EX-99.1 2 q42018ex991.htm PRESS RELEASE ISSUED MARCH 5, 2019 Exhibit
EXHIBIT 99.1


image04162018a04.jpg
Qumu Announces Fourth Quarter and Year-End 2018 Results

Company delivers two quarters of positive adjusted EBITDA, and meets all 2018 guidance for Bookings Growth, Revenue, Gross Margin and Adjusted EBITDA

Conference Call Wednesday, March 6, 2019 at 10:00 a.m. ET

Minneapolis, MN – March 5, 2019 – Qumu Corporation (NASDAQ: QUMU) today reported financial results for the fourth quarter and year ended December 31, 2018. The Company reported fourth quarter revenue of $6.9 million, positive basic earnings per share, net income of $48,000 and adjusted EBITDA, a non-GAAP measure, of $130,000, ending the year with cash of $8.6 million.

"Qumu delivered on our financial guidance for 2018, marking two consecutive years of positive annual contract value growth, as well as two quarters of positive adjusted EBITDA," said Vern Hanzlik, Qumu’s President and CEO. "As we continue to transition the company to a recurring revenue model, we are positioned for growth with a strong cash position and sales pipeline, a growing partner channel, and a leadership position with all major analysts who cover our industry. These factors, along with the announcement of our intelligent platform, give us a high degree of confidence in the business as we enter 2019."

Fourth quarter 2018 revenue was $6.9 million, compared to $7.2 million in the fourth quarter 2017, and net income for the fourth quarter 2018 was $48,000, or $0.01 per basic share, compared to a net loss of $(3.2) million, or $(0.35) per basic share, in the fourth quarter 2017. Adjusted EBITDA, a non-GAAP measure, was $130,000 for the fourth quarter 2018, compared to $(805,000) for the fourth quarter 2017.

For the year ended December 31, 2018, revenue was $25.0 million, compared to $28.2 million last year, and net loss was $(3.6) million, or a loss of $(0.38) per basic share, compared to $(11.7) million, or a loss of $(1.25) per basic share, for 2017. For the year ended December 31, 2018, adjusted EBITDA was $(3.5) million, compared to adjusted EBITDA of $(4.6) million for 2017. The 2018 net loss included a $6.6 million gain on the third quarter 2018 sale of the Company's investment in BriefCam, Ltd. and reflected improved operating efficiencies. The year-over-year revenue comparisons were favorably impacted by approximately $778,000 and $201,000 for the three months and year ended December 31, 2018, respectively, due to the adoption of the new revenue recognition standard (ASC Topic 606).

Other Financial Highlights
•
Cash and cash equivalents totaled $8.6 million as of December 31, 2018, compared to $7.7 million as of December 31, 2017 and $8.5 million as of September 30, 2018.
•
Operating expenses decreased $719,000 and $3.3 million during the three months and year ended December 31, 2018, respectively, compared to the corresponding 2017 periods, reflecting the impact of the Company's improved operating efficiencies.
•
Software license and appliance revenue was $1.5 million and $2.0 million for the three months ended December 31, 2018 and 2017, respectively, and $5.8 million and $6.0 million for the years ended December 31, 2018 and 2017, respectively.
•
Subscription, maintenance and support revenue was $4.9 million and $4.3 million for the three months ended December 31, 2018 and 2017, respectively, and $17.1 million and $19.4 million for the years ended December 31, 2018 and 2017, respectively. The year-over-year revenue comparisons were favorably impacted by $528,000 for the three months ended December 31, 2018 and negatively impacted by $212,000 for the year ended December 31, 2018 due to the adoption of the new revenue recognition standard (ASC Topic 606). Additionally, the loss of a large customer which was previously announced as lost in the fourth quarter 2017, negatively impacted the year-over-year revenue comparisons by $2.4 million for the year ended December 31, 2018.
•
Gross margin for the fourth quarter 2018 was 73.1%, compared to 65.7% for the fourth quarter 2017. Gross margin for the year ended December 31, 2018 was 66.0%, compared to 63.6% for the year ended December 31, 2017.

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Business Outlook
The Company is issuing the following financial guidance for 2019:
•
Annual contract value bookings growth is expected to be 20% to 25% in 2019 compared to 2018.
•
Revenue for 2019 is expected to be approximately $27 million. Gross margin percentage is expected to be in the high 60s to low 70s.
•
Net loss for 2019 is expected to be approximately $(5.1) million. Adjusted EBITDA for 2019 is expected to be approximately $(1.5) million. Forecasted adjusted EBITDA for 2019 excludes forecasted interest expense of approximately $1.0 million, income tax benefit of approximately $(0.2) million, depreciation expense of approximately $0.3 million, amortization of acquired intangible assets of approximately $1.2 million, stock-based compensation of approximately $0.9 million, and increase in warrant liability of approximately $0.4 million.

Conference Call
The Company has scheduled a conference call and webcast to review its fourth quarter and full year 2018 results tomorrow, March 6, 2019 at 10:00 a.m. Eastern Time. The dial-in number for the conference call is 877-456-6914 for domestic participants and 929-387-3794 for international participants. Investors can also access a webcast of the live conference call by linking through the Investor Relations section of the Qumu website, https://qumu.com/en/investor-relations/. Webcasts will be archived on Qumu’s website.

Non-GAAP Information
To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company uses adjusted EBITDA, a non-GAAP measure, which excludes certain items from net income (loss), a GAAP measure. Adjusted EBITDA excludes items related to interest income and expense, the impact of income-based taxes, depreciation and amortization, stock-based compensation, change in fair value of warrant liabilities, foreign currency gains and losses, the gain on the sale of the Company's BriefCam investment, the loss on extinguishment of debt and other non-operating income and expenses.

The Company uses both GAAP and non-GAAP measures when planning, monitoring, and evaluating the Company’s performance. The Company believes that adjusted EBITDA is useful to investors because it provides supplemental information that allows investors to review the Company's results of operations from the same perspective as management and the Company's board of directors. Non-GAAP results are presented for supplemental informational purposes only for understanding our operating results. The non-GAAP results should not be considered a substitute for financial information presented in accordance with generally accepted accounting principles, and may be different from non-GAAP measures used by other companies.

See the attached Supplemental Financial Information for a reconciliation of net income (loss), a GAAP measure, to adjusted EBITDA, a non-GAAP measure, for the three months and year ended December 31, 2018 and 2017.

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, 2017 and other factors set forth in the Company’s filings with the Securities and Exchange Commission.

About Qumu
Qumu (Nasdaq: QUMU) is the leading provider of best-in-class tools to create, manage, secure, distribute and measure the success of live and on-demand video for the enterprise. Backed by the most trusted and experienced

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team in the industry, the Qumu platform enables global organizations to drive employee engagement, increase access to video, and modernize the workplace by providing a more efficient and effective way to share knowledge.
 
Investor Contact:                
Dave Ristow
Chief Financial Officer
Qumu Corporation
Dave.Ristow@qumu.com
+1.612.638.9045

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QUMU CORPORATION
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Revenues:
 

 
 

 
 

 
 

Software licenses and appliances
$
1,511

 
$
2,011

 
$
5,814

 
$
5,982

Service
5,392

 
5,218

 
19,199

 
22,185

Total revenues
6,903

 
7,229

 
25,013

 
28,167

Cost of revenues:
 

 
 

 
 

 
 

Software licenses and appliances
634

 
629

 
2,277

 
2,407

Service
1,226

 
1,852

 
6,216

 
7,855

Total cost of revenues
1,860

 
2,481

 
8,493

 
10,262

Gross profit
5,043

 
4,748

 
16,520

 
17,905

Operating expenses:
 

 
 

 
 

 
 

Research and development
1,854

 
1,603

 
7,013

 
7,279

Sales and marketing
2,006

 
2,542

 
8,394

 
10,026

General and administrative
1,586

 
2,015

 
7,122

 
8,567

Amortization of purchased intangibles
224

 
229

 
904

 
904

Total operating expenses
5,670

 
6,389

 
23,433

 
26,776

Operating loss
(627
)
 
(1,641
)
 
(6,913
)
 
(8,871
)
Other income (expense):
 

 
 

 
 

 
 

Gain on sale of BriefCam, Ltd.
100

 
—

 
6,602

 
—

Loss on extinguishment of debt
—

 
—

 
(1,189
)
 
—

Interest expense, net
(193
)
 
(1,858
)
 
(1,809
)
 
(2,852
)
Decrease in value of warrant liability
660

 
126

 
368

 
74

Other, net
103

 
(88
)
 
(378
)
 
(433
)
Total other income (expense), net
670

 
(1,820
)
 
3,594

 
(3,211
)
Income (loss) before income taxes
43

 
(3,461
)
 
(3,319
)
 
(12,082
)
Income tax expense (benefit)
(5
)
 
(219
)
 
298

 
(358
)
Net income (loss)
$
48

 
$
(3,242
)
 
$
(3,617
)
 
$
(11,724
)
 
 
 
 
 
 
 
 
Net income (loss) per share – basic:
 
 
 
 
 
 
 
Net income (loss) per share – basic
$
0.01

 
$
(0.35
)
 
$
(0.38
)
 
$
(1.25
)
Weighted average shares outstanding – basic
9,581

 
9,381

 
9,499

 
9,347

Net loss per share – diluted:
 
 
 
 
 
 
 
Loss attributable to common shareholders
$
(509
)
 
$
(3,242
)
 
$
(3,778
)
 
$
(11,724
)
Net loss per share – diluted
$
(0.05
)
 
$
(0.35
)
 
$
(0.39
)
 
$
(1.25
)
Weighted average shares outstanding – diluted
9,883

 
9,381

 
9,606

 
9,347



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QUMU CORPORATION
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
Assets
December 31,
2018
 
December 31,
2017
Current assets:
 
 
 
Cash and cash equivalents
$
8,636

 
$
7,690

Receivables, net
6,278

 
5,529

Contract assets
485

 
—

Income taxes receivable
327

 
156

Prepaid expenses and other current assets
2,192

 
1,830

Total current assets
17,918

 
15,205

Property and equipment, net
545

 
911

Intangible assets, net
4,247

 
6,295

Goodwill
6,971

 
7,390

Deferred income taxes, non-current
55

 
77

Other assets, non-current
544

 
4,398

Total assets
$
30,280

 
$
34,276

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable and other accrued liabilities
$
2,838

 
$
3,878

Accrued compensation
1,548

 
1,824

Deferred revenue
9,672

 
8,923

Deferred rent
45

 
181

Financing obligations
152

 
1,047

Warrant liability
2,798

 
819

Total current liabilities
17,053

 
16,672

Long-term liabilities:
 

 
 

Deferred revenue, non-current
1,672

 
141

Income taxes payable, non-current
563

 
3

Deferred tax liability, non-current
2

 
153

Deferred rent, non-current
302

 
507

Term loan and other financing obligations, non-current
3,488

 
7,608

Other liabilities, non-current
195

 
—

Total long-term liabilities
6,222

 
8,412

Total liabilities
23,275

 
25,084

Stockholders’ equity:
 

 
 

Common stock
96

 
94

Additional paid-in capital
69,072

 
68,035

Accumulated deficit
(58,875
)
 
(56,197
)
Accumulated other comprehensive loss
(3,288
)
 
(2,740
)
Total stockholders’ equity
7,005

 
9,192

Total liabilities and stockholders’ equity
$
30,280

 
$
34,276



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QUMU CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
 
Year Ended 
 December 31,
 
2018
 
2017
Operating activities:
 

 
 

Net loss
$
(3,617
)
 
$
(11,724
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
2,366

 
3,045

Stock-based compensation
1,082

 
1,190

Accretion of debt discount and issuance costs
1,321

 
2,013

Gain on sale of BriefCam, Ltd.
(6,602
)
 
—

Loss on debt extinguishment
1,189

 
—

Loss on lease contract termination
177

 
72

Decrease in value of warrant liability
(368
)
 
(74
)
Deferred income taxes
(131
)
 
(166
)
Changes in operating assets and liabilities:
 
 
 
Receivables
(786
)
 
2,101

Contract assets
65

 
—

Income taxes receivable / payable
375

 
167

Prepaid expenses and other assets
449

 
1,166

Accounts payable and other accrued liabilities
(1,196
)
 
1,656

Accrued compensation
(263
)
 
(574
)
Deferred revenue
3,092

 
(573
)
Deferred rent
(144
)
 
(311
)
Other non-current liabilities
148

 
—

Net cash used in operating activities
(2,843
)
 
(2,012
)
Investing activities:
 

 
 

Proceeds from sale of BriefCam, Ltd.
9,778

 
—

Purchases of property and equipment
(127
)
 
(24
)
Net cash provided by (used in) investing activities
9,651

 
(24
)
Financing activities:
 

 
 

Proceeds from term loan and warrant issuance
10,000

 
—

Principal payments on term loans
(14,000
)
 
—

Payments for term loan issuance costs
(1,308
)
 
(225
)
Principal payments on financing obligations
(402
)
 
(505
)
Common stock repurchases to settle employee withholding liability
(33
)
 
(17
)
Net cash used in financing activities
(5,743
)
 
(747
)
Effect of exchange rate changes on cash
(119
)
 
109

Net increase (decrease) in cash and cash equivalents
946

 
(2,674
)
Cash and cash equivalents, beginning of year
7,690

 
10,364

Cash and cash equivalents, end of year
$
8,636

 
$
7,690


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QUMU CORPORATION
Supplemental Financial Information
(unaudited - in thousands)

A summary of revenue is as follows:
 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Software licenses and appliances
$
1,511

 
$
2,011

 
$
5,814

 
$
5,982

Service
 
 
 
 
 
 
 
Subscription, maintenance and support
4,881

 
4,313

 
17,132

 
19,374

Professional services and other
511

 
905

 
2,067

 
2,811

Total service
5,392

 
5,218

 
19,199

 
22,185

Total revenue
$
6,903

 
$
7,229

 
$
25,013

 
$
28,167


A reconciliation from GAAP results to adjusted EBITDA is as follows:
 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
48

 
$
(3,242
)
 
$
(3,617
)
 
$
(11,724
)
Interest expense, net
193

 
1,858

 
1,809

 
2,852

Income tax expense (benefit)
(5
)
 
(219
)
 
298

 
(358
)
Depreciation and amortization expense:
 
 
 
 
 
 
 
Depreciation and amortization in cost of revenues
—

 
4

 
7

 
29

Depreciation and amortization in operating expenses
73

 
199

 
431

 
915

Total depreciation and amortization expense
73

 
203

 
438

 
944

Amortization of intangibles included in cost of revenues
145

 
304

 
1,024

 
1,197

Amortization of intangibles included in operating expenses
224

 
229

 
904

 
904

Total amortization of intangibles expense
369

 
533

 
1,928

 
2,101

Total depreciation and amortization expense
442

 
736

 
2,366

 
3,045

EBITDA
678

 
(867
)
 
856

 
(6,185
)
Gain on sale of BriefCam, Ltd.
(100
)
 
—

 
(6,602
)
 
—

Loss on extinguishment of debt
—

 
—

 
1,189

 
—

Decrease in fair value of warrant liability
(660
)
 
(126
)
 
(368
)
 
(74
)
Other expense, net
(103
)
 
88

 
378

 
433

Stock-based compensation expense:
 
 
 
 
 
 
 
Stock-based compensation included in cost of revenues
8

 
10

 
34

 
39

Stock-based compensation included in operating expenses
307

 
90

 
1,048

 
1,151

Total stock-based compensation expense
315

 
100

 
1,082

 
1,190

Adjusted EBITDA
$
130

 
$
(805
)
 
$
(3,465
)
 
$
(4,636
)


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