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Qumu Announces Third Quarter 2016 Results

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MINNEAPOLIS--(BUSINESS WIRE)--

Qumu Corporation (NASDAQ: QUMU) today reported financial results for the third quarter ended September 30, 2016.

Third quarter revenue was $7.1 million, compared to $9.6 million in the third quarter 2015. Third quarter net loss was $(2.5) million, or a loss of $(0.27) per share, compared to $(7.3) million, or a loss of $(0.79) per share, in the third quarter 2015. Third quarter adjusted EBITDA (a non-GAAP measure) was a loss of $(1.4) million, compared to an adjusted EBITDA loss of $(6.2) million for the third quarter 2015.

For the nine months ended September 30, 2016, revenue was $22.4 million, compared to $24.3 million last year. For the nine months ended September 30, 2016, net loss was $(10.9) million, or a loss of $(1.18) per share, compared to $(24.1) million, or a loss of $(2.61) per share, last year. For the nine months ended September 30, 2016, adjusted EBITDA was a loss of $(7.4) million, compared to an adjusted EBITDA loss of $(20.7) million last year.

"Revenue was within our expectations and operating results were better than our expectations as we continue to manage expenses well. Based on our sales pipeline, we are positioned for strong fourth quarter revenue and operating results," said Vern Hanzlik, Qumu's president and CEO. "Additionally, in October we strengthened our balance sheet with the proceeds from an $8 million term loan. These funds will enable us to advance our market leadership as we continue to provide the best enterprise video content management solutions and services to our customers and the Global 5000 market while we transition to more recurring revenue over time."

Other Information

  • Subscription, maintenance and support revenue was $5.0 million and $4.9 million for the third quarter 2016 and 2015, respectively, and $15.2 million and $13.6 million for the nine months ended September 30, 2016 and 2015, respectively.
  • Gross margin was 59.8% and 49.3% for the third quarter 2016 and 2015, respectively, and 56.9% and 46.0% for the nine months ended September 30, 2016 and 2015, respectively.
  • Total headcount was 152 as of September 30, 2016 compared to 165 as of June 30, 2016 and 194 as of September 30, 2015.
  • Cash and marketable securities were $4.6 million as of September 30, 2016, compared to $8.3 million as of June 30, 2016, reflecting the third quarter operating loss and the impact on cash from changes in working capital.
  • On October 21, 2016, the Company closed an $8 million credit agreement with Hale Capital Partners, LP as administrative agent and HCP-FVD, LLC, an affiliate of Hale Capital Partners, as lender. The credit agreement provided for an $8 million term loan drawn at close, with principal due on October 21, 2019 and interest set at prime plus 6% payable monthly. The credit agreement included a detachable 10-year warrant to purchase 314,286 shares of the Company's common stock at an exercise price of $2.80 per share. The Company intends to use the term loan for general corporate purposes.

Guidance
For the fourth quarter 2016, revenue is expected to be in the range of $10.0 million to $11.0 million. Total gross margin percentage is expected to be in the mid 60s in the fourth quarter. Fourth quarter net loss is expected to be in the range of $(1.0) million to $(0.5) million, or $(0.11) to $(0.06) per share, with weighted average shares outstanding of approximately 9.25 million shares. Adjusted EBITDA for the fourth quarter 2016 is expected to be in the range of $0.3 million to $0.8 million, compared to an adjusted EBITDA loss of $(3.7) million in the fourth quarter 2015. While the Company expects to be adjusted EBITDA positive the fourth quarter 2016, due to the timing of changes in working capital, the Company expects that it will not be cash flow breakeven the fourth quarter 2016 excluding the net proceeds of the $8 million term loan.

For the full year 2016, revenue is expected to be in the range of $32.4 million to $33.4 million. Net loss is expected to be in the range of $(11.9) million to $(11.4) million, or $(1.29) to $(1.24) per share, with weighted average shares outstanding of approximately 9.25 million shares. Adjusted EBITDA is expected to be in the range of a loss of $(7.1) million to $(6.6) million compared to an adjusted EBITDA loss of $(24.5) million in fiscal 2015. The Company expects a tax benefit of $200,000 in fiscal 2016.

Conference Call
The Company has scheduled a conference call and webcast to review its third quarter 2016 results tomorrow, November 2, 2016 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 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 stock-based compensation, foreign currency gains and losses, net income (loss) from discontinued operations, depreciation and amortization, interest income and expense, and the impact of income-based taxes.

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 operating loss, a GAAP measure, to adjusted EBITDA, a non-GAAP measure, for the three and nine months ended September 30, 2016 and 2015.

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, 2015 and other factors set forth in the Company's filings with the Securities and Exchange Commission.

About Qumu
Video is today's document. Qumu Corporation (NASDAQ: QUMU) provides the tools businesses need to create, manage, secure, deliver and measure the success of their videos. Qumu's innovative solutions release the power in video to engage and empower employees, partners and clients. Organizations around the world realize the greatest possible value from video they create and publish using Qumu. Whatever the audience size, viewer device or network configuration, Qumu solutions are how business does video. Additional information can be found at www.qumu.com.

 
QUMU CORPORATION
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
 
    Three Months Ended     Nine Months Ended
September 30, September 30,
2016     2015 2016     2015
Revenues:
Software licenses and appliances $ 1,154 $ 3,267 $ 3,952 $ 6,970
Service   5,956     6,335     18,409     17,365  
Total revenues   7,110     9,602     22,361     24,335  
Cost of revenues:
Software licenses and appliances 563 1,057 1,932 1,996
Service   2,294     3,813     7,697     11,141  
Total cost of revenues   2,857     4,870     9,629     13,137  
Gross profit   4,253     4,732     12,732     11,198  
Operating expenses:
Research and development 1,986 2,848 6,746 8,508
Sales and marketing 2,435 4,706 8,945 14,274
General and administrative 2,109 4,353 7,344 12,275
Amortization of purchased intangibles   221     200     674     599  
Total operating expenses   6,751     12,107     23,709     35,656  
Operating loss   (2,498 )   (7,375 )   (10,977 )   (24,458 )
Other income (expense):
Interest income (expense), net (13 ) (10 ) (40 ) 21
Other expense, net   (13 )   (89 )   (24 )  
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