8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
	FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): August 2, 2016
Qumu Corporation
(Exact name of Registrant as Specified in its Charter)
	Minnesota
(State Or Other Jurisdiction Of Incorporation)

000-20728	41-1577970
(Commission File Number)	(I.R.S. Employer Identification No.)
510 1st Avenue North, Suite 305
Minneapolis, MN	55403
(Address Of Principal Executive Offices)	(Zip Code)

	(612) 638-9100
Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Items under Sections 1 and 3 through 8 are not applicable and therefore omitted.

ITEM 2.02RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Qumu Corporation (the “Company”) hereby furnishes as Exhibit 99.1 a press release issued on August 2, 2016 disclosing material non-public information regarding its results of operations for the quarter ended June 30, 2016 and hereby furnishes as Exhibit 99.2 statements of Vern Hanzlik, its President and Chief Executive Officer, and Peter J. Goepfrich, its Chief Financial Officer, made on August 3, 2016 at a telephone conference relating to the quarter ended June 30, 2016 results.

ITEM 9.01FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.	Description
99.1	Press Release issued on August 2, 2016.
99.2	Statements of Vern Hanzlik, President and Chief Executive Officer, and Peter J. Goepfrich, Chief Financial Officer at a telephone conference held on August 3, 2016.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	QUMU CORPORATION
	By:	/s/ Peter J. Goepfrich
		Peter J. Goepfrich
		Chief Financial Officer
Date: August 3, 2016

EX-99.1

EXHIBIT 99.1

Qumu Announces Second Quarter 2016 Results

Conference Call Wednesday, August 3 at 10:00 a.m. ET

Minneapolis, MN – August 2, 2016 – Qumu Corporation (NASDAQ: QUMU) today reported financial results for the second quarter ended June 30, 2016, which were slightly improved from the estimates included in its July 21, 2016 press release.

Second quarter revenue was $6.5 million, compared to $8.8 million in the second quarter 2015. Second quarter net loss was $(4.3) million, or a loss of $(0.46) per share, compared to $(6.9) million, or a loss of $(0.75) per share, in the second quarter 2015. Second quarter adjusted EBITDA (a non-GAAP measure) was a loss of $(3.1) million, compared to an adjusted EBITDA loss of $(5.8) million for the second quarter 2015.

For the six months ended June 30, 2016, revenue was $15.3 million, compared to $14.7 million last year. For the six months ended June 30, 2016, net loss was $(8.4) million, or a loss of $(0.91) per share, compared to $(16.9) million, or a loss of $(1.83) per share, last year. For the six months ended June 30, 2016, adjusted EBITDA was a loss of $(6.0) million, compared to an adjusted EBITDA loss of $(14.5) million last year.

“As previously indicated, we are disappointed with our second quarter revenue; however, we have right-sized our expense structure over the past twelve months and we remain confident in our ability to transition to more recurring revenue and a lower reliance on perpetual license sales over time. For example, in the second quarter we closed our largest number of new cloud customers in a quarter,” said Vern Hanzlik, Qumu’s president and CEO. “In the near term, due to the variability of the timing of larger perpetual license opportunities, we have revised our annual guidance. During this transition, we are continuing to focus on providing the best enterprise video content management solutions and services, as rated by industry analysts, to our customers and to the Global 5000 market.”

Other Information

• Subscription, maintenance and support revenue was $4.7 million and $4.6 million for the second quarter 2016 and 2015, respectively, and $10.2 million and $8.7 million for the six months ended June 2016 and 2015, respectively.

• Gross margin was 54.7% and 48.7% for the second quarter 2016 and 2015, respectively, and 55.6% and 43.9% for the six months ended June 2016 and 2015, respectively.

• Total headcount was 165 as of June 30, 2016 compared to 182 as of March 31, 2016 and 232 as of June 30, 2015.

• Cash and marketable securities were $8.3 million as of June 30, 2016, compared to $11.3 million as of March 31, 2016, reflecting the second quarter operating loss and the impact on cash from changes in working capital.

Guidance

For the third quarter 2016, revenue is expected to be in the range of $7.0 million to $8.0 million. Third quarter net loss is expected to be in the range of $(3.7) million to $(3.2) million, or $(0.40) to $(0.35) per share, with weighted average shares outstanding of approximately 9.25 million shares. Adjusted EBITDA for the third quarter 2016 is expected to be in the range of a loss of $(2.5) million to $(2.0) million, compared to an adjusted EBITDA loss of $(6.2) million in the third quarter 2015.

For the full year of 2016, revenue is expected to be in the range of $32.0 million to $35.0 million. Gross margins are expected to improve from the mid 50s through the first half of the year to the mid to high 60s late in the year. Net

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loss is expected to be in the range of $(13.0) million to $(11.6) million, or $(1.40) to $(1.25) per share, with weighted average shares outstanding of approximately 9.25 million shares. Adjusted EBITDA is expected to be in the range of a loss of $(8.0) million to $(6.5) million compared to an adjusted EBITDA loss of $(24.5) million in fiscal 2015. The Company expects a tax benefit of $200,000 in fiscal 2016. Additionally, the Company expects that it will be cash flow breakeven the fourth quarter of 2016.

Conference Call

The Company has scheduled a conference call and webcast to review its second quarter 2016 results tomorrow, August 3, 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, foreign currency gains and losses, net income (loss) from discontinued operations, 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 and six months ended June 30, 2016 and 2015.

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, 2015 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 arehow business does video. Additional information can be found at www.qumu.com.

Investor Contact:

Peter Goepfrich, CFO                

Qumu Corporation                

612-638-9096

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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,
	2016			2015			2016			2015
Revenues:
Software licenses and appliances	$	836		$	2,719		$	2,798		$	3,703
Service	5,679			6,045			12,453			11,030
Total revenues	6,515			8,764			15,251			14,733
Cost of revenues:
Software licenses and appliances	412			706			1,369			939
Service	2,542			3,786			5,403			7,328
Total cost of revenues	2,954			4,492			6,772			8,267
Gross profit	3,561			4,272			8,479			6,466
Operating expenses:
Research and development	2,410			2,858			4,760			5,660
Sales and marketing	2,978			4,740			6,510			9,568
General and administrative	2,265			3,558			5,235			7,922
Amortization of purchased intangibles	227			200			453			399
Total operating expenses	7,880			11,356			16,958			23,549
Operating loss	(4,319		)	(7,084		)	(8,479		)	(17,083		)
Other income (expense):
Interest income (expense), net	(15		)	15			(27		)	31
Other, net	(47		)	(4		)	(11		)	(68		)
Total other income (expense), net	(62		)	11			(38		)	(37		)
Loss before income taxes	(4,381		)	(7,073		)	(8,517		)	(17,120		)
Income tax benefit	(90		)	(146		)	(94		)	(319		)
Net loss from continuing operations	(4,291		)	(6,927		)	(8,423		)	(16,801		)
Net loss from discontinued operations, net of tax	—			(22		)	—			(89		)
Net loss	$	(4,291	)	$	(6,949	)	$	(8,423	)	$	(16,890	)
Net loss per basic and diluted share:
Net loss from continuing operations per share	$	(0.46	)	$	(0.75	)	$	(0.91	)	$	(1.83	)
Net loss from discontinued operations per share	—			—			—			—
Net loss per share	$	(0.46	)	$	(0.75	)	$	(0.91	)	$	(1.83	)
Basic and diluted weighted average shares outstanding	9,236			9,243			9,227			9,206

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QUMU CORPORATION

Condensed Consolidated Balance Sheets

(in thousands)

Assets	June 30, 2016			December 31, 2015
Current assets:	(unaudited)
Cash and cash equivalents	$	8,032		$	7,072
Marketable securities	250			6,249
Receivables, net	5,826			11,257
Income taxes receivable	384			659
Prepaid expenses and other current assets	2,873			3,392
Total current assets	17,365			28,629
Property and equipment, net	2,360			2,942
Intangible assets, net	9,472			11,032
Goodwill	7,330			8,103
Other assets, non-current	5,359			3,706
Total assets	$	41,886		$	54,412
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other accrued liabilities	$	4,154		$	3,864
Accrued compensation	2,881			4,014
Deferred revenue	10,130			10,413
Deferred rent	296			270
Financing obligations	407			502
Current liabilities from discontinued operations	50			50
Total current liabilities	17,918			19,113
Long-term liabilities:
Deferred revenue, non-current	503			2,215
Income taxes payable, non-current	6			9
Deferred tax liability, non-current	436			575
Deferred rent, non-current	847			998
Financing obligations, non-current	347			519
Other non-current liabilities	—			226
Total long-term liabilities	2,139			4,542
Total liabilities	20,057			23,655
Stockholders’ equity:
Common stock	92			92
Additional paid-in capital	66,206			65,484
Accumulated deficit	(41,721		)	(33,298		)
Accumulated other comprehensive loss	(2,748		)	(1,521		)
Total stockholders’ equity	21,829			30,757
Total liabilities and stockholders’ equity	$	41,886		$	54,412

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QUMU CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

	Six Months Ended   June 30,
	2016			2015
Cash flows used in operating activities:
Net loss	$	(8,423	)	$	(16,890	)
Net loss from discontinued operations, net of tax	—			(89		)
Net loss from continuing operations	(8,423		)	(16,801		)
Adjustments to reconcile net loss to net cash used in continuing operating activities:
Depreciation and amortization	1,700			1,503
Stock-based compensation	740			1,068
Loss on disposal of property and equipment	—			4
Deferred income taxes	(90		)	(170		)
Changes in operating assets and liabilities:
Receivables	5,192			3,393
Income taxes receivable / payable	241			(209		)
Prepaid expenses and other assets	(1,171		)	(2,293		)
Accounts payable and other accrued liabilities	330			(559		)
Accrued compensation	(1,113		)	(1,763		)
Deferred revenue	(1,749		)	1,073
Deferred rent	(120		)	—
Other non-current liabilities	(226		)	(69		)
Net cash used in continuing operating activities	(4,689		)	(14,823		)
Net cash used in discontinued operating activities	—			(397		)
Net cash used in operating activities	(4,689		)	(15,220		)
Cash flows provided by investing activities:
Purchases of marketable securities	—			(9,250		)
Sales and maturities of marketable securities	6,000			17,965
Purchases of property and equipment	(33		)	(425		)
Proceeds from sale of property and equipment	—			43
Net cash provided by investing activities	5,967			8,333
Cash flows provided by (used in) financing activities:
Common stock repurchases to settle employee withholding liability	(18		)	(45		)
Principal payments on financing obligations	(259		)	(168		)
Proceeds from employee stock plans	—			142
Net cash used in financing activities	(277		)	(71		)
Effect of exchange rate changes on cash	(41		)	9
Net increase (decrease) in cash and cash equivalents	960			(6,949		)
Cash and cash equivalents, beginning of period	7,072			11,684
Cash and cash equivalents, end of period	$	8,032		$	4,735

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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,
	2016		2015		2016		2015
Software licenses and appliances	$	836	$	2,719	$	2,798	$	3,703
Service
Subscription, maintenance and support	4,712		4,592		10,237		8,704
Professional services and other	967		1,453		2,216		2,326
Total service	5,679		6,045		12,453		11,030
Total revenue	$	6,515	$	8,764	$	15,251	$	14,733

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

	Three Months Ended   June 30,						Six Months Ended   June 30,
	2016			2015			2016			2015
Net loss	$	(4,291	)	$	(6,949	)	$	(8,423	)	$	(16,890	)
Interest (income) expense, net	15			(15		)	27			(31		)
Income tax benefit	(90		)	(146		)	(94		)	(319		)
Depreciation and amortization expense:
Depreciation and amortization in cost of revenues	18			26			40			48
Depreciation and amortization in operating expenses	280			212			562			423
Total depreciation and amortization expense	298			238			602			471
Amortization of intangibles included in cost of revenues	323			317			645			633
Amortization of intangibles included in operating expenses	227			200			453			399
Total amortization of intangibles expense	550			517			1,098			1,032
Total depreciation and amortization expense	848			755			1,700			1,503
EBITDA	(3,518		)	(6,355		)	(6,790		)	(15,737		)
Foreign currency losses, net	47			4			11			68
Loss from discontinued operations, net	—			22			—			89
Stock-based compensation expense:
Stock-based compensation included in cost of revenues	25			38			18			74
Stock-based compensation included in operating expenses	364			462			722			994
Total stock-based compensation expense	389			500			740			1,068
Adjusted EBITDA	$	(3,082	)	$	(5,829	)	$	(6,039	)	$	(14,512	)

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EX-99.2

Exhibit 99.2

Qumu Corporation

Q2 2016

Conference Call

August 3, 2016

Operator

[Introduction]

Vern Hanzlik

Thank you. Good morning everyone and thank you for joining us for our second-quarter 2016 earnings conference call.

Some of our comments today may contain forward-looking statements which are subject to risks, uncertainties and assumptions. Should any of these materialize or should our assumptions prove to be incorrect, actual Company results could differ materially from these forward-looking statements. A description of our risks, uncertainties and assumptions and other factors that could affect our financial results are included in our SEC filings, including our most recent reports on Form 10-K and Form 10-Q.

During our call, we may offer additional metrics to provide further insight into our business or results. This detail may or may not be provided in the future. We may also reference certain unreleased services or features not yet available, and we cannot guarantee the timing or availability of these services or features. So we recommend customers listening today make purchase decisions based on services or features currently available.

With me today is Peter Goepfrich, our CFO. I will begin the call touching on a few second quarter financial highlights. Peter will then provide some additional financial commentary. From there I will provide other operational highlights and comments on our market. After that we will open the call to questions.

Second Quarter Financial Highlights

• We generated quarterly revenue of $6.5 million, compared to $8.8 million in the second quarter of 2015, but in the first 6 months revenue was $15.3 million, compared to $14.7 million last year. Additionally, in the first half of 2016 we continued to see perpetual license transactions move into the second half of the year and those transactions are mostly larger deals.

• Software license and appliances revenue for the quarter was $836,000. The $1.9 million decrease from the second quarter 2015 and the $905,000 decrease year to date was primarily due to the delay in several larger perpetual license opportunities in second quarter 2016.

• Subscription, maintenance and support revenue for the quarter was $4.7 million:

◦ The $120,000 increase from the second quarter 2015 was primarily due to the runoff of the deferred revenue write-down during 2015 relating to the Kulu Valley acquisition.

◦ The $1.5 million increase year to date was primary due to the inclusion of approximately $700,000 of revenue in the first quarter 2016 relating to customer acceptance and contract buyouts, the runoff of approximately $375,000 of the deferred revenue write-down during 2015 relating to the Kulu Valley acquisition, and the balance of the increase was a result of the net impact of customer activity.

• Professional services and other revenue for the quarter was $967,000. The $486,000 increase from the second quarter 2015 and the $110,000 decrease year to date was primarily due to lower software license and appliances sales in the first half of 2016 compared to the first half of 2015.

• We continue to focus on strengthening our financial performance and growing the business with new and existing customers. Ten existing customers accounted for 46% of revenue for the second quarter. These enterprise customers represent some of our largest vertical markets - financial, technology, manufacturing and pharmaceuticals. All new customers for the quarter were cloud with the potential to grow into hybrid enterprise customers.

• Geographically, the Americas and EMEA markets continued to show adoption of enterprise video and our enterprise customers continue to expand. The Americas market represented 75% of our revenue and the EMEA market was 22% of our revenue for the quarter.

• In APAC we continued to make progress developing a pipeline through our partnership with V-Cube, Fujitsu, CTC and other Unified Communications partners. APAC represented 2% of our revenue for the quarter.

• Additionally, in the first half of 2016 our global renewal rates for maintenance and support, term contracts and SaaS contracts was greater than 88%.

As I commented in our press release, we saw the timing of several deals with both new and existing customers pushed into the second half of the year and we continue to feel confident about those transactions but are more cautious about their timing.

For additional financial commentary, I will now turn the call over to Peter.

Peter Goepfrich

Thank you, Vern.

I will expand on a few items not already addressed by Vern or included in our earnings release yesterday. I will begin with gross margin.

• Total gross margin improved 6 percentage points to 54.7% and 11.7 percentage points to 55.6% for the three and six months ended June 30, 2016 compared to the corresponding periods last year.

◦ The improvement was driven by increased service gross margin related to cost savings initiatives implemented in the second half of 2015 and improved economies of scale on increased subscription, maintenance and support revenues.

◦ Partially offsetting the improvement in service gross margin was a decrease in software license and appliances gross margin in the three and six months ended June 30, 2016 compared to the corresponding periods last year. The decrease was due to the product mix for the 2016 periods which included a higher percentage of appliance revenue, which generally have lower margins than software license revenue.

• Total gross margin is expected to improve from the mid-50s through the first half of the year to the mid to high 60s late in the year.

Moving on to operating expenses and adjusted EBITDA, a non-GAAP measure.

• We have right-sized our expense structure over the past twelve months on a similar revenue base significantly improving operating results and adjusted EBITDA. Compared to the corresponding periods last year:

◦ Total operating expenses decreased 31% and 28% for the three and six months ended June 30, 2016.

◦ Total operating loss improved 39% and 50% for the three and six months ended June 30, 2016.

◦ Adjusted EBITDA improved 47% to a loss of $3.1 million, and 58% to a loss of $6 million for the three and six months ended June 30, 2016.

Now for the balance sheet.

• Cash and investments were $8.3 million as of June 30, 2016 compared to $11.3 million as of March 31, 2016. We continue to manage cash closely and we expect that we will be cash flow breakeven the fourth quarter of 2016.

• Whether or not we are able to become cash flow breakeven the fourth quarter of 2016, we believe that we will need to raise capital to execute our business plan and to pursue our growth objectives which include the transition to more recurring revenue and a lower reliance on perpetual license sales over time. There can be no assurance that we will raise capital at any particular time or on acceptable terms, if at all. Potential strategies for raising capital could include, but are not be limited to, the sale of all or a portion of our BriefCam investment, and/or the issuance of equity securities.

• During this transition in our business model, we are continuing to focus on providing the best enterprise video content management solutions and services, as rated by industry analysts, to our customers and to the Global 5000 market.

Now back to Vern.

Vern Hanzlik

Thanks, Peter.

Let me review some of our key operational highlights and market comments. Then we will open the call up for questions.

• The business video market continues to evolve and grow, but Qumu's core opportunity hasn’t changed: deliver the leading enterprise-class, end-to-end video platform, built with a cloud-first architecture but deployable on-premise, as a hybrid or in the cloud. 

• Our investment in Kulu Valley less than two years ago has positioned us well to do this. We have been delivering on that strategy for the last year with early adopters and now we are ready to put a next-generation architecture in play for our defined markets.

• Our software platform is unique in its ability to address the needs of enterprise video with a single platform: departmental and enterprise-wide at scale, internal and external use cases, and with our new architecture, a service layer for our partners to integrate with the platform. This flexibility opens up multiple avenues for us and our customers as business video use cases evolve over the next 12 to 24 months.

• We have defined our target market as the Forbes Global 2000, which represents a huge market size with 8.7 million employees and 51% of the world’s GDP. The opportunity for us is clear to see in the number of Qumu customers already on the Forbes Global 2000 list: Qumu customers represent approximately 4% of the top 2000 companies, 10% of the top 500 companies, and 19% of the top 100 companies on the Forbes list.

• We will continue to focus new customer acquisition on Forbes Global 2000 companies and similarly sized privately held firms, in three distinct areas:

◦ At the enterprise-wide level we continue to have success with new and existing customers. These deals tend to be on-premise installations and have ASPs of several hundred thousand dollars and higher. We continue to win business because customers demand the choice, control and completeness of solutions that we can offer. We continue to see use cases for video in the enterprises multiplying and hence our ability to expand horizontally in our base of customers. We are best in class at scale with this segment.

◦ The second area of opportunity is for hybrid enterprise solutions, which we can now fulfill with our Qumu Cloud solution and Pathfinder delivery services. This is a large and growing segment of the market, usually starting smaller than enterprise-wide on-premise deals, but greater in number. The Qumu Cloud solution, coupled with our highly differentiated Pathfinder delivery technology, will give our customers the benefits of cloud with the ability to scale into an enterprise-wide solution.

◦ The third area of opportunity is for entry-level cloud video. These deals are smaller in size but have the potential to expand into hybrid or enterprise-wide deployments. This space is competitive, but our integrations with Unified Communications solutions like Pexip or Skype for Business and our ability to offer a seamless path to scale are creating wins for us. In Q2 we won more new cloud deals than in any previous quarter.

• In Q2 we began to implement an account-based marketing strategy that we expect will have a positive impact on our account acquisition rate in our defined market and maximize our horizontal expansion of existing enterprise accounts in the future. We are making significant progress with account-based marketing on several fronts:

• We are building a targeted contact database through internal data mining and external acquisition, focused on identifying five key titles in IT and communications at each of our two thousand defined target accounts. This list is powering our outbound marketing campaigns that are engaging our target accounts at higher than typical rates. For example, one of our very targeted email campaigns achieved a 40% open rate and a 50% click-to-open rate - 3X to 4X higher than our typical engagement rates.

• Account-based marketing is also driving increased engagement with our existing customer accounts, including roadmap meetings with over 20 accounts in the last five months that we expect to drive significant upgrades in 2016 or 2017. Another example of targeted outreach to our customer base: an outbound email campaign to our existing accounts on our Unified Communications solution - a key cross-sell opportunity for existing Qumu accounts.

Partners

• On the business development front, integrations with partners with adjacent technologies and applications are now in place that open opportunities for us.  We have integrations with Pexip and Skype for Business in Unified Communications; Citrix for video for VDI desktops; and Jive for video in social business collaboration platforms.  We are seeing a strong pipeline of new opportunities collectively from these integrations.

Enterprise Customers

• As I mentioned earlier, we had continued growth in some of our largest existing enterprise customers for the second quarter - as stated earlier, 46% of the revenue for second quarter came from multiple existing customers, of which 50% were in financial services and 15% came from technology companies and the balance from pharmaceutical, manufacturing and professional services industries. The deployment footprint for business video creation, management and delivery for everyone in these organizations will continure to increase as we reach all employees, partners and customers with secure video. Organizations will continue to invest in video applications for the future for more live and on-demand applications as well as other video use cases.

• In summary, while we are disappointed with our second quarter revenue, we have appropriately adjusted our expense structure over the past twelve months. We remain confident in our ability to transition to more recurring revenue and a lower reliance on perpetual license sales over time.

• In the near term, due to the uncertainty related to the timing of larger perpetual license opportunities, we have revised our annual guidance. During this transition, we will continue to focus on providing the best video solutions to the enterprise video content management market for our customers and our defined market.

• We continue to invest for the future with a mindful discipline for our product direction, a clear vision for our team and operational momentum to carry us into the second half of the year well-positioned to reach our corporate milestones and revenue growth objectives in the future.

• Now, we would like to open the call to questions.

Q&A

Vern Hanzlik

Thank you again for joining us today. If you have any follow-up questions, please contact us directly.