Analyzing Cornerstone OnDemand’s Acquisition

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The?global Corporate Learning Management System (LMS) market is estimated to grow at 19% CAGR from $13.38 billion in 2021 to $44.49 billion in 2028 . Cornerstone OnDemand (Nasdaq: CSOD) recently reported its second quarter results that surpassed market expectations. But the big news was the announcement of its acquisition by a private equity player.

Cornerstone OnDemand’s Financials

Revenues for the second quarter grew 16.3% to $214.34 million with subscription revenues growing 16.7% to $206.8 million. The market was looking for revenues of $209.43 million. EPS of $0.73 surpassed the market’s estimates of $0.54 for the quarter.

The company forecast revenues of $203-$205 million for the third quarter and $847-$857 million for the year. The market was looking for revenues of $215.46 million and an EPS of $0.54 for the third quarter. The Street expects the company to end the current year with revenues of $855.75 million with an EPS of $2.39.

Cornerstone OnDemand’s Product Growth

Cornerstone was recently acquired by Santa Monica-based Clearlake Capital Group for an estimated $5.2 billion. Like several other private equity firms, Clearlake too is looking to expand its portfolio of companies that offer new software capabilities for optimizing workforce agility, transform skill development, deliver personalized, and engaging growth experiences. Clearlake traditionally invests in communications, healthcare, and industrial companies. Some of the other technology companies that Clearlake has acquired in the past include Precisely, which is a provider of solutions for data integration, content management and document management; Confluence Technologies that provides solutions for investment management companies to automate their fund administration process; and nThrive Technology that provides healthcare revenue cycle management SaaS solutions, to name a few.

Cornerstone is looking to benefit from the operating capabilities, capital support, and sector expertise that Clearlake’s management will bring to the team. Post the acquisition, Cornerstone will become a private company. Cornerstone believes that its private stature will allow it to deliver better innovation, capitalize on its market opportunities, and extend its platform. The significant strategic flexibility and financial resources will help create new opportunities for its employees.

Cornerstone’s stock is trading at $57.19 with a market capitalization of $3.8 billion. It had fallen to a 52-week low of $34.50 in September last year. The stock was trading at a 52-week high of $57.50 earlier this month.

Disclosure:?All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

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Photo Credit:?Gerd Altmann ?from?Pixabay