QUMU Qumu Corporation

Quarterly Revenue of $8.7 Million, a 46% year-over-year increase

Conference Call Wednesday, May 4 at 10:00 a.m. ET

Qumu Corporation (NASDAQ: QUMU) today reported financial results for the first quarter ended March 31, 2016.

First quarter revenue was $8.7 million, a 46% increase compared to the first quarter 2015. First quarter net loss per share was $(0.45) compared to $(1.07) in the first quarter 2015.

First quarter adjusted EBITDA (a non-GAAP measure) was a loss of $3.0 million, compared to an adjusted EBITDA loss of $8.7 million for the first quarter 2015.

“Strong execution in customer deployment and solid expense management enabled us to greatly improve revenue and adjusted EBITDA on a year-over-year basis. We continue to focus on strengthening our financial performance and technology lead in our market. Qumu has the largest video deployments in the enterprise video space. Our software platform’s ability to address the video market at the departmental and enterprise level is unique in the industry. We continue to concentrate on Global 5000 companies with a particular focus on the financial services, pharmaceutical and manufacturing verticals,” said Vern Hanzlik, Qumu’s President and Chief Executive Officer. “Despite timing delays in the first quarter and second quarter with respect to a few large enterprise transactions, we remain confident in our ability to execute on our 2016 expectations.”

Other Information

• First quarter subscription, maintenance and support revenue was $5.5 million compared to $4.1 million in the first quarter 2015.
• First quarter gross margin was 56.3% compared to 36.8% the first quarter 2015.
• Total headcount was 182 as of March 31, 2016 compared to 192 as of December 31, 2015 and 227 as of March 31, 2015.
• Cash, marketable securities and restricted cash were $11.3 million as of March 31, 2016, compared to $13.3 million as of December 31, 2015, reflecting the first quarter operating loss and the impact on cash from changes in working capital.

GuidanceFor the second quarter 2016, revenue is expected to be consistent with the first quarter 2016. Second quarter net loss per diluted share is expected to improve from the first quarter 2016 to a range of $(0.40) to $(0.36) with fully diluted weighted average shares outstanding of approximately 9.2 million shares. Adjusted EBITDA for the second quarter 2016 is also expected to improve from the first quarter 2016 to a range of a loss of $2.5 million to $2.0 million, compared to an adjusted EBITDA loss of $5.8 million in the second quarter 2015.

The Company is maintaining previously provided full year 2016 guidance. Revenue is expected to be in the range of $40.0 million to $43.0 million, representing approximately 16% to 25% growth over 2015. Gross margins are expected to improve from the mid 50s early in the year to the mid to high 60s late in the year. Net loss per diluted share is expected to be in the range of $(1.15) to $(1.00) with fully diluted weighted average shares outstanding of approximately 9.2 million shares. Adjusted EBITDA is expected to be in the range of a loss of $5.5 million to $4.0 million compared to an adjusted EBITDA loss of $24.5 million in fiscal 2015. The Company expects a tax benefit of $200,000 in fiscal 2016. Additionally, the Company expects that it will be cash flow breakeven the second half of 2016.

Conference CallThe Company has scheduled a conference call and webcast to review its first quarter 2016 results tomorrow, May 4, 2016 at 10:00 a.m. Eastern Time. The dial-in number for the conference call is 877-456-6914 for domestic participants and 929-387-3794 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.

Non-GAAP InformationTo supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company uses adjusted EBITDA (a non-GAAP measure), which excludes certain items presented under GAAP. Adjusted EBITDA excludes items related to stock-based compensation, depreciation and amortization, interest income and expense, and the impact of income-based taxes.

The Company uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the Company’s performance. The Company believes that adjusted EBITDA is useful to investors because it provides supplemental information that allows investors to review the Company's results of operations from the same perspective as management and the Company's board of directors. Non-GAAP results are presented for supplemental informational purposes only for understanding our operating results. The non-GAAP results should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.

See the attached Supplemental Financial Information for a reconciliation of operating loss, a GAAP measure, to adjusted EBITDA, a non-GAAP measure, for the three months ended March 31, 2016 and 2015.

Forward-Looking StatementsThis 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; 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, 2015 and other factors set forth in the Company’s filings with the Securities and Exchange Commission.

About QumuVideo 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.

QUMU CORPORATION

 

Condensed Consolidated Statements of Operations

(unaudited - in thousands, except per share data)

  Three Months Ended March 31, 2016   2015 Revenues: Software licenses and appliances $ 1,962 $ 984 Service 6,774   4,985   Total revenues 8,736   5,969   Cost of revenues: Software licenses and appliances 957 233 Service 2,861   3,542   Total cost of revenues 3,818   3,775   Gross profit 4,918   2,194   Operating expenses: Research and development 2,350 2,802 Sales and marketing 3,532 4,828 General and administrative 2,970 4,364 Amortization of purchased intangibles 226   199   Total operating expenses 9,078   12,193   Operating loss (4,160 ) (9,999 ) Other income (expense): Interest, net (12 ) 16 Other, net 36   (64 ) Total other income (expense), net 24   (48 ) Loss before income taxes (4,136 ) (10,047 ) Income tax benefit (4 ) (174 ) Net loss from continuing operations (4,132 ) (9,873 ) Net loss from discontinued operations, net of tax —   (67 ) Net loss $ (4,132 ) $ (9,940 ) Net loss per basic and diluted share: Net loss from continuing operations per share $ (0.45 ) $ (1.07 ) Net loss from discontinued operations per share —   (0.01 ) Net loss per share $ (0.45 ) $ (1.08 ) Basic and diluted weighted average shares outstanding 9,218 9,168  

QUMU CORPORATION

   

Condensed Consolidated Balance Sheets

(in thousands)

  March 31, December 31, Assets 2016 2015 Current assets: (unaudited) Cash and cash equivalents $ 9,011 $ 7,072 Marketable securities 2,250 6,249 Receivables, net 7,214 11,257 Income taxes receivable 394 659 Prepaid expenses and other current assets 4,590   3,392   Total current assets 23,459 28,629 Property and equipment, net 2,644 2,942 Intangible assets, net 10,330 11,032 Goodwill 7,865 8,103 Other assets, non-current 3,667   3,706   Total assets $ 47,965   $ 54,412   Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and other accrued liabilities $ 3,753 $ 3,864 Accrued compensation 2,995 4,014 Deferred revenue 9,815 10,413 Deferred rent 295 270 Financing obligations 465 502 Current liabilities from discontinued operations 50   50  

Total current liabilities

17,373   19,113   Long-term liabilities: Deferred revenue, non-current 1,944 2,215 Income taxes payable, non-current 6 9 Deferred tax liability, non-current 558 575 Deferred rent, non-current 923 998 Financing obligations, non-current 435 519 Other non-current liabilities 101   226   Total long-term liabilities 3,967   4,542   Total liabilities 21,340   23,655   Stockholders’ equity: Common stock 92 92 Additional paid-in capital 65,833 65,484 Accumulated deficit (37,430 ) (33,298 ) Accumulated other comprehensive loss (1,870 ) (1,521 ) Total stockholders’ equity 26,625   30,757   Total liabilities and stockholders’ equity $ 47,965   $ 54,412    

QUMU CORPORATION

 

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

  Three Months Ended March 31, 2016   2015 Cash flows used in operating activities: Net loss $ (4,132 ) $ (9,940 ) Net loss from discontinued operations, net of tax —   (67 ) Net loss from continuing operations (4,132 ) (9,873 ) Adjustments to reconcile net loss to net cash used in continuing operating activities: Depreciation and amortization 852 748 Stock-based compensation 351 568 Loss on disposal of property and equipment — 1 Deferred income taxes (1 ) (89 ) Changes in operating assets and liabilities: Receivables 3,911 4,084 Income taxes receivable / payable 245 (142 ) Prepaid expenses and other assets (1,170 ) (1,532 ) Accounts payable and other accrued liabilities (101 ) (166 ) Accrued compensation (1,006 ) (1,839 ) Deferred revenue (756 ) 1,208 Deferred rent (48 ) — Other non-current liabilities (125 ) (35 ) Net cash used in continuing operating activities (1,980 ) (7,067 ) Net cash used in discontinued operating activities —   (397 ) Net cash used in operating activities (1,980 ) (7,464 ) Cash flows provided by investing activities: Purchases of marketable securities — (7,250 ) Sales and maturities of marketable securities 4,000 10,250 Purchases of property and equipment (12 ) (240 ) Proceeds from sale of property and equipment —   43   Net cash provided by investing activities 3,988   2,803   Cash flows provided by (used in) financing activities: Common stock repurchases to settle employee withholding liability (1 ) — Principal payments on financing obligations (118 ) — Proceeds from employee stock plans —   45   Net cash provided by (used in) financing activities (119 ) 45   Effect of exchange rate changes on cash 50   (143 ) Net increase (decrease) in cash and cash equivalents 1,939 (4,759 ) Cash and cash equivalents, beginning of period 7,072   11,684   Cash and cash equivalents, end of period $ 9,011   $ 6,925    

QUMU CORPORATION

 

Supplemental Financial Information

(unaudited - in thousands)

 

A summary of revenue is as follows:

  Three Months Ended March 31, 2016   2015 Software licenses and appliances $ 1,962 $ 984 Services Subscription, maintenance and support 5,525 4,112 Professional services and other 1,249   873   Total services 6,774   4,985   Total revenue $ 8,736   $ 5,969    

A reconciliation from GAAP results to adjusted EBITDA is as follows:

  Three Months Ended March 31, 2016 2015 Operating loss $ (4,160 ) $ (9,999 )   Depreciation and amortization expense: Depreciation and amortization in cost of revenues 22 22 Depreciation and amortization in operating expenses 282   211   Total depreciation and amortization expense 304   233   Amortization of intangibles included in cost of revenues 322 316 Amortization of intangibles included in operating expenses 226   199   Total amortization of intangibles expense 548   515   Total depreciation and amortization expense 852   748   EBITDA (3,308 ) (9,251 ) Stock-based compensation expense: Stock-based compensation included in cost of revenues (7 ) 36 Stock-based compensation included in operating expenses 358   532   Total stock-based compensation expense 351   568   Adjusted EBITDA $ (2,957 ) $ (8,683 )

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Qumu CorporationInvestor Contact:Peter Goepfrich, CFO, 612-638-9096