Qumu Announces First Quarter 2019 Results, Reiterates Confidence in Annual Guidance

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    Company reports record gross margins, growing revenues and second
    consecutive quarter of positive adjusted EBITDA

    Conference Call Wednesday, May 1, 2019 at 10:00 a.m. ET

    MINNEAPOLIS–(BUSINESS WIRE)–Qumu Corporation (NASDAQ: QUMU) today reported financial results for the
    first quarter ended March 31, 2019. The Company reported first quarter
    revenue of $7.1 million, a net loss of $(950,000) and adjusted EBITDA, a
    non-GAAP measure, of $210,000, ending the quarter with cash of $8.6
    million.

    “Qumu has delivered a strong start to 2019, building on momentum from
    the second half of 2018. Given our growing revenue, strong sales
    pipeline, solid balance sheet and positive adjusted EBITDA for three of
    the last four quarters, we have a high degree of confidence in our 2019
    annual financial guidance,” said Vern Hanzlik, Qumu’s President and CEO.
    “Convergence of the Enterprise Video market with the Web and Video
    Conferencing market traditionally dominated by firms like Zoom, Cisco,
    Microsoft, and Google is happening as we speak—and Qumu is directly
    benefiting from it.”

    For the three months ended March 31, 2019, revenue was $7.1 million,
    compared to $4.8 million last year, and net loss was $(950,000), or
    $(0.10) per diluted share, compared to $(4.5) million, or $(0.48) per
    diluted share, for the first quarter 2018. For the three months ended
    March 31, 2019, adjusted EBITDA was $210,000, compared to adjusted
    EBITDA of $(2.9) million for the first quarter 2018.

    Other Financial Highlights

    • Operating loss decreased by $3.3 million in the three months ended
      March 31, 2019, compared to corresponding 2018 period.
    • Gross margin for the first quarter 2019 was 78.3%, compared to 56.3%
      for first quarter 2018.
    • Cash and cash equivalents totaled $8.6 million as of March 31, 2019,
      compared to $8.6 million as of December 31, 2018.
    • Software license and appliance revenue was $1.0 million and $451,000
      for the three months ended March 31, 2019 and 2018, respectively.
    • Subscription, maintenance and support revenue was $5.6 million and
      $4.0 million for the three months ended March 31, 2019 and 2018,
      respectively.
    • Operating expenses decreased $503,000 during the three months ended
      March 31, 2019, compared to the corresponding 2018 period, reflecting
      the impact of the Company’s improved operating efficiencies.

    Business Outlook

    The Company is reiterating its financial guidance for 2019:

    • Annual contract value bookings growth is expected to be 20% to 25% in
      2019 compared to 2018.
    • 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 $(5.1) million.
      Adjusted EBITDA for 2019 is expected to be approximately $(1.5)
      million. 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 $0.9 million, and increase in warrant liability of
      approximately $0.4 million.

    Conference Call

    The Company has scheduled a conference call and webcast to review its
    first quarter 2019 results tomorrow, May 1, 2019 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, https://qumu.com/en/investor-relations/.
    Webcasts will be archived on Qumu’s website.

    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 loss, a GAAP measure, to adjusted EBITDA, a non-GAAP measure, for
    the three months ended March 31, 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 (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
    March 31,
    2019   2018
    Revenues:
    Software licenses and appliances $ 1,005 $ 451
    Service 6,093   4,380  
    Total revenues 7,098   4,831  
    Cost of revenues:
    Software licenses and appliances 311 335
    Service 1,226   1,777  
    Total cost of revenues 1,537   2,112  
    Gross profit 5,561   2,719  
    Operating expenses:
    Research and development 1,674 1,903
    Sales and marketing 2,352 2,180
    General and administrative 1,746 2,181
    Amortization of purchased intangibles 218   229  
    Total operating expenses 5,990   6,493  
    Operating loss (429 ) (3,774 )
    Other income (expense):
    Interest expense, net (205 ) (844 )
    Decrease (increase) in value of warrant liability (289 ) 387
    Other, net (31 ) (387 )
    Total other expense, net (525 ) (844 )
    Loss before income taxes (954 ) (4,618 )
    Income tax benefit (4 ) (88 )
    Net loss $ (950 ) $ (4,530 )
     
    Net loss per share – basic and diluted:
    Net income loss per share $ (0.10 ) $ (0.48 )
    Weighted average shares outstanding 9,688 9,370
     

    QUMU CORPORATION

       

    Condensed Consolidated Balance Sheets

    (unaudited – in thousands)

     
    March 31, December 31,
    Assets 2019 2018
    Current assets:
    Cash and cash equivalents $ 8,571 $ 8,636
    Receivables, net 4,380 6,278
    Contract assets 1,661 485
    Income taxes receivable 339 327
    Prepaid expenses and other current assets 2,140   2,192  
    Total current assets 17,091 17,918
    Property and equipment, net 680 545
    Right of use assets – operating leases 1,128
    Intangible assets, net 3,956 4,247
    Goodwill 7,134 6,971
    Deferred income taxes, non-current 53 55
    Other assets, non-current 476   544  
    Total assets $ 30,518   $ 30,280  
    Liabilities and Stockholders’ Equity
    Current liabilities:
    Accounts payable and other accrued liabilities $ 2,640 $ 2,838
    Accrued compensation 1,150 1,548
    Deferred revenue 9,558 9,672
    Operating lease liabilities 549
    Deferred rent 45
    Term loan and other financing obligations 3,690 152
    Warrant liability 3,087   2,798  
    Total current liabilities 20,674   17,053  
    Long-term liabilities:
    Deferred revenue, non-current 1,425 1,672
    Income taxes payable, non-current 568 563
    Deferred tax liability, non-current 2
    Operating lease liabilities, non-current 1,021
    Deferred rent, non-current 302
    Term loan and other financing obligations, non-current 146 3,488
    Other liabilities, non-current   195  
    Total long-term liabilities 3,160   6,222  
    Total liabilities 23,834   23,275  
    Stockholders’ equity:
    Common stock 98 96
    Additional paid-in capital 69,266 69,072
    Accumulated deficit (59,635 ) (58,875 )
    Accumulated other comprehensive loss (3,045 ) (3,288 )
    Total stockholders’ equity 6,684   7,005  
    Total liabilities and stockholders’ equity $ 30,518   $ 30,280  
     

    QUMU CORPORATION

     

    Condensed Consolidated Statements of Cash Flows

    (unaudited – in thousands)

     
    Three Months Ended
    March 31,
    2019   2018
    Operating activities:
    Net loss $ (950 ) $ (4,530 )
    Adjustments to reconcile net loss to net cash provided by (used in)
    operating activities:
    Depreciation and amortization 408 699
    Stock-based compensation 231 210
    Accretion of debt discount and issuance costs 128 746
    Gain on lease modification (21 )
    Decrease in value of warrant liability 289 (387 )
    Deferred income taxes (37 )
    Changes in operating assets and liabilities:
    Receivables 1,914 1,645
    Contract assets (1,176 ) 14
    Income taxes receivable / payable (3 ) (62 )
    Prepaid expenses and other assets 125 (317 )
    Accounts payable and other accrued liabilities (75 ) (444 )
    Accrued compensation (405 )
    Deferred revenue (424 ) 603
    Deferred rent (75 )
    Other non-current liabilities (24 ) 186  
    Net cash provided by (used in) operating activities 17   (1,749 )
    Investing activities:
    Purchases of property and equipment (14 ) (2 )
    Net cash used in investing activities (14 ) (2 )
    Financing activities:
    Proceeds from term loan and warrant issuance 10,000
    Principal payments on term loans (8,000 )
    Payments for term loan issuance costs (1,308 )
    Principal payments on financing obligations (80 ) (99 )
    Common stock repurchases to settle employee withholding liability (36 ) (19 )
    Net cash provided by (used in) financing activities (116 ) 574  
    Effect of exchange rate changes on cash 48   45  
    Net decrease in cash and cash equivalents (65 ) (1,132 )
    Cash and cash equivalents, beginning of period 8,636   7,690  
    Cash and cash equivalents, end of period $ 8,571   $ 6,558  
     

    QUMU CORPORATION

     

    Supplemental Financial Information

    (unaudited – in thousands)

     

    A summary of revenue is as follows:

     
    Three Months Ended
    March 31,
    2019   2018
    Software licenses and appliances $ 1,005 $ 451
    Service
    Subscription, maintenance and support 5,563 4,038
    Professional services and other 530   342  
    Total service 6,093   4,380  
    Total revenue $ 7,098   $ 4,831  
     

    A reconciliation from GAAP results to adjusted EBITDA is as
    follows:

     
    Three Months Ended
    March 31,
    2019 2018
    Net loss $ (950 ) $ (4,530 )
    Interest expense, net 205 844
    Income tax benefit (4 ) (88 )
    Depreciation and amortization expense:
    Depreciation and amortization in cost of revenues 3
    Depreciation and amortization in operating expenses 73   169  
    Total depreciation and amortization expense 73   172  
    Amortization of intangibles included in cost of revenues 117 298
    Amortization of intangibles included in operating expenses 218   229  
    Total amortization of intangibles expense 335   527  
    Total depreciation and amortization expense 408   699  
    EBITDA (341 ) (3,075 )
    Increase (decrease) in fair value of warrant liability 289 (387 )
    Other expense, net 31 387
    Stock-based compensation expense:
    Stock-based compensation included in cost of revenues 8 10
    Stock-based compensation included in operating expenses 223   200  
    Total stock-based compensation expense 231   210  
    Adjusted EBITDA $ 210   $ (2,865 )

    Contacts

    Dave Ristow
    Chief Financial Officer
    Qumu Corporation
    [email protected]
    +1.612.638.9045