Qumu Corp - FORM 8-K - EX-99.1 - PRESS RELEASE ISSUED AUGUST 2, 2016 - August 3, 2016

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EX-99.2 - STATEMENTS OF VERN HANZLIK AND PETER J. GOEPFRICH - Qumu Corpq22016ex992.htm
8-K - FORM 8-K DATED AUGUST 2, 2016 - Qumu Corpa8-kq22016.htm


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 are how 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



4


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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