnoss
|
|
|
|
|
|
|
|
/s/ Marcus Ryu
|
|
Director
|
February 25, 2020
|
Marcus Ryu
|
|
|
|
|
|
|
|
/s/ Kristina Salen
|
|
Director
|
February 25, 2020
|
Kristina Salen
|
|
|
|
|
|
|
|
/s/ Steffan Tomlinson
|
|
Director
|
February 25, 2020
|
Steffan Tomlinson
|
|
|
|
•
|
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 (except that our classified board of directors is being phased out and, starting at the 2021 annual meeting of stockholders, all of our directors elected by stockholders shall serve one-year terms);
|
•
|
provide that our directors who have been elected to serve a three-year term (or any director appointed to fill a vacancy caused by the death, resignation, retirement, disqualification or other removal of such director) may be removed only for cause until the expiration of such three-year term;
|
•
|
specify that special meetings of our stockholders can be called only by the board, 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;
|
•
|
provide that vacancies on our board 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.
|
1.
|
|
I have reviewed this Annual Report on Form 10-K 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
|
Chief Executive Officer
|
1.
|
|
I have reviewed this Annual Report on Form 10-K 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/ Brian L. Swartz
|
Brian L. Swartz
|
Chief Financial Officer
|
/s/ Adam L. Miller
|
Adam L. Miller
|
Chief Executive Officer
|
/s/ Brian L. Swartz
|
Brian L. Swartz
|
Chief Financial Officer
|