2019 Investor/ Analyst Day NASDAQ: CSOD June 4, 2019
Safe Harbor This presentation includes forward-looking statements. These statements relate to, among other things, our future financial and operating performance, including our GAAP and non-GAAP guidance, the growth of the learning and human capital management market, our business strategy, and our plans and objectives for future operations. In light of the risks and uncertainties outlined below, the future events and circumstances discussed in this presentation may not occur, and actual results could differ materially from those anticipated or implied in the forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting its business. Forward- looking statements should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward- looking statements are based on information available at the date of this presentation and management’s go od faith belief as of such date with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to: • Statements regarding the Company’s business strategies; • The Company’s anticipated future operating results and operating expenses; • The Company’s ability to attract new clients to enter into subscriptions for its solution; • The Company’s ability to service those clients effectively and induce them to renew and upgrade their deployments of the Comp any ’s solution; • The Company’s ability to expand its sales organization to address effectively the new industries, geographies and types of or ganizations the company intends to target; • The Company’s ability to accurately forecast revenue and appropriately plan its expenses; market acceptance of enhanced solut ions, alternate ways of addressing learning and talent management needs or new technologies generally by the Company and its competitors; continued acceptance of SaaS as an effective method for delivering learning and talent management solutions and other business management applications; the attraction and retention of qualified employees and key personnel; • The Company’s ability to protect and defend its intellectual property; costs associated with defending intellectual property infringement and other claims; events in the markets for the Company’s solution and alternatives to the Company’s solution, as well as in the United States and global markets generally; fut ure regulatory, judicial and legislative changes in the Company’s industry; changes in the competitive environment in the Company’s industry and the markets in which the Company operates; and ot her factors discussed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s periodic reports fil ed with the Securities and Exchange Commission (the “SEC”). Forward-looking statements speak only as of the date of this presentation. You should not put undue reliance on any forward-looking statement. The Company assumes no obligation to update any forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting future performance or results, except to the extent required by applicable laws. If the Company updates one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. These non-GAAP financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. Please see the discussion of these non-GAAP financial measures and their reconciliations to the most directly comparable U.S. GAAP measures at the end of this presentation. 2
Agenda • Welcome – Jason Gold, VP of Finance and Corporate Development • Strategic Review – Adam Miller, Founder & CEO • Exec Interviews – Heidi Spirgi, Mark Goldin and Jeff Lautenbach • Partner Panel – Deloitte and Alight • Content Panel – Whil, TED, and Service King • Financial Overview – Brian Swartz, Chief Financial Officer 3
Adam Miller Founder & CEO 4
Looking Back: The Transformation 5
Transforming Cornerstone Focus on recurring revenue and exit enterprise 1 service delivery Improve operating margins and cash flows 2 Create new recurring revenue streams and 3 aggressively enter the content market Bolster the team 4 Improve governance 5 6
Transforming Cornerstone ✓ Focus on recurring revenue and exit enterprise service delivery ✓ Improve operating margins and cash flows ✓ Create new recurring revenue streams and aggressively enter the content market ✓ Bolster the team ✓ Improve governance 7
Key Metrics: The Cornerstone Transformation (in millions) Total Revenue Annual Recurring Revenue (ARR) Subscription Revenue $578 - $590 $537 - $545 $510 $562 - $570 $473 $538 $439 $482 $397 2017 2018 2019E 2017 2018 2019E 2017 2018 2019E Operating Margin Cashflow Margin 17% 14-15% 15-16% 12% 14% 12% 6% 9% -1% 2017 2018 2019E -10% 2017 2018 2019E 1 GAAP OM Non-GAAP OM Operating CF Margin uFCF Margin 8 Not e: FY19 Guidance ranges as of M ay 7, 2019. Not e: A reconciliat ion of non-GAAP met rics used in this presentation to their nearest GAAP equivalent s is provided in t he appendix t o t his presentation. 1 – Operat ing CF margin is calculat ed by dividing operat ing cash flow int o to tal revenue.
Cornerstone Today 9
Global Reach CLIENTS USERS COUNTRIES LANGUAGES OFFICES 3,500+ 40M+ 190+ 43 22 Stockholm Amsterdam London New York Dusseldorf San Francisco City Paris Munich Sunnyvale Madrid Tokyo Tel Aviv Santa Monica Salt Lake Hong Kong City Mumbai Mexico City Bangalore Singapore Sao Paulo Sydney Auckland As of March 31, 2019 Note: User and client count figures exclude PiiQ, Cornerstone for Salesforce, Workpop Inc. and Grovo Learning, Inc. 10
Marquee Clients Around the World US & LATAM EMEA APJ 11
Cornerstone is the Market Leader in Talent Management CHALLENGERS LEADERS SAP (SuccessFactors) ABILITY TO EXECUTE 2018 Magic Quadrant for Talentsoft Talent Management Suites Saba (Saba Cloud) Saba (TalentSpace) Skillsoft (SumTotal Systems) PageUp Haufe Cegid NICHE PLAYERS VISIONARIES COMPLETENESS OF VISION SOURCE: Gartner 2018 Magic Quadrant for Talent Management Suites (September 2018) 12
The Macro Backdrop 13
The Skills Divide is Real Skilled Jobs Unskilled Jobs Skilled Workers Unskilled Labor
Recruiters Are Overwhelmed 40 250 Requisitions Resumes Average Number Submitted for the Average Per Recruiter Unskilled Job
Many of the 6.5M Americans Looking for Work Today Do Not Possess the Skills Required to Do Most of the 7.6M Unfilled Jobs 6.5M Americans Looking for Work 7.6M Unfilled Jobs Requiring Skills
Computer and Information Technology Occupation Projected Growth to 2026 557,100 New jobs to be added 40,000 Average number of Computer and information technology graduates per year Only 6% of all degrees earned each year are in computer and information technology
Skills Have Become the New Digital Currency 18
At the Same Time, Consumer Habits Have Changed How people How people consume video consume audio 19
Expanding our Moat 20
Cornerstone Learning Modern learning requires a holistic strategy Learning Learning Experience Management (LMS) (LXP) Modern Content 21
Cornerstone Learning The World’s Most Robust Learning Platform Configurable, yet simple • Learning Management The next generation of Learning • Experience Content you can’t get • anywhere else 22
State of the Art Learning Experience
Highly Curated Collections of Content Subject-matter Wide Partner Experts Ecosystem to listen to your business with a variety of modalities, needs and recommend topics, and titles the right content Content Best-of-breed Consultants Partners Client Seamlessly Purchased Intelligently Curated & Loaded Subscriptions Curated Integrated for enhanced user built to solve specific Subscriptions with LXP experience business needs [We handle metadata, thumbnails, [Playlists included with each content upload] subscription] 24
Our Holistic Solution will Distance us from the Competition 25
Cornerstone's Second Act: $40 Billion Market Opportunity 20-Year Start up 2018 and Beyond : Cornerstone Operates in Two Markets ~$40B $25 $6B $3.6B $16 Founding to IPO IPO to 2017 2018 Learning Systems Market Full Talent Management HCM Content 26 Source: Training Industry Report (2017); Company estimates and WW HCM Apps Forecast, IDC WW Tracker, June 2018 Report
The Global Training Market is Huge $374b Global Corporate Training $100b External Training $77b Content $50b Our Content Topics $25b Online Only Source: Training Industry Estimates 27
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