Qumu Announces Fourth Quarter and Full Year 2015 Results

Minneapolis, MN – March 8, 2016 – Qumu Corporation (NASDAQ: QUMU) today reported financial results for the fourth quarter and year ended December 31, 2015.

Fourth quarter revenue was $10.1 million, a 21% increase compared to the fourth quarter 2014. Full year 2015 revenue was $34.5 million, a 30% increase compared to last year. Fourth quarter net loss per share was $(0.50) compared to $(0.87) in the fourth quarter 2014. Fourth quarter 2015 results included severance expense of $743,000 or $(0.08) per share, a loss on a third party license agreement of $1.2 million or $(0.13) per share, and a tax benefit of $357,000 or $0.04 per share.

Qumu Announces Fourth Quarter and Full Year 2015 Results

Record Quarterly Revenue of $10.1 Million, a 21% year-over-year increase
Full Year 2015 Revenue of $34.5 Million, a 30% year-over-year increase
Initiates Fiscal 2016 Guidance

Conference Call Wednesday, March 9 at 10:00 a.m. ET

 

Fourth quarter adjusted EBITDA (a non-GAAP measure) was a loss of $3.7 million, compared to a loss of $7.2 million for the fourth quarter of 2014 and a loss of $6.2 million for the third quarter of 2015.

“I am proud of our performance in the fourth quarter. Our team delivered on revenue, gross margin and expense management while growing our customer base and increasing our technology lead. We are the clear leader in the enterprise video market, as can be seen from Qumu’s consistently high leadership ratings in analyst reports from Gartner, Forrester, Aragon, Frost & Sullivan, and our addressable market continues to grow within the segments we target: financial services, pharmaceutical, manufacturing, retail and other Global 5000 businesses,” said Vern Hanzlik, Qumu’s President and Chief Executive Officer. “We will continue to improve our financial metrics without compromising our ability to grow. Our focus on the enterprise video market is our key differentiator, resulting in software solutions that deliver the best user experience to our customers.”

Other Information

  • Fourth quarter subscription, maintenance and support revenue was $5.2 million compared to $4.2 million in the fourth quarter 2014. Full year subscription, maintenance and support revenue was $18.8 million compared to $12.2 million last year.
  • Fourth quarter gross margin was 57% compared to 46% the fourth quarter 2014. Full year 2015 gross margin was 49% compared to 45% last year.
  • Total headcount was 192 as of December 31, 2015 compared to 194 as of September 30, 2015 and 222 as of December 31, 2014.
  • Cash, marketable securities and restricted cash were $13.3 million as of December 31, 2015, compared to $15.1 million as of September 30, 2015, reflecting the fourth quarter operating loss and the impact on cash from changes in working capital.

Guidance
For the first quarter of 2016, revenue is expected to be in the range of $8.0 million to $9.0 million. First quarter net loss per diluted share is expected to be in the range of $(0.53) to $(0.49) with fully diluted weighted average shares outstanding of approximately 9.2 million shares. Adjusted EBITDA is expected to be in the range of a loss of $3.5 million to $3.0 million compared to a loss of $8.7 million in the first quarter 2015.

For the full year of 2016, revenue is expected to be in the range of $40.0 million to $43.0 million, representing approximately 16% to 25% growth over 2015. Gross margins are expected to improve from the low to mid 50s early in the year to the mid to high 60s late in the year. Full year net loss per diluted share is expected to be in the range of $(1.15) to $(1.00) with fully diluted weighted average shares outstanding of approximately 9.2 million shares. Adjusted EBITDA is expected to be in the range of a loss of $5.5 million to $4.0 million compared to a loss of $24.5 million in fiscal 2015. The Company expects a tax benefit of $300,000 in fiscal 2016. Additionally, the Company expects that it will be cash flow breakeven the second half of 2016.

Conference Call
The Company has scheduled a conference call and webcast to review its fourth quarter and full year 2015 results tomorrow, March 9, 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 presented under GAAP. Adjusted EBITDA excludes items related to stock-based compensation, 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 months ended December 31, 2015 and December 31, 2014 and full year 2015 and 2014, as well as other prior quarterly periods.

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; the demand for the Company’s products or software; and the success of cost reduction measures. 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, 2014 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.

Investor Contacts:
Peter Goepfrich, CFO
Qumu Corporation
612-638-9096

 
QUMU CORPORATION
Condensed Consolidated Statements of Operations
(unaudited – in thousands, except per share data)
       
Three Months Ended Year Ended
December 31, December 31,
2015     2014 2015     2014
Revenues:
Software licenses and appliances $ 2,486 $ 3,260 $ 9,456 $ 11,363
Service   7,633     5,075     24,998     15,158  
Total revenues   10,119     8,335     34,454     26,521  
Cost of revenues:
Software licenses and appliances 953 966 2,949 3,816
Service   3,409     3,502     14,550     10,656  
Total cost of revenues   4,362     4,468     17,499     14,472  
Gross profit   5,757     3,867     16,955     12,049  
Operating expenses:
Research and development 2,181 2,897 10,689 9,506
Sales and marketing 3,720 5,474 17,994 17,991
General and administrative 4,603 3,732 16,878 12,626
Amortization of purchased intangibles   199     182     798     652  
Total operating expenses   10,703     12,285     46,359     40,775  
Operating loss   (4,946 )   (8,418 )   (29,404 )   (28,726 )
Other income (expense):
Interest, net (14 ) 27 7 60
Other, net   26     (147 )   (131 )   (241 )
Total other income (expense), net   12     (120 )   (124 )   (181 )
Loss before income taxes (4,934 ) (8,538 ) (29,528 ) (28,907 )
Income tax benefit   (357 )   (626 )   (839 )   (6,564 )
Net loss from continuing operations (4,577 ) (7,912 ) (28,689 ) (22,343 )
Net income (loss) from discontinued operations, net of tax       (542 )   (10 )   13,823  
Net loss $ (4,577 ) $ (8,454 ) $ (28,699 ) $ (8,520 )
Net income (loss) per basic and diluted share:
Net loss from continuing operations per share $ (0.50 ) $ (0.87 ) $ (3.11 ) $ (2.53 )
Net income (loss) from discontinued operations per share       (0.06 )       1.57  
Net loss per share $ (0.50 ) $ (0.93 ) $ (3.11 ) $ (0.96 )
Basic and diluted weighted average shares outstanding 9,243 9,114 9,235 8,836
 
 
QUMU CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
       
December 31, December 31,
Assets 2015 2014
Current assets: (unaudited)
Cash and cash equivalents $ 7,072 $ 11,684
Marketable securities 6,249 23,486
Restricted cash 2,300
Receivables, net 11,257 10,090
Prepaid income taxes 659 301
Prepaid expenses and other current assets 3,392 3,801
Deferred income taxes 64
Current assets from discontinued operations       1,026  
Total current assets   28,629     52,752  
Property and equipment, net 2,942 1,899
Intangible assets, net 11,032 13,384
Goodwill 8,103 8,525
Other assets, non-current   3,706     3,617  
Total assets $ 54,412   $ 80,177  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other accrued liabilities $ 3,864 $ 3,396
Accrued compensation 4,014 6,222
Deferred revenue 10,413 9,015
Deferred income taxes 110
Income taxes payable 53
Deferred rent 270 133
Financing obligations 502
Current liabilities from discontinued operations   50     448  
Total current liabilities   19,113     19,377  
Long-term liabilities:
Deferred revenue, non-current 2,215 1,047
Income taxes payable, non-current 9 8
Deferred tax liability, non-current 575 1,071
Deferred rent, non-current 998 401
Financing obligations, non-current 519
Other non-current liabilities   226      
Total long-term liabilities   4,542     2,527  
Total liabilities   23,655     21,904  
Stockholders’ equity:
Common stock 92 91
Additional paid-in capital 65,484 63,566
Accumulated deficit (33,298 ) (4,599 )
Accumulated other comprehensive loss   (1,521 )   (785 )
Total stockholders’ equity   30,757     58,273  
Total liabilities and stockholders’ equity $ 54,412   $ 80,177  
 
 
QUMU CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited – in thousands)
   
Year Ended
December 31,
2015     2014
Cash flows used in operating activities:
Net loss $ (28,699 ) $ (8,520 )
Net (income) loss from discontinued operations, net of tax   10     (13,823 )
Net loss from continuing operations (28,689 ) (22,343 )
Adjustments to reconcile net loss to net cash used in continuing
operating activities:
Depreciation and amortization 3,118 2,049
Stock-based compensation 1,834 1,841
Loss on disposal of property and equipment 108 102
Deferred income taxes (564 ) (126 )
Current income tax benefit resulting from income generated from
discontinued operations
(6,337 )
Changes in operating assets and liabilities:
Receivables (1,331 ) (5,679 )
Prepaid income taxes / income taxes payable (378 ) 1,068
Prepaid expenses and other assets 748 (2,032 )
Trade accounts payable and other accrued liabilities 443 1,189
Accrued compensation (2,184 ) 686
Deferred revenue 2,729 5,499
Deferred rent 48 (105 )
Other non-current liabilities   226      
Net cash used in continuing operating activities (23,892 ) (24,188 )
Net cash provided by discontinued operating activities   665     1,544  
Net cash used in operating activities   (23,227 )   (22,644 )
Cash flows provided by (used in) investing activities:
Purchases of marketable securities (9,500 ) (33,499 )
Sales and maturities of marketable securities 26,715 23,250
Purchases of property and equipment (635 ) (1,051 )
Proceeds from sale of property and equipment 43
Cash paid for acquisition of business, net of cash acquired       (11,556 )
Net cash provided by (used in) continuing investing activities 16,623 (22,856 )
Net cash provided by (used in) discontinued investing activities   2,300     19,676  
Net cash provided by investing activities   18,923     (3,180 )
Cash flows used in financing activities:
Common stock repurchases to settle employee withholding liability (50 ) (99 )
Principal payments on financing obligations (320 )
Proceeds from employee stock plans   142     193  
Net cash provided by (used in) continuing financing activities (228 ) 94
Net cash used in discontinued financing activities       (59 )
Net cash provided by (used in) financing activities   (228 )   35  
Effect of exchange rate changes on cash   (80 )   (252 )
Net decrease in cash and cash equivalents (4,612 ) (26,041 )
Cash and cash equivalents, beginning of year   11,684       37,725  
Cash and cash equivalents, end of year $ 7,072     $ 11,684  
 
 

QUMU CORPORATION

Supplemental Financial Information

(unaudited – in thousands)

 

A summary of revenue is as follows:

       
Three Months Ended Year Ended
December 31, December 31,
2015     2014 2015     2014
Software licenses and appliances $ 2,486 $ 3,260 $ 9,456 $ 11,363
Services
Subscription, maintenance and support 5,240 4,235 18,804 12,229
Professional services and other   2,393   840   6,194   2,929
Total services   7,633   5,075   24,998   15,158
Total revenue $ 10,119 $ 8,335 $ 34,454 $ 26,521
 
    Three Months Ended
Mar 31,     Jun 30,     Sep 30,     Dec 31,     Mar 31,     Jun 30,     Sep 30,     Dec 31,
2014 2014 2014 2014 2015 2015 2015 2015
Software licenses and appliances $ 1,196 $ 4,714 $ 2,193 $ 3,260 $ 984 $ 2,719 $ 3,267 $ 2,486
Services
Subscription, maintenance and support 2,058 2,936 3,000 4,235 4,112 4,592 4,860 5,240
Professional services and other   675   754   660   840   873   1,453   1,475   2,393
Total services   2,733   3,690   3,660   5,075   4,985   6,045   6,335   7,633
Total revenue $ 3,929 $ 8,404 $ 5,853 $ 8,335 $ 5,969 $ 8,764 $ 9,602 $ 10,119
 

Additional information regarding amounts historically classified as
selling, general and administrative expense is as follows:

   
Three Months Ended
Mar 31,     Jun 30,     Sep 30,     Dec 31,     Mar 31,     Jun 30,     Sep 30,     Dec 31,
2014 2014 2014 2014 2015 2015 2015 2015
Sales and marketing 3,759 4,601 4,157 5,474 4,828 4,740 4,706 3,720
General and administrative   2,758   2,820   3,316   3,732   4,364   3,558   4,353   4,603
Total selling, general and administrative $ 6,517 $ 7,421 $ 7,473 $ 9,206 $ 9,192 $ 8,298 $ 9,059 $ 8,323
 
 

QUMU CORPORATION

Supplemental Financial Information

(unaudited – in thousands)

 

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

       
Three Months Ended Year Ended
December 31, December 31,
2015     2014 2015     2014
Operating loss $ (4,946 ) $ (8,418 ) $ (29,404 ) $ (28,726 )
 
Depreciation and amortization expense:
Depreciation and amortization in cost of revenues 26 15 100 53
Depreciation and amortization in operating expenses   286     211     952     694  
Total depreciation and amortization expense   312     226     1,052     747  
Amortization of intangibles included in cost of revenues 315 230 1,268 650
Amortization of intangibles included in operating expenses   199     182     798     652  
Total amortization of intangibles expense   514     412     2,066     1,302  
Total depreciation and amortization expense   826     638     3,118     2,049  
EBITDA (4,120 ) (7,780 ) (26,286 ) (26,677 )
Stock-based compensation expense:
Stock-based compensation included in cost of revenues 44 32 159 55
Stock-based compensation included in operating expenses   360     528     1,675     1,786  
Total stock-based compensation expense   404     560     1,834     1,841  
Adjusted EBITDA $ (3,716 ) $ (7,220 ) $ (24,452 ) $ (24,836 )
 
   
Three Months Ended
Mar 31,     Jun 30,     Sep 30,     Dec 31,     Mar 31,     Jun 30,     Sep 30,     Dec 31,
2014 2014 2014 2014 2015 2015 2015 2015
Operating loss $ (7,308 ) $ (5,679 ) $ (7,321 ) $ (8,418 ) $ (9,999 ) $ (7,084 ) $ (7,375 ) $ (4,946 )
 
Depreciation and amortization expense:
Depreciation and amortization in cost of revenues 5 7 26 15 22 26 26 26
Depreciation and amortization in operating expenses   153     166     164     211     211     212     243     286  
Total depreciation and amortization expense   158     173     190     226     233     238     269     312  
Amortization of intangibles included in cost of revenues 140 140 140 230 316 317 320 315
Amortization of intangibles included in operating expenses   157     156     157     182     199     200     200     199  
Total amortization of intangibles expense   297     296     297     412     515     517     520     514  
Total depreciation and amortization expense   455     469     487     638     748     755     789     826  
EBITDA (6,853 ) (5,210 ) (6,834 ) (7,780 ) (9,251 ) (6,329 ) (6,586 ) (4,120 )
Stock-based compensation expense:
Stock-based compensation included in cost of revenues 7 11 5 32 36

38

41

44
Stock-based compensation included in operating expenses   342     424     492     528     532    

462

   

321

    360  
Total stock-based compensation expense   349     435     497     560     568     500     362     404  
Adjusted EBITDA $ (6,504 ) $ (4,775 ) $ (6,337 ) $ (7,220 ) $ (8,683 ) $ (5,829 ) $ (6,224 ) $ (3,716 )