Company Affirms 74% Revenue Increase in
Second Quarter to Record $9.3 Million; Strong Demand Continues to
Expand Sales Pipeline
Qumu Corporation (Nasdaq: QUMU), the leading provider of
best-in-class video technology for the enterprise, today reported
financial results for the second quarter ended June 30, 2020.
Q2 2020 Financial Highlights
- Revenue increased 74% year-over-year to a quarterly record $9.3
million, Qumu's highest for a second quarter period as a video
technology solutions company
- Net loss was $(692,000) and adjusted EBITDA, a non-GAAP
measure, totaled $809,000
- Customer retention was 90% for the second quarter 2020
- Cash and cash equivalents totaled $9.9 million
- Management reaffirms its 2020 revenue outlook of $29 million,
representing 14% year-over-year growth and an increase from
previous revenue outlook of $28 million provided on May 5,
2020
Management Commentary
“Our financial outperformance in the second quarter was the
direct result of the swelling demand for Qumu’s best-in-class
software platform in the now largely remote-work environment," said
Qumu Chairman Neil E. Cox. “We believe the COVID-19 pandemic has
catalyzed a fundamental shift in enterprise video usage, driving
organizations globally to rapidly adopt and expand their use of
video for both business continuity and effective internal
communications in the ‘new normal’ business landscape. Qumu’s
technology forms the critical infrastructure that enables Global
2000 enterprises to securely create, manage and deliver live and on
demand video across any organization at scale.”
TJ Kennedy, Qumu President and CEO commented: “The global
pandemic has positioned Qumu as an even more essential part of our
customers’ businesses, fueling an exponential increase in usage of
our platform over the last several months. One illustrative example
of this paradigm shift is the large expansion order we received at
the end of Q1 from one our financial institutions customers that
multiplied from 3,000 to 50,000 users in just a matter of days.
This win, while notable in its own right, is indicative of an
overall surge we’re experiencing across our customer base, where
usage is running at orders of magnitude above base levels, and
which we expect will ultimately translate to real revenue growth in
the coming quarters.
“As customers and prospects first solved their immediate video
and collaboration needs in the wake of the pandemic, we’ve seen a
material increase in demand from both constituencies for Qumu’s
back end video infrastructure platform to help them securely manage
and deliver their outgrown video needs. We are seeing this
increased demand drive a record sales pipeline for our Company that
we are actively and efficiently working to monetize over the coming
quarters.”
Second Quarter 2020 Financial Results
Revenue increased 74% to $9.3 million in the second quarter 2020
from $5.4 million in the second quarter 2019. The increase in
revenue was primarily due to a large customer order received at the
end of the first quarter 2020, which the customer identified as
specifically driven by COVID-19. A significant portion of the
revenue from that customer order was recognized in the second
quarter 2020, with incremental revenue to be recognized in the
third and fourth quarter of 2020.
Subscription, maintenance and support revenue increased 12% to
$4.7 million in the second quarter 2020 from $4.2 million in the
second quarter 2019, which was driven by revenue related to the
large customer order received at the end of the first quarter 2020
previously mentioned.
Gross margin for the second quarter 2020 was 68.5% compared to
70.9% for the second quarter 2019. The gross margin percentage
decrease was primarily due to a higher mix of appliance revenue,
which generally carries lower margins compared to term license
revenue. The higher mix of appliance revenue was driven by the
on-premise expansion component of the large customer order.
Net loss for the second quarter 2020 was $(692,000), or $(0.05)
loss per basic share and $(0.06) loss per diluted share, an
improvement compared to $(3.6) million, or $(0.37) loss per basic
and diluted share, for the second quarter 2019. Net loss for the
second quarter of 2020 included transaction-related expenses of
$699,000 related to the previously announced merger termination
with Synacor, Inc. on June 29, 2020. The transaction-related
expenses represent an adjustment in the calculation of adjusted
EBITDA (see Supplemental Financial Information below).
Adjusted EBITDA for the second quarter 2020 was $809,000, an
improvement compared to adjusted EBITDA loss of $(1.4) million for
the second quarter 2019.
Cash and cash equivalents totaled $9.9 million as of June 30,
2020, compared to $10.6 million as of December 31, 2019.
Six Month 2020 Financial Highlights
Revenue increased 25% to $15.6 million for the six months ended
June 30, 2020 from $12.5 million for the six months ended June 30,
2019. The increase in revenue was primarily due to a large customer
order received at the end of the first quarter 2020, which the
customer identified as specifically driven by COVID-19.
Subscription, maintenance and support revenue decreased 9% for
the six months ended June 30, 2020 to $8.8 million from $9.7
million for the six months ended June 30, 2019. The decrease in
subscription, maintenance and support revenue was due to the
recognition of large term license renewals in the first six months
of 2019 that were absent in the comparable period of 2020.
Gross margin was 67.7% for the six months ended June 30, 2020
compared to 75.1% for the six months ended June 30, 2019. The gross
margin percentage decrease was primarily due to a higher mix of
appliance revenue, which generally carries lower margins compared
to term license revenue. Additionally, the six months ended June
30, 2020 included outsourced professional services expenses for
certain customer-specific projects, which negatively impacted
services gross margin.
Net loss for the six months ended June 30, 2020 was $(3.4)
million, or $(0.25) loss per basic share and $(0.27) loss per
diluted share, an improvement compared to $(4.6) million, or
$(0.47) loss per basic and diluted share, for the six months ended
June 30, 2019. Net loss for the six months ended June 30, 2020
included transaction-related expenses of $1.5 million related to
the merger termination with Synacor, Inc. The transaction-related
expenses represent an adjustment in the calculation of adjusted
EBITDA (see Supplemental Financial Information below).
Adjusted EBITDA loss was $(436,000), an improvement compared to
adjusted EBITDA loss of $(1.2) million for the comparable 2019
period.
Business Outlook
Qumu provides revenue guidance based on current market
conditions and management’s expectations, including the financial
impact that COVID-19 is expected to have on economies and
enterprises around the world. Based on the Company’s strong second
quarter 2020 financial results and expanding pipeline of business,
management currently expects revenue for 2020 to be approximately
$29 million compared to $25.4 million in 2019, representing
year-over-year growth of 14%. Management will continue to assess
its revenue outlook for the second half of 2020 as more information
becomes available on customer ordering trends and the economic
disruption caused by COVID-19.
Conference Call
Qumu executive management will host a conference call today
(July 28, 2020) at 4:30 p.m. Eastern time. A question and answer
session will follow management’s prepared remarks.
U.S. Dial-In Number: +1.833.644.0679 International Dial-In
Number: +1.918.922.6755
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
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, other non-operating income and expenses, and
transaction-related 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 six months ended June 30, 2020
and 2019.
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.
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. Forward-looking statements
are subject to various risks and uncertainties that could cause
actual results to differ materially from those expressed or implied
in such statements.
Such forward-looking statements include, for example, statements
about: the expected use and adoption of video in the enterprise,
the impact of COVID-19 on the use and adoption of video in the
enterprise, 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
risks and uncertainties that could cause actual results to differ
materially from those expressed or implied in these forward-looking
statements include the risk factors described in the Company’s most
recent Annual Report on Form 10-K, subsequent Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and other filings with the
Securities and Exchange Commission.
The forward-looking statements in this press release speak only
as of the date of this press release. Except as required by law,
Qumu assumes no obligation to update or revise these
forward-looking statements for any reason, even if new information
becomes available in the future, except as required by law.
QUMU CORPORATION
Condensed Consolidated
Statements of Operations
(unaudited - in thousands,
except per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Revenues:
Software licenses and appliances
$
4,061
$
689
$
5,601
$
1,694
Service
5,273
4,676
9,960
10,769
Total revenues
9,334
5,365
15,561
12,463
Cost of revenues:
Software licenses and appliances
1,477
336
2,125
647
Service
1,463
1,227
2,902
2,453
Total cost of revenues
2,940
1,563
5,027
3,100
Gross profit
6,394
3,802
10,534
9,363
Operating expenses:
Research and development
2,088
1,838
3,868
3,512
Sales and marketing
2,181
2,212
4,399
4,564
General and administrative
2,320
1,579
4,913
3,325
Amortization of purchased intangibles
163
201
327
419
Total operating expenses
6,752
5,830
13,507
11,820
Operating loss
(358
)
(2,028
)
(2,973
)
(2,457
)
Other income (expense):
Interest expense, net
(22
)
(214
)
(5
)
(419
)
Decrease in fair value of derivative
liability
105
—
105
—
Increase in fair value of warrant
liability
(434
)
(1,436
)
(398
)
(1,725
)
Other, net
(37
)
66
(197
)
35
Total other income (expense), net
(388
)
(1,584
)
(495
)
(2,109
)
Loss before income taxes
(746
)
(3,612
)
(3,468
)
(4,566
)
Income tax benefit
(54
)
(11
)
(104
)
(15
)
Net loss
$
(692
)
$
(3,601
)
$
(3,364
)
$
(4,551
)
Net loss per share – basic:
Net loss per share – basic
$
(0.05
)
$
(0.37
)
$
(0.25
)
$
(0.47
)
Weighted average shares outstanding –
basic
13,534
9,861
13,543
9,775
Net loss per share – diluted:
Loss attributable to common
shareholders
$
(820
)
$
(3,601
)
$
(3,658
)
$
(4,551
)
Net loss per share – diluted
$
(0.06
)
$
(0.37
)
$
(0.27
)
$
(0.47
)
Weighted average shares outstanding –
diluted
13,538
9,861
13,573
9,775
QUMU CORPORATION
Condensed Consolidated Balance
Sheets
(unaudited - in thousands)
Assets
June 30, 2020
December 31, 2019
Current assets:
Cash and cash equivalents
$
9,887
$
10,639
Receivables, net
8,224
4,586
Contract assets
948
1,089
Income taxes receivable
515
338
Prepaid expenses and other current
assets
1,719
1,981
Total current assets
21,293
18,633
Property and equipment, net
464
596
Right of use assets – operating leases
1,490
1,746
Intangible assets, net
2,537
3,075
Goodwill
6,718
7,203
Deferred income taxes, non-current
12
21
Other assets, non-current
478
442
Total assets
$
32,992
$
31,716
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other accrued
liabilities
$
3,744
$
2,816
Accrued compensation
1,329
1,165
Deferred revenue
11,142
10,140
Operating lease liabilities
600
587
Financing obligations
203
157
Note payable
1,735
—
Derivative liability
35
—
Warrant liability
1,482
2,939
Total current liabilities
20,270
17,804
Long-term liabilities:
Deferred revenue, non-current
3,979
1,449
Income taxes payable, non-current
597
585
Operating lease liabilities,
non-current
1,256
1,587
Financing obligations, non-current
39
83
Other liabilities, non-current
151
—
Total long-term liabilities
6,022
3,704
Total liabilities
26,292
21,508
Stockholders’ equity:
Common stock
135
136
Additional paid-in capital
78,416
78,061
Accumulated deficit
(68,492
)
(65,128
)
Accumulated other comprehensive loss
(3,359
)
(2,861
)
Total stockholders’ equity
6,700
10,208
Total liabilities and stockholders’
equity
$
32,992
$
31,716
QUMU CORPORATION
Condensed Consolidated Statements of
Cash Flows
(unaudited - in thousands)
Six Months Ended June
30,
2020
2019
Operating activities:
Net loss
$
(3,364
)
$
(4,551
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
618
809
Stock-based compensation
409
425
Accretion of debt discount and issuance
costs
20
263
Gain on lease modification
—
(21
)
Decrease in fair value of derivative
liability
(105
)
—
Increase in fair value of warrant
liability
398
1,725
Deferred income taxes
9
7
Changes in operating assets and
liabilities:
Receivables
(3,685
)
3,290
Contract assets
140
(1,010
)
Income taxes receivable / payable
(184
)
(15
)
Prepaid expenses and other assets
394
586
Accounts payable and other accrued
liabilities
1,030
(397
)
Accrued compensation
177
(711
)
Deferred revenue
3,709
(1,445
)
Other non-current liabilities
151
(24
)
Net cash used in operating activities
(283
)
(1,069
)
Investing activities:
Purchases of property and equipment
(29
)
(43
)
Net cash used in investing activities
(29
)
(43
)
Financing activities:
Proceeds from issuance of common
stock under employee stock plans
—
42
Principal payments on financing
obligations
(185
)
(158
)
Common stock repurchases to settle
employee withholding liability
(54
)
(53
)
Net cash used in financing activities
(239
)
(169
)
Effect of exchange rate changes on
cash
(201
)
(6
)
Net decrease in cash and cash
equivalents
(752
)
(1,287
)
Cash and cash equivalents, beginning of
period
10,639
8,636
Cash and cash equivalents, end of
period
$
9,887
$
7,349
QUMU CORPORATION
Supplemental Financial
Information
(unaudited - in thousands)
A summary of revenue is as follows:
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Software licenses and appliances
$
4,061
$
689
$
5,601
$
1,694
Service
Subscription, maintenance and support
4,673
4,154
8,833
9,717
Professional services and other
600
522
1,127
1,052
Total service
5,273
4,676
9,960
10,769
Total revenue
$
9,334
$
5,365
$
15,561
$
12,463
A reconciliation from GAAP results to
adjusted EBITDA is as follows:
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Net loss
$
(692
)
$
(3,601
)
$
(3,364
)
$
(4,551
)
Interest expense, net
22
214
5
419
Income tax benefit
(54
)
(11
)
(104
)
(15
)
Depreciation and amortization expense:
Depreciation and amortization in operating
expenses
73
86
151
159
Total depreciation and amortization
expense
73
86
151
159
Amortization of intangibles included in
cost of revenues
68
114
140
231
Amortization of intangibles included in
operating expenses
163
201
327
419
Total amortization of intangibles
expense
231
315
467
650
Total depreciation and amortization
expense
304
401
618
809
EBITDA
(420
)
(2,997
)
(2,845
)
(3,338
)
Decrease in fair value of derivative
liability
(105
)
—
(105
)
—
Increase in fair value of warrant
liability
434
1,436
398
1,725
Other income (expense), net
37
(66
)
197
(35
)
Stock-based compensation expense:
Stock-based compensation included in cost
of revenues
5
6
10
14
Stock-based compensation included in
operating expenses
159
188
399
411
Total stock-based compensation expense
164
194
409
425
Transaction-related expenses
699
—
1,510
—
Adjusted EBITDA
$
809
$
(1,433
)
$
(436
)
$
(1,223
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200728005960/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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