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.
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QUMU CORPORATION |
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Condensed Consolidated Statements of Operations |
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(unaudited – in thousands, except per share data) |
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| 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 |
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|
Condensed Consolidated Balance Sheets |
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|
(unaudited – in thousands) |
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| 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 | ||||
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QUMU CORPORATION |
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Condensed Consolidated Statements of Cash Flows |
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(unaudited – in thousands) |
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| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (950 | ) | $ | (4,530 | ) | ||
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Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
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| 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 | ||||
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QUMU CORPORATION |
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Supplemental Financial Information |
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(unaudited – in thousands) |
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A summary of revenue is as follows: |
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| 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 | ||||
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A reconciliation from GAAP results to adjusted EBITDA is as |
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| 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 | ) | |||
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