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Qumu Reports Third Quarter 2021 Financial Results

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Continued Execution of Cloud Growth Strategy Drives 19% Year-over-Year Increase in Subscription ARR and Strong SaaS Metrics

MINNEAPOLIS, October 28, 2021--(BUSINESS WIRE)--Qumu Corporation (Nasdaq: QUMU), a leading provider of cloud-based enterprise video technology for organizations of all sizes, today reported financial results for the third quarter ended September 30, 2021.

Q3 2021 and Recent Operational Highlights

  • Formed a partnership with TD SYNNEX, a leading distributor and solutions aggregator for the IT ecosystem, to bring Qumu’s Video Engagement Platform to its network of more than 150,000 resellers.

  • Launched a world-class global channel program with JS Group, leaders in channel strategy, expanding Qumu’s reach into more medium and large enterprises.

  • Added on-demand video transcriptions and AI-enabled, automatic captioning for on-demand video to the Qumu platform.

  • Launched customer-defined encryption keys, giving users additional options for how they control and secure their video content.

  • Introduced moderated question and answer widget for more engagement before, during and after live video events.

Q3 2021 Financial Highlights

  • SaaS ARR grew to $13.1 million (up 19% YOY).

  • Gross margin improved to 76% in Q3 2021 from 74% in Q2 2021.

  • Revenue in Q3 2021 was $6.4 million, an increase of 10% from $5.9 million in Q2 2021.

  • Subscription, maintenance, and support revenue in Q3 2021 increased 2% to $5.1 million from $5.0 million in Q2 2021.

  • Operating expenses decreased 9% compared Q2 2021.

  • Strong balance sheet at the end of Q3 2021 with $18.2 million of cash and cash equivalents and no borrowings on the company’s revolving credit facility.

Q3 2021 Key Performance Indicators

  • Software-as-a-Service (SaaS) Annual Recurring Revenue (SaaS ARR) increased 19% to $13.1 million in Q3 2021 from $11.0 million in Q3 2020.

  • SaaS customer retention metrics:

    • Gross Renewal Rate (GRR): 94% at end of Q3 2021 compared to 91% at end of Q3 2020.

    • Net Renewal Rate (NRR): 119% at end of both Q3 2021 and Q3 2020.

    • Dollar Value Retention: 101% at end of Q3 2021 compared to 99% at end of Q3 2020.

Management Commentary
"Our strong financial results for the third quarter reflect the continued execution of our strategic plan to grow our cloud business and scale our SaaS recurring revenue base," said Qumu President and CEO TJ Kennedy. "Today, we have a growing SaaS ARR business, which totaled $13.1 million at quarter end, up 13% year-to-date and 19% year-over-year. At the same time, as a result of the cost-optimization measures we implemented in the quarter, we were able drive a 9% sequential decrease in operating expenses and an approximate $3 million decrease in cash burn during the period. Operationally, our partner and direct sales motions are gaining traction, while our customer success efforts are deepening relationships and driving growth in our subscription ARR and cloud conversions."

Rose Bentley, Qumu’s Chief Operating Officer, commented: "One of our most important growth initiatives involves extending Qumu's footprint and value to customers through strategic partnerships and alliances. All of our new customers in Q3 were partner led, demonstrating the early traction of this partner-first strategy; long term, we believe strongly in the channel’s ability to materially enhance our direct sales efforts. Importantly, the partner-led process creates less friction and shortens sales cycles because our partners know their customers’ needs, and already have a contractual relationship in place. It’s because of this dynamic that we have placed even more emphasis on expanding our channel-led salesforce to scale our customer footprint and create new revenue streams for Qumu more rapidly."

"Beyond the critical role partnerships are playing, our customer success team remains an equally important component of our go-forward strategy," said Kennedy. "This new group has been key in retaining customers, securing more on-time renewals, and driving expansion over the past several months. In Q3 we had a company-best result in on-time renewals, surpassing the previous record we achieved just last quarter. Our customer success initiatives have also led to expansion with existing customers, supporting increased retention of our SaaS customers, and propelling the SaaS subscription engine we’re building."

Kennedy continued: "Our partner and direct go-to-market motions, targeting both large and medium enterprises, are gaining traction. The execution of our strategic plan has enabled us to deliver robust SaaS growth and generate momentum heading into the remainder of the year and into 2022. Looking ahead, we remain on track to achieve our SaaS ARR growth and revenue mix targets, including growing our SaaS recurring revenue as a percentage of our recurring revenue to 50% this year, 60% by the end of 2022, and 70% by the end of 2023. Longer term, we are confident that Qumu will emerge as a subscription driven, growth company operating at scale, benefiting from high-margin recurring revenues, sustainable and growing adjusted EBITDA, and net income profitability."

Third Quarter 2021 Financial Results
Revenue for Q3 2021 was $6.4 million, an increase of 10% compared to $5.9 million in Q2 2021 and a decrease of 3% compared to $6.6 million in Q3 2020. The year-over-year decrease resulted as management placed less emphasis on pursuing perpetual license sales, for which revenue is recognized upon delivery, as part of the Company's accelerated implementation of its SaaS-focused strategic plan, which results in ratable recognition of revenue through subscription terms.

Subscription, maintenance, and support revenue for Q3 2021 was $5.1 million, an increase of 2% compared to $5.0 million in Q2 2021 and an increase of 1% compared to $5.0 million in Q3 2020. The year-over-year increase resulted from on-premise to cloud conversions as well as incremental cloud customer expansions.

Gross margin in Q3 2021 was 76%, an improvement compared to 74% in Q2 2021 and 75% in Q3 2020. The gross margin percentage increase was primarily due to improvements to more SaaS in our sales mix.

Net loss in Q3 2021 totaled $(3.7) million, or $(0.21) loss per basic and diluted share. This compares to net loss of $(4.3) million, or $(0.24) loss per basic share and $(0.30) loss per diluted share, for Q2 2021 and net loss of $(1.9) million, or $(0.14) loss per basic and diluted share, in Q3 2020.

Adjusted EBITDA loss, a non-GAAP measure, in Q3 2021 was $(3.5) million, compared to $(4.5) million in Q2 2021 and $(839,000) in Q3 2020.

As of September 30, 2021, the company had cash and cash equivalents of $18.2 million and no borrowings on the company’s revolving credit facility.

Business Outlook
Qumu provides guidance based on current market conditions and expectations. The Company emphasizes that its guidance is subject to various important cautionary factors referenced in the section entitled "Forward-Looking Statements" below, including risks and uncertainties associated with the Company’s strategic plan and the COVID-19 pandemic, such as trends in distributed remote and hybrid work impacting enterprise technology adoption and procurement.

To give insight into the progress of Qumu’s SaaS business transformation, the Company provides a business outlook based on the percentage of recurring revenue comprised of SaaS revenue. Qumu management reiterated its expectation that SaaS recurring revenue will comprise approximately 60% of its overall recurring revenue mix by the end of 2022, with targeted growth to approximately 70% by the end of 2023.

Reclassification of Recurring Term Software License Revenue
During Q3 2021, the Company reclassified revenue recognized for recurring term software license agreements from service revenue to software licenses and appliances revenue, similar to perpetual software licenses. These recurring term software licenses have significant standalone functionality and, subsequent to delivery of the software, Qumu's activities do not substantively change the functionality and do not significantly affect the use of the software delivered. Amounts and percentages following the reclassification for previous quarters for the current and prior years are as follows:

Three Months Ended

Mar 31, 2020

Jun 30, 2020

Sep 30, 2020

Dec 31, 2020

Mar 31, 2021

Jun 30, 2021

Revenue:

Software licenses and appliances

$

1,555

$

4,294

$

887

$

811

$

121

$

228

Subscription, maintenance and support

4,145

4,440

5,010

5,175

4,966

4,992

Total service

4,672

5,040

5,743

6,070

5,699

5,639

Gross profit:

Software licenses and appliances

$

907

$

2,817

$

668

$

627

$

57

$

165

Service

3,233

3,577

4,308

4,582

4,196

4,153

Gross margin:

Software licenses and appliances

58

%

66

%

75

%

77

%

47

%

72

%

Service

69

%

71

%

75

%

76

%

74

%

74

%

Conference Call
Qumu executive management will host a conference call today (October 28, 2021) at 4:30 p.m. Eastern time.

U.S. Dial-In Number: +1.833.644.0679
International Dial-In Number: +1.918.922.6755

Investors can also access a webcast of the live conference call by linking through the investor relations section of the Qumu website at https://ir.qumu.com. 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 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 derivative and warrant liabilities, foreign currency gains and losses, other non-operating income and expenses, and transaction-related 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 and nine months ended September 30, 2021 and 2020.

About Qumu
Qumu (Nasdaq: QUMU) is a 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. The Qumu Cloud platform enables global organizations to drive human engagement, increase access to and insights from video use, and modernize the workplace by providing a more efficient and effective way to share knowledge.

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. Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements.

Such forward-looking statements include, for example, statements about: the expected use and adoption of video in the enterprise, the impact of COVID-19 on the use and adoption of video in the enterprise, 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, or the success of go-to-market strategies or the other initiatives in the Company’s strategic plan. The risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements include the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and other factors set forth in the Company’s filings with the Securities and Exchange Commission.

The forward-looking statements in this press release speak only as of the date of this press release. Except as required by law, Qumu assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future, except as required by law.

QUMU CORPORATION

Condensed Consolidated Statements of Operations

(unaudited - in thousands, except per share data)

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Revenues:

Software licenses and appliances

$

742

$

887

$

1,091

$

6,736

Service

5,683

5,743

17,021

15,455

Total revenues

6,425

6,630

18,112

22,191

Cost of revenues:

Software licenses and appliances

63

219

190

2,344

Service

1,481

1,435

4,470

4,337

Total cost of revenues

1,544

1,654

4,660

6,681

Gross profit

4,881

4,976

13,452

15,510

Operating expenses:

Research and development

2,305

2,105

6,519

5,973

Sales and marketing

4,490

2,044

14,139

6,443

General and administrative

1,881

2,142

6,550

7,055

Amortization of purchased intangibles

163

165

488

492

Total operating expenses

8,839

6,456

27,696

19,963

Operating loss

(3,958)

(1,480)

(14,244)

(4,453)

Other income (expense):

Interest expense, net

(12)

(33)

(81)

(38)

Decrease (increase) in fair value of derivative liability

(1)

37

104

Decrease (increase) in fair value of warrant liability

94

(332)

1,469

(730)

Gain on sale of BriefCam

50

50

Other, net

4

(55)

(23)

(252)

Total other income (expense), net

136

(421)

1,452

(916)

Loss before income taxes

(3,822)

(1,901)

(12,792)

(5,369)

Income tax benefit

(77)

(43)

(276)

(147)

Net loss

$

(3,745)

$

(1,858)

$

(12,516)

$

(5,222)

Net loss per share – basic:

Net loss per share – basic

$

(0.21)

$

(0.14)

$

(0.72)

$

(0.39)

Weighted average shares outstanding – basic

17,872

13,579

17,358

13,555

Net loss per share – diluted:

Loss attributable to common shareholders

$

(3,788)

$

(1,858)

$

(13,985)

$

(5,516)

Net loss per share – diluted

$

(0.21)

$

(0.14)

$

(0.80)

$

(0.41)

Weighted average shares outstanding – diluted

17,881

13,579

17,525

13,575

QUMU CORPORATION

Condensed Consolidated Balance Sheets

(unaudited - in thousands)

September 30,

December 31,

Assets

2021

2020

Current assets:

Cash and cash equivalents

$

18,199

$

11,878

Receivables, net

4,703

5,612

Contract assets

430

467

Income taxes receivable

393

479

Prepaid expenses and other current assets

2,142

2,302

Total current assets

25,867

20,738

Property and equipment, net

373

249

Right of use assets – operating leases

194

332

Intangible assets, net

1,574

2,143

Goodwill

7,366

7,455

Deferred income taxes, non-current

19

19

Other assets, non-current

402

490

Total assets

$

35,795

$

31,426

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and other accrued liabilities

$

2,495

$

2,705

Accrued compensation

1,227

2,145

Deferred revenue

11,442

12,918

Operating lease liabilities

709

735

Financing obligations

96

406

Note payable

1,800

Derivative liability

37

Warrant liability

881

2,910

Total current liabilities

16,850

23,656

Long-term liabilities:

Deferred revenue, non-current

2,144

3,488

Income taxes payable, non-current

624

608

Operating lease liabilities, non-current

82

554

Financing obligations, non-current

126

75

Other liabilities, non-current

160

160

Total long-term liabilities

3,136

4,885

Total liabilities

19,986

28,541

Stockholders’ equity:

Common stock

178

138

Additional paid-in capital

104,995

79,489

Accumulated deficit

(86,844

)

(74,328

)

Accumulated other comprehensive loss

(2,520

)

(2,414

)

Total stockholders’ equity

15,809

2,885

Total liabilities and stockholders’ equity

$

35,795

$

31,426

QUMU CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

Nine Months Ended
September 30,

2021

2020

Operating activities:

Net loss

$

(12,516

)

$

(5,222

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

738

935

Loss on disposal of property and equipment

3

Stock-based compensation

1,403

620

Accretion of debt discount and issuance costs

35

52

Gain on sale of BriefCam, Ltd.

(50

)

Decrease in fair value of derivative liability

(37

)

(104

)

Increase (decrease) in fair value of warrant liability

(1,469

)

730

Deferred income taxes

9

Changes in operating assets and liabilities:

Receivables

913

(1,107

)

Contract assets

37

296

Income taxes receivable / payable

107

70

Prepaid expenses and other assets

264

268

Accounts payable and other accrued liabilities

(607

)

(629

)

Accrued compensation

(915

)

617

Deferred revenue

(2,800

)

4,338

Other non-current liabilities

264

Net cash used in operating activities

(14,894

)

1,137

Investing activities:

Proceeds from sale of BriefCam, Ltd.

50

Purchases of property and equipment

(216

)

(68

)

Net cash used in investing activities

(166

)

(68

)

Financing activities:

Proceeds from line of credit

1,840

Payment on line of credit

(1,840

)

Principal payments on term loan

(1,833

)

Principal payments on financing obligations

(342

)

(286

)

Payment of debt issuance costs

(25

)

Net proceeds from common stock issuance

23,085

Proceeds from issuance of common stock under employee stock plans

545

238

Common stock repurchases to settle employee withholding liability

(47

)

(160

)

Net cash provided by (used in) financing activities

21,383

(208

)

Effect of exchange rate changes on cash

(2

)

(148

)

Net increase (decrease) in cash and cash equivalents

6,321

713

Cash and cash equivalents, beginning of period

11,878

10,639

Cash and cash equivalents, end of period

$

18,199

$

11,352

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,

2021

2020

2021

2020

Software licenses and appliances

$

742

$

887

$

1,091

$

6,736

Service

Subscription, maintenance and support

5,080

5,010

15,038

13,595

Professional services and other

603

733

1,983

1,860

Total service

5,683

5,743

17,021

15,455

Total revenue

$

6,425

$

6,630

$

18,112

$

22,191

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

Three Months Ended
September 30,

Nine Months Ended
September 30,

2021

2020

2021

2020

Net loss

$

(3,745

)

$

(1,858

)

$

(12,516

)

$

(5,222

)

Interest expense, net

12

33

81

38

Income tax benefit

(77

)

(43

)

(276

)

(147

)

Depreciation and amortization expense:

Depreciation and amortization in operating expenses

57

80

170

231

Total depreciation and amortization expense

57

80

170

231

Amortization of intangibles included in cost of revenues

26

72

80

212

Amortization of intangibles included in operating expenses

163

165

488

492

Total amortization of intangibles expense

189

237

568

704

Total depreciation and amortization expense

246

317

738

935

EBITDA

(3,564

)

(1,551

)

(11,973

)

(4,396

)

Gain on sale of BriefCam, Ltd.

(50

)

(50

)

Increase (decrease) in fair value of derivative liability

1

(37

)

(104

)

Increase (decrease) in fair value of warrant liability

(94

)

332

(1,469

)

730

Other expense (income), net

(4

)

55

23

252

Stock-based compensation expense:

Stock-based compensation included in cost of revenues

12

12

44

22

Stock-based compensation included in operating expenses

236

199

1,359

598

Total stock-based compensation expense

248

211

1,403

620

Transaction-related expenses

113

1,623

Adjusted EBITDA

$

(3,464

)

$

(839

)

$

(12,103

)

$

(1,275

)

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028006117/en/

Contacts

Matt Glover or Tom Colton
Gateway Investor Relations
QUMU@gatewayir.com
+1.949.574.3860

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