The document outlines an agenda for a Cornerstone Financial Analyst & Investor Day event. The agenda includes presentations on Cornerstone's business overview, opportunities in various markets and business units, financial review, and Q&A. It also includes forward-looking statements and risk factors. Jeff Lautenbach then summarizes Cornerstone's strategic plan to improve sales focus on recurring revenue, operating margins, new recurring revenue streams, leadership team, and governance. The plan aims to address past issues and drive growth.
5 transformative strategies to unlock more-procurement_value_ardent partnersBravoSolution
The current generation of procurement professionals has witnessed first-hand a period of unrivaled advances for their profession as market forces and new technologies combined to pull procurement to the center of business operations and business results. While the foundation of procurement's future will be built upon the past, the strategies and approaches that drive new successes will be markedly different. This report looks at the transformative strategies that will unlock procurement's next wave of value.
5 transformative strategies to unlock more-procurement_value_ardent partnersBravoSolution
The current generation of procurement professionals has witnessed first-hand a period of unrivaled advances for their profession as market forces and new technologies combined to pull procurement to the center of business operations and business results. While the foundation of procurement's future will be built upon the past, the strategies and approaches that drive new successes will be markedly different. This report looks at the transformative strategies that will unlock procurement's next wave of value.
Introducing the Professional Service Maturity ModelJeanne Urich
Introducing the leading Professional Service Maturity model used by over 10,000 service and project-oriented organizations to chart their course to service excellence.
A Brief Introduction to The Strategic Offsites GroupBob Frisch
A thumbnail overview of The Strategic Offsites Group, the world's leader in the design and facilitation of strategy offsites for executive leadership teams and Boards of Directors.
Tax reform actually changes everything. We've never had a moment in which so much cash will be sitting on corporate balance sheets. The most strategic-minded executives will see this opportunity as a watershed moment to reevaluate how they allocate cash.
Each year, Tenet Partners analyzes the data in
the CoreBrand Index (CBI) to determine the US
economy’s Top 100 Most Powerful Brands based on
high awareness and positive brand perceptions. 2015
marks the eighth year of the report. The report is
unique because it is based on a single, data-driven
score that assesses each brand’s familiarity and
favorability. We call this BrandPower. Powerful Brands build and nurture their brands and in turn, their create and make it
competitive – by making investments in
innovation, R&D and strategic partnerships
to drive customer-centric experiences
Strategy, of course, has engaged the attention of business people ever since it was first spoken, and many great books have been written in an attempt to expound it.
In spite of all that has been written about business strategy and not wishing to add anything further to the subject in an exhaustive sense, my plan is to contend with something of the advantages that are to be gained by strategists taking a dynamic view of strategy.
This small book covers a range of subjects connected with strategy formulation and management. It should not be taken as the be all and end all of strategy nor should it be considered as an exhaustive piece on the subject. But the 12 items included herein offer the tools to craft superior strategies - without the verbiage!
Thinking about launching a hedge fund or looking to grow your fund's assets faster? Find out why some funds raise capital faster than others.
Note: Content is targeted to hedge funds, but the information is applicable to other types of asset managers.
Introducing the Professional Service Maturity ModelJeanne Urich
Introducing the leading Professional Service Maturity model used by over 10,000 service and project-oriented organizations to chart their course to service excellence.
A Brief Introduction to The Strategic Offsites GroupBob Frisch
A thumbnail overview of The Strategic Offsites Group, the world's leader in the design and facilitation of strategy offsites for executive leadership teams and Boards of Directors.
Tax reform actually changes everything. We've never had a moment in which so much cash will be sitting on corporate balance sheets. The most strategic-minded executives will see this opportunity as a watershed moment to reevaluate how they allocate cash.
Each year, Tenet Partners analyzes the data in
the CoreBrand Index (CBI) to determine the US
economy’s Top 100 Most Powerful Brands based on
high awareness and positive brand perceptions. 2015
marks the eighth year of the report. The report is
unique because it is based on a single, data-driven
score that assesses each brand’s familiarity and
favorability. We call this BrandPower. Powerful Brands build and nurture their brands and in turn, their create and make it
competitive – by making investments in
innovation, R&D and strategic partnerships
to drive customer-centric experiences
Strategy, of course, has engaged the attention of business people ever since it was first spoken, and many great books have been written in an attempt to expound it.
In spite of all that has been written about business strategy and not wishing to add anything further to the subject in an exhaustive sense, my plan is to contend with something of the advantages that are to be gained by strategists taking a dynamic view of strategy.
This small book covers a range of subjects connected with strategy formulation and management. It should not be taken as the be all and end all of strategy nor should it be considered as an exhaustive piece on the subject. But the 12 items included herein offer the tools to craft superior strategies - without the verbiage!
Thinking about launching a hedge fund or looking to grow your fund's assets faster? Find out why some funds raise capital faster than others.
Note: Content is targeted to hedge funds, but the information is applicable to other types of asset managers.
Successful Digital Transformation starts with a well defined StrategyGlen Alleman
Leading successful Digital Transformation projects cannot be successful without a Strategy for their success.
This briefing shows how to develop and apply a Strategy for Program Success through clear and concise descriptions of the strategic outcomes, Measures of Effectiveness and Performances, and identification of Value needed to meet business goals in a timely manner for the needed budget.
INTRODUCTION
A business plan is an important document for any business and it can be written for a variety of reasons.
Internally, it can help owners and managers crystallise their ideas, focus their efforts and monitor performance against established objectives.
Externally, the business plan can act as a medium for attracting finance for start-ups or expansion.
INTRODUCTION
For many people, the experience of raising finance is a new one.
Many opportunities presented to financiers are subsequently rejected.
It is essential, therefore, that the entrepreneur prepares a quality document.
The objective of this work-pack is to help you prepare just such a document by providing you with the headings which need to be covered.
CONTENTS
The business plan should summarise the proposed activity and the prospects for success for the venture, paying particular attention to factors that are critical to success or failure.
The contents should be tailored to the particular individual requirements, circumstances or characteristics of the proposal.
In general, they have the following categories:
CONTENTS
Executive Summary
Current position
Objectives
Product/Service and Operations
Marketing and Sales Plan
Competition
Management and Staff
Financial plan
Information and control
Risk factors and mitigation
2. 1:00 Introduction - Alexandra Geller
1:05 Cornerstone Overview & Cornerstone 2.0 - Adam Miller
2:00 Cornerstone Opportunities: A View from the Field
Global Field Operations - Jeff Lautenbach
Learning & Content Opportunity - Josh Schwede
Winning in the Learning & HCM Market - Josh Bersin
Talent Management Opportunity - Dan Bock
EMEA and the HCM Opportunity - Vincent Belliveau
Growth Market Opportunities - Chirag Shah
4:00 BREAK
4:10 Services Partner Panel - Moderated by Tiffany Appleby
4:30 Financial Review - Brian Swartz
5:00 Wrap-Up and Q&A - Executive Team
5:30 Cocktails - Executive Team
Agenda
2
3. 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 good 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 Company’s solution;
• The Company’s ability to expand its sales organization to address effectively the new industries, geographies and types of organizations the company intends to target;
• The Company’s ability to accurately forecast revenue and appropriately plan its expenses; market acceptance of enhanced solutions, 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; future 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 other factors discussed under “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” in the Company’s periodic reports filed 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 in the Company’s press release dated February 13, 2018.
Safe Harbor
3
8. Mechanization
Water power
Steam power
1 2 3
Mass production
Assembly line
Electricity
Computer
Automation
Networks
4
Digital
Machine learning
Artificial intelligence
The Next Industrial Revolution has Arrived
8
10. 10
How we manage talent & develop skills
over the next 5 years will be
completely different from the last 20
11. 11
A Shift in Focus is Required
Skills-based people management
Relationship-centric
Integrated people and work solutions
Real-time data empowered decision-making
Personalized leveraging machine learning
Automating HR data & processes
Financially motivated
Application and data silos
Historical, intuition-based decisions
One-size-fits-all approach
Transaction
focused
People
focused
to
12. Talent in the
Digital Age
Consumer expectations
have entered the workforce
Competition for skills and
experiences is intense
Jobs are being redefined or
eliminated
“Career Walls” are the new
career ladder
12
13. The Market Need is Real
13
Kara Goldin | 11. 10. 2017
From Gap to Gen Z: Why
Collaboration is More
Important Than Ever
Nuha Masri | 11. 7. 2017
4 Ways Technology Will
Shape the Future of Work
by 2020
Jeff Miller | 10. 17. 2017
Why a Culture of
Learning Should be Built
from the Top Down
Alexandra Gibbs | 10. 27. 2017
Why Taking Care of the
‘Human-Capital’ of Your
Employees is Vital
Jeffrey Selingo & Kevin Simon
10. 9. 2017
The Future of Your
Career Depends on
Lifelong Learning
14. 14
Our goal is to meet the needs of the business with
ready leaders who can move into any business line
when they’re needed, ready to lead. Between the
T-Mobile team and our partnership with
Cornerstone, we are really making that happen.
“
”Melissa Lanier,
Director of Career and Leadership Development Programs
15. 15
Cornerstone has allowed Hitachi to globalize HR
efforts in order to achieve growth. Our plans are
to increase the revenue of the non-Japanese
market by 45-50% or more.
“
”Levent Arabaci,
EVP & CHRO
16. 16
Cornerstone has allowed us to grow from
being a product-focused company to one
that is seen as a leading solutions and
technology provider.
“
”Alban Jacquin,
Learners Experience Director
17. 17
Using Cornerstone, we’ve since seen a 53%
increase in [employee] movement between
Hyatt brands. Employees feel like they have
even more options from a career standpoint.
“
”Randy Goldberg,
Vice President , Talent Management
18. 18
With Cornerstone, it takes two minutes to verify
someone is administratively and logistically ready to
deploy. It makes a huge difference. We sent 60
volunteer responders to Nepal and only had to make
one phone call. We had zero misses.
“
”Pat Ross,
Deputy Director of Membership
19. 19
Cornerstone helped us move from a
heterogenic, localized learning approach to
one that is aligned across all business units and
markets. We’re seeing employees take more
initiative with Cornerstone.
“
”Gerard Pieterse,
Learning & Development Director
22. 22
In the Past, We Focused Only on Total Sales
Total New Sales by Year
Note: charts are illustrative and not drawn to scale.
2012 2013 2014 2015 2016 2017
New ARR One-Time FX
23. 23
…But Our Sales Mix Shifted Negatively
New Sales Composition
2011 2013 2015 2017
Recurring ServicesNew ARR One-Time
15pts lower
than in 2011
Note: charts are illustrative and not drawn to scale.
29. Focus on recurring revenue and exit enterprise
service delivery
Improve operating margins and cash flows
Create new recurring revenue streams, including
aggressively enter the content market
Bolster the team
Improve governance
Transforming Cornerstone
29
1
2
3
4
5
32. Commission
Focusing on ARR
32
100% focus by the field on recurring sales
Commission plans were changed in January
Quota credit
non-recurring salesnon-recurring sales
A. B.
33. Shifting Delivery to Partners
33
Enterprise Deals
• Partner “papers” all services work
• Cornerstone provides “delivery assurance”
• Cornerstone oversees delivery success
Partner Client
Enterprise and Strategic Clients
Mid-Market and SMB Clients
• Client contracts services directly with Cornerstone
• Cornerstone “papers” all services work
• Services charged as recurring fees
• Cornerstone owns delivery success
Client
Mid-Market and SMB Clients
44. Cornerstone
Content Anytime
• Recurring subscription content model
• Usage-based partner revenue sharing
• Over 3,000 courses available
• Fully-integrated in Cornerstone Learning
• Available NOW
44
45. 45
Customer Success Packages:
Now Recurring
Technical
Support
Education
& Training
Answer
Desk
Client
Community
System
Adoption
Optimization Customer
Success
Release
Readiness
46. 46
Tech Projects: Now Recurring
Inbound
Data Feeds
Outbound
Data Feeds
SSO
Web
Services
Data
Warehouse
Encryption
• Cornerstone continues to do all
tech projects
• Recurring charge for tech
projects, such as “Connectors”
for inbound and outbound feeds
• Drive further efficiencies with
Cornerstone Edge
48. Half of the Executive Leadership Team is New in 2018
New Additions
• Hired Jeff Lautenbach as President of Global Field Operations
• Hired Adrianna Burrows as Chief Marketing Officer
• Hired Chris Wheaton as VP of Field Operations
• Hired Jennifer Gianola as VP of Investor Relations
Exits
• Kirsten Helvey, COO
• Dave Carter, Chief Sales Officer
• Frank Ricciardi, GM of Asia Pacific
• Matt Gahr, VP Sales
Bolstering the Team
48
50. • Added three new directors in 2017
• Planning to add two new directors in 2018; one new director in
2019
• By the end of 2018, we expect that the majority of the board will
have joined in the last two years
• Plan to appoint a new chairman in 2018
• June shareholder vote to declassify the board, beginning in 2019
Improving Governance
50
53. 53
Background
Over 25 Years of Experience
• Go-to-market leadership roles
• Scaling and transforming
global businesses
• Building and executing growth
strategies
• Optimizing customer
segmentation
54. Leadership position in
Learning & Talent is
undeniable
Initial Observations
54
Individual reps are solid
sales people
TAM is large, highly
fragmented, and growing
2 31
54
55. Magic Quadrant for Talent
Management Suites
Source: Gartner (February 2017)
NICHE PLAYERS VISIONARIES
CHALLENGERS LEADERS
COMPLETENESS OF VISION
ABILITYTOEXECUTE
Technomedia
Haufe
SumTotal
Halogen
Software
Saba
Oracle
(Talent Management Cloud)
SAP
(SuccessFactors)
Talentsoft
Cornerstone is the Market Leader
in Talent Management
55
56. 400M
ADDRESSABLE
SEATS
Source: Cornerstone estimates, adapted from IDC, US Census Bureau
35M
CSOD SEATS
BY MARKET SEGMENT
BY GEOGRAPHY
ADDRESSABLE MARKET
150M
ENTERPRISE
150M
MID MARKET 100M
SMB
155M
NORTH
AMERICA
32M
LATIN
AMERICA
139M
EUROPE,
MIDDLE EAST
& AFRICA
74M
ASIA
PACIFIC
The Market is HUGE
56
57. Highly Fragmented Markets = Opportunity
57
None
17%
Oracle Taleo
12%
SAP
SuccessFactors
10%
Skillsoft
5%
Kenexa
5%
Other
48%
Recruiting
None
18%
SAP
SuccessFactors
12%
Oracle Taleo
9%
SumTotal
5%ADP
4%
Other
46%
Talent
In each of our markets, we face a varied list of competitors. We intend
to use our scale to grow market share in each segment.
SAP
SuccessFactors
19%
None
16%
Unknown
7%
Saba
5%
Other
41%
Learning
Source: Company Data.
58. The Workday “Threat” Has Been Overblown
58
Cornerstone only competes
with Workday in a subset of
it’s total business
Workday primarily competes
in the United states
Workday is ONLY selling talent
to their ERP base
59. 1. Sales focus had been on “easy wins” (i.e. services) at the
expense of recurring sales which drive growth (Recruiting,
Performance, Cornerstone HR)
2. Company missed a product cycle when LEPs came to market
3. Some damage was self-inflicted,especiallyin the Enterprisesegment
4. Marketing message has been weak; market does not
understand breadth of Cornerstone’s capabilities
5. Sales processes are sub-optimized and need major over-haul
So What is the Issue?
59
60. Improve productivity
Activate the base
Enter the learning content market
Sell recruiting suite
Leverage vertical momentum
60
The Solution: Drive ARR Growth
1
2
3
4
5
61. 1. Improving Productivity
61
1. Instituted more disciplined go-to-market cadence
2. Created global field ops and global enablement teams
3. Improved pricing discipline; introducing deal desk
4. Established sales and marketing interlock to ensure better alignment
5. Created new global dashboards and enhanced reporting
62. 2. Activating the Base
62
Have 3+
products
70%
Approximately
40%
Approximately
Note: Data represents purchase of an application with one of the Cornerstone product suites
Have 2+
products
• Introducing top account program
• Leveraging deal desk and
renewals team
• Analyzing sales & marketing data
to drive better decision-making
and resource allocation
• Driving U.S. to match international
Recruiting sales rates
63. 63
3. Entering the Learning Content Market
Go Big or Go Home!
Content Anytime deal
sizes exceeding our
highest expectation
We will aggressively
attach Content to
Learning deals
4Q17 launched Content
Anytime & Learning
Experience Platform
64. 64
Innovation in Driving Recruiting Success
4. Selling Recruiting – Accelerate Growth
Q1
2013
Q4
2017
Applicant
Tracking
Onboarding
Campus
Recruiting
Selection
Candidate
Experience
Recruiter
Experience
Candidate
Relationship
Management
Why recruiting growth now?
• Established market incumbents are not innovating
• Newer entrants look slick but still play in mid-market
• Differentiating on product front
65. 5. Capitalize on Vertical Momentum
• Drive alignment, focus and urgency – SLED+FED+HC
• Identify Extended Enterprise opportunities in Public Sector
• Examples include Opioid Crisis, preventive care, certifications, constituent learning
• Expand Federal into DOD
PUBLIC SECTOR GREW NEW ARR IN 2017 BY
GREATER THAN 150% YOY
65
66. 66
Bonus: Execute Partner 1ST Model
Drive productivity
and engagement
Ensure client
success
Ensure partner
readiness
Focusing marketing
on more strategic
initiatives
Alliances
Partner
Opportunities
Enablement
Partner
Marketing
69. 69
CEOs Must Upskill and Reskill
Their Workforce
CEOs expect digital
tech to disrupt their
company
CEOs think their
company is not
equipped with the
right skills to adapt
(Deloitte 2017)
70%90%
70. 70
Rising Employees Demand
More Learning
Say a clear career path
would compel them to
stay with an
organization longer
(Mercer 2015)
78%
Say development is
important in a job
(Gallup 2017)
87%
(Deloitte 2017)
Are likely to leave
because they’re not
learning enough
42%
79. Organizations are Playing a Constant
Game of Catch-up
Expensive,
outdated content
Top-down vs.
Bottom-up learning
Manual curation
and learning paths
Complex Vendor
Management
79
81. 1:1,000 Ratio
81
1 L&D professional for every
1,000 learners
Source: Bersin by Deloitte, 2017
82. 82
Cornerstone Content Anytime
PRE-CURATED
Constantly Evolving
Library Topics
• Business Skills
• Creative
• Health & Wellness
• Leadership & Management
• Office Productivity
• Personal Development
• Sales & Service
• Technology
4PREMIER
PARTNERS
2,500+COURSE OFFERINGS
83. 83
Content Anytime: European Edition
PRE-CURATED
Constantly Evolving
• Office Productivity
• Personal Development
• Sales & Service
• Technology
• Business Skills
• Creative
• Health & Wellness
• Leadership & Management
5PREMIER
PARTNERS
2,500+COURSE OFFERINGS
English
Spanish
German
French
Portuguese
Library Topics
84. 84
Custom Curated Packages
• Leadership & Management
• Office Productivity
• Personal Development
• Sales & Service
• Technology
• Business Skills
• Compliance
• Continuing Education & Certifications
• Creative
• Health & Wellness
• Industry Specific
34K+MULTILANGUAGE COURSE OFFERINGS
30+PREMIER PARTNERS
Library Topics
84
87. 87
Recent Content Anytime Deals
Client Industry Location
No. of
Users
Content vs. Learning
RPU Multiple
Manufacturer France 500 10x
Retailer United States 1,000 7x
Engineering United Kingdom 750 5x
Oil & Gas United Kingdom 20,000 4x
Insurance United States 3,000 3x
Based on Content Anytime Deals through 12/31/2017
88. 88
3-10x
Content Anytime
RPU of Learning
100%
Size of Content
Opportunity Overall
Relative to Learning
~$225M
ARR Opportunity Today
What We’ve
Seen
Relative
Opportunity
Today’s ARR
Opportunity
Content at Scale
Sizing the Content Opportunity for Cornerstone
92. Robots and AI
77% of CEOs expect the role of AI, Robotics,
and Automation to “increase significantly”
over the next 2 years.
Source: Robots: The new low-cost worker, Dhara Ranasinghe, CNBC, April 10, 2015. https://www.cnbc.com/2015/04/10/robots-the-new-low-cost-worker.html
Source: China Can’t Buy Enough Industrial Robots, Jethro Mullen, CNNTech, June 23, 2016 http://money.cnn.com/2016/06/23/technology/china-industrial-
robots/index.html
93. How the Global Economy Has Changed
The value of “brand, IP, and services” is skyrocketing
http://www.oceantomo.com/intangible-asset-market-value-study/
http://brandfinance.com/images/upload/gift_report_2017_bf_version_high_res_version.pdf
94. Hiring is as hard as it has been since 2001 and “time to hire” is even greater
Unemployment Rate Nearing Record Lows
End of
Korean War
Vietnam
War
https://www.thebalance.com/unemployment-rate-by-year-3305506
Black
Monday
Dot Com
Dot Bomb
Financial
Crisis
1970- 1976
6.2% jumping to 12.3 % Inflation
2007
4.1% Inflation
Mean “time to hire” for new hires
is 31 days, higher than it was in
2001.
http://dhihiringindicators.com/wp-content/uploads/2018/01/2018-01-DHI-Hiring-Indicators-Report-FINAL-2.pdf
Expected to drop
to 3.9%
95. CEOs, CFOs, CHROs agree on #1 issue: risk of retaining and attracting top talent
Talent Is Now the #1 CEO Issue
TCB-1652 Conference Board C-Suite Challenge 2018, n=570
96. Reinvention of the Talent
Management market
A new war for labor and skills.
Productivity, AI, and Analytics Driving The Next Wave
97. 1990s-2000s 2004-2012 2012-2017 2018+
Automated
talent management
Integrated talent
management
Engagement, fit,
Culture, analytics
Productivity,
performance, teams
Automate PerformIntegrate Engage
Shift from talent management to team and work management
Talent management:
integrated processes and
systems, talent as core to HR
and business agenda
Systems of automation
Practice-driven
solutions
People management:
focus on culture,
engagement, environment,
leadership, and fit
Systems of engagement
Empowerment
solutions
Team and work
management:
optimizing productivity,
alignment, connection of the
“network of teams”, tools to
make work better.
Systems of
productivity
Productivity-driven
solutions
98. • Core HR Technology spending is slowing
(41% say it’s flat)
• Clients not fully satisfied: only 21% of customers say
talent systems “always meet their needs.”
• Two biggest growth areas are Learning and
Analytics (37% yty)
• Career, succession, onboarding, analytics hottest
functional needs
• User satisfaction is 2/3 lower than
vendor satisfaction
How will you upgrade
your HR technology?
Sources: Sierra-Cedar 2016–2017 HR Systems Survey White Paper, 19th Annual Edition, and Sierra-Cedar 2017–2018 HR Systems Survey White Paper, 20th Annual Edition
used with permission and 2016 Bersin by Deloitte HR Systems Research
Multiple pathways to an HR tech transformation
todays state of replacing HR technology
HighriskLowrisk
ReactiveFocused
Current state
22%
Rip & replace
Move everything all at once
to the cloud
25%
Hybrids
Move ONLY TM or WFM
apps to cloud
22%
Parallel / Patchwork
Combination licensed and
cloud solutions
19%
Hosting / Outsource
Single tenant or BPO
Shift to cloud is important, not sufficient
Rip and replace pace slows
99. Feedback and
engagement
Reinventing
performance
Video-based
learning & career
Social
recognition
Well-being
Work – Team
management
2018 and beyond: From Talent Management to Management
Marketgrowth-adoption
2016
Pulse
survey
Text
analytics
Mobile
feedback
2020
Culture
assessment
Coaching
tools
Checkins
with feedback
Agile, open
goal management
Org network
analysis
Recognition
everywhere
Custom rewards
programs
Customer
recognition
Progression over time
Video learning
Content
curation
Intelligent
learning
Career
planning
Gamification
accreditation
Well-being
fitness tracking
Competitions
social sharing
Points
gamification
Fitness merges
w/ engagement
Virtual work
management
Document
management
Goal sharing
Goal tracking
Communications
messaging
Process
automation
Integration &
new talent apps
Analytics driven
“Systems of
engagement”
Apps that
“Make work life
better”
Total Addressable Market: $16.9B in US (2/3 in companies < 500)
100. The exponential importance of learning
A business, economic, and social imperative
“The learning curve is the earning curve.”
101. A New War for Skills
2/3 of companies believe they have a shortage of technical and complex problem solving skills
2.8
2.9
3
3.1
3.4
3.6
4.4
4.5
5.5
5.5
5.6
5.7
6.5
9.8
0 1 2 3 4 5 6 7 8 9 10
Head of Customer Experience
Reliability Engineer
Marketing Content Manager
Guest Experience Manager
Licensed Realtor
Head of Partnerships
Peronsal Loan Consultant
Brand Partner
Big Data Developer
Full Stack Engineer
Customer Success Manager
Sales Representative
Data Scientist
Machine Learning Engineer
Most In-Demand Jobs 2018
Soft Skills
Tech
https://economicgraph.linkedin.com/research/LinkedIns-2017-US-Emerging-Jobs-Report
Most In-Demand Skills
Most In-Demand Capabilities
102. Yet until now, L&D had not been keeping up
75%
of the workforce will be made up of
Millennials by 2025, yet 45% tell us they
get no leadership development at all.
45%
of North American survey respondents
think their current skills will be
inadequate in three years
Source: A New Model for Corporate Learning, by Karie Willyerd, Alwin Grünwald, Kerry Brown, Bernd Welz, and Polly Traylor, Deloitte Human Capital Trends 2017, Deloitte Millennial Survey
2017, Bersin High-Impact Learning Organization 2017, Deloitte Human Capital Trends 2017 and 2018
of survey respondents think their
companies are not giving them
opportunities to develop future careers
59%
The Net-Promoter
Score of L&D rated
by non HR
professionals is -15!
- Bersin HILO 2017
103. We are here
E-Learning
& Blended
1998-2002 2005 20182010
Self-Study
Online Learning
Course Catalog
Online University
2020
Learning
In Flow of
Work
LearningInTheFlow
ofWork
Instructional Design
Kirkpatrick
LMS as
E-Learning Platform
Talent
Management
Career Focused
Lots of Topics
Learning Path
Career Track
Blended Learning
Social Learning
LMS as Talent
Platform
Continuous
Learning
Everyone, All the
Time, Everywhere
Micro-Learning
Real-time Video
Courses Everywhere
Design Thinking
Learning Experience
LMS invisible
Data Driven, Mobile
Learning
Experience
Learning On Demand
Embedded Learning
Video, Self-Authored
Mobile, YouTube
70-20-10
Taxonomies
LMS as Experience
Platform
Formats
Philosophy
Users
Systems
Source: Bersin by Deloitte, Deloitte Consulting LLP
From e-learning to “learning in the flow of work”
We are entering a whole new era of L&D technologies and architecture
104. L&D Market Size: Content, Technology, Staff
Tuition Reimbursement,
$27.0
Managerial, $29.6
Compliance, $23.3
Process/Procedure,
$21.1
Sales, $19.0Onboarding/orientatio
n, $17.3
Professional (engr,
acct, legal), $16.9
IT and desktop, $16.7
Soft skills, interpersonal,
$16.5
Executive/leadership,
$14.6
Customer Service,
$12.7
Product Education,
$12.7
Basic skills, $6.1
Total Worldwide L&D Spending by Program
($ Billion)
US: $141 Billion
Global: $211 Billion
Sources: ATD Market Study, Bersin Corporate Learning Factbooks, Toward Maturity Benchmark Surveys, Sierra-Cedar HR Systems Survey, Bersin Proprietary Research
105. The L&D Marketplace Is Growing Rapidly
-11%
2%
10%
12%
10%
8%
7%
2008-2009 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2016-2017
L&D Global Spending YTY Growth Rate
Sources: ATD Market Study, Bersin Corporate Learning Factbooks, Toward Maturity Benchmark Surveys, Sierra-
Cedar HR Systems Survey
106. Breakdown of Corporate Learning Spend
Training Tools and Technology Market
LMS Platforms $6 Billion
Development Tools $1.5 Billion
Other equipment, facilities, technologies $11.5 Billion
Spend Category Pct of budget WW Spend Billion
Internal Payroll and Facilities 41% 86.71$
External learning providers (content and programs) 26% 54.99$
Tools and technology 9% 19.03$
Tuition Reimbursement 13% 27.49$
Administration 11% 23.26$
100% 211.48$
Sources: ATD Market Study, Bersin Corporate Learning Factbooks, Toward Maturity Benchmark Surveys, Sierra-Cedar HR Systems Survey, Bersin Proprietary Research
107. L&D Market: Content and Programs
Managerial, $7.88 ,
14.3%
Compliance, $6.19 ,
11.3%
Process/Procedure,
$5.63 , 10.2%
Sales, $5.07 , 9.2%
Onboarding/orientation,
$4.61 , 8.4%
Professional (engr, acct,
legal), $4.50 , 8.2%
IT and desktop, $4.45 ,
8.1%
Soft skills, interpersonal,
$4.39 , 8.0%
Executive/leadership,
$3.88 , 7.1%
Customer Service, $3.38
, 6.1%
Product Education,
$3.38 , 6.1%
Basic skills, $1.63 , 3.0%
Total Worldwide Content And Program Spending by
Program ($ Billion)
US: $36.7 Billion
Global: $54.9 Billion
Leadership + Mgt: $11.8B
Sales + Cust Svc: $8.5B
General Softskills: $4.4B
IT/Tech/Prof: $8.95B
Sources: ATD Market Study, Bersin Corporate Learning Factbooks, Toward Maturity Benchmark Surveys, Sierra-Cedar HR Systems Survey, Bersin Proprietary Research
108. Source: Meet the Modern Learner: Engaging the Overwhelmed, Distracted,
and Impatient Employee, Bersin by Deloitte, Deloitte Consulting LLP
The Reality of Learning Today:
24 Minutes A Week
24 minutes a
week
109. And… We are living longer.. stretching the talent cycle
“Since 1840 there
has been an
increase in life
expectancy of three
months for every
year.”
Source: Gratton, Lynda; Scott, Andrew.
The 100-Year Life
Today’s
Millennials have
a 50% chance of
living to 100+
Increase in Life Expectancy Over Time
Source: http://www.mortality.org/
Will
Generational
Bias Be the Hot
Button of 2018?
110. Buidling a completely new career model in companies
Redesigned: 58% of companies are
redesigning or planning to
redesign their career model
Deloitte HC Trends 2017
Open Models: While 33% of companies
promote vertical career moves, 67%
now promote horizontal or project
based career progression, and 83%
expect to have “open career models”
in next 3-5 years.
Deloitte HC Trends 2017
More Dynamic:
31% of companies expect careers
to be 3-5 years long, and 60%
expect them to be 10 years or less
Deloitte HC Trends 2017
Learning and career management
software is the #1 fastest growing
segment in HR technology
(Sierra-Cedar 2016– 2017 Survey
HR White Paper)
Yet….54% of companies have no firm
plans to build new career systems for
their employees yet.
Deloitte HC Trends 2018
111. Many learning tools are needed
Source: Toward Maturity, 2017 and Learning Technology Survey, Don Taylor, 2017
Source: Sierra-Cedar HR Systems Study, 2017
Change Has
Come:
38% of LMS users
want to “improve
the user
experience”
28% of companies
are buying a new
core learning
platform
14% are planning
on replacing their
LMS
112. New Learning Tech Segments Are Here
Learning Experience
Platforms
Degreed, EdCast, PathGather
Jam, Fuse, Percipio, Cornerstone,
Valamis, Tribridge, …
Program Experience
(Delivery) Platforms
Intrepid (Vitalsource), NovoEd
EdX, Everwise, OpenEdX, Blackboard,
Instructure, ...
Micro Learning
Platforms
Axonify, Grovo, Qstream, Practice,
Rehearsal, Jubi, Wisetail, Mindtickle, etc.
LMS and Content Platforms
Traditional: Cornerstone, Saba, SuccessFactors, SumTotal
Modernized: Workday, Oracle, SAP, Bridge, D2L, Litmos, Intellum, Docebo, others
Assessment, VR, Development Tools
Video Authoring, Intelligent assessment, spaced learning,
gaming, virtual reality, collaboration, simulations, …
Content Libraries
Udacity, Coursera, EdX, Udemy, Pluralsight,
SkillSoft, CrossKnowledge, hundreds of others
Learning Record
Store
GrassBlade, Learning Locker,
Saltbox, Yet, Watershed
Source: Bersin by Deloitte, Deloitte Consulting LLP
1 2 3
4 5
6 7
113. Companies Are Not Yet Ready And Need Vendor Support
2018 Bersin Learning Organization Maturity Model
Source: 2017 Bersin by Deloitte High-Impact Learning Organization, n=1,200, >1,000 employees; Bersin by Deloitte, Deloitte Consulting LLP
Episodic / Programmatic
Level 1
Responsive / Contextualized
Level 2
Continuous / Empowering
Level 3
Anticipatory / Flow
Level 4
6%
20%
39%
35%
114. believe their
employees are fully
aligned with the
corporate purpose
23%
believe internal
processes for
collaboration
are working well
14%
are excellent
at building
a differentiated
employee experience
22%
are using design
thinking as part
of crafting the
employee
experience
10%
Say problem is
urgent
38%
Culture, engagement, and beyond
Focus on the employee experience
Source: Deloitte and Facebook, “Transitioning to the future of work and the workplace,” November 2016
115. Self Service Intelligent ServicesCase Mgt. AI/Voice App Interfaces
Engagement
Feedback
Recognition
Learning
Career
Coaching
Performance
Goals
Succession
HRMS
Payroll/Time
Communications
Analytics/AI
ONA
Workforce Mgt
Wellbeing
Rewards
Benefits
Sourcing
Recruitment
Assessment
White collar Hourly Senior leaders Line managers Candidates Contractors External network Alumni
Senior Geographic
Business Partners
Talent Specialists
(OD, sourcing, recruiting, learning,
organized in networks of excellence)
Wellbeing, safety, culture,
engagement, recognition
Analytics, Monitoring,
Predictive, WF Planning
HR Tech,
App development
Research, Market
Best Practices,
Comp, Ben, Rewards HR Prof DevelopmentHR Ops, AI and Bots,
Intelligence
Junior
Geo Bus Partners
Teams@Work
(productivity, services, team
management, wellness, feedback,
recognition, learning)
People@Work
(productivity, services,
team management,
wellness, feedback,
recognition, learning)
Candidates@Life
Candidates (products,
jobs, projects,
opportunities)
Leaders@Work Alumni@life
Learning and HR Technology Architecture Of The Future
116. Dan Bock
Senior Vice President of Sales
North America
Talent Management Opportunity
117. 117
Talent is the Competitive Advantage That Will
Define the Winners & Losers of the 21st Century
Success in business is all about people,
people, people. Whatever industry a
company is in, its employees are its biggest
competitive advantage.
-Richard Branson
“
”
118. 118
How we manage talent & develop
skills in the next 5 years will be
completely different from the last 20
120. Cornerstone Learning
• Foster collaborative learning
with fresh content
• Enable online &
mobile training
• Manage competencies
& certifications
• Build communities &
activity streams
• Easily administer learning
Modern learning to inspire
continuous development
120
121. Cornerstone Performance
• Facilitate continuous
feedback & coaching
• Develop aligned goals
• Foster career mobility
• Manage compensation
with ease & precision
• Identify top performers
& future leaders
Continuous performance
management to drive
engagement and results
121
122. Cornerstone Recruiting
• Branded candidate experience
• Social sourcing
• Recruiting analytics
• Robust talent pipelines
• Improved process efficiency
• New hire onboarding tracking
Next-generation recruiting
to attract, select and
onboard top talent globally
122
123. 123
Canon Visualizes their Talent
with Cornerstone
25%
Increase in
internal hires
84%
Performance review
completion across 22
countries
Launched
self-directed learning
initiative across the
globe
124. 124
ResCare Transforms People’s
Lives with Cornerstone
32%
Reduced application
completion time
48%
Reduced
time-to-hire
5%
Increased application
flow
128. 0
500
1,000
1,500
2,000
2,500
3,000
3,500
Learning Performance Recruiting Cornerstone HR
Existing Client Penetration Client Opportunity
NumberofClients
Calculated based on 3,250 clients with approximately 10,850 users on average
Clear Opportunity in Recruiting
128
50% penetration
in Recruiting is a
$100M+
incremental ARR
opportunity
129. • Candidate Communication
• Employer Branding
• External Sourcing
• SEO & Google Analytics
• Campus Recruiting /
Interview Events
• Candidate Search
• Assessments
• Talent Scoring
• Talent Pools
• Selection
• Interview Management
• Background Checks
• Agency Portal
• Partner Integrations
• Reporting
• New Hire Portals
• Onboarding Tracking
• Forms Management
• Automatic Workflows
• Dashboards
• Requisition Management
• Applicant Tracking
• Batch Actions/High Volume
OnboardHire
Measure
*Available with purchase of Selection
Cornerstone’s Recruiting Suite Supports
the Entire Talent Acquisition Process
129
Select
Mobile and Localized
Attract
136. EMEA Continues to Expand its Footprint
136
10M+
Users
650+
Clients
21
Countries
30
Languages
NOTE: USER AND CLIENT COUNT FIGURES EXCLUDE GROWTH EDITION AND CORNERSTONE FOR SALESFORCE.
AS OF DECEMBER 31, 2017
138. 138
2
4 4
13
5
14 13
16
0
5
10
15
20
25
30
35
Qtr1 Qtr2 Qtr3 Qtr4
Existing New
• 32% of all new logos included
Cornerstone HR in scope
• 38% of all new ARR $s included
Cornerstone HR
• 18% of new ARR $s in existing
accounts included Cornerstone
HR
HCM-driven business
(EMEA stats)
…Followed by a Solid Comeback in 2017
Led by Accelerating Traction with Cornerstone HR in 2017
with Both New and Existing Clients
148. Import Integrate
Edge Import
Easily map and load data
into Cornerstone
Edge Integrate
Easily purchase and manage
integrations with 3rd-party apps
Develop
Edge Develop
Build external applications and
reports using Cornerstone APIs
Making Integrations Easy
Cornerstone Edge
148
149. Cornerstone HR Transforms HR Administration
• View & manage all employee
records in one place
• Empower employees to
manage personal data
• Build configurable
organizational hierarchies
• Control Personally Identifiable
Information (PII) access
• Create headcount forecasts
Modern HR administration –
without the rip-and-replace
price tag
149
151. Cornerstone is Gaining Traction in HCM
Fosway 9-Grid for Cloud HCM
Source: Fosway (October 2017)
Advanced into the CORE
CHALLENGER
position in the October 2017
Fosway 9-Grid, progressing
from last year’s position as a
POTENTIAL CHALLENGER
PERFORMANCE
POTENTIAL
Potential Leader
Potential Challenger
Potential Performer
Strategic Challenger
Core Challenger
Solid Performer
Strategic Leader
Core Leader
Poor Performer
‘Oct. 2017
‘Oct. 2016
151
152. Cornerstone HR’s Impact on Deals
152*EMEA deals from 2016-2017
Average deal values converted from local currency to USD
Average Suites Purchased
Average RPU
1.7
3.5
Without Cornerstone HR With Cornerstone HR
~$20
~$60
Without Cornerstone HR With Cornerstone HR
• In the past two years, EMEA has
seen that clients purchasing
Cornerstone HR buy ~2x more
product suites on average
• Inclusion of Cornerstone HR also
significantly increased RPUs by
~3x on average
158. 158
A Sizeable Market… 400M
SEATS
100M
SEATS
SMB MARKET*
GLOBAL
ADDRESSABLE MARKET
*Represents organizations with between 20 and 500 employees globally
159. 159
…that Could Be Our Largest Segment In Dollars
SMB unit economics are 4-5x Enterprise, and 2-3x Mid-Market
Enterprise Mid-Market SMB
160. 160
Established A Unified, Focused Team in 2017
We moved to a divisional structure to create a more unified,
focused approach to addressing the SMB market
GM SMB
OperationsSMB MarketingSMB SalesSMB Product &
Development
*HIGHLIGHTED boxes represent new roles/functions added in 2017
161. 161
Took Time To Understand Our Market
We engaged an external research firm to help us better understand
the makeup of the SMB market
Talent Laggards Minimalists
31%
Savvy HR Pro
27%
Talent Champions
26%16%
Addressable MarketNo Interest
LOW MEDIUM HIGH
Savviness & Feature Requirements
750+
SMBs
Interviewed
162. 162
Shifted to a Multi-Product Strategy
To enable us to effectively address the entirety of the SMB market,
we shifted our go-to-market to a multi-product strategy
Savvy HR Pro
27M Seats
Talent Champions
26M Seats
Simple Robust
Minimalists
31M Seats
164. 165
Simplified Conversations with Pricing Consistency
Pricing consistency between both PiiQ and Cornerstone solutions simplifies
conversation for prospects considering both products
EXAMPLE
Learning & Performance: 150 users
Annual Software Price $13,500 $17,500
Upfront Services Price — —
Total Annual Price $13,500 $17,500
Monthly User Price $7.50 $9.72
165. 166
The Result: Dramatic Year-Over-Year Sales Growth
3%
234%
0%
50%
100%
150%
200%
250%
1H '17 2H '17
After implementing many of the changes described earlier, SMB
demonstrated strong second half growth (with fewer reps than in ‘16)
Key Changes Implemented
166. 167
Year-Over-Year Rep Productivity Improvement
In the second half of 2017, the average SMB rep was generating 4.3x as
much in new sales as they were in the second half of 2016
1.8x
4.3x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
1H '17 2H '17
Key Changes Implemented
167. 168
Significant Increase in SMB Deal Volume
In Q4 of 2017, the volume of SMB deals was significantly higher than
any other quarter in Cornerstone’s history
0
20
40
60
80
100
120
140
160
180
200
Q1:14 Q2:14 Q3:14 Q4:14 Q1:15 Q2:15 Q3:15 Q4:15 Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Q4:17
Key Changes Implemented
Historical SMB Deal Volume
170. 171
But Significant Untapped Potential Remains
After ten weeks assessing the APJ region, many of my observations
are analogous to what I initially saw with SMB
1
Need an increased level of
local expertise
Sales and marketing must be
more country-specific
Pricing strategy must better
optimize conversion
2
3
171. 172
It’s Time to Focus
We are creating a focused, country-specific GTM approach across the
region, with deeper levels of investment in fewer major markets
Large-Investment,
Anchor Markets
Secondary Markets
Australia &
New Zealand
Japan Hong Kong South KoreaSingapore
(ASEAN)
172. 173
APJ Expected To Be Key Growth Driver
After making some of the changes discussed on previous slides, we
expect APJ to be the catalyst to take Cornerstone’s international
mix to 40%+ in the years to come
35%
40%+
30%
33%
36%
39%
42%
2017A 2018E 2019E 2020E
International Revenue Mix
173. 174
Cornerstone 2.0 - Services Partner Panel
Bill Forsyth
Chief Sales
& Solutions Officer
174
Colin Brennan
Executive Vice President
Cloud Deployment
Tiffany Appleby
Vice President Alliances,
North America
Jason Magill
Senior Manager
Human Capital
175. 1. A look back: historical financial performance
2. Transformation: top line
3. Transformation: bottom line
4. ASC 606 and 2018 outlook
5. 2020 Framework
Topics to cover
176
178. $154
$232
$316
$400
$453
$526
2012 2013 2014 2015 2016 2017
$118
$185
$264
$340
$423
$482
2012 2013 2014 2015 2016 2017
179
Continued Top Line Growth
Billings
(in millions)
Revenue
(in millions)
57% 42% 29% 25% 14%Revenue Growth YOY:
179. 180
Best Q3 in CSOD History
Q3 Total New Sales Year-over-Year
2010 2011 2012 2013 2014 2015 2016 2017
New Sales Linear (New Sales)
Note: charts are illustrative and not drawn to scale.
180. 181
Second Best Q4 in CSOD History
Q4 Total New Sales Year-over-Year
2010 2011 2012 2013 2014 2015 2016 2017
New Sales Linear (New Sales)
Note: charts are illustrative and not drawn to scale.
181. 182
In the Past, We Focused Only on Total Sales
Total New Sales by Year
Note: charts are illustrative and not drawn to scale.
2012 2013 2014 2015 2016 2017
New ARR One-Time FX
182. 183
…But Our Sales Mix Shifted Negatively
New Sales Composition
2011 2013 2015 2017
Recurring ServicesNew ARR One-Time
15pts lower
than in 2011
Note: charts are illustrative and not drawn to scale.
183. How Selling Services Impacted Our ARR
184
2014 Ending ARR
Less: Churn
Plus: New ARR
2015 2016 2017 2018E
$439
$475-495*
(8-13%)
2015 Ending ARR
2016 Ending ARR
2017 Ending ARR
Less: Churn
Less: Churn
Less: Churn
Plus: New ARR
Plus: New ARR
Plus: New ARR
(in millions)
ARR
New
Sales
Excluded:
One-Time
Excluded:
One-Time
Excluded:
One-Time
*2018E ARR reflects the guidance range provided on earnings call on 2/13/18.
Note: charts are illustrative and not draw to scale.
184. RECURRING
RECURRING
RECURRING
ARR’s Impact on Total Revenue
185
2015 2016 2017
SERVICES
$340
+29%
SERVICES
$423
+25%
SERVICES
$482
+14%
(in millions)
Total Revenue
Private & Confidential
As ARR growth slowed, so did our recurring and total
revenue growth…..
185. RECURRING
RECURRING
RECURRING
SERVICES
SERVICES
ARR’s Impact on Total Revenue
186
2015 2016 2017
SERVICES
$430
+29%
$514
+20%
Source: Cornerstone estimates
Maintaining historical recurring rates would have resulted in
higher growth of 400bps in 2016 and 600bps in 2017
(in millions)
Total Revenue
+$7M
(29% vs. 25%)
+$32M
(20% vs. 14%)
Private & Confidential
187. How the Services Transformation Affects Billings
2015 2016 2017 2018
Recurring Billings Services Billings
188
188. Starting ARR Currency ARR Churn New ARR from
Existing Customers
New ARR from New
Customers
Ending ARR
How ARR Moves
Note: Bar sizes are representative only and should not be used to estimate actual values. 189
Illustrative Year-over-Year Bridge
189. 190
How ARR Impacts Recurring Revenue
$1M Deal
ARR = $1M
Rev = $1M
ARR = $1M
Rev = $0.5M
ARR = $1M
Rev = $5K
Jan 1 July 1 Dec 30
EXAMPLE
Date Signed Date Signed Date Signed
190. Prior Year Exit
ARR
Revenue Lost
From Churn
Revenue from
New ARR
Currency Fair Value
Adjustment
606 Adjustment Recurring
Revenue
Illustrative Bridge from 2017 ARR to
2018 Recurring Revenue
Note: Bar sizes are representative only and should not be used to estimate actual values. 191
201. 202
Understanding ASC 606
• Modified Retrospective Adoption
• 2018 financial statements and guidance reported under 606 to reflect adoption of
new accounting standard
• Financial statements footnotes will include 2018 results reported under 605
• New disclosure in first quarter 10-Q will provide total backlog
• One-Time Financial Impacts from Adopting ASC 606 (On Jan. 1, 2018)
• Reduction of $7M in deferred revenue with an increase to shareholder equity
• Increase of $16M in deferred commissions with an increase to shareholder equity
*Update from previous guidance of $29M in deferred commissions
• 2018 Financial Impacts
• ~$3M total revenue headwind
• Slight increase to commission expense
• ~$3M operating profit headwind
• No impact to cash flow
• Expect Commission accounting to improve margins by 2pts over the next several years
202. 2017 Actual
(605)
2018 Guidance
(605)
2018 Guidance
(606)
Annual Recurring
Revenue*
$439M $475 - $495M
(8-13% growth)
$475 - $495M
(8-13% growth)
Total Revenue $482M $500 - $510M
(4-6% growth)
$497 - $507M
(3-5% growth)
Subscription Revenue $397M $458 - $468M
(15-18% growth)
$453 - $463
(14-17% growth)
Professional Consulting
Services Revenue
$85M Down ~50% Down ~50%
Operating Profit* $27M
(6% margin)
$55 - $65M
(11-13% margin)
$52 - $62M
(10-12% margin)
Unlevered Free Cash
Flow*
$44M
(9% margin)
$50 - $60M
(10-12% margin)
$50 - $60M
(10-12% margin)
2018 Guidance (605 and 606)
*Denotes a non-GAAP metric.
** Net Interest Expense is Gross Interest Expense less Interest Income
Note: Reflects guidance issued as of February 13th, 2018. Please refer to the earnings press release for Q1 2018 guidance.
203
OTHER:
1. Total S&M dollars down YOY
2. Net Interest Expense**:
1. GAAP $25M
2. Non-GAAP $16M
3. Cash Interest Paid $14M
4. Shares outstanding to
increase from 58M to 63M
when EPS is positive.
5. Operating margin and uFCF
margin percentages could
vary depending on the
pace of services roll-off
6. Income tax expense slightly
above $2M
7. Capex 3-4% of revenue
203. Q1 2017 Actual
(605)
Q1 2018 Guidance
(605)
Q1 2018 Guidance
(606)
Total Revenue $112M $126 - $128M
(13-15%)
$126 - $128M
(13-15%)
Subscription Revenue $93M $112 - $114M
(21-23%)
$111 - $113M
(19-22%)
Professional Consulting
Services Revenue
$19M Down ~20% Down ~20%
Operating Margin* 4.4%
Slight
Improvement YOY
Slight
Improvement YOY
Unlevered
Free Cash Flow Margin*
($14M)
Slight
Improvement YOY
Slight
Improvement YOY
Q1 2018 Guidance (605 and 606)
204
OTHER:
1. Gross margin expected to
be down YOY in Q1, but to
significantly improve on a
sequential basis in Q2-Q4
2018
2. Net Interest Expense**:
1. GAAP $8M
2. Non-GAAP $5M
3. Cash Interest Paid $3M
*Denotes a non-GAAP metric.
** Net Interest Expense is Gross Interest Expense less Interest Income
Note: Reflects guidance issued as of February 13th, 2018. Please refer to the earnings press release for Q1 2018 guidance.
206. 207Note: 2020 uFCF target assumes we have no cash taxes and assumes the convertible note is converted into equity.
2020 “Moderate Growth” Target
in uFCF
~$150M
per share
~$2.00
2020 Growth/Profitability Framework
211. 212
Dominate the Learning Market
Definitive market leader in
Learning Management
Only holistic
“learning platform”
in the market
Embedded content &
machine learning
(Learning Management +
Learning Experience)
212. 213
Re-establish Our Leadership
in Talent Management
Deepest functionality
in the market
Extreme focus on
the experience
Holistically integrated
across the talent suite
213. 214
Emerge as a Global
Human Capital Management Player
Only real alternative
to “rip & replace”
Employee-driven
experience
Transformation without
the cost
