Continued Progress within Cloud Growth Strategy
Drives 28% Year-over-Year Increase in Subscription Annual Recurring
Revenue (ARR) and Improving SaaS Metrics
Qumu Corporation (Nasdaq: QUMU), a leading provider of
cloud-based enterprise video technology for organizations of all
sizes, today reported financial results for the second quarter
ended June 30, 2021.
Q2 2021 and Recent Operational Highlights
- Launched 360-degree video on demand for fully immersive
enterprise video experience.
- Introduced artificial intelligence-based translation of voice
to on-screen captions for video viewers.
- Released integration with Socialive, giving video creators
enhanced studio-quality production capabilities from one unified
interface.
- Appointed cloud computing executive Andi Mann as Chief
Technology Officer.
- Appointed channel sales veteran Susan Young to grow strategic
partner ecosystem.
Q2 2021 Financial Highlights
- Revenue in Q2 2021 was $5.9 million, up from $5.8 million in Q1
2021.
- Subscription, maintenance, and support revenue in Q2 2021
increased 9% to $5.1 million, compared to $4.7 million in Q2
2020.
- Gross margin improved to 74% in Q2 2021 from 69% in Q2
2020.
- Strong balance sheet at the end of Q2 2021 with $21.3 million
of cash and cash equivalents and no borrowings on the company's
revolving credit facility.
Q2 2021 Key Performance Indicators
- Software-as-a-Service (SaaS) Annual Recurring Revenue (SaaS
ARR) increased 28% to $12.4 million in Q2 2021 from $9.7 million in
Q2 2020.
- SaaS customer retention:
- Gross Renewal Rate (GRR): 93% at end of Q2 2021 compared to 87%
at end of Q2 2020.
- Net Renewal Rate (NRR): 132% at end of Q2 2021 compared to 118%
at end of Q2 2020.
- Dollar Value Retention: 104% at end of Q2 2021 compared to 96%
at end of Q2 2020.
Management Commentary
“Qumu is in the midst of a significant business transformation,
and we’re well on our way to becoming a SaaS-first organization
capable of generating robust and predictable long-term growth,”
said Qumu President and CEO TJ Kennedy. “Our financial results for
the second quarter of 2021 were in-line with or better than the
preliminary results we announced last month. We are actively
addressing and overcoming several near-term headwinds, including
longer-than-expected sales cycles, slower ramp of our new SaaS
sales resources, and the anticipated decline of our legacy
on-premise business. Although these transformation challenges have
pushed our anticipated growth inflection point into early next
year, this process has yielded actionable insights that have helped
us to hone our approach and implement adjustments in our business
execution for the second half of 2021.”
“Our revised plan focuses on ensuring continued growth of our
subscription-based business while still maintaining dedicated
support for our on-premise customers,” added Kennedy. “We have
already taken action on important go-forward initiatives, including
simplifying our selling motions with focused messaging that better
highlights our key differentiators, updating our pricing to better
align with our value-based selling approach, and modifying the
packaging of our services offerings to focus on our customers’ key
enterprise use cases.”
Dave Ristow, Qumu’s Chief Financial Officer, commented: “We are
executing a cost-optimization program to align our expenses with
our new level of anticipated revenues. This strategy includes
reducing our burn rate, slowing our hiring in non-revenue
generating and quota-carrying resources, and implementing other
cost-cutting measures to ensure adequate working capital to support
our SaaS transition. When completed, these measures will create an
even more focused, nimble, and efficient organization. We believe
we have the necessary resources, including more than $21 million of
cash, that we expect will cover our growth investment needs and
ensure our sustainability as we execute our long-term growth
initiatives. As we execute our strategic roadmap, we will continue
to monitor spending closely as we march towards adjusted EBITDA
positivity targeted for the second half of 2022 with the goal of
maintaining a solid cash position throughout the process.”
Kennedy continued: “From a leadership standpoint, we have
significantly strengthened the Qumu team necessary to execute our
strategic roadmap. This includes bolstering our customer facing
teams, adding experienced SaaS sales executives, and appointing
world-class business leaders. Most recently, we announced Andi Mann
as our new Chief Technology Officer, who joined Qumu a few weeks
ago. Andi will lead our technology efforts to deepen and enhance
our enterprise video portfolio, including expanding our advanced
video analytics capabilities and ensuring best-in-class cloud
security. With Andi’s appointment, Qumu’s leadership team is the
strongest and deepest in company history, and the group’s
collective experience gives us confidence in our ability to execute
on our long-term strategy.
“SaaS businesses are built on strong foundations of process,
people, and technology, and we have now put in place the foundation
for our long-term success. Our go-to-market motions, targeting both
large and medium enterprises are gaining traction. Our improved
customer success efforts are deepening customer relationships and
driving growth in our subscription ARR and continued on-prem to
cloud conversions. As we transform our business, our focus remains
on delivering robust SaaS revenue growth. Today, we have a growing
SaaS ARR business, which totaled $12.4 million at quarter end and
was up 28% year-over-year. Our plan is centered around driving
additional scale of our SaaS business through our direct sales
team, our new customer success and account management organization,
and our newly invigorated channel and partnership ecosystem, which
will enable us to accelerate the value we deliver to our
customers.
“Looking ahead, hybrid work and the use of video by enterprises
is here to stay, and Qumu is building for the long-term success of
the company and its shareholders. We have the right plan and team
in place, and the resources to ensure sustainability and the
successful achievement of our strategic roadmap. We remain
confident that Qumu will emerge as a subscription driven, growth
company operating at scale, benefiting from high-margin recurring
revenues, sustainable and growing adjusted EBITDA, and net income
profitability.”
Second Quarter 2021 Financial Results
Revenue for Q2 2021 was $5.9 million compared to $9.3 million
for Q2 2020. The decrease in revenue was primarily due to
significant one-time license and appliance revenues recognized from
a large single customer in Q2 2020.
Subscription, maintenance, and support revenue for Q2 2021
increased 9% to $5.1 million from $4.7 million in Q2 2020, which
was driven by new cloud and term deals as well as moderate cloud
usage overage fees.
Gross margin in Q2 2021 was 74% compared to 69% for Q2 2020. The
gross margin percentage increase was primarily due to a favorable
sales mix and an increase in higher-margin SaaS revenue.
Net loss in Q2 2021 was $(4.3) million, or $(0.24) loss per
basic share and $(0.30) loss per diluted share, compared to
$(692,000), or $(0.05) loss per basic share and $(0.06) loss per
diluted share, for Q2 2020. The higher net loss reflects costs
associated with the implementation of the company’s strategic
roadmap.
Adjusted EBITDA loss, a non-GAAP measure, in Q2 2021 was $(4.5)
million, compared to adjusted EBITDA of $809,000 for Q2 2020.
Adjusted EBITDA loss reflects decreased revenues and increased
operating expenses associated with investments in Qumu's strategic
roadmap to transform the company’s perpetual license business into
a SaaS subscription business model.
As of June 30, 2021, the company had cash and cash equivalents
of $21.3 million and no borrowings on the company's revolving
credit facility.
Business Outlook
Qumu provides guidance based on current market conditions and
expectations. The Company emphasizes that its guidance is subject
to various important cautionary factors referenced in the section
entitled "Forward-Looking Statements" below, including risks and
uncertainties associated with the Company’s strategic roadmap and
the COVID-19 pandemic, such as trends in distributed remote and
hybrid work impacting enterprise technology adoption and
procurement.
In order to provide better insight into the progress of Qumu’s
SaaS business transformation, the Company provides a business
outlook based on the percentage of recurring revenue comprised of
SaaS revenue. Qumu management currently anticipates SaaS recurring
revenue to comprise approximately 60% of its overall recurring
revenue mix by the end of 2022, with targeted growth to
approximately 70% by the end of 2023.
Conference Call
Qumu executive management will host a conference call today
(July 29, 2021) at 4:30 p.m. Eastern time.
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://ir.qumu.com. 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, non-cash office
lease surrender costs 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, 2021
and 2020.
About Qumu
Qumu (Nasdaq: QUMU) is a 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 Cloud
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, the demand for the Company’s products or software, or the
success of go-to-market strategies or the other initiatives in the
Company’s strategic roadmap. 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 Annual Report on Form 10-K for
the year ended December 31, 2020 and other factors set forth in the
Company’s 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,
2021
2020
2021
2020
Revenues:
Software licenses and appliances
$
138
$
4,061
$
246
$
5,601
Service
5,729
5,273
11,441
9,960
Total revenues
5,867
9,334
11,687
15,561
Cost of revenues:
Software licenses and appliances
63
1,477
127
2,125
Service
1,486
1,463
2,989
2,902
Total cost of revenues
1,549
2,940
3,116
5,027
Gross profit
4,318
6,394
8,571
10,534
Operating expenses:
Research and development
2,184
2,088
4,214
3,868
Sales and marketing
5,173
2,181
9,649
4,399
General and administrative
2,142
2,320
4,669
4,913
Amortization of purchased intangibles
163
163
325
327
Total operating expenses
9,662
6,752
18,857
13,507
Operating loss
(5,344)
(358)
(10,286)
(2,973)
Other income (expense):
Interest expense, net
(15)
(22)
(69)
(5)
Decrease in fair value of derivative
liability
—
105
37
105
Decrease (increase) in fair value of
warrant liability
1,018
(434)
1,375
(398)
Other, net
(89)
(37)
(27)
(197)
Total other income (expense), net
914
(388)
1,316
(495)
Loss before income taxes
(4,430)
(746)
(8,970)
(3,468)
Income tax benefit
(109)
(54)
(199)
(104)
Net loss
$
(4,321)
$
(692)
$
(8,771)
$
(3,364)
Net loss per share – basic:
Net loss per share – basic
$
(0.24)
$
(0.05)
$
(0.51)
$
(0.25)
Weighted average shares outstanding –
basic
17,741
13,534
17,096
13,543
Net loss per share – diluted:
Loss attributable to common
shareholders
$
(5,339)
$
(820)
$
(10,146)
$
(3,658)
Net loss per share – diluted
$
(0.30)
$
(0.06)
$
(0.59)
$
(0.27)
Weighted average shares outstanding –
diluted
17,899
13,538
17,299
13,573
QUMU CORPORATION
Condensed Consolidated Balance
Sheets
(unaudited - in
thousands)
June 30,
December 31,
Assets
2021
2020
Current assets:
Cash and cash equivalents
$
21,328
$
11,878
Receivables, net
3,833
5,612
Contract assets
229
467
Income taxes receivable
280
479
Prepaid expenses and other current
assets
2,462
2,302
Total current assets
28,132
20,738
Property and equipment, net
431
249
Right of use assets – operating leases
242
332
Intangible assets, net
1,776
2,143
Goodwill
7,583
7,455
Deferred income taxes, non-current
19
19
Other assets, non-current
439
490
Total assets
$
38,622
$
31,426
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other accrued
liabilities
$
2,714
$
2,705
Accrued compensation
842
2,145
Deferred revenue
10,434
12,918
Operating lease liabilities
711
735
Financing obligations
206
406
Note payable
—
1,800
Derivative liability
—
37
Warrant liability
975
2,910
Total current liabilities
15,882
23,656
Long-term liabilities:
Deferred revenue, non-current
2,306
3,488
Income taxes payable, non-current
619
608
Operating lease liabilities,
non-current
258
554
Financing obligations, non-current
139
75
Other liabilities, non-current
160
160
Total long-term liabilities
3,482
4,885
Total liabilities
19,364
28,541
Stockholders’ equity:
Common stock
176
138
Additional paid-in capital
104,472
79,489
Accumulated deficit
(83,099)
(74,328)
Accumulated other comprehensive loss
(2,291)
(2,414)
Total stockholders’ equity
19,258
2,885
Total liabilities and stockholders’
equity
$
38,622
$
31,426
QUMU CORPORATION
Condensed Consolidated
Statements of Cash Flows
(unaudited - in
thousands)
Six Months Ended
June 30,
2021
2020
Operating activities:
Net loss
$
(8,771)
$
(3,364)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
492
618
Loss on disposal of property and
equipment
3
—
Stock-based compensation
1,155
409
Accretion of debt discount and issuance
costs
33
20
Decrease in fair value of derivative
liability
(37)
(105)
Increase (decrease) in fair value of
warrant liability
(1,375)
398
Deferred income taxes
—
9
Changes in operating assets and
liabilities:
Receivables
1,802
(3,685)
Contract assets
238
140
Income taxes receivable / payable
221
(184)
Prepaid expenses and other assets
(105)
394
Accounts payable and other accrued
liabilities
(242)
1,030
Accrued compensation
(1,305)
177
Deferred revenue
(3,724)
3,709
Other non-current liabilities
—
151
Net cash used in operating activities
(11,615)
(283)
Investing activities:
Purchases of property and equipment
(216)
(29)
Net cash used in investing activities
(216)
(29)
Financing activities:
Proceeds from line of credit
1,840
—
Payment on line of credit
(1,840)
—
Principal payments on term loan
(1,833)
—
Principal payments on financing
obligations
(219)
(185)
Net proceeds from common stock
issuance
23,085
—
Proceeds from issuance of common stock
under employee stock plans
226
—
Common stock repurchases to settle
employee withholding liability
(6)
(54)
Net cash provided by (used in) financing
activities
21,253
(239)
Effect of exchange rate changes on
cash
28
(201)
Net increase (decrease) in cash and cash
equivalents
9,450
(752)
Cash and cash equivalents, beginning of
period
11,878
10,639
Cash and cash equivalents, end of
period
$
21,328
$
9,887
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,
2021
2020
2021
2020
Software licenses and appliances
$
138
$
4,061
$
246
$
5,601
Service
Subscription, maintenance and support
5,082
4,673
10,061
8,833
Professional services and other
647
600
1,380
1,127
Total service
5,729
5,273
11,441
9,960
Total revenue
$
5,867
$
9,334
$
11,687
$
15,561
A reconciliation from GAAP results to
adjusted EBITDA is as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
2021
2020
Net loss
$
(4,321)
$
(692)
$
(8,771)
$
(3,364)
Interest expense, net
15
22
69
5
Income tax benefit
(109)
(54)
(199)
(104)
Depreciation and amortization expense:
Depreciation and amortization in operating
expenses
59
73
113
151
Total depreciation and amortization
expense
59
73
113
151
Amortization of intangibles included in
cost of revenues
27
68
54
140
Amortization of intangibles included in
operating expenses
163
163
325
327
Total amortization of intangibles
expense
190
231
379
467
Total depreciation and amortization
expense
249
304
492
618
EBITDA
(4,166)
(420)
(8,409)
(2,845)
Decrease in fair value of derivative
liability
—
(105)
(37)
(105)
Increase (decrease) in fair value of
warrant liability
(1,018)
434
(1,375)
398
Other expense, net
89
37
27
197
Stock-based compensation expense:
Stock-based compensation included in cost
of revenues
17
5
32
10
Stock-based compensation included in
operating expenses
549
159
1,123
399
Total stock-based compensation expense
566
164
1,155
409
Transaction-related expenses
—
699
—
1,510
Adjusted EBITDA
$
(4,529)
$
809
$
(8,639)
$
(436)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210729006072/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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