Current Report Filing (8-k)




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


	FORM 8-K


CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): August 6, 2015

Qumu Corporation
(Exact name of Registrant as Specified in its Charter)

	Minnesota
(State Or Other Jurisdiction Of Incorporation)




000-20728		41-1577970
(Commission File Number)		(I.R.S. Employer Identification No.)

7725 Washington Avenue South
Minneapolis, MN		55439
(Address Of Principal Executive Offices)		(Zip Code)




	(952) 683-7900
Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):




o	Written communications pursuant to Rule 425 under the Securities Act

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Items under Sections 1 and 3 through 8 are not applicable and therefore omitted.

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Qumu Corporation (the “Company”) hereby furnishes as Exhibit 99.1 a press release issued on August 6, 2015 disclosing material non-public information regarding its results of operations for the quarter ended June 30, 2015 and hereby furnishes as Exhibit 99.2 statements of Sherman L. Black, its President and Chief Executive Officer, and Peter J. Goepfrich, its Chief Financial Officer, made on August 6, 2015 at a telephone conference relating to the quarter ended June 30, 2015 results.

The Exhibit 99.1 furnished herein reports amounts for cash and marketable securities that were adjusted following the issuance of the press release. The Company recorded a reclassification adjustment which resulted in a $1.25 million decrease to cash and an offsetting increase to marketable securities as of June 30, 2015, with a corresponding increase to cash used for purchases of marketable securities for the six months ended June 30, 2015. Corrected amounts will be properly reported in the Company’s Form 10-Q for the quarter ended June 30, 2015. The line items impacted in the condensed consolidated financial statements as of and for the six months ended June 30, 2015 are as follows:



	Amount reported in Exhibit 99.1		Corrected amount reported in Form 10-Q
Condensed consolidated balance sheet as of June 30, 2015:
Cash	5,985		4,735
Marketable securities	13,503		14,753
Condensed consolidated statement of cash flows for the six months ended June 30, 2015:
Cash used for purchases of marketable securities	(8,000	)	(9,250	)
Net cash provided by continuing investing activities	9,583		8,333
Net cash used in investing activities	9,583		8,333
Net decrease in cash and cash equivalents	(5,699	)	(6,949	)

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.




Exhibit No.		Description
99.1		Press Release issued on August 6, 2015.

99.2		Statements of Sherman L. Black, President and Chief Executive Officer, and Peter J. Goepfrich, Chief Financial Officer at a telephone conference held on August 6, 2015.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




	QUMU CORPORATION

	By:	/s/ Peter J. Goepfrich
		Peter J. Goepfrich
		Chief Financial Officer

Date: August 7, 2015

EXHIBIT 99.1

Qumu Reports Record Quarterly Revenue of $8.8 Million

Revenue up 47% from 1Q 2015

Gross Margin Increased to 49% from 37% in 1Q 2015

Conference Call Today at 4:30 p.m. ET

Minneapolis, MN – August 6, 2015 – Qumu Corporation (NASDAQ: QUMU) today reported financial results for the second quarter ended June 30, 2015. Revenue totaled $8.8 million during the period and was up 47% from the revenue in the first quarter of 2015, establishing a new quarterly record for Qumu. Revenue was four percent higher than the $8.4 million generated during last year’s second quarter, which was previously the Company’s highest. Excluding significant revenue in the second quarter of 2014 from a large customer, revenue is up 46% over last year. Contracted commitments totaled $8.3 million in the second quarter of 2015 compared with $7.4 million in the second quarter of 2014, an increase of 12%.

“The second quarter results reflected significant sequential growth in revenue and improved gross margins,” said Sherman Black, CEO of Qumu. “We also saw improved execution in EMEA as we addressed issues noted in our first quarter report. In North America we continued to generate strong results from the Global 2000 market as we added new customers and expanded within our existing base. Lastly, in APAC we entered into a valuable sales partnership with Fujitsu, one of the world’s foremost IT service providers and the number one IT service provider in Japan.”

“During the quarter we were once again recognized by an industry analyst for our product and technology leadership,” Mr. Black continued. “Aragon Research, a technology-focused research and advisory firm, named Qumu a leader in the Aragon Research Globe for Video Content Management, 2015 report. In addition, our R&D investments resulted in several product highlights for the quarter.” These include:


•	Video Optimization Pack for Citrix Virtual Desktop Infrastructure


•	Enhanced mobility offerings


◦	Qumu Enterprise Mobile App v 2.5


◦	Qumu Enterprise integration with Citrix XenMobile Enterprise Mobility Management


◦	Qumu Cloud iOS and Android mobile apps


•	Qumu Cloud deployment on IBM Cloud’s SoftLayer


•	Cross publishing ability from Qumu Enterprise to Qumu Cloud


•	Qumu Cloud Japanese localization


•	Unified Communications Gateway to enable videoconferencing endpoints as sources for a live webcast


•	Live Transform, added functionality to Qumu’s already expansive streaming capabilities


•	Receipt of a U.S. Patent for Secured Delivery technology


•	Integrations with Webex and Microsoft Office 365

Other Second Quarter Information


•	Contracted commitments of $8.3 million for the second quarter of 2015 were received from several new customers representing a variety of industries, including financial services, insurance, heavy industry, creative services and non-profit service organizations.


•	Backlog was $33.4 million at June 30, 2015 compared with $33.9 million at the end of March 2015.

•

Cash, marketable securities and restricted cash at the end of June totaled $21.8 million compared with $29.7 million at the end of March, reflecting the second quarter operating loss and an unfavorable impact on cash from changes in working capital. Restricted cash consists of $2.3 million in proceeds from the sale of the disc publishing business in July 2014 that are in escrow which is scheduled to be released to the Company in October 2015.

Guidance for 2015

During the second half of 2015, the Company expects increased revenue growth compared with the first half of the year. Factors expected to drive this growth include stronger European leadership and execution, the continued strength of Qumu Enterprise in the Americas, the completion of a reseller agreement with a leading APAC channel partner, and a strong second half pipeline. Qumu maintains its guidance that annual revenue growth in 2015 will exceed 40% compared with prior year results. In addition, the Company maintains expectations of gross margins to exceed 50% for 2015.

“In support of our goal to be cash flow break even by the end of 2016, we are in the midst of a comprehensive operational review and have begun implementing cost reduction measures to consolidate and better focus our resources. As a result of this effort, we expect cash used by operations in the second half of 2015 to be reduced by at least 50% compared to the first half of 2015, and we expect cash and marketable securities to be approximately $15 million at the end of 2015,” Mr. Black concluded.

Conference Call

The Company has scheduled a conference call and webcast to review its second quarter results today, August 6, 2015 at 4:30 p.m. Eastern Time. The dial-in number for the conference call is 877-419-6594 for domestic participants and 719-325-4760 for international participants. Investors can also access a webcast of the live conference call by linking through the investor relations section of the Qumu website, www.qumu.com. Webcasts will be archived on Qumu’s website.

Forward-Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” or “estimate” or comparable terminology are intended to identify forward-looking statements. Such forward-looking statements include, for example, statements about: the Company’s future revenue and operating performance, cash balances, future product mix or the timing of recognition of revenue; the demand for the Company’s products or software; the anticipated benefits of sales partnerships and the success of cost reduction measures. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and other factors set forth in the Company’s filings with the Securities and Exchange Commission.

About Qumu

Video is today’s document. Qumu Corporation (NASDAQ: QUMU) provides the tools businesses need to create, manage, secure, deliver and measure the success of their videos. Qumu's innovative solutions release the power in video to engage and empower employees, partners and clients. Organizations around the world realize the greatest possible value from video they create and publish using Qumu. Whatever the audience size, viewer device or network configuration, Qumu solutions are how business does video. Additional information can be found at www.qumu.com.

Investor Contacts:

Peter Goepfrich, CFO

Qumu Corporation

952-683-7864

EVC Group

Doug Sherk, 415-652-9100

QUMU CORPORATION

Condensed Consolidated Statements of Operations

(unaudited - in thousands, except per share data)



	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenues:
Software licenses and appliances	$	2,719		$	4,714		$	3,703		$	5,910
Service	6,045			3,690			11,030			6,423
Total revenues	8,764			8,404			14,733			12,333
Cost of revenues:
Software licenses and appliances	706			1,464			939			2,236
Service	3,786			2,778			7,328			4,545
Total cost of revenues	4,492			4,242			8,267			6,781
Gross profit	4,272			4,162			6,466			5,552
Operating expenses:
Research and development	2,858			2,264			5,660			4,288
Selling, general and administrative	8,298			7,421			17,490			13,938
Amortization of purchased intangibles	200			156			399			313
Total operating expenses	11,356			9,841			23,549			18,539
Operating loss	(7,084		)	(5,679		)	(17,083		)	(12,987		)
Other income (expense):
Interest, net	15			10			31			22
Loss on currency exchange	(4		)	(6		)	(68		)	(23		)
Other, net	—			—			—			(10		)
Total other income (expense), net	11			4			(37		)	(11		)
Loss before income taxes	(7,073		)	(5,675		)	(17,120		)	(12,998		)
Income tax benefit	(146		)	(296		)	(319		)	(1,446		)
Net loss from continuing operations	(6,927		)	(5,379		)	(16,801		)	(11,552		)
Net income (loss) from discontinued operations, net of tax	(22		)	562			(89		)	2,806
Net loss	$	(6,949	)	$	(4,817	)	$	(16,890	)	$	(8,746	)
Net income (loss) per basic and diluted share:
Net loss from continuing operations per share	$	(0.75	)	$	(0.61	)	$	(1.83	)	$	(1.32	)
Net income (loss) from discontinued operations per share	$	—		$	0.06		$	—		$	0.32
Net loss per share	$	(0.75	)	$	(0.55	)	$	(1.83	)	$	(1.00	)
Basic and diluted weighted average shares outstanding	9,243			8,748			9,206			8,724

QUMU CORPORATION

Condensed Consolidated Balance Sheets

(in thousands)



Assets	June 30, 2015			December 31, 2014
Current assets:	(unaudited)
Cash and cash equivalents	$	5,985		$	11,684
Marketable securities	13,503			23,486
Restricted cash	2,301			2,300
Receivables, net of allowance for doubtful accounts	6,722			10,090
Finished goods inventories	384			168
Prepaid income taxes	512			301
Prepaid expenses and other current assets	5,565			3,633
Deferred income taxes - current	62			64
Current assets from discontinued operations	945			1,026
Total current assets	35,979			52,752
Property and equipment, net of accumulated depreciation	2,209			1,899
Intangible assets, net of amortization	12,401			13,384
Goodwill	8,609			8,525
Other assets - non-current	3,985			3,617
Total assets	$	63,183		$	80,177
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable and other accrued liabilities	$	2,962		$	3,529
Accrued compensation	4,463			6,222
Deferred revenue	10,036			9,015
Deferred income taxes - current	32			110
Income taxes payable	24			53
Financing obligations - current	163			—
Current liabilities from discontinued operations	50			448
Total current liabilities	17,730			19,377
Non-current liabilities:
Deferred revenue - non-current	1,143			1,047
Income taxes payable - non-current	9			8
Deferred tax liability - non-current	991			1,071
Financing obligations - non-current	315			—
Other non-current liabilities	331			401
Total non-current liabilities	2,789			2,527
Total liabilities	20,519			21,904
Stockholders’ equity:
Common stock	93			91
Additional paid-in capital	64,729			63,566
Accumulated deficit	(21,489		)	(4,599		)
Accumulated other comprehensive loss	(669		)	(785		)
Total stockholders’ equity	42,664			58,273
Total liabilities and stockholders’ equity	$	63,183		$	80,177

QUMU CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)



	Six Months Ended June 30,
	2015			2014
Cash flows used in operating activities:
Net loss	$	(16,890	)	$	(8,746	)
Net income (loss) from discontinued operations, net of tax	(89		)	2,806
Net loss from continuing operations	(16,801		)	(11,552		)
Adjustments to reconcile net loss to net cash used in continuing operating activities:
Depreciation and amortization	1,503			924
Current income tax benefit resulting from income generated from discontinued operations	—			(1,463		)
Deferred income tax benefit	(170		)	(25		)
Loss on disposal of property and equipment	4			10
Stock-based compensation	1,068			784
Changes in operating assets and liabilities:
Receivables	3,393			(5,456		)
Finished goods inventories	(216		)	(39		)
Prepaid income taxes / income taxes payable	(209		)	396
Prepaid expenses and other assets	(2,077		)	(1,555		)
Trade accounts payable and other accrued liabilities	(559		)	762
Accrued compensation	(1,763		)	(1,153		)
Deferred revenue	1,073			1,741
Other non-current liabilities	(69		)	(63		)
Net cash used in continuing operating activities	(14,823		)	(16,689		)
Net cash provided by (used in) discontinued operating activities	(397		)	5,980
Net cash used in operating activities	(15,220		)	(10,709		)
Cash flows provided by (used in) investing activities:
Purchases of marketable securities	(8,000		)	(20,251		)
Sales and maturities of marketable securities	17,965			9,000
Purchases of property and equipment	(425		)	(367		)
Proceeds from sale of property and equipment	43			—
Net cash provided by (used in) continuing investing activities	9,583			(11,618		)
Net cash provided by discontinued investing activities	—			22
Net cash provided by (used in) investing activities	9,583			(11,596		)
Cash flows provided by (used in) financing activities:
Checks written in excess of bank balance	—			74
Common stock repurchases to settle employee withholding liability	(45		)	(52		)
Principal payments on capital lease obligations	(168		)	—
Proceeds from employee stock plans	142			108
Net cash provided by (used in) continuing financing activities	(71		)	130
Net cash used in discontinued financing activities	—			(5		)
Net cash provided by (used in) financing activities	(71		)	125
Effect of exchange rate changes on cash	9			11
Net decrease in cash and cash equivalents	(5,699		)	(22,169		)
Cash and cash equivalents, beginning of period	11,684			37,725
Cash and cash equivalents, end of period	$	5,985		$	15,556

QUMU CORPORATION

Non-Cash Charges Included in Continuing Operations

(unaudited - in thousands)



	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Continuing Operations:
Depreciation	$	238	$	173	$	471	$	331
Amortization of intangibles
Cost of revenues	$	317	$	140	$	633	$	280
Amortization of purchased intangibles	200		156		399		313
Total amortization of intangibles	$	517	$	296	$	1,032	$	593
Equity compensation:
Cost of revenues	$	39	$	11	$	75	$	18
Research and development	81		59		162		117
Selling, general and administrative	380		365		831		649
Total equity compensation	$	500	$	435	$	1,068	$	784

Exhibit 99.2

Qumu Corporation

Q2 2015

Conference Call

August 6, 2015

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Qumu Corporation Q2 2015 Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for questions. If you have a question, please press the star followed by the one on your touchtone phone. If you’d like to withdraw your question, please press the star followed by the two. If you’re using speaker equipment, please lift the handset before making your selection. This conference is being recorded today, Thursday, August 6, 2015.

I would now like to turn the conference over to Doug Sherk of the EVC Group. Please go ahead, Mr. Sherk.

Doug Sherk

Thank you, Operator, and good afternoon everyone. After the close of the market today, Qumu issued a press release announcing its second quarter 2015 financial results. The release is available on the Company’s corporate website at www.qumu.com.

Before we get started, during the course of this conference call, the company will make forward-looking statements about its future plans, objectives, beliefs, expectations and prospects. For this purpose, any statements made today that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are not guarantees of future actions, outcomes, results or performance. By their nature, these forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from the results discussed in or implied by the forward-looking statement. A discussion of the risks and uncertainties that affect Qumu’s business is contained in the company’s SEC filings, particularly under the heading Risk Factors, and in the press release issued this afternoon. Copies of these documents are available online from the SEC or on the Qumu website. These forward-looking statements are made only as of the date this conference call was initially held and the Company assumes no obligation and does not intend to update these forward-looking statements after the date of this conference call, whether as a result of new information, future events, developments, changes in assumptions or otherwise.

And now, I’d like to turn the call over to Sherman Black, CEO of Qumu.

Sherman Black

•

Thank you Doug and thanks everyone for joining us today on our second quarter 2015 earnings call. With me today is Peter Goepfrich, our recently appointed Chief Financial Officer. Peter joined us in May and has been quickly getting up to speed. He has already made significant contributions and is actively engaged in improvements to our financial processes and modeling as well as helping us drive focus on critical company initiatives. We look forward to his contributions going forward. Also our other senior leader, Vern Hanzlik, our President, is with us today and he will participate in the Q&A that will follow our remarks.


•	I’ll begin today with an overview of the financial and operational highlights in the second quarter and provide an update on our outlook for 2015. Peter will offer a more detailed look at the second quarter results. Then we will open the call for your questions.

Second Quarter Highlights


•	There were some very positive developments in the second quarter that demonstrate the progress we are making to address the challenges that we noted in our first quarter conference call.


•	We generated record quarterly revenue of $8.8 million in the recent second quarter. This surpassed the previous quarterly record of $8.4 million reported in the second quarter of 2014. Last year, second quarter revenue included a significant contribution from a single, large customer. Excluding that contribution,

revenue was up 46% over last year. More importantly, the second quarter revenue reflected an increase of 47% above revenue in the first quarter of 2015.


•	Driving the revenue growth were better results from Europe and continued success in the Americas with the Global 2000 market, where we added new customers and expanded our business within our existing client base.


•	Contracted commitments in the second quarter totaled $8.3 million, an increase of 12% from $7.4 million in the second quarter of 2014. The increase reflected several new customers from a range of industries including financial services, heavy industry, creative services and non-profits.


•	Our gross margin in the second quarter was 49%, compared with 37% in the first quarter of 2015. The increase reflects the strong, quarter over quarter growth in revenue that allowed us to better leverage the investments we made in customer support and services.

•

These improved financial metrics reflect progress we made on our operations during the quarter. On our first quarter call we highlighted execution challenges in EMEA. The new leadership team there has been actively pursuing enhanced sales and marketing efforts and reassessing our priorities and resources. During the quarter we had a significant customer win in the region at one of the world’s ten largest pharmaceutical companies. Also in July, Paul Herdman joined us to lead our sales effort in EMEA. I am confident that these changes, along with our maturing pipeline of opportunities, will result in significantly improved results in the second half of the year.


•	The North America market continues to show strong adoption of enterprise video, and on the strength of our products, our Enterprise business performed very well in the region.

•

One of our North American wins for the quarter is a Fortune 100 diversified insurer. They have tens of thousands of employees and hundreds of offices distributed around the world. Like many businesses they have invested in an ‘inside the firewall’ social media platform to maximize employee engagement and collaboration. That platform isn’t able to support video as a key component. At this customer we are not only enabling that existing social platform with video capability, we are also replacing a competitor and building out a private video broadcast network.


•	In Japan, we entered into an important sales partnership with Fujitsu, one of the top 5 leading IT service providers in the world and the number one IT service provider in Japan. The brand strength of Fujitsu will certainly advance our efforts in this region.

•

In Australia we had our first win and it was at one of the country’s Big Four banks. That win, based on our Qumu Cloud platform, stages a significant expansion opportunity as well as a landmark win in the financial sector in Australia. Our customer’s initial use case will be for external broadcast of institutional research reports. Over the next several quarters we expect a half dozen other operating groups within that bank to come on board our platform. This is a great example of our land and expand sales strategy that Qumu Cloud has enabled.

Other 2Q Operational Highlights


•	In addition to progress on our sales efforts, there were several important product highlights in the second quarter.


•	We were recognized once again by an industry analyst for our product and technology leadership. Aragon Research, a technology-focused research and advisory firm, named Qumu a leader in their recent report - the Aragon Research Globe for Video Content Management.


•	Our R&D investments resulted in some significant new product introductions and technology partnerships. I would like to highlight a few of those.


◦	Delivering high performance video to Virtual Desktop Infrastructures has long been a difficulty for organizations. Qumu has developed a solution for this challenge with the Video Optimization Pack for Citrix by providing integrations with the latest Citrix VDI and XenApp infrastructures. This will enable endpoints under management to request and play high quality streaming video.

◦

Mobility remains a key objective of all enterprises. Mobile video security and functionality are a key differentiator for our offering. During the quarter we launched a new version of our Qumu Enterprise Mobile App and on the Qumu Cloud platform we launched our iOS and Android Mobile Apps. Also our Qumu Enterprise platform is now integrated with another leading mobile device management platform, XenMobile Enterprise Mobility Management from Citrix. These releases along with our other mobile device management integrations provide our customers the broadest capability of ‘enterprise secure’ mobile video.

◦

As you know, last year we acquired Kulu Valley and have been aggressively advancing our cloud offerings and capabilities. We believe that flexible hybrid deployment solutions will continue to gain momentum in the market. Last quarter we took a couple of steps forward in aligning to that trend. We now offer cross publishing capability from Qumu Enterprise to Qumu Cloud. We also deployed our cloud offerings on IBM Cloud’s SoftLayer infrastructure which will provide us with improved performance, flexibility and worldwide reach.

◦

Qumu has been recognized many times for the breadth of our video delivery technology leadership. During the quarter we were proud to announce receipt of a US patent for our secure content delivery technology that provides a policy based, secure download delivery alternative perfect for mobile devices. During the quarter we further expanded our video delivery capabilities by introducing Live Transform, a dynamic streaming capability.


◦	As stated earlier we see a significant market opportunity in Japan and we are pleased to be partnering with Fujitsu. In support of that opportunity we have completed the Japanese localization for Qumu Cloud.

◦

Finally, in our drive to make Qumu an enterprise standard for video content management and delivery, we introduced several key integrations. Qumu now offers an app for Microsoft Office 365, providing a true solution for that environment. We’ve also focused on the growing video opportunity within unified communications (UC) through two new offerings: a WebEx integration, which enables archive, speech search, and rebroadcast of those webcasts; and a unified communications gateway which can ingest from videoconferencing endpoints and stream video to any device in an organization.


•	It was a very productive quarter from an operational standpoint and it has positioned us well for continued improvement through the remainder of the year.

2015 Outlook

•

During the second half of 2015, the Company expects increased revenue growth compared with the first half of the year. Factors in this growth include improved leadership and execution in Europe, the continued strength of Qumu Enterprise in the Americas, the consummation of a reseller agreement with a leading APAC channel partner, and a strong second half pipeline. We continue to expect 2015 annual revenue growth to exceed 40% compared to 2014.


•	We continue to expect gross margins will exceed 50% for all of 2015.

•

During the first half of the year our cash consumption exceeded our plans. To support our goal to be cash flow breakeven by the end of 2016, we are in the midst of a comprehensive operational review and have begun implementing cost reduction measures to consolidate and better focus our resources. These expense reductions are coming from all areas of the company, including headcount, contractors and vendors.


•	Through increased revenue and cost reductions, we anticipate that we will reduce the cash burn from operations by at least 50% in the second half of the year compared with the first half, and we expect to end 2015 with cash and marketable securities of approximately $15 million.


•	With that, I’ll now turn the call over to Peter for more details on the second quarter financial results. Peter.

Peter Goepfrich


•	Thank you, Sherman. Good afternoon.


•	My comments will be brief today and I’ll touch on a few of the key highlights from our second quarter financial performance.


•	Second quarter 2015 contracted commitments were $8.3 million, 12% growth from second quarter last year. Recurring term contracts - which include maintenance contracts - represented approximately 45% of our contracted commitments in the second quarter 2015.


•	As noted in the past, revenue will vary quarter to quarter based on the type of contract between Qumu and its customers. Perpetual contracts generally result in revenue recognized closer to the bookings date while term contracts result in the majority of revenue being recognized ratably over the contract period.


•	Gross margin in the second quarter 2015 was 49% compared with 50% in the second quarter last year and much improved from the 37% in the first quarter 2015. Gross margin will continue to improve as we

generate additional revenue, improve our revenue mix to higher gross margin offerings, and gain more economies of scale in our existing cost structure.


•	Moving on to operating expenses.


◦	R&D expense in the second quarter 2015 increased approximately $600 thousand as compared to the second quarter last year.


◦	SG&A expense increased $900 thousand compared to the second quarter last year.


◦	The increase in these expenses was primarily due to increased headcount through the acquisition of Kulu Valley in October 2014 and increased contractor and headcount in R&D and SG&A over the past three quarters.

•

I will close by reiterating Sherman’s comments – to support our goal to be cash flow breakeven by the end of 2016, we are in the midst of a comprehensive operational review and have begun implementing cost reduction measures to consolidate and better focus our resources. We anticipate that we will reduce the cash burn from operations by at least 50% in the second half of the year compared with the first half, and we expect to end 2015 with cash and marketable securities of approximately $15 million.