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Qumu Corp (QUMU) SEC Filing 8-K Material Event for the period ending Thursday, July 29, 2021

Qumu Corp

CIK: 892482 Ticker: QUMU
EXHIBIT 99.1

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Qumu Reports Second Quarter 2021 Financial Results
Continued Progress within Cloud Growth Strategy Drives 28% Year-over-Year Increase in Subscription Annual Recurring Revenue (ARR) and Improving SaaS Metrics

MINNEAPOLIS – July 29, 2021 – Qumu Corporation (Nasdaq: QUMU), a leading provider of cloud-based enterprise video technology for organizations of all sizes, today reported financial results for the second quarter ended June 30, 2021.
Q2 2021 and Recent Operational Highlights
Launched 360-degree video on demand for fully immersive enterprise video experience.
Introduced artificial intelligence-based translation of voice to on-screen captions for video viewers.
Released integration with Socialive, giving video creators enhanced studio-quality production capabilities from one unified interface.
Appointed cloud computing executive Andi Mann as Chief Technology Officer.
Appointed channel sales veteran Susan Young to grow strategic partner ecosystem.

Q2 2021 Financial Highlights
Revenue in Q2 2021 was $5.9 million, up from $5.8 million in Q1 2021.
Subscription, maintenance, and support revenue in Q2 2021 increased 9% to $5.1 million, compared to $4.7 million in Q2 2020.
Gross margin improved to 74% in Q2 2021 from 69% in Q2 2020.
Strong balance sheet at the end of Q2 2021 with $21.3 million of cash and cash equivalents and no borrowings on the company's revolving credit facility.

Q2 2021 Key Performance Indicators
Software-as-a-Service (SaaS) Annual Recurring Revenue (SaaS ARR) increased 28% to $12.4 million in Q2 2021 from $9.7 million in Q2 2020.
SaaS customer retention:
Gross Renewal Rate (GRR): 93% at end of Q2 2021 compared to 87% at end of Q2 2020.
Net Renewal Rate (NRR): 132% at end of Q2 2021 compared to 118% at end of Q2 2020.
Dollar Value Retention: 104% at end of Q2 2021 compared to 96% at end of Q2 2020.
Management Commentary
“Qumu is in the midst of a significant business transformation, and we’re well on our way to becoming a SaaS-first organization capable of generating robust and predictable long-term growth,” said Qumu President and CEO TJ Kennedy. “Our financial results for the second quarter of 2021 were in-line with or better than the preliminary results we announced last month. We are actively addressing and overcoming several near-term headwinds, including longer-than-expected sales cycles, slower ramp of our new SaaS sales resources, and the anticipated decline of our legacy on-premise business. Although these transformation challenges have pushed our anticipated growth inflection point into early next year, this process has yielded actionable insights that have helped us to hone our approach and implement adjustments in our business execution for the second half of 2021.”
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“Our revised plan focuses on ensuring continued growth of our subscription-based business while still maintaining dedicated support for our on-premise customers,” added Kennedy. “We have already taken action on important go-forward initiatives, including simplifying our selling motions with focused messaging that better highlights our key differentiators, updating our pricing to better align with our value-based selling approach, and modifying the packaging of our services offerings to focus on our customers’ key enterprise use cases.”
Dave Ristow, Qumu’s Chief Financial Officer, commented: “We are executing a cost-optimization program to align our expenses with our new level of anticipated revenues. This strategy includes reducing our burn rate, slowing our hiring in non-revenue generating and quota-carrying resources, and implementing other cost-cutting measures to ensure adequate working capital to support our SaaS transition. When completed, these measures will create an even more focused, nimble, and efficient organization. We believe we have the necessary resources, including more than $21 million of cash, that we expect will cover our growth investment needs and ensure our sustainability as we execute our long-term growth initiatives. As we execute our strategic roadmap, we will continue to monitor spending closely as we march towards adjusted EBITDA positivity targeted for the second half of 2022 with the goal of maintaining a solid cash position throughout the process.”
Kennedy continued: “From a leadership standpoint, we have significantly strengthened the Qumu team necessary to execute our strategic roadmap. This includes bolstering our customer facing teams, adding experienced SaaS sales executives, and appointing world-class business leaders. Most recently, we announced Andi Mann as our new Chief Technology Officer, who joined Qumu a few weeks ago. Andi will lead our technology efforts to deepen and enhance our enterprise video portfolio, including expanding our advanced video analytics capabilities and ensuring best-in-class cloud security. With Andi’s appointment, Qumu’s leadership team is the strongest and deepest in company history, and the group’s collective experience gives us confidence in our ability to execute on our long-term strategy.
“SaaS businesses are built on strong foundations of process, people, and technology, and we have now put in place the foundation for our long-term success. Our go-to-market motions, targeting both large and medium enterprises are gaining traction. Our improved customer success efforts are deepening customer relationships and driving growth in our subscription ARR and continued on-prem to cloud conversions. As we transform our business, our focus remains on delivering robust SaaS revenue growth. Today, we have a growing SaaS ARR business, which totaled $12.4 million at quarter end and was up 28% year-over-year. Our plan is centered around driving additional scale of our SaaS business through our direct sales team, our new customer success and account management organization, and our newly invigorated channel and partnership ecosystem, which will enable us to accelerate the value we deliver to our customers.
“Looking ahead, hybrid work and the use of video by enterprises is here to stay, and Qumu is building for the long-term success of the company and its shareholders. We have the right plan and team in place, and the resources to ensure sustainability and the successful achievement of our strategic roadmap. We remain 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.”
Second Quarter 2021 Financial Results
Revenue for Q2 2021 was $5.9 million compared to $9.3 million for Q2 2020. The decrease in revenue was primarily due to a significant one-time license and appliance revenues recognized from a large single customer in Q2 2020.
Subscription, maintenance, and support revenue for Q2 2021 increased 9% to $5.1 million from $4.7 million in Q2 2020, which was driven by new cloud and term deals as well as moderate cloud usage overage fees.
Gross margin in Q2 2021 was 74% compared to 69% for Q2 2020. The gross margin percentage increase was primarily due to a favorable sales mix and an increase in higher-margin SaaS revenue.
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Net loss in Q2 2021 was $(4.3) million, or $(0.24) loss per basic share and $(0.30) loss per diluted share, compared to $(692,000), or $(0.05) loss per basic share and $(0.06) loss per diluted share, for Q2 2020. The higher net loss reflects costs associated with the implementation of the company’s strategic roadmap.
Adjusted EBITDA loss, a non-GAAP measure, in Q2 2021 was $(4.5) million, compared to adjusted EBITDA of $809,000 for Q2 2020. Adjusted EBITDA loss reflects decreased revenues and increased operating expenses associated with investments in Qumu's strategic roadmap to transform the company’s perpetual license business into a SaaS subscription business model.
As of June 30, 2021, the company had cash and cash equivalents of $21.3 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 roadmap and the COVID-19 pandemic, such as trends in distributed remote and hybrid work impacting enterprise technology adoption and procurement.
In order to provide better 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 currently anticipates SaaS recurring revenue to 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.
Conference Call
Qumu executive management will host a conference call today (July 29, 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 warrant liabilities, foreign currency gains and losses, other non-operating income and expenses, non-cash office lease surrender costs 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 six months ended June 30, 2021 and 2020.
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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. Backed by the most trusted and experienced team in the industry, the Qumu Cloud 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.
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 roadmap. 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.
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
 June 30,
Six Months Ended
 June 30,
 2021202020212020
Revenues:    
Software licenses and appliances$138 $4,061 $246 $5,601 
Service5,729 5,273 11,441 9,960 
Total revenues5,867 9,334 11,687 15,561 
Cost of revenues:    
Software licenses and appliances63 1,477 127 2,125 
Service1,486 1,463 2,989 2,902 
Total cost of revenues1,549 2,940 3,116 5,027 
Gross profit4,318 6,394 8,571 10,534 
Operating expenses:    
Research and development2,184 2,088 4,214 3,868 
Sales and marketing5,173 2,181 9,649 4,399 
General and administrative2,142 2,320 4,669 4,913 
Amortization of purchased intangibles163 163 325 327 
Total operating expenses9,662 6,752 18,857 13,507 
Operating loss(5,344)(358)(10,286)(2,973)
Other income (expense):    
Interest expense, net(15)(22)(69)(5)
Decrease in fair value of derivative liability— 105 37 105 
Decrease (increase) in fair value of warrant liability1,018 (434)1,375 (398)
Other, net(89)(37)(27)(197)
Total other income (expense), net914 (388)1,316 (495)
Loss before income taxes(4,430)(746)(8,970)(3,468)
Income tax benefit(109)(54)(199)(104)
Net loss$(4,321)$(692)$(8,771)$(3,364)
Net loss per share – basic:
Net loss per share – basic$(0.24)$(0.05)$(0.51)$(0.25)
Weighted average shares outstanding – basic17,741 13,534 17,096 13,543 
Net loss per share – diluted:
Loss attributable to common shareholders$(5,339)$(820)$(10,146)$(3,658)
Net loss per share – diluted$(0.30)$(0.06)$(0.59)$(0.27)
Weighted average shares outstanding – diluted17,899 13,538 17,299 13,573 

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QUMU CORPORATION
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
June 30,December 31,
Assets20212020
Current assets:
Cash and cash equivalents$21,328 $11,878 
Receivables, net3,833 5,612 
Contract assets229 467 
Income taxes receivable280 479 
Prepaid expenses and other current assets2,462 2,302 
Total current assets28,132 20,738 
Property and equipment, net431 249 
Right of use assets – operating leases242 332 
Intangible assets, net1,776 2,143 
Goodwill7,583 7,455 
Deferred income taxes, non-current19 19 
Other assets, non-current439 490 
Total assets$38,622 $31,426 
Liabilities and Stockholders’ Equity  
Current liabilities:  
Accounts payable and other accrued liabilities$2,714 $2,705 
Accrued compensation842 2,145 
Deferred revenue10,434 12,918 
Operating lease liabilities711 735 
Financing obligations206 406 
Note payable— 1,800 
Derivative liability— 37 
Warrant liability975 2,910 
Total current liabilities15,882 23,656 
Long-term liabilities:  
Deferred revenue, non-current2,306 3,488 
Income taxes payable, non-current619 608 
Operating lease liabilities, non-current258 554 
Financing obligations, non-current139 75 
Other liabilities, non-current160 160 
Total long-term liabilities3,482 4,885 
Total liabilities19,364 28,541 
Stockholders’ equity:  
Common stock176 138 
Additional paid-in capital104,472 79,489 
Accumulated deficit(83,099)(74,328)
Accumulated other comprehensive loss(2,291)(2,414)
Total stockholders’ equity19,258 2,885 
Total liabilities and stockholders’ equity$38,622 $31,426 

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QUMU CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
 Six Months Ended
 June 30,
 20212020
Operating activities:  
Net loss$(8,771)$(3,364)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization492 618 
Loss on disposal of property and equipment— 
Stock-based compensation1,155 409 
Accretion of debt discount and issuance costs33 20 
Decrease in fair value of derivative liability(37)(105)
Increase (decrease) in fair value of warrant liability(1,375)398 
Deferred income taxes— 
Changes in operating assets and liabilities:
Receivables1,802 (3,685)
Contract assets238 140 
Income taxes receivable / payable221 (184)
Prepaid expenses and other assets(105)394 
Accounts payable and other accrued liabilities(242)1,030 
Accrued compensation(1,305)177 
Deferred revenue(3,724)3,709 
Other non-current liabilities— 151 
Net cash used in operating activities(11,615)(283)
Investing activities:  
Purchases of property and equipment(216)(29)
Net cash used in investing activities(216)(29)
Financing activities:  
Proceeds from line of credit1,840 — 
Payment on line of credit(1,840)— 
Principal payments on term loan(1,833)— 
Principal payments on financing obligations(219)(185)
Net proceeds from common stock issuance23,085 — 
Proceeds from issuance of common stock under employee stock plans226 — 
Common stock repurchases to settle employee withholding liability(6)(54)
Net cash provided by (used in) financing activities21,253 (239)
Effect of exchange rate changes on cash28 (201)
Net increase (decrease) in cash and cash equivalents9,450 (752)
Cash and cash equivalents, beginning of period11,878 10,639 
Cash and cash equivalents, end of period$21,328 $9,887 
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QUMU CORPORATION
Supplemental Financial Information
(unaudited - in thousands)

A summary of revenue is as follows:
 Three Months Ended
 June 30,
Six Months Ended
 June 30,
 2021202020212020
Software licenses and appliances$138 $4,061 $246 $5,601 
Service
Subscription, maintenance and support5,082 4,673 10,061 8,833 
Professional services and other647 600 1,380 1,127 
Total service5,729 5,273 11,441 9,960 
Total revenue$5,867 $9,334 $11,687 $15,561 

A reconciliation from GAAP results to adjusted EBITDA is as follows:
 Three Months Ended
 June 30,
Six Months Ended
 June 30,
 2021202020212020
Net loss$(4,321)$(692)$(8,771)$(3,364)
Interest expense, net15 22 69 
Income tax benefit(109)(54)(199)(104)
Depreciation and amortization expense:
Depreciation and amortization in operating expenses59 73 113 151 
Total depreciation and amortization expense59 73 113 151 
Amortization of intangibles included in cost of revenues27 68 54 140 
Amortization of intangibles included in operating expenses163 163 325 327 
Total amortization of intangibles expense190 231 379 467 
Total depreciation and amortization expense249 304 492 618 
EBITDA(4,166)(420)(8,409)(2,845)
Decrease in fair value of derivative liability— (105)(37)(105)
Increase (decrease) in fair value of warrant liability(1,018)434 (1,375)398 
Other expense, net89 37 27 197 
Stock-based compensation expense:
Stock-based compensation included in cost of revenues17 32 10 
Stock-based compensation included in operating expenses549 159 1,123 399 
Total stock-based compensation expense566 164 1,155 409 
Transaction-related expenses— 699 — 1,510 
Adjusted EBITDA$(4,529)$809 $(8,639)$(436)

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Ticker: QUMU
CIK: 892482
Form Type: 8-K Corporate News
Accession Number: 0000892482-21-000039
Submitted to the SEC: Fri Jul 30 2021 10:59:35 AM EST
Accepted by the SEC: Fri Jul 30 2021
Period: Thursday, July 29, 2021
Industry: Prepackaged Software
Events:
  1. Earnings Release
  2. Financial Exhibit

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