Conference Call Wednesday, August 1, 2018 at
10:00 a.m. ET
Qumu Corporation (NASDAQ: QUMU) today reported financial results
for the second quarter ending June 30, 2018. The Company reported
strong growth in both license revenue and sales pipeline,
increasing gross margins, paydown of its long-term debt, and
reiteration of its 2018 full year revenue guidance.
Second quarter 2018 revenue was $7.6 million, compared to $6.7
million in the second quarter 2017, and net loss for the second
quarter 2018 was $(1.5) million, or $(0.16) per diluted share,
compared to a net loss of $(2.6) million, or $(0.28) per diluted
share, in the second quarter 2017. Second quarter adjusted EBITDA,
a non-GAAP measure, was $71,000 for the second quarter 2018,
compared to $(1.0) million for the second quarter 2017.
"During the second quarter of 2018 we not only brought revenue
into line, but also created a strong balance sheet by monetizing
our investment in BriefCam,” said Vern Hanzlik, Qumu’s President
and CEO. “Now we are focused on carrying that momentum through the
second half of 2018, as our software-as-a-service video solutions
gain traction within the enterprise."
For the six months ended June 30, 2018, revenue was $12.5
million, compared to $13.4 million last year, and net loss was
$(6.1) million, or a loss of $(0.64) per diluted share, compared to
$(6.2) million, or a loss of $(0.66) per diluted share, last year.
For the six months ended June 30, 2018, adjusted EBITDA was
negative $(2.8) million, compared to negative adjusted EBITDA of
$(3.0) million last year.
The year-over-year revenue comparisons were negatively impacted
by approximately $240,000 and $424,000 for the three and six months
ended June 30, 2018, respectively, due to the adoption of the new
revenue recognition standard (ASC Topic 606). Additionally, the
loss of a large customer, which was previously announced as lost in
the fourth quarter 2017, negatively impacted the year-over-year
revenue comparisons by approximately $800,000 and $1.6 million in
the three and six months ended June 30, 2018, respectively. The
Company incurred severance expense relating to cost reduction
initiatives of $6,000 and $16,000 in the three months ended June
30, 2018 and 2017, respectively, and $168,000 and $123,000 for the
six months ended June 30, 2018 and 2017, respectively.
Other Financial Highlights
- Software license and appliance revenue
was $2.9 million and $0.9 million for the three months ended June
30, 2018 and 2017, respectively, and $3.3 million and $2.1 million
for the six months ended June 30, 2018 and 2017, respectively, with
the increases attributable to both new license sales and expansion
of existing customers.
- Subscription, maintenance and support
revenue was $4.1 million and $5.1 million for the three months
ended June 30, 2018 and 2017, respectively, and $8.2 million and
$9.9 million for the six months ended June 30, 2018 and 2017,
respectively. The year-over-year revenue comparisons were
negatively impacted by approximately $246,000 and $443,000 for the
three and six months ended June 30, 2018, respectively, due to the
adoption of the new revenue recognition standard (ASC Topic 606).
Additionally, the loss of a large customer which was previously
announced as lost in the fourth quarter 2017, negatively impacted
the year-over-year revenue comparisons by approximately $800,000
and $1.6 million in the three and six months ended June 30, 2018,
respectively.
- Offsetting for the negative impacts
noted above is growth in our core business and subscription growth.
Contributing to subscription, maintenance and support revenue in
the current period was the arrangement with iStudy Co. Ltd., Qumu’s
sales partner in Japan. iStudy has agreed to pay Qumu $1 million in
non-refundable Qumu Cloud license fees to expand the strategic
relationship between the companies.
- Gross margin for the second quarter
2018 was 68.5%, compared to 65.6% for the second quarter 2017.
Gross margin for the six months ended June 30, 2018 was 63.7%,
compared to 63.6% for the six months ended June 30, 2017. The
change in gross margin compared to the prior year periods was
favorably impacted by increased perpetual license revenue in the
quarter.
- Cash and cash equivalents totaled $5.2
million as of June 30, 2018, compared to $7.7 million as of
December 31, 2017, reflecting the 2018 first half operating
loss offset by changes in working capital.
- Subsequent to June 30, 2018, the
Company received net cash proceeds of $9.6 million on July 6, 2018
from the sale of its investment in BriefCam Ltd., which was
recently acquired by Canon Inc.
- From the BriefCam net proceeds, the
Company paid on July 19, 2018 $6.0 million of principal and
$463,000 of accrued interest on its outstanding term loan with ESW
Holdings, Inc. As of July 20, 2018, after the receipt of BriefCam
proceeds and prepayment on its outstanding term loan, the Company
had cash on hand of $7.3 million.
Given the performance to date and sales pipeline, the Company is
confident in the achievement of its previously issued revenue
guidance for the full year 2018. Core bookings growth is expected
to be 25% in 2018, emphasizing growth in sales of the Qx platform.
Revenue for 2018 is expected to be approximately $25
million, which includes an approximately $1.1 million unfavorable
revenue impact due to the adoption of the new revenue recognition
standard (ASC Topic 606) in 2018, as well as the loss of a large
customer in the fourth quarter 2017, representing revenue of
approximately $3.2 million annually. Gross margin percentage is
expected to be in the mid to high 60s. Adjusted EBITDA for
2018 is expected to be approximately $(3.5) million, which is
unchanged from previously issued guidance. The Company expects to
achieve positive adjusted EBITDA, a non-GAAP measure, in the fourth
quarter 2018. Adjusted EBITDA for 2018 excludes the net gain of
approximately $5.2 million on the sale of BriefCam Ltd. and
subsequent paydown of term debt, stock-based compensation expense
of approximately $1.0 million, amortization of acquired
intangible assets of approximately $2.1 million, depreciation
expense of approximately $0.5 million, income tax benefit of
approximately $0.2 million, and interest expense of approximately
$1.8 million. Net loss for 2018 is expected to be approximately
$(3.5) million, which includes the gain on the sale of its
investment in BriefCam Ltd. in the third quarter 2018 and results
for the six months ended June 30, 2018.
Conference CallThe Company has scheduled a conference
call and webcast to review its second quarter 2018 results
tomorrow, August 1, 2018 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
liabilities, foreign currency gains and losses, the gain on the
sale of BriefCam 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 six months ended June 30, 2018
and 2017.
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, the demand for the
Company’s products or software, and the expected tax effects of the
Company’s disposition of its investment in BriefCam. 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, 2017 and
other factors set forth in the Company’s filings with the
Securities and Exchange Commission.
About QumuQumu 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 June
30, Six Months Ended June 30,
2018 2017 2018
2017 Revenues: Software licenses and appliances $ 2,867 $
929 $ 3,318 $ 2,149 Service 4,759 5,725
9,139 11,216 Total revenues
7,626 6,654 12,457 13,365
Cost of revenues: Software licenses and appliances 804 368
1,139 862 Service 1,602 1,918
3,379 4,008 Total cost of revenues
2,406 2,286 4,518 4,870
Gross profit 5,220 4,368
7,939 8,495 Operating expenses: Research and
development 1,639 1,798 3,542 3,907 Sales and marketing 2,412 2,524
4,592 4,975 General and administrative 1,747 2,009 3,928 4,469
Amortization of purchased intangibles 227 226
456 449 Total operating expenses
6,025 6,557 12,518
13,800 Operating loss (805 ) (2,189 )
(4,579 ) (5,305 ) Other income (expense): Interest expense,
net (510 ) (334 ) (1,354 ) (651 ) Decrease (increase) in value of
warrant liability (278 ) 11 109 (67 ) Other, net (16 )
(124 ) (403 ) (179 ) Total other expense, net
(804 ) (447 ) (1,648 ) (897 ) Loss
before income taxes (1,609 ) (2,636 ) (6,227 ) (6,202 ) Income tax
benefit (78 ) (25 ) (166 ) (29 ) Net
loss $ (1,531 ) $ (2,611 ) $ (6,061 ) $ (6,173 ) Net loss
per share – basic: Net loss per share $ (0.16 ) $ (0.28 ) $ (0.64 )
$ (0.66 ) Weighted average shares outstanding
9,484
9,356 9,427 9,301 Net loss per share – diluted: Net loss per share
$ (0.16 ) $ (0.28 ) $ (0.64 ) $ (0.66 ) Weighted average shares
outstanding
9,484
9,357 9,427 9,301
QUMU CORPORATION
Condensed Consolidated Balance Sheets (unaudited - in
thousands) Assets
June
30, 2018
December 31, 2017 Current assets: Cash and
cash equivalents $ 5,202 $ 7,690 Receivables, net 4,954 5,529
Contract assets 339 — Income taxes receivable 277 156 Prepaid
expenses and other current assets 1,934 1,830
Total current assets 12,706 15,205 Property and equipment,
net 533 911 Intangible assets, net 5,202 6,295 Goodwill 7,224 7,390
Deferred income taxes, non-current 69 77 Other assets, non-current
4,200 4,398 Total assets $ 29,934
$ 34,276 Liabilities and Stockholders’ Equity Current
liabilities: Accounts payable and other accrued liabilities $ 2,961
$ 3,878 Accrued compensation 1,216 1,824 Deferred revenue 8,514
8,923 Deferred rent 49 181 Financing obligations 226 1,047 Warrant
liability 2,886 819 Total current
liabilities 15,852 16,672 Long-term
liabilities: Deferred revenue, non-current 947 141 Income taxes
payable, non-current — 3 Deferred tax liability, non-current 76 153
Deferred rent, non-current 298 507 Term loan and other financing
obligations, non-current 7,956 7,608 Other liabilities, non-current
485 — Total long-term liabilities
9,762 8,412 Total liabilities
25,614 25,084 Stockholders’ equity: Common
stock 95 94 Additional paid-in capital 68,435 68,035 Accumulated
deficit (61,319 ) (56,197 ) Accumulated other comprehensive loss
(2,891 ) (2,740 ) Total stockholders’ equity
4,320 9,192 Total liabilities and
stockholders’ equity $ 29,934 $ 34,276
QUMU CORPORATION Condensed Consolidated Statements of
Cash Flows (unaudited - in thousands)
Six Months Ended June 30, 2018
2017 Operating activities: Net loss $ (6,061 ) $
(6,173 ) Adjustments to reconcile net loss to net cash used in
operating activities: Depreciation and amortization 1,347 1,548
Stock-based compensation 438 783 Accretion of debt discount and
issuance costs 1,035 236 Loss on lease contract termination 177 —
Change in value of warrant liability (109 ) 67 Deferred income
taxes (72 ) (71 ) Changes in operating assets and liabilities:
Receivables 588 2,425 Contract assets 211 — Income taxes receivable
/ payable (130 ) 135 Prepaid expenses and other assets 197 710
Accounts payable and other accrued liabilities (1,019 ) 315 Accrued
compensation (604 ) (522 ) Deferred revenue 938 (368 ) Deferred
rent (144 ) (150 ) Other non-current liabilities 436
— Net cash used in operating activities (2,772
) (1,065 ) Investing activities: Purchases of property and
equipment (73 ) (20 ) Net cash used in investing
activities (73 ) (20 ) Financing activities: Proceeds
from term loan and warrant issuance 10,000 — Principal payment on
term loan (8,000 ) — Payments for term loan issuance costs (1,308 )
(125 ) Principal payments on financing obligations (247 ) (255 )
Common stock repurchases to settle employee withholding liability
(27 ) (11 ) Net cash provided by (used in) financing
activities 418 (391 ) Effect of exchange rate
changes on cash (61 ) 94 Net decrease in cash
and cash equivalents (2,488 ) (1,382 ) Cash and cash equivalents,
beginning of period 7,690 10,364 Cash
and cash equivalents, end of period $ 5,202 $ 8,982
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, 2018
2017 2018 2017 Software
licenses and appliances $ 2,867 $ 929 $ 3,318 $ 2,149 Service
Subscription, maintenance and support 4,122 5,110 8,160 9,948
Professional services and other 637 615
979 1,268 Total service 4,759
5,725 9,139 11,216
Total revenue $ 7,626 $ 6,654 $ 12,457 $
13,365
A reconciliation from GAAP results to
adjusted EBITDA is as follows:
Three Months Ended June 30, Six Months
Ended June 30, 2018 2017 2018
2017 Net loss $ (1,531 ) $ (2,611 ) $ (6,061 ) $ (6,173 )
Interest expense, net 510 334 1,354 651 Income tax benefit (78 )
(25 ) (166 ) (29 ) Depreciation and amortization expense:
Depreciation and amortization in cost of revenues 2 9 5 19
Depreciation and amortization in operating expenses 126
241 295 489 Total
depreciation and amortization expense 128 250
300 508 Amortization of
intangibles included in cost of revenues 293 298 591 591
Amortization of intangibles included in operating expenses
227 226 456 449
Total amortization of intangibles expense 520
524 1,047 1,040 Total
depreciation and amortization expense 648 774
1,347 1,548 EBITDA (451 ) (1,528
) (3,526 ) (4,003 ) Increase (decrease) in fair value of warrant
liability 278 (11 ) (109 ) 67 Other expense, net 16 124 403 179
Stock-based compensation expense: Stock-based compensation included
in cost of revenues 8 18 18 32 Stock-based compensation included in
operating expenses 220 352 420
751 Total stock-based compensation expense
228 370 438 783
Adjusted EBITDA $ 71 $ (1,045 ) $ (2,794 ) $ (2,974 )
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180731005901/en/
Qumu CorporationInvestor Contact:Dave Ristow,
612-638-9045Chief Financial OfficerDave.Ristow@qumu.com
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