EX-99.1 2 q32019ex991.htm PRESS RELEASE ISSUED OCTOBER 31, 2019 Exhibit
EXHIBIT 99.1


image04162018a07.jpg

Qumu Reports Third Quarter 2019 Results
6% Year-to-Date Revenue Increase and 51% Adjusted EBITDA Improvement Underpin Return to Growth
Reiterates Revenue and Adjusted EBITDA Financial Guidance for 2019

Conference Call Today, October 31, 2019 at 4:30 p.m. ET

Minneapolis, MN – October 31, 2019 – Qumu Corporation (NASDAQ: QUMU) today reported financial results for the third quarter and nine months ended September 30, 2019. The Company reported third quarter revenue of $6.7 million, net loss of $(221,000), adjusted EBITDA, a non-GAAP measure, of $(535,000), and ended the quarter with cash of $7.5 million. Compared to the corresponding first nine months of 2018, year-to-date 2019 gross profit improved $2.5 million as revenue grew $1.0 million, or 6%, and gross margin percentage increased 10%. Further, adjusted EBITDA, a non-GAAP measure, improved $1.8 million, or 51%. Qumu management also reiterated its revenue and adjusted EBITDA financial guidance for the year ending December 31, 2019.

Management Commentary
“Qumu’s growth in the third quarter was driven by large enterprise customers investing in major expansions,” said Vern Hanzlik, Qumu’s President and CEO. “Our customers are experiencing an explosion of video content and traffic across their global networks. This rapid expansion will only intensify with the ongoing migration toward Self-Service video streaming options, which Qumu enables by transforming a Zoom, WebEx, Teams or other video conferencing system into a video recording and broadcasting tool.”

"On the financial side, Q3 was a solid quarter for Qumu during which we regained much of the momentum we generated at the start of 2019,” added Hanzlik. “With these strong results, we are reiterating our revenue and adjusted EBITDA guidance for 2019. Our confidence is further supported by several key factors, including two major deals already secured in the fourth quarter as well as a robust sales pipeline and customer retention of 94%, an all-time high. In addition, our BT partnership is already producing encouraging early results as we received our first two purchase orders through that new channel at the start of the current quarter.”

Third Quarter 2019 Financial Highlights
Third quarter 2019 revenue was $6.7 million, compared to $5.7 million for the third quarter 2018, and net loss was $(221,000), or $(0.02) loss per basic share or $(0.11) loss per diluted share, compared to net income of $2.4 million, or $0.25 income per basic and diluted share, for the third quarter 2018. Third quarter 2019 adjusted EBITDA was $(535,000), compared to adjusted EBITDA of $(801,000) for the third quarter 2018. The revenue growth of $1.0 million and improved gross margin for the third quarter 2019 resulted in a $1.1 million increase in gross profit compared to the third quarter 2018.

Significantly impacting the $(0.36) decrease in diluted earnings per share compared to the 2018 third quarter was the inclusion of a large gain on the sale of BriefCam, Ltd. and loss on extinguishment of debt in the 2018 third quarter and the dilutive effect of the Company’s warrants on 2019 third quarter loss per diluted share. Net income in the 2018 third quarter was favorably impacted by the inclusion of $5.3 million of other income (pre-tax), or approximately $0.56 (pre-tax) per diluted share, relating to the $6.5 million gain on the sale of BriefCam, Ltd., partially offset by a loss on extinguishment of debt of $1.2 million incurred with the paydown of the Company's term debt by $6.0 million in principal and $463,000 in accrued interest from the proceeds of the BriefCam sale. In accordance with generally accepted accounting principles, loss per diluted share for the third quarter 2019 was impacted by the exclusion of $973,000 of income, resulting in the exclusion of $0.09 of income per diluted share, related to the change in the fair value of the Company's warrant liability during the quarter.

Nine Month 2019 Financial Highlights
For the nine months ended September 30, 2019, revenue was $19.1 million, compared to $18.1 million for the corresponding 2018 period, and net loss was $(4.8) million, or $(0.49) loss per basic and diluted share, compared to $(3.7) million, or $(0.39) loss per basic and diluted share, for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, adjusted EBITDA was $(1.8) million, an improvement from adjusted

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EBITDA of $(3.6) million for the nine months ended September 30, 2018. The revenue growth of $1.0 million and improved gross margin for the nine months ended September 30, 2019 resulted in a $2.5 million increase in gross profit compared to the nine months ended September 30, 2018.

Significantly impacting the $(0.10) increase in diluted loss per share compared to the nine months ended September 30, 2018 was the inclusion in the 2018 period of $5.3 million of other income (pre-tax), or approximately $0.56 (pre-tax) per diluted share, relating to the $6.5 million gain on the sale of BriefCam, Ltd., partially offset by a loss on extinguishment of debt of $1.2 million incurred with the paydown of the Company's term debt by $6.0 million in principal and $463,000 in accrued interest from the proceeds of the BriefCam sale.

Other Financial Highlights
Software license and appliance revenue was $2.0 million and $1.0 million for the three months ended September 30, 2019 and 2018, respectively, and $3.7 million and $4.3 million for the nine months ended September 30, 2019 and 2018, respectively.
Subscription, maintenance and support revenue was $4.2 million and $4.1 million for the three months ended September 30, 2019 and 2018, respectively, and $13.9 million and $12.3 million for the nine months ended September 30, 2019 and 2018, respectively.
Gross margin was 70% for the third quarter 2019, compared to 63% for third quarter 2018, and 73% for the nine months ended September 30, 2019, compared to 63% for the nine months ended September 30, 2018.
Cash and cash equivalents totaled $7.5 million as of September 30, 2019, compared to $7.3 million as of June 30, 2019 and $8.6 million as of December 31, 2018.
Customer retention continued to build steadily, reaching a new record of 94% during the three months ended September 30, 2019.

Business Outlook
The Company is reiterating its previously issued revenue and adjusted EBITDA financial guidance for 2019:
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 $(5.5) million, which differs from previous guidance of $(5.1) million, due to management's expectation of an increase in the fair value of the Company's warrant liability during the balance of the year. Adjusted EBITDA for 2019 is expected to be approximately $(1.5) million, the same as previously issued guidance. 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 $0.8 million, other income of approximately $(0.1) million and increase in warrant liability of approximately $1.0 million.
The Company had previously provided guidance for 2019 annual contract value (ACV) bookings growth. As the Company’s business has transitioned, beginning in 2018 and more significantly in 2019, to a deal-specific, customer-driven mix of on-premise and Software-as-a-Service (SaaS) solutions, ACV bookings has become an increasingly less predictable and relevant metric by which to judge the performance of the Company during a given period. Although ACV bookings are expected to grow in 2019 in the range of 6% to 10% as compared to 2018, management believes that ACV bookings is no longer relevant as a measure of customer adoption of the Company’s technology or as a measure of the Company’s financial performance, particularly as compared to revenue and adjusted EBITDA. Accordingly, the Company will no longer be providing ACV bookings guidance for 2019. Management will continue to be focused on revenue growth and adjusted EBITDA improvement in 2019 as these are the key indicators and drivers of the Company’s financial performance.

Conference Call
Qumu President and CEO Vern Hanzlik and CFO Dave Ristow will host a conference call today (October 31, 2019) at 4:30 p.m. Eastern time, followed by a question and answer period.

U.S. Dial-In Number: 877-456-6914
International Dial-In Number: 929-387-3794


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Investors can also access a webcast of the live conference call by linking through the Investor Relations section of the Qumu website at https://qumu.com/en/investor-relations/. 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 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 income (loss), a GAAP measure, to adjusted EBITDA, a non-GAAP measure, for the three and nine months ended September 30, 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 Corporation (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.
 
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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QUMU CORPORATION
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
 
Three Months Ended
 September 30,
 
Nine Months Ended
 September 30,
 
2019
 
2018
 
2019
 
2018
Revenues:
 

 
 

 
 

 
 

Software licenses and appliances
$
1,962

 
$
985

 
$
3,656

 
$
4,303

Service
4,709

 
4,668

 
15,478

 
13,807

Total revenues
6,671

 
5,653

 
19,134

 
18,110

Cost of revenues:
 

 
 

 
 

 
 

Software licenses and appliances
719

 
504

 
1,366

 
1,643

Service
1,294

 
1,611

 
3,747

 
4,990

Total cost of revenues
2,013

 
2,115

 
5,113

 
6,633

Gross profit
4,658

 
3,538

 
14,021

 
11,477

Operating expenses:
 

 
 

 
 

 
 

Research and development
1,849

 
1,617

 
5,361

 
5,159

Sales and marketing
2,083

 
1,796

 
6,647

 
6,388

General and administrative
1,673

 
1,608

 
4,998

 
5,536

Amortization of purchased intangibles
168

 
224

 
587

 
680

Total operating expenses
5,773

 
5,245

 
17,593

 
17,763

Operating loss
(1,115
)
 
(1,707
)
 
(3,572
)
 
(6,286
)
Other income (expense):
 

 
 

 
 

 
 

Gain on sale of BriefCam, Ltd.
41

 
6,502

 
41

 
6,502

Loss on extinguishment of debt

 
(1,189
)
 

 
(1,189
)
Interest expense, net
(235
)
 
(262
)
 
(654
)
 
(1,616
)
Decrease (increase) in fair value of warrant liability
973

 
(401
)
 
(752
)
 
(292
)
Other, net
(3
)
 
(78
)
 
32

 
(481
)
Total other income (expense), net
776

 
4,572

 
(1,333
)
 
2,924

Income (loss) before income taxes
(339
)
 
2,865

 
(4,905
)
 
(3,362
)
Income tax expense (benefit)
(118
)
 
469

 
(133
)
 
303

Net income (loss)
$
(221
)
 
$
2,396

 
$
(4,772
)
 
$
(3,665
)
 
 
 
 
 
 
 
 
Net income (loss) per share – basic:
 
 
 
 
 
 
 
Net income (loss) per share – basic
$
(0.02
)
 
$
0.25

 
$
(0.49
)
 
$
(0.39
)
Weighted average shares outstanding – basic
9,913

 
9,559

 
9,822

 
9,472

Net income (loss) per share – diluted:
 
 
 
 
 
 
 
Income (loss) attributable to common shareholders
$
(1,194
)
 
$
2,396

 
$
(4,772
)
 
$
(3,665
)
Net income (loss) per share – diluted
$
(0.11
)
 
$
0.25

 
$
(0.49
)
 
$
(0.39
)
Weighted average shares outstanding – diluted
10,413

 
9,709

 
9,822

 
9,472



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QUMU CORPORATION
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
Assets
September 30,
2019
 
December 31,
2018
Current assets:
 
 
 
Cash and cash equivalents
$
7,525

 
$
8,636

Receivables, net
4,202

 
6,278

Contract assets
1,330

 
485

Income taxes receivable
274

 
327

Prepaid expenses and other current assets
1,752

 
2,192

Total current assets
15,083

 
17,918

Property and equipment, net
633

 
545

Right of use assets – operating leases
1,783

 

Intangible assets, net
3,279

 
4,247

Goodwill
6,748

 
6,971

Deferred income taxes, non-current
45

 
55

Other assets, non-current
602

 
544

Total assets
$
28,173

 
$
30,280

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable and other accrued liabilities
$
3,286

 
$
2,838

Accrued compensation
817

 
1,548

Deferred revenue
9,050

 
9,672

Operating lease liabilities
465

 

Deferred rent

 
45

Financing obligations
214

 
152

Term loan
3,834

 

Warrant liability
3,550

 
2,798

Total current liabilities
21,216

 
17,053

Long-term liabilities:
 

 
 

Deferred revenue, non-current
1,768

 
1,672

Income taxes payable, non-current
580

 
563

Deferred tax liability, non-current

 
2

Operating lease liabilities, non-current
1,735

 

Deferred rent, non-current

 
302

Financing obligations, non-current
104

 
57

Term loan, non-current

 
3,431

Other liabilities, non-current

 
195

Total long-term liabilities
4,187

 
6,222

Total liabilities
25,403

 
23,275

Stockholders’ equity:
 

 
 

Common stock
99

 
96

Additional paid-in capital
69,705

 
69,072

Accumulated deficit
(63,457
)
 
(58,875
)
Accumulated other comprehensive loss
(3,577
)
 
(3,288
)
Total stockholders’ equity
2,770

 
7,005

Total liabilities and stockholders’ equity
$
28,173

 
$
30,280



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QUMU CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
 
Nine Months Ended
 September 30,
 
2019
 
2018
Operating activities:
 

 
 

Net loss
$
(4,772
)
 
$
(3,665
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
1,170

 
1,924

Stock-based compensation
644

 
767

Accretion of debt discount and issuance costs
403

 
1,194

Gain on sale of BriefCam, Ltd.
(41
)
 
(6,502
)
Loss on debt extinguishment

 
1,189

Gain on lease modification
(21
)
 

Loss on lease contract termination

 
177

Increase in fair value of warrant liability
752

 
292

Deferred income taxes
8

 
(99
)
Changes in operating assets and liabilities:
 
 
 
Receivables
2,038

 
1,363

Contract assets
(845
)
 
394

Income taxes receivable / payable
62

 
357

Prepaid expenses and other assets
573

 
291

Accounts payable and other accrued liabilities
546

 
(2,082
)
Accrued compensation
(732
)
 
(857
)
Deferred revenue
(431
)
 
2,283

Deferred rent

 
(121
)
Other non-current liabilities
(24
)
 
98

Net cash used in operating activities
(670
)
 
(2,997
)
Investing activities:
 

 
 

Proceeds from sale of BriefCam, Ltd.
41

 
9,678

Purchases of property and equipment
(137
)
 
(116
)
Net cash provided by (used in) investing activities
(96
)
 
9,562

Financing activities:
 

 
 

Proceeds from term loan and warrant issuance

 
10,000

Principal payments on term loans

 
(14,000
)
Payments for term loan issuance costs

 
(1,308
)
Principal payments on financing obligations
(242
)
 
(329
)
Proceeds from employee stock plans
46

 

Common stock repurchases to settle employee withholding liability
(54
)
 
(28
)
Net cash used in financing activities
(250
)
 
(5,665
)
Effect of exchange rate changes on cash
(95
)
 
(91
)
Net increase (decrease) in cash and cash equivalents
(1,111
)
 
809

Cash and cash equivalents, beginning of period
8,636

 
7,690

Cash and cash equivalents, end of period
$
7,525

 
$
8,499


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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,
 
2019
 
2018
 
2019
 
2018
Software licenses and appliances
$
1,962

 
$
985

 
$
3,656

 
$
4,303

Service
 
 
 
 
 
 
 
Subscription, maintenance and support
4,166

 
4,091

 
13,883

 
12,251

Professional services and other
543

 
577

 
1,595

 
1,556

Total service
4,709

 
4,668

 
15,478

 
13,807

Total revenue
$
6,671

 
$
5,653

 
$
19,134

 
$
18,110


A reconciliation from GAAP results to adjusted EBITDA is as follows:
 
Three Months Ended
 September 30,
 
Nine Months Ended
 September 30,
 
2019
 
2018
 
2019
 
2018
Net income (loss)
$
(221
)
 
$
2,396

 
$
(4,772
)
 
$
(3,665
)
Interest expense, net
235

 
262

 
654

 
1,616

Income tax expense (benefit)
(118
)
 
469

 
(133
)
 
303

Depreciation and amortization expense:
 
 
 
 
 
 
 
Depreciation and amortization in cost of revenues

 
2

 

 
7

Depreciation and amortization in operating expenses
84

 
63

 
243

 
358

Total depreciation and amortization expense
84

 
65

 
243

 
365

Amortization of intangibles included in cost of revenues
109

 
288

 
340

 
879

Amortization of intangibles included in operating expenses
168

 
224

 
587

 
680

Total amortization of intangibles expense
277

 
512

 
927

 
1,559

Total depreciation and amortization expense
361

 
577

 
1,170

 
1,924

EBITDA
257

 
3,704

 
(3,081
)
 
178

Gain on sale of BriefCam, Ltd.
(41
)
 
(6,502
)
 
(41
)
 
(6,502
)
Loss on extinguishment of debt

 
1,189

 

 
1,189

Increase (decrease) in fair value of warrant liability
(973
)
 
401

 
752

 
292

Other (income) expense, net
3

 
78

 
(32
)
 
481

Stock-based compensation expense:
 
 
 
 
 
 
 
Stock-based compensation included in cost of revenues
6

 
8

 
20

 
26

Stock-based compensation included in operating expenses
213

 
321

 
624

 
741

Total stock-based compensation expense
219

 
329

 
644

 
767

Adjusted EBITDA
$
(535
)
 
$
(801
)
 
$
(1,758
)
 
$
(3,595
)


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