I mentioned Cornerstone (CSOD) when I wrote about Ultimate Software (ULTI), so I wanted to provide a quick Q1 update. Cornerstone shares jumped more than 14% today after the company reported Q1 revenue growth of 52%. Bookings growth of 67% was particularly strong and accelerated from 47% growth in Q3 and 58% growth in Q4. Gross margin rose 230 basis points from the year-ago quarter, hitting 73.5%. Deferred revenue rose 72% to $55.8 million.
In Q1, the company added 85 new customers, bringing its total count up to 891 customers, an increase of 58% from a year ago. Cornerstone now has 8.2 million users (+57% year over year and +9% sequentially), making it a significant SaaS vendor.
Cornerstone management said it sees an opportunity to push further into the mid-market customer segment now that ERP vendors Oracle (Taleo) and SAP (SuccessFactors) have caused disruptions in the talent-management sector with their recent acquisitions. Many customers will prefer to go with best-of-breed talent-management vendors. And Cornerstone is one of the few remaining independents worth considering, especially after the recent rollout of its Recruiting Cloud offering.
For 2012, Cornerstone raised its revenue guidance range to $114.5 million-$116.5 million (representing 53% growth at the midpoint) from previous guidance of $112 million-$114 million.
@Value Hiker @Noreen
Value Hiker is right investors are reaction to an unexpected expansion in margins. Amazon did a huge capital spend last year to expand warehouses and data centers and now they can expand margins but c'mon 2%? Just can't see how this rationalizes a 13% pop. It's mostly the shorts that were forced to cover.
I would never short this stock but I don't understand its valuation either.
Re: fact vs reality
tokyogai
4/27/2012 8:55:30 AM
Scott- I agree. there are many much better tech buys out there. Sometimes investors are just not logical.
Go figure: a double digit jump in share prices for a 36% year over year drop in earnings, along with lowered guidance and worsening cash flow.
Guess it must be because Amazon remains "heads-down focused on driving a better customer experience through price, selection and convenience. We believe putting customers first is the only reliable way to create lasting value for shareholders."
At least that's what Tom Szkutak, CFO and SVP at Amazon.com, said during yesterday's conference call.
Investors think Amazon is at the same stage of 2004: it has put the foundation for rapid growth in the coming years - Kindle Fire, Cloud computing, and court win against ABA and Apple. Even the profit margin is razor thin now. but the capital spending of current cycle is almost done, great margin expand lies ahead.
Of course, it is just a hope and only time can tell it will come true or not.
AMZN beats and it's up 14% AH. Amazes me. Don't understand that people want to pay 70X forward earnings on a stock w/ 2% margins (at best). PEG is 5.87! Can somebody please explain this to me? I can never buy Amazon because of my valuation discipline.
Thanks mInvestor! Maybe I'll do a "Part 2" next week to cover some of the latest beats. There were some good numbers out today from NetSuite (N) and Ariba (ARBA), for example.
Re: fact vs reality
mInvestor
4/26/2012 7:27:39 PM
Robert,
Well, eager to read your update. I'd be interested to find how many medium sized tech companies beat the expectation. That will be a good sign our economy is growing, and we may see some new big things or products in the near future.
It's just a sampling of some names that have reported better-than-expected results so far. Equinix (EQIX) was another one, but didn't make it in for space reasons. A lot of Q1 reports came in after the close today, and more next week, of course.
Re: fact vs reality
mInvestor
4/26/2012 7:07:18 PM
Robert,
Thank you for this update. Like Scott said in previous post, it's good to see Tech companies' growth.
Just curious, why did you pick up those companies, Citrix, Akamai and Fortinet? Are they somehow special?
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