Year-over-year improved gross margins and
operating results
Conference Call Wednesday, November 1 at
10:00 a.m. ET
Qumu Corporation (NASDAQ: QUMU) today reported financial results
for the third quarter 2017.
Third quarter revenue was $7.6 million, compared to $7.1 million
in the third quarter 2016, and net loss was $(2.3) million, or a
loss of $(0.25) per share, compared to $(2.5) million, or a loss of
$(0.27) per share, in the third quarter 2016. Third quarter 2017
results included foreign currency losses of $(0.02) per share.
Third quarter adjusted EBITDA (a non-GAAP measure) was a loss of
$(0.9) million, compared to an adjusted EBITDA loss of $(1.4)
million for the third quarter 2016.
For the nine months ended September 30, 2017, revenue was $20.9
million, compared to $22.4 million last year, and net loss was
$(8.5) million, or a loss of $(0.91) per share, compared to $(10.9)
million, or a loss of $(1.18) per share, last year. For the nine
months ended September 30, 2017, adjusted EBITDA was a loss of
$(3.8) million, compared to an adjusted EBITDA loss of $(7.4)
million last year.
“This was a notable quarter for Qumu. We signed a large number
of new customers as our Qx strategy, announced in May, gains
momentum. Revenues were within guidance but were at the lower end
of the range due to a contingent sale representing more than
$600,000 which we expect to be recognized as revenue in the fourth
quarter. Our growing number and variety of new blue-chip customers
tells me that our Qx enterprise video platform is resonating within
the Global 2000. These organizations know their future depends on
an adaptive workforce with a high digital IQ. Video will permeate
all facets of their business and they need an infrastructure with
the flexibility to scale,” said Vern Hanzlik, Qumu’s president and
CEO.
Qumu has also announced the appointment of Dave Ristow as
Interim Chief Financial Officer, effective November 7, 2017. Ristow
brings more than 20 years of experience in the CFO role, with
leadership expertise in strategic planning, stakeholder relations,
financial process design and corporate governance. He has worked
with companies in various industries including software as a
service, professional services and medical technology.
Other Financial Highlights
- Subscription, maintenance and support
revenue for the third quarter 2017 was $5.1 million compared to
$5.0 million for the third quarter 2016. The variance in
subscription, maintenance and support revenue primarily resulted
from growth in the customer base, as well as the timing of customer
renewals.
- Gross margin for the third quarter 2017
was 61.6% compared to 59.8% for the third quarter 2016. Gross
margin for the nine months ended September 30, 2017 was 62.8%
compared to 56.9% for the nine months ended September 30,
2016.
- Total headcount was 120 as of September
30, 2017 compared to 119 as of June 30, 2017 and 152 as of
September 30, 2016.
- Cash and marketable securities were
$7.7 million as of September 30, 2017, compared to $9.0 million as
of June 30, 2017, reflecting the third quarter operating loss and
the impact on cash from changes in working capital.
GuidanceFor the fourth quarter 2017, revenue is expected
to be in the range of $8.5 million to $9.5 million, compared
to $9.3 million in the fourth quarter last year. Total gross margin
percentage is expected to be in the mid to high 60s in the fourth
quarter. Fourth quarter net loss is expected to be in the range of
$(1.4) million to $(900,000), or $(0.15) to $(0.10) per diluted
share, with weighted-average shares outstanding of approximately
9.4 million shares. Adjusted EBITDA for the fourth quarter 2017 is
expected to be in the range of breakeven to income of $500,000,
compared to adjusted EBITDA income of $790,000 in the fourth
quarter 2016.
For the full year 2017, revenue is expected to be in the range
of $29.4 million to $30.4 million. Total gross margin percentage is
expected to improve from the low 60s early in the year to the mid
60s late in the year. Net loss is expected to be in the range of
$(9.9) million to $(9.4) million, or $(1.05) to $(1.00) per diluted
share, with weighted-average shares outstanding of approximately
9.4 million shares. Adjusted EBITDA loss for the full year 2017 is
expected to be in the range of a loss of $(3.8) million to $(3.3)
million compared to an adjusted EBITDA loss of $(6.6) million in
fiscal 2016. The Company expects a tax benefit of $200,000 in
fiscal 2017.
Term LoanThe Company has continued to experience
recurring operating losses and negative cash flows from operating
activities. The ability of the Company to continue as a going
concern is dependent upon the Company maintaining compliance with
the covenants of its term loan credit agreement with HCP-FVD, LLC,
an affiliate of Hale Capital Partners, LP, the administrative
agent. If an event of default occurs due to the Company not
maintaining compliance with the covenants, the lender may
accelerate the repayment of outstanding principal or exercise its
other rights as a secured lender, which would negatively impact the
Company’s ability to fund its working capital requirements, capital
expenditures and general corporate expenses. The Company likely
will not comply at October 31, 2017 with the covenant requiring
that cash and eligible accounts receivable be at least 118% of the
outstanding obligations under the credit
agreement. Outstanding obligations under the credit agreement
were $8,000,000 at September 30, 2017 and October 31,
2017. The covenant shortfall is primarily due to provisions of
the credit agreement requiring the exclusion of portions of certain
large accounts receivable from eligible accounts
receivable. These provisions resulted in $974,000 of accounts
receivable from two Fortune 50 customers being excluded from
eligible accounts receivable at October 31, 2017. Additionally, the
Company is unable to project, with reasonable certainty, future
compliance with this minimum cash and eligible accounts receivable
covenant over the next twelve months. If an event of default
occurred and the term loan were accelerated, the Company would be
unable to fund full repayment of the term loan obligations from its
existing cash and fund its other liquidity needs within the
next twelve months. At September 30, 2017, the Company had cash and
cash equivalents of $7,738,000 as compared to $8,000,000 in
outstanding obligations relating to the term loan and a required
$800,000 prepayment fee. The Company’s cash position as compared to
the outstanding obligations of the credit agreement, the Company’s
historical and expected cash flows from operating activities, and
the likelihood of non-compliance with covenants indicate
substantial doubt exists regarding the Company's ability to
continue as a going concern. The Company is continuing to negotiate
with HCP-FVD, LLC and Hale Capital Partners, LP regarding the
covenants and a potential amendment of or waiver to the credit
agreement, receipt of which cannot be assured.
Conference CallThe Company has scheduled a conference
call and webcast to review its third quarter 2017 results tomorrow,
November 1, 2017 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 from net income (loss) (a GAAP measure). Adjusted
EBITDA excludes items related to interest income and expense, the
impact of income-based taxes, depreciation and amortization,
stock-based compensation, change in fair value of warrant
liability, foreign currency gains and losses, and other
non-operating income and expenses.
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 net loss, a GAAP measure, to adjusted EBITDA, a
non-GAAP measure, for the three and nine months ended September 30,
2017 and 2016.
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, and the demand for the
Company’s products or software. 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, 2016 and other factors set forth in the
Company’s filings with the Securities and Exchange Commission.
About QumuQumu (NASDAQ: QUMU) helps the world’s largest
companies realize the value of putting video to work for their
digital workforce. Organizations use Qumu software to create,
manage and share video-live streaming and on demand-turning video
into an always-on resource and connecting thousands of stakeholders
across a single enterprise.
QUMU CORPORATION
Condensed Consolidated Statements of
Operations
(unaudited - in thousands, except per
share data)
Three Months Ended Nine Months Ended
September 30, September 30, 2017
2016 2017 2016 Revenues: Software
licenses and appliances $ 1,822 $ 1,154 $ 3,971 $ 3,952 Service
5,751 5,956 16,967 18,409 Total
revenues 7,573 7,110 20,938 22,361 Cost
of revenues: Software licenses and appliances 916 563 1,778 1,932
Service 1,995 2,294 6,003 7,697 Total
cost of revenues 2,911 2,857 7,781 9,629
Gross profit 4,662 4,253 13,157 12,732
Operating expenses: Research and development 1,769 1,986
5,676 6,746 Sales and marketing 2,509 2,435 7,484 8,945 General and
administrative 2,083 2,109 6,552 7,344 Amortization of purchased
intangibles 226 221 675 674 Total
operating expenses 6,587 6,751 20,387 23,709
Operating loss (1,925 ) (2,498 ) (7,230 ) (10,977 ) Other
income (expense): Interest expense, net (343 ) (13 ) (994 ) (40 )
Change in value of warrant liability 15 — (52 ) — Other, net (166 )
(13 ) (345 ) (24 ) Total other expense, net (494 ) (26 ) (1,391 )
(64 ) Loss before income taxes (2,419 ) (2,524 ) (8,621 ) (11,041 )
Income tax benefit (110 ) (39 ) (139 ) (133 ) Net loss $ (2,309 ) $
(2,485 ) $ (8,482 ) $ (10,908 ) Net loss per share – basic
and diluted: Net loss per share $ (0.25 ) $ (0.27 ) $ (0.91 ) $
(1.18 ) Weighted average shares outstanding 9,404 9,241 9,335 9,232
QUMU CORPORATION
Condensed Consolidated Balance
Sheets
(in thousands)
September 30, December 31, Assets
2017
2016 Current assets:
(unaudited) Cash and cash
equivalents $ 7,738 $ 10,364 Receivables, net 6,425 7,495 Income
taxes receivable 180 317 Prepaid expenses and other current assets
1,813 2,470 Total current assets 16,156 20,646
Property and equipment, net 1,114 1,827 Intangible assets, net
6,807 8,110 Goodwill 7,335 6,749 Deferred income taxes, non-current
68 70 Other assets, non-current 4,437 4,827 Total
assets $ 35,917 $ 42,229 Liabilities and
Stockholders’ Equity Current liabilities: Accounts payable and
other accrued liabilities $ 2,712 $ 2,394 Accrued compensation
1,988 2,361 Deferred revenue 9,411 8,992 Deferred rent 331 283
Financing obligations 284 508 Warrant liability 945 893
Total current liabilities 15,671 15,431
Long-term liabilities: Deferred revenue, non-current 364 423 Income
taxes payable, non-current 3 6 Deferred tax liability, non-current
199 294 Deferred rent, non-current 537 712 Financing obligations,
non-current 13 170 Term loan, non-current 6,856 6,617
Total long-term liabilities 7,972 8,222 Total
liabilities 23,643 23,653 Stockholders’ equity:
Common stock 94 92 Additional paid-in capital 67,941 66,864
Accumulated deficit (52,955 ) (44,473 ) Accumulated other
comprehensive loss (2,806 ) (3,907 ) Total stockholders’ equity
12,274 18,576 Total liabilities and stockholders’
equity $ 35,917 $ 42,229
QUMU CORPORATION
Condensed Consolidated Statements of
Cash Flows
(unaudited - in thousands)
Nine Months Ended September 30, 2017
2016 Operating activities: Net loss $ (8,482 ) $
(10,908 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 2,309 2,515
Stock-based compensation 1,090 1,035 Accretion of debt discount and
issuance costs 364 — Change in value of warrant liability 52 —
Deferred income taxes (112 ) (148 ) Changes in operating assets and
liabilities: Receivables 1,204 4,892 Income taxes receivable /
payable 142 265 Prepaid expenses and other assets 1,070 (727 )
Accounts payable and other accrued liabilities 563 (884 ) Accrued
compensation (405 ) (1,823 ) Deferred revenue 151 (1,857 ) Deferred
rent (132 ) (193 ) Other non-current liabilities — (226 )
Net cash used in operating activities (2,186 ) (8,105 ) Investing
activities: Sales and maturities of marketable securities — 6,250
Purchases of property and equipment (22 ) (52 ) Net cash provided
by (used in) investing activities (22 ) 6,198 Financing
activities: Principal payments on financing obligations (383 ) (386
) Payments for debt issuance costs (125 ) — Common stock
repurchases to settle employee withholding liability (11 ) (18 )
Net cash used in financing activities (519 ) (404 ) Effect of
exchange rate changes on cash 101 (120 ) Net decrease in
cash and cash equivalents (2,626 ) (2,431 ) Cash and cash
equivalents, beginning of period 10,364 7,072 Cash
and cash equivalents, end of period $ 7,738 $ 4,641
QUMU CORPORATION
Supplemental Financial
Information
(unaudited - in thousands)
A summary of revenue is as follows:
Three Months Ended Nine Months Ended
September 30, September 30, 2017
2016 2017 2016 Software licenses and
appliances $ 1,822 $ 1,154 $ 3,971 $ 3,952 Service Subscription,
maintenance and support 5,113 4,986 15,061 15,223 Professional
services and other 638 970 1,906 3,186
Total service 5,751 5,956 16,967 18,409
Total revenue $ 7,573 $ 7,110 $ 20,938 $
22,361
A reconciliation from GAAP results to
adjusted EBITDA is as follows:
Three Months Ended Nine Months Ended
September 30, September 30, 2017 2016
2017 2016 Net loss $ (2,309 ) $ (2,485 ) $ (8,482 ) $
(10,908 ) Interest expense, net 343 13 994 40 Income tax benefit
(110 ) (39 ) (139 ) (133 ) Depreciation and amortization expense:
Depreciation and amortization in cost of revenues 6 15 25 55
Depreciation and amortization in operating expenses 227 271
716 833 Total depreciation and amortization
expense 233 286 741 888 Amortization of
intangibles included in cost of revenues 302 308 893 953
Amortization of intangibles included in operating expenses 226
221 675 674 Total amortization of
intangibles expense 528 529 1,568 1,627
Total depreciation and amortization expense 761 815
2,309 2,515 EBITDA (1,315 ) (1,696 ) (5,318 ) (8,486
) Change in fair value of warrant liability (15 ) — 52 — Other
expense, net 166 13 345 24 Stock-based compensation expense:
Stock-based compensation included in cost of revenues (3 ) 9 29 27
Stock-based compensation included in operating expenses 310
286 1,061 1,008 Total stock-based compensation
expense 307 295 1,090 1,035 Adjusted
EBITDA $ (857 ) $ (1,388 ) $ (3,831 ) $ (7,427 )
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171031006643/en/
Qumu CorporationInvestor Contact:Vern Hanzlik,
650-396-8531President and CEOvern.hanzlik@qumu.com
Qumu (NASDAQ:QUMU)
Historical Stock Chart
From Jul 2024 to Aug 2024
Qumu (NASDAQ:QUMU)
Historical Stock Chart
From Aug 2023 to Aug 2024
