Continued Execution of Cloud Growth Strategy
Drives 19% Year-over-Year Increase in Subscription ARR and Strong
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 third quarter ended
September 30, 2021.
Q3 2021 and Recent Operational Highlights
- Formed a partnership with TD SYNNEX, a leading distributor and
solutions aggregator for the IT ecosystem, to bring Qumu’s Video
Engagement Platform to its network of more than 150,000
resellers.
- Launched a world-class global channel program with JS Group,
leaders in channel strategy, expanding Qumu’s reach into more
medium and large enterprises.
- Added on-demand video transcriptions and AI-enabled, automatic
captioning for on-demand video to the Qumu platform.
- Launched customer-defined encryption keys, giving users
additional options for how they control and secure their video
content.
- Introduced moderated question and answer widget for more
engagement before, during and after live video events.
Q3 2021 Financial Highlights
- SaaS ARR grew to $13.1 million (up 19% YOY).
- Gross margin improved to 76% in Q3 2021 from 74% in Q2
2021.
- Revenue in Q3 2021 was $6.4 million, an increase of 10% from
$5.9 million in Q2 2021.
- Subscription, maintenance, and support revenue in Q3 2021
increased 2% to $5.1 million from $5.0 million in Q2 2021.
- Operating expenses decreased 9% compared Q2 2021.
- Strong balance sheet at the end of Q3 2021 with $18.2 million
of cash and cash equivalents and no borrowings on the company’s
revolving credit facility.
Q3 2021 Key Performance Indicators
- Software-as-a-Service (SaaS) Annual Recurring Revenue (SaaS
ARR) increased 19% to $13.1 million in Q3 2021 from $11.0 million
in Q3 2020.
- SaaS customer retention metrics:
- Gross Renewal Rate (GRR): 94% at end of Q3 2021 compared to 91%
at end of Q3 2020.
- Net Renewal Rate (NRR): 119% at end of both Q3 2021 and Q3
2020.
- Dollar Value Retention: 101% at end of Q3 2021 compared to 99%
at end of Q3 2020.
Management Commentary “Our strong financial results for
the third quarter reflect the continued execution of our strategic
plan to grow our cloud business and scale our SaaS recurring
revenue base,” said Qumu President and CEO TJ Kennedy. “Today, we
have a growing SaaS ARR business, which totaled $13.1 million at
quarter end, up 13% year-to-date and 19% year-over-year. At the
same time, as a result of the cost-optimization measures we
implemented in the quarter, we were able drive a 9% sequential
decrease in operating expenses and an approximate $3 million
decrease in cash burn during the period. Operationally, our partner
and direct sales motions are gaining traction, while our customer
success efforts are deepening relationships and driving growth in
our subscription ARR and cloud conversions.”
Rose Bentley, Qumu’s Chief Operating Officer, commented: “One of
our most important growth initiatives involves extending Qumu's
footprint and value to customers through strategic partnerships and
alliances. All of our new customers in Q3 were partner led,
demonstrating the early traction of this partner-first strategy;
long term, we believe strongly in the channel’s ability to
materially enhance our direct sales efforts. Importantly, the
partner-led process creates less friction and shortens sales cycles
because our partners know their customers’ needs, and already have
a contractual relationship in place. It’s because of this dynamic
that we have placed even more emphasis on expanding our channel-led
salesforce to scale our customer footprint and create new revenue
streams for Qumu more rapidly.”
“Beyond the critical role partnerships are playing, our customer
success team remains an equally important component of our
go-forward strategy,” said Kennedy. “This new group has been key in
retaining customers, securing more on-time renewals, and driving
expansion over the past several months. In Q3 we had a company-best
result in on-time renewals, surpassing the previous record we
achieved just last quarter. Our customer success initiatives have
also led to expansion with existing customers, supporting increased
retention of our SaaS customers, and propelling the SaaS
subscription engine we’re building.”
Kennedy continued: “Our partner and direct go-to-market motions,
targeting both large and medium enterprises, are gaining traction.
The execution of our strategic plan has enabled us to deliver
robust SaaS growth and generate momentum heading into the remainder
of the year and into 2022. Looking ahead, we remain on track to
achieve our SaaS ARR growth and revenue mix targets, including
growing our SaaS recurring revenue as a percentage of our recurring
revenue to 50% this year, 60% by the end of 2022, and 70% by the
end of 2023. Longer term, we are 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.”
Third Quarter 2021 Financial Results Revenue for Q3 2021
was $6.4 million, an increase of 10% compared to $5.9 million in Q2
2021 and a decrease of 3% compared to $6.6 million in Q3 2020. The
year-over-year decrease resulted as management placed less emphasis
on pursuing perpetual license sales, for which revenue is
recognized upon delivery, as part of the Company's accelerated
implementation of its SaaS-focused strategic plan, which results in
ratable recognition of revenue through subscription terms.
Subscription, maintenance, and support revenue for Q3 2021 was
$5.1 million, an increase of 2% compared to $5.0 million in Q2 2021
and an increase of 1% compared to $5.0 million in Q3 2020. The
year-over-year increase resulted from on-premise to cloud
conversions as well as incremental cloud customer expansions.
Gross margin in Q3 2021 was 76%, an improvement compared to 74%
in Q2 2021 and 75% in Q3 2020. The gross margin percentage increase
was primarily due to improvements to more SaaS in our sales
mix.
Net loss in Q3 2021 totaled $(3.7) million, or $(0.21) loss per
basic and diluted share. This compares to net loss of $(4.3)
million, or $(0.24) loss per basic share and $(0.30) loss per
diluted share, for Q2 2021 and net loss of $(1.9) million, or
$(0.14) loss per basic and diluted share, in Q3 2020.
Adjusted EBITDA loss, a non-GAAP measure, in Q3 2021 was $(3.5)
million, compared to $(4.5) million in Q2 2021 and $(839,000) in Q3
2020.
As of September 30, 2021, the company had cash and cash
equivalents of $18.2 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 plan and the COVID-19 pandemic, such as trends
in distributed remote and hybrid work impacting enterprise
technology adoption and procurement.
To give 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 reiterated its expectation that SaaS recurring revenue
will 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.
Reclassification of Recurring Term Software License
Revenue During Q3 2021, the Company reclassified revenue
recognized for recurring term software license agreements from
service revenue to software licenses and appliances revenue,
similar to perpetual software licenses. These recurring term
software licenses have significant standalone functionality and,
subsequent to delivery of the software, Qumu's activities do not
substantively change the functionality and do not significantly
affect the use of the software delivered. Amounts and percentages
following the reclassification for previous quarters for the
current and prior years are as follows:
Three Months Ended
Mar 31, 2020
Jun 30, 2020
Sep 30, 2020
Dec 31, 2020
Mar 31, 2021
Jun 30, 2021
Revenue:
Software licenses and appliances
$
1,555
$
4,294
$
887
$
811
$
121
$
228
Subscription, maintenance and support
4,145
4,440
5,010
5,175
4,966
4,992
Total service
4,672
5,040
5,743
6,070
5,699
5,639
Gross profit:
Software licenses and appliances
$
907
$
2,817
$
668
$
627
$
57
$
165
Service
3,233
3,577
4,308
4,582
4,196
4,153
Gross margin:
Software licenses and appliances
58
%
66
%
75
%
77
%
47
%
72
%
Service
69
%
71
%
75
%
76
%
74
%
74
%
Conference Call Qumu executive management will host a
conference call today (October 28, 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 derivative and
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 nine months ended September 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.
The Qumu Cloud platform enables global organizations to drive human
engagement, increase access to and insights from video use, 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 plan. 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 September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
Revenues:
Software licenses and appliances
$
742
$
887
$
1,091
$
6,736
Service
5,683
5,743
17,021
15,455
Total revenues
6,425
6,630
18,112
22,191
Cost of revenues:
Software licenses and appliances
63
219
190
2,344
Service
1,481
1,435
4,470
4,337
Total cost of revenues
1,544
1,654
4,660
6,681
Gross profit
4,881
4,976
13,452
15,510
Operating expenses:
Research and development
2,305
2,105
6,519
5,973
Sales and marketing
4,490
2,044
14,139
6,443
General and administrative
1,881
2,142
6,550
7,055
Amortization of purchased intangibles
163
165
488
492
Total operating expenses
8,839
6,456
27,696
19,963
Operating loss
(3,958)
(1,480)
(14,244)
(4,453)
Other income (expense):
Interest expense, net
(12)
(33)
(81)
(38)
Decrease (increase) in fair value of
derivative liability
—
(1)
37
104
Decrease (increase) in fair value of
warrant liability
94
(332)
1,469
(730)
Gain on sale of BriefCam
50
—
50
—
Other, net
4
(55)
(23)
(252)
Total other income (expense), net
136
(421)
1,452
(916)
Loss before income taxes
(3,822)
(1,901)
(12,792)
(5,369)
Income tax benefit
(77)
(43)
(276)
(147)
Net loss
$
(3,745)
$
(1,858)
$
(12,516)
$
(5,222)
Net loss per share – basic:
Net loss per share – basic
$
(0.21)
$
(0.14)
$
(0.72)
$
(0.39)
Weighted average shares outstanding –
basic
17,872
13,579
17,358
13,555
Net loss per share – diluted:
Loss attributable to common
shareholders
$
(3,788)
$
(1,858)
$
(13,985)
$
(5,516)
Net loss per share – diluted
$
(0.21)
$
(0.14)
$
(0.80)
$
(0.41)
Weighted average shares outstanding –
diluted
17,881
13,579
17,525
13,575
QUMU CORPORATION
Condensed Consolidated Balance
Sheets
(unaudited - in thousands)
September 30,
December 31,
Assets
2021
2020
Current assets:
Cash and cash equivalents
$
18,199
$
11,878
Receivables, net
4,703
5,612
Contract assets
430
467
Income taxes receivable
393
479
Prepaid expenses and other current
assets
2,142
2,302
Total current assets
25,867
20,738
Property and equipment, net
373
249
Right of use assets – operating leases
194
332
Intangible assets, net
1,574
2,143
Goodwill
7,366
7,455
Deferred income taxes, non-current
19
19
Other assets, non-current
402
490
Total assets
$
35,795
$
31,426
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other accrued
liabilities
$
2,495
$
2,705
Accrued compensation
1,227
2,145
Deferred revenue
11,442
12,918
Operating lease liabilities
709
735
Financing obligations
96
406
Note payable
—
1,800
Derivative liability
—
37
Warrant liability
881
2,910
Total current liabilities
16,850
23,656
Long-term liabilities:
Deferred revenue, non-current
2,144
3,488
Income taxes payable, non-current
624
608
Operating lease liabilities,
non-current
82
554
Financing obligations, non-current
126
75
Other liabilities, non-current
160
160
Total long-term liabilities
3,136
4,885
Total liabilities
19,986
28,541
Stockholders’ equity:
Common stock
178
138
Additional paid-in capital
104,995
79,489
Accumulated deficit
(86,844
)
(74,328
)
Accumulated other comprehensive loss
(2,520
)
(2,414
)
Total stockholders’ equity
15,809
2,885
Total liabilities and stockholders’
equity
$
35,795
$
31,426
QUMU CORPORATION
Condensed Consolidated Statements of
Cash Flows
(unaudited - in thousands)
Nine Months Ended
September 30,
2021
2020
Operating activities:
Net loss
$
(12,516
)
$
(5,222
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
738
935
Loss on disposal of property and
equipment
3
—
Stock-based compensation
1,403
620
Accretion of debt discount and issuance
costs
35
52
Gain on sale of BriefCam, Ltd.
(50
)
—
Decrease in fair value of derivative
liability
(37
)
(104
)
Increase (decrease) in fair value of
warrant liability
(1,469
)
730
Deferred income taxes
—
9
Changes in operating assets and
liabilities:
Receivables
913
(1,107
)
Contract assets
37
296
Income taxes receivable / payable
107
70
Prepaid expenses and other assets
264
268
Accounts payable and other accrued
liabilities
(607
)
(629
)
Accrued compensation
(915
)
617
Deferred revenue
(2,800
)
4,338
Other non-current liabilities
—
264
Net cash used in operating activities
(14,894
)
1,137
Investing activities:
Proceeds from sale of BriefCam, Ltd.
50
—
Purchases of property and equipment
(216
)
(68
)
Net cash used in investing activities
(166
)
(68
)
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
(342
)
(286
)
Payment of debt issuance costs
(25
)
—
Net proceeds from common stock
issuance
23,085
—
Proceeds from issuance of common stock
under employee stock plans
545
238
Common stock repurchases to settle
employee withholding liability
(47
)
(160
)
Net cash provided by (used in) financing
activities
21,383
(208
)
Effect of exchange rate changes on
cash
(2
)
(148
)
Net increase (decrease) in cash and cash
equivalents
6,321
713
Cash and cash equivalents, beginning of
period
11,878
10,639
Cash and cash equivalents, end of
period
$
18,199
$
11,352
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,
2021
2020
2021
2020
Software licenses and appliances
$
742
$
887
$
1,091
$
6,736
Service
Subscription, maintenance and support
5,080
5,010
15,038
13,595
Professional services and other
603
733
1,983
1,860
Total service
5,683
5,743
17,021
15,455
Total revenue
$
6,425
$
6,630
$
18,112
$
22,191
A reconciliation from GAAP results to
adjusted EBITDA is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Net loss
$
(3,745
)
$
(1,858
)
$
(12,516
)
$
(5,222
)
Interest expense, net
12
33
81
38
Income tax benefit
(77
)
(43
)
(276
)
(147
)
Depreciation and amortization expense:
Depreciation and amortization in operating
expenses
57
80
170
231
Total depreciation and amortization
expense
57
80
170
231
Amortization of intangibles included in
cost of revenues
26
72
80
212
Amortization of intangibles included in
operating expenses
163
165
488
492
Total amortization of intangibles
expense
189
237
568
704
Total depreciation and amortization
expense
246
317
738
935
EBITDA
(3,564
)
(1,551
)
(11,973
)
(4,396
)
Gain on sale of BriefCam, Ltd.
(50
)
—
(50
)
—
Increase (decrease) in fair value of
derivative liability
—
1
(37
)
(104
)
Increase (decrease) in fair value of
warrant liability
(94
)
332
(1,469
)
730
Other expense (income), net
(4
)
55
23
252
Stock-based compensation expense:
Stock-based compensation included in cost
of revenues
12
12
44
22
Stock-based compensation included in
operating expenses
236
199
1,359
598
Total stock-based compensation expense
248
211
1,403
620
Transaction-related expenses
—
113
—
1,623
Adjusted EBITDA
$
(3,464
)
$
(839
)
$
(12,103
)
$
(1,275
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211028006117/en/
Matt Glover or Tom Colton Gateway Investor Relations
QUMU@gatewayir.com +1.949.574.3860
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