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Why Cornerstone OnDemand Shares Plunged Today

Image source: Cornerstone OnDemand.

What happened

Shares of Cornerstone OnDemand (NASDAQ: CSOD) have plunged today, down by 20% as of 12:20 p.m. EDT, after the company announced third-quarter earnings.

So what

Revenue in the third quarter rose 24% to $107.8 million. On a constant currency basis, sales would have increased 30%. Billings came in at $107 million. Non-GAAP net income for the quarter was $6.9 million, or $0.11 per share. The company easily beat analyst expectations, which called for $104.5 million in sales and an adjusted net loss of $0.01 per share. CEO Brian L. Swartz said significant improvements in sales and marketing expenses helped profitability.

Now what

Guidance for the fourth quarter calls for revenue in the range of $108 million to $110 million, which would translate into growth of 14% at the midpoint. Cornerstone OnDemand updated its full-year guidance as well, and now expects non-GAAP net income of $2.5 million, or $0.04 per share. The Street was unhappy with guidance as foreign currency concerns weigh on sales cycles and Cornerstone is restructuring some of its sales organization. At least four analysts have downgraded shares today.

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Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.