6% Year-to-Date Revenue Increase and 51%
Adjusted EBITDA Improvement Underpin Return to Growth
Reiterates Revenue and Adjusted EBITDA
Financial Guidance for 2019
Conference Call Today, October 31, 2019 at
4:30 p.m. ET
Qumu Corporation (NASDAQ: QUMU) today reported financial results
for the third quarter and nine months ended September 30, 2019. The
Company reported third quarter revenue of $6.7 million, net loss of
$(221,000), adjusted EBITDA, a non-GAAP measure, of $(535,000), and
ended the quarter with cash of $7.5 million. Compared to the
corresponding first nine months of 2018, year-to-date 2019 gross
profit improved $2.5 million as revenue grew $1.0 million, or 6%,
and gross margin percentage increased 10%. Further, adjusted
EBITDA, a non-GAAP measure, improved $1.8 million, or 51%. Qumu
management also reiterated its revenue and adjusted EBITDA
financial guidance for the year ending December 31, 2019.
Management Commentary “Qumu’s growth in the third quarter
was driven by large enterprise customers investing in major
expansions,” said Vern Hanzlik, Qumu’s President and CEO. “Our
customers are experiencing an explosion of video content and
traffic across their global networks. This rapid expansion will
only intensify with the ongoing migration toward Self-Service video
streaming options, which Qumu enables by transforming a Zoom,
WebEx, Teams or other video conferencing system into a video
recording and broadcasting tool.”
"On the financial side, Q3 was a solid quarter for Qumu during
which we regained much of the momentum we generated at the start of
2019,” added Hanzlik. “With these strong results, we are
reiterating our revenue and adjusted EBITDA guidance for 2019. Our
confidence is further supported by several key factors, including
two major deals already secured in the fourth quarter as well as a
robust sales pipeline and customer retention of 94%, an all-time
high. In addition, our BT partnership is already producing
encouraging early results as we received our first two purchase
orders through that new channel at the start of the current
quarter.”
Third Quarter 2019 Financial Highlights Third quarter
2019 revenue was $6.7 million, compared to $5.7 million for the
third quarter 2018, and net loss was $(221,000), or $(0.02) loss
per basic share or $(0.11) loss per diluted share, compared to net
income of $2.4 million, or $0.25 income per basic and diluted
share, for the third quarter 2018. Third quarter 2019 adjusted
EBITDA was $(535,000), compared to adjusted EBITDA of $(801,000)
for the third quarter 2018. The revenue growth of $1.0 million and
improved gross margin for the third quarter 2019 resulted in a $1.1
million increase in gross profit compared to the third quarter
2018.
Significantly impacting the $(0.36) decrease in diluted earnings
per share compared to the 2018 third quarter was the inclusion of a
large gain on the sale of BriefCam, Ltd. and loss on extinguishment
of debt in the 2018 third quarter and the dilutive effect of the
Company’s warrants on 2019 third quarter loss per diluted share.
Net income in the 2018 third quarter was favorably impacted by the
inclusion of $5.3 million of other income (pre-tax), or
approximately $0.56 (pre-tax) per diluted share, relating to the
$6.5 million gain on the sale of BriefCam, Ltd., partially offset
by a loss on extinguishment of debt of $1.2 million incurred with
the paydown of the Company's term debt by $6.0 million in principal
and $463,000 in accrued interest from the proceeds of the BriefCam
sale. In accordance with generally accepted accounting principles,
loss per diluted share for the third quarter 2019 was impacted by
the exclusion of $973,000 of income, resulting in the exclusion of
$0.09 of income per diluted share, related to the change in the
fair value of the Company's warrant liability during the
quarter.
Nine Month 2019 Financial Highlights For the nine months
ended September 30, 2019, revenue was $19.1 million, compared to
$18.1 million for the corresponding 2018 period, and net loss was
$(4.8) million, or $(0.49) loss per basic and diluted share,
compared to $(3.7) million, or $(0.39) loss per basic and diluted
share, for the nine months ended September 30, 2018. For the nine
months ended September 30, 2019, adjusted EBITDA was $(1.8)
million, an improvement from adjusted EBITDA of $(3.6) million for
the nine months ended September 30, 2018. The revenue growth of
$1.0 million and improved gross margin for the nine months ended
September 30, 2019 resulted in a $2.5 million increase in gross
profit compared to the nine months ended September 30, 2018.
Significantly impacting the $(0.10) increase in diluted loss per
share compared to the nine months ended September 30, 2018 was the
inclusion in the 2018 period of $5.3 million of other income
(pre-tax), or approximately $0.56 (pre-tax) per diluted share,
relating to the $6.5 million gain on the sale of BriefCam, Ltd.,
partially offset by a loss on extinguishment of debt of $1.2
million incurred with the paydown of the Company's term debt by
$6.0 million in principal and $463,000 in accrued interest from the
proceeds of the BriefCam sale.
Other Financial Highlights
- Software license and appliance revenue was $2.0 million and
$1.0 million for the three months ended September 30, 2019 and
2018, respectively, and $3.7 million and $4.3 million for the nine
months ended September 30, 2019 and 2018, respectively.
- Subscription, maintenance and support revenue was $4.2 million
and $4.1 million for the three months ended September 30, 2019 and
2018, respectively, and $13.9 million and $12.3 million for the
nine months ended September 30, 2019 and 2018, respectively.
- Gross margin was 70% for the third quarter 2019, compared to
63% for third quarter 2018, and 73% for the nine months ended
September 30, 2019, compared to 63% for the nine months ended
September 30, 2018.
- Cash and cash equivalents totaled $7.5 million as of September
30, 2019, compared to $7.3 million as of June 30, 2019 and $8.6
million as of December 31, 2018.
- Customer retention continued to build steadily, reaching a new
record of 94% during the three months ended September 30,
2019.
Business Outlook The Company is reiterating its
previously issued revenue and adjusted EBITDA financial guidance
for 2019:
- Revenue for 2019 is expected to be approximately $27 million.
Gross margin percentage is expected to be in the high 60s to low
70s.
- Net loss for 2019 is expected to be approximately $(5.5)
million, which differs from previous guidance of $(5.1) million,
due to management's expectation of an increase in the fair value of
the Company's warrant liability during the balance of the year.
Adjusted EBITDA for 2019 is expected to be approximately $(1.5)
million, the same as previously issued guidance. Forecasted
adjusted EBITDA for 2019 excludes forecasted interest expense of
approximately $1.0 million, income tax benefit of approximately
$(0.2) million, depreciation expense of approximately $0.3 million,
amortization of acquired intangible assets of approximately $1.2
million, stock-based compensation of approximately $0.8 million,
other income of approximately $(0.1) million and increase in
warrant liability of approximately $1.0 million.
The Company had previously provided guidance for 2019 annual
contract value (ACV) bookings growth. As the Company’s business has
transitioned, beginning in 2018 and more significantly in 2019, to
a deal-specific, customer-driven mix of on-premise and
Software-as-a-Service (SaaS) solutions, ACV bookings has become an
increasingly less predictable and relevant metric by which to judge
the performance of the Company during a given period. Although ACV
bookings are expected to grow in 2019 in the range of 6% to 10% as
compared to 2018, management believes that ACV bookings is no
longer relevant as a measure of customer adoption of the Company’s
technology or as a measure of the Company’s financial performance,
particularly as compared to revenue and adjusted EBITDA.
Accordingly, the Company will no longer be providing ACV bookings
guidance for 2019. Management will continue to be focused on
revenue growth and adjusted EBITDA improvement in 2019 as these are
the key indicators and drivers of the Company’s financial
performance.
Conference Call Qumu President and CEO Vern Hanzlik and
CFO Dave Ristow will host a conference call today (October 31,
2019) at 4:30 p.m. Eastern time, followed by a question and answer
period.
U.S. Dial-In Number: 877-456-6914 International Dial-In Number:
929-387-3794
Investors can also access a webcast of the live conference call
by linking through the Investor Relations section of the Qumu
website at https://qumu.com/en/investor-relations/. The webcast
will be archived on Qumu’s website for one year.
Non-GAAP Information To 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 liabilities, 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 income (loss), a GAAP measure, to adjusted
EBITDA, a non-GAAP measure, for the three and nine months ended
September 30, 2019 and 2018.
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 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, 2018 and other factors set forth in the
Company’s filings with the Securities and Exchange Commission.
About Qumu Qumu Corporation (Nasdaq: QUMU) is the leading
provider of best-in-class tools to create, manage, secure,
distribute and measure the success of live and on-demand video for
the enterprise. Backed by the most trusted and experienced team in
the industry, the Qumu platform enables global organizations to
drive employee engagement, increase access to video, and modernize
the workplace by providing a more efficient and effective way to
share knowledge.
QUMU CORPORATION
Condensed Consolidated Statements of
Operations
(unaudited - in thousands, except per
share data)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Revenues:
Software licenses and appliances
$
1,962
$
985
$
3,656
$
4,303
Service
4,709
4,668
15,478
13,807
Total revenues
6,671
5,653
19,134
18,110
Cost of revenues:
Software licenses and appliances
719
504
1,366
1,643
Service
1,294
1,611
3,747
4,990
Total cost of revenues
2,013
2,115
5,113
6,633
Gross profit
4,658
3,538
14,021
11,477
Operating expenses:
Research and development
1,849
1,617
5,361
5,159
Sales and marketing
2,083
1,796
6,647
6,388
General and administrative
1,673
1,608
4,998
5,536
Amortization of purchased intangibles
168
224
587
680
Total operating expenses
5,773
5,245
17,593
17,763
Operating loss
(1,115
)
(1,707
)
(3,572
)
(6,286
)
Other income (expense):
Gain on sale of BriefCam, Ltd.
41
6,502
41
6,502
Loss on extinguishment of debt
—
(1,189
)
—
(1,189
)
Interest expense, net
(235
)
(262
)
(654
)
(1,616
)
Decrease (increase) in fair value of
warrant liability
973
(401
)
(752
)
(292
)
Other, net
(3
)
(78
)
32
(481
)
Total other income (expense), net
776
4,572
(1,333
)
2,924
Income (loss) before income taxes
(339
)
2,865
(4,905
)
(3,362
)
Income tax expense (benefit)
(118
)
469
(133
)
303
Net income (loss)
$
(221
)
$
2,396
$
(4,772
)
$
(3,665
)
Net income (loss) per share – basic:
Net income (loss) per share – basic
$
(0.02
)
$
0.25
$
(0.49
)
$
(0.39
)
Weighted average shares outstanding –
basic
9,913
9,559
9,822
9,472
Net income (loss) per share – diluted:
Income (loss) attributable to common
shareholders
$
(1,194
)
$
2,396
$
(4,772
)
$
(3,665
)
Net income (loss) per share – diluted
$
(0.11
)
$
0.25
$
(0.49
)
$
(0.39
)
Weighted average shares outstanding –
diluted
10,413
9,709
9,822
9,472
QUMU CORPORATION
Condensed Consolidated Balance
Sheets
(unaudited - in thousands)
Assets
September 30, 2019
December 31, 2018
Current assets:
Cash and cash equivalents
$
7,525
$
8,636
Receivables, net
4,202
6,278
Contract assets
1,330
485
Income taxes receivable
274
327
Prepaid expenses and other current
assets
1,752
2,192
Total current assets
15,083
17,918
Property and equipment, net
633
545
Right of use assets – operating leases
1,783
—
Intangible assets, net
3,279
4,247
Goodwill
6,748
6,971
Deferred income taxes, non-current
45
55
Other assets, non-current
602
544
Total assets
$
28,173
$
30,280
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other accrued
liabilities
$
3,286
$
2,838
Accrued compensation
817
1,548
Deferred revenue
9,050
9,672
Operating lease liabilities
465
—
Deferred rent
—
45
Financing obligations
214
152
Term loan
3,834
—
Warrant liability
3,550
2,798
Total current liabilities
21,216
17,053
Long-term liabilities:
Deferred revenue, non-current
1,768
1,672
Income taxes payable, non-current
580
563
Deferred tax liability, non-current
—
2
Operating lease liabilities,
non-current
1,735
—
Deferred rent, non-current
—
302
Financing obligations, non-current
104
57
Term loan, non-current
—
3,431
Other liabilities, non-current
—
195
Total long-term liabilities
4,187
6,222
Total liabilities
25,403
23,275
Stockholders’ equity:
Common stock
99
96
Additional paid-in capital
69,705
69,072
Accumulated deficit
(63,457
)
(58,875
)
Accumulated other comprehensive loss
(3,577
)
(3,288
)
Total stockholders’ equity
2,770
7,005
Total liabilities and stockholders’
equity
$
28,173
$
30,280
QUMU CORPORATION
Condensed Consolidated Statements of
Cash Flows
(unaudited - in thousands)
Nine Months Ended September
30,
2019
2018
Operating activities:
Net loss
$
(4,772
)
$
(3,665
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
1,170
1,924
Stock-based compensation
644
767
Accretion of debt discount and issuance
costs
403
1,194
Gain on sale of BriefCam, Ltd.
(41
)
(6,502
)
Loss on debt extinguishment
—
1,189
Gain on lease modification
(21
)
—
Loss on lease contract termination
—
177
Increase in fair value of warrant
liability
752
292
Deferred income taxes
8
(99
)
Changes in operating assets and
liabilities:
Receivables
2,038
1,363
Contract assets
(845
)
394
Income taxes receivable / payable
62
357
Prepaid expenses and other assets
573
291
Accounts payable and other accrued
liabilities
546
(2,082
)
Accrued compensation
(732
)
(857
)
Deferred revenue
(431
)
2,283
Deferred rent
—
(121
)
Other non-current liabilities
(24
)
98
Net cash used in operating activities
(670
)
(2,997
)
Investing activities:
Proceeds from sale of BriefCam, Ltd.
41
9,678
Purchases of property and equipment
(137
)
(116
)
Net cash provided by (used in) investing
activities
(96
)
9,562
Financing activities:
Proceeds from term loan and warrant
issuance
—
10,000
Principal payments on term loans
—
(14,000
)
Payments for term loan issuance costs
—
(1,308
)
Principal payments on financing
obligations
(242
)
(329
)
Proceeds from employee stock plans
46
—
Common stock repurchases to settle
employee withholding liability
(54
)
(28
)
Net cash used in financing activities
(250
)
(5,665
)
Effect of exchange rate changes on
cash
(95
)
(91
)
Net increase (decrease) in cash and cash
equivalents
(1,111
)
809
Cash and cash equivalents, beginning of
period
8,636
7,690
Cash and cash equivalents, end of
period
$
7,525
$
8,499
QUMU CORPORATION
Supplemental Financial
Information
(unaudited - in thousands)
A summary of revenue is as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Software licenses and appliances
$
1,962
$
985
$
3,656
$
4,303
Service
Subscription, maintenance and support
4,166
4,091
13,883
12,251
Professional services and other
543
577
1,595
1,556
Total service
4,709
4,668
15,478
13,807
Total revenue
$
6,671
$
5,653
$
19,134
$
18,110
A reconciliation from GAAP results to
adjusted EBITDA is as follows:
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net income (loss)
$
(221
)
$
2,396
$
(4,772
)
$
(3,665
)
Interest expense, net
235
262
654
1,616
Income tax expense (benefit)
(118
)
469
(133
)
303
Depreciation and amortization expense:
Depreciation and amortization in cost of
revenues
—
2
—
7
Depreciation and amortization in operating
expenses
84
63
243
358
Total depreciation and amortization
expense
84
65
243
365
Amortization of intangibles included in
cost of revenues
109
288
340
879
Amortization of intangibles included in
operating expenses
168
224
587
680
Total amortization of intangibles
expense
277
512
927
1,559
Total depreciation and amortization
expense
361
577
1,170
1,924
EBITDA
257
3,704
(3,081
)
178
Gain on sale of BriefCam, Ltd.
(41
)
(6,502
)
(41
)
(6,502
)
Loss on extinguishment of debt
—
1,189
—
1,189
Increase (decrease) in fair value of
warrant liability
(973
)
401
752
292
Other (income) expense, net
3
78
(32
)
481
Stock-based compensation expense:
Stock-based compensation included in cost
of revenues
6
8
20
26
Stock-based compensation included in
operating expenses
213
321
624
741
Total stock-based compensation expense
219
329
644
767
Adjusted EBITDA
$
(535
)
$
(801
)
$
(1,758
)
$
(3,595
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191031005784/en/
Company Contact: Dave Ristow Chief Financial Officer Qumu
Corporation Dave.Ristow@qumu.com +1.612.638.9045
Investor Contact: Matt Glover or Tom Colton Gateway
Investor Relations QUMU@gatewayir.com +1.949.574.3860
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