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Cornerstone OnDemand, Inc.'s (NASDAQ:CSOD) Profit Outlook

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Simply Wall St
·3 min read
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Cornerstone OnDemand, Inc. (NASDAQ:CSOD) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Cornerstone OnDemand, Inc., together with its subsidiaries, provides learning and people development solutions through software-as-a-service model worldwide. The US$3.0b market-cap company posted a loss in its most recent financial year of US$4.1m and a latest trailing-twelve-month loss of US$32m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Cornerstone OnDemand will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Cornerstone OnDemand

According to the 8 industry analysts covering Cornerstone OnDemand, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$49m in 2022. Therefore, the company is expected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 78%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Cornerstone OnDemand given that this is a high-level summary, but, keep in mind that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Cornerstone OnDemand is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Cornerstone OnDemand, so if you are interested in understanding the company at a deeper level, take a look at Cornerstone OnDemand's company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:

  1. Valuation: What is Cornerstone OnDemand worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Cornerstone OnDemand is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cornerstone OnDemand’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.