Cornerstone OnDemand Inc.

Overview Key strengths Key risks Strong recurring revenue compared with other technology software companies. Extremely high leverage. Well-received talent management solutions. Financial-sponsor ownership leads to very aggressive financial policies. Operating track record of over 20 years. Narrow product focus on talent management software. Operates in an intensely fragmented and competitive market. In 2022, Cornerstone acquired two talent management solutions companies with a mix of revolver borrowings and balance sheet cash, which caused its S&P Global Ratings-adjusted leverage to remain above 15x. However, there are also other factors that are elevating Cornerstone?s S&P Global Ratings-adjusted leverage. For example, the company has $700 million of payment-in-kind (PIK) preferred equity. We treat this preferred equity as debt for analytical purposes because it is

...Even though Cornerstone's financial policy has remained very aggressive over the past 12 months, leading to very high S&P Global Ratings-adjusted leverage, we believe it can decrease its leverage in 2023 supported by organic revenue growth, the realization of synergies, and the roll-off of large one-time costs. In 2022, Cornerstone acquired two talent management solutions...

Full Report