Qumu Corp - FORM 8-K - EX-99.1 - PRESS RELEASE ISSUED FEBRUARY 28, 2017 - March 1, 2017

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EX-99.2 - STATEMENTS OF VERN HANZLIK AND PETER J. GOEPFRICH - Qumu Corpq42016ex992.htm
8-K - FORM 8-K DATED FEBRUARY 28, 2017 - Qumu Corpa8-kq42016.htm


EXHIBIT 99.1
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Qumu Announces Fourth Quarter and Full Year 2016 Results

Achieves record gross margins and operating results
Procures key enterprise transactions
Continues to grow recurring revenue base

Conference Call Wednesday, March 1 at 10:00 a.m. ET

Minneapolis, MN – February 28, 2017 – Qumu Corporation (NASDAQ: QUMU) today reported financial results for the fourth quarter and year ended December 31, 2016.

Fourth quarter revenue was $9.3 million, compared to $10.1 million in the fourth quarter 2015; and net loss was $(0.3) million, or a loss of $(0.04) per diluted share, compared to $(4.6) million, or a loss of $(0.50) per diluted share, in the fourth quarter 2015. Fourth quarter adjusted EBITDA (a non-GAAP measure) was income of $0.8 million, compared to an adjusted EBITDA loss of $(3.7) million for the fourth quarter 2015. Fourth quarter 2015 operating loss and adjusted EBITDA included severance expense of $743,000 and a loss on a third-party license agreement of $1.2 million.

For the full year 2016, revenue was $31.7 million, compared to $34.5 million last year; and net loss was $(11.2) million, or a loss of $(1.23) per diluted share, compared to $(28.7) million, or a loss of $(3.11) per diluted share, last year. For the full year 2016, adjusted EBITDA was a loss of $(6.6) million, compared to an adjusted EBITDA loss of $(24.5) million last year. Full year 2016 included severance expense of $563,000. Full year 2015 included severance expense of $2.1 million, a loss on a third-party license agreement of $1.2 million and equipment operating lease loss of $1.0 million.

“2016 was a pivotal year for Qumu and our fourth quarter illustrates our strong progress​ in several key areas. We continued to demonstrate that we are the only vendor with a full suite of video enterprise solutions as we gained significant ground in our transformation from a perpetual software licensing model to a higher-value, SaaS model. We also drove record gross margins and adjusted EBITDA​ and bolstered our blue-chip customer list with several high-value enterprise wins within new Fortune 500 organizations,” said Vern Hanzlik, Qumu’s president and CEO.

“Additionally, we achieved nearly $20 million of expense reductions year over year, while maintaining​ over a 90% customer renewal rate, a strong customer satisfaction metric​. Early adopting enterprise clients are beginning to migrate toward cloud-based solutions, but we have also seen continued demand for our best-in-class, behind the firewall, on-premise video solution. During 2016, 70% of revenue came from our blue-chip on-premise customer base and 30% came from new SaaS customers. We are in a strong position with enterprise customers whether they seek a highly secure on-premise solution or a more flexible SaaS solution. We are confident that this trend will continue as we move into 2017.”

Other Financial Highlights
•
Subscription, maintenance and support revenue for the fourth quarter 2016 was $6.2 million compared to $5.2 million for the fourth quarter 2015, and for the full year 2016 was $21.4 million compared to $18.8 million last year. Fourth quarter 2016 revenue included subscription, maintenance and support revenue of $1.2 million and professional service revenue of $0.4 million of previously deferred revenue contingent on a customer's acceptance, which was received in the fourth quarter. Going forward, subscription, maintenance and support revenue relating to this customer is expected to be $300,000 annually.
•
Gross margin for the fourth quarter 2016 was 70.7% compared to 56.9% for the fourth quarter 2015, and for the full year 2016 was 61.0% compared to 49.2% last year. The benefit to gross margin relating to the previously noted customer acceptance was 6.1% and 1.8% for the fourth quarter and full year 2016, respectively.
•
Total headcount was 150 as of December 31, 2016 compared to 192 as of December 31, 2015.

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•
Cash and marketable securities were $10.4 million as of December 31, 2016, compared to $4.6 million as of September 30, 2016, reflecting the fourth quarter operating loss, the impact on cash from changes in working capital and the term loan net proceeds of $7.5 million received in the fourth quarter.

Guidance
For the first quarter 2017, revenue is expected to be in the range of $7.0 million to $8.0 million. Total gross margin percentage is expected to be in the low 60s in the first quarter. First quarter net loss is expected to be in the range of $(3.6) million to $(3.1) million, or $(0.39) to $(0.34) per diluted share, with weighted average shares outstanding of approximately 9.25 million shares. Adjusted EBITDA for the first quarter 2017 is expected to be in the range of a loss of $(2.2) million to $(1.7) million, compared to an adjusted EBITDA loss of $(3.0) million in the first quarter 2016.

For the full year 2017, revenue is expected to be in the range of $31.0 million to $34.0 million as the Company continues to grow its recurring revenue base. Total gross margin percentage is expected to improve from the low 60s early in the year to the high 60s late in the year. Net loss is expected to be in the range of $(10.5) million to $(9.0) million, or $(1.12) to $(0.97) per diluted share, with weighted average shares outstanding of approximately 9.3 million shares. Adjusted EBITDA for the full year 2017 is expected to be in the range of a loss of $(5.0) million to $(3.5) million compared to an adjusted EBITDA loss of $(6.6) million in fiscal 2016. The Company expects a tax benefit of $200,000 in fiscal 2017. Additionally, the Company expects that it will be cash flow breakeven for the second half of 2017.

Conference Call
The Company has scheduled a conference call and webcast to review its fourth quarter 2016 results tomorrow, March 1, 2017 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 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 liability, foreign currency gains and losses, other non-operating income and expenses, and net income (loss) from discontinued operations.

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 months and year ended December 31, 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

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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 
 December 31,
 
Year Ended 
 December 31,
 
2016
 
2015
 
2016
 
2015
Revenues:
 

 
 

 
 

 
 

Software licenses and appliances
$
1,887

 
$
2,486

 
$
5,839

 
$
9,456

Service
7,434

 
7,633

 
25,843

 
24,998

Total revenues
9,321

 
10,119

 
31,682

 
34,454

Cost of revenues:
 

 
 

 
 

 
 

Software licenses and appliances
542

 
953

 
2,474

 
2,949

Service
2,189

 
3,409

 
9,886

 
14,550

Total cost of revenues
2,731

 
4,362

 
12,360

 
17,499

Gross profit
6,590

 
5,757

 
19,322

 
16,955

Operating expenses:
 

 
 

 
 

 
 

Research and development
1,795

 
2,181

 
8,541

 
10,689

Sales and marketing
2,584

 
3,720

 
11,529

 
17,994

General and administrative
2,378

 
4,603

 
9,722

 
16,878

Amortization of purchased intangibles
217

 
199

 
891

 
798

Total operating expenses
6,974

 
10,703

 
30,683

 
46,359

Operating loss
(384
)
 
(4,946
)
 
(11,361
)
 
(29,404
)
Other income (expense):
 

 
 

 
 

 
 

Interest income (expense), net
(247
)
 
(14
)
 
(287
)
 
7

Change in value of warrant liability
137

 
—

 
137

 
—

Other, net
108

 
26

 
84

 
(131
)
Total other income (expense), net
(2
)
 
12

 
(66
)
 
(124
)
Loss before income taxes
(386
)
 
(4,934
)
 
(11,427
)
 
(29,528
)
Income tax benefit
(119
)
 
(357
)
 
(252
)
 
(839
)
Net loss from continuing operations
(267
)
 
(4,577
)
 
(11,175
)
 
(28,689
)
Net loss from discontinued operations, net of tax
—

 
—

 
—

 
(10
)
Net loss
$
(267
)
 
$
(4,577
)
 
$
(11,175
)
 
$
(28,699
)
 
 
 
 
 
 
 
 
Net loss per share - basic:
 
 
 
 
 
 
 
Net loss from continuing operations per share - basic
$
(0.03
)
 
$
(0.50
)
 
$
(1.21
)
 
$
(3.11
)
Net income from discontinued operations per share - basic
—

 
—

 
—

 
—

Net loss per share - basic
$
(0.03
)
 
$
(0.50
)
 
$
(1.21
)
 
$
(3.11
)
Basic weighted average shares outstanding
9,234

 
9,243

 
9,232

 
9,235

Net loss per share - diluted:
 
 
 
 
 
 
 
Net loss from continuing operations per share - diluted
$
(0.04
)
 
$
(0.50
)
 
$
(1.23
)
 
$
(3.11
)
Net loss from discontinued operations per share - diluted
—

 
—

 
—

 
—

Net loss per share - diluted
$
(0.04
)
 
$
(0.50
)
 
$
(1.23
)
 
$
(3.11
)
Diluted weighted average shares outstanding
9,234

 
9,243

 
9,232

 
9,235



4


QUMU CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
Assets
December 31,
2016
 
December 31,
2015
Current assets:
(unaudited)
 
 
Cash and cash equivalents
$
10,364

 
$
7,072

Marketable securities
—

 
6,249

Receivables, net
7,495

 
11,257

Income taxes receivable
317

 
659

Prepaid expenses and other current assets
2,470

 
3,392

Total current assets
20,646

 
28,629

Property and equipment, net
1,827

 
2,942

Intangible assets, net
8,110

 
11,032

Goodwill
6,749

 
8,103

Deferred income taxes, non-current
70

 
57

Other assets, non-current
4,827

 
3,649

Total assets
$
42,229

 
$
54,412

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable and other accrued liabilities
$
2,394

 
$
3,864

Accrued compensation
2,361

 
4,014

Deferred revenue
8,992

 
10,413

Deferred rent
283

 
270

Financing obligations
508

 
502

Warrant liability
893

 
—

Current liabilities from discontinued operations
—

 
50

Total current liabilities
15,431

 
19,113

Long-term liabilities:
 

 
 

Deferred revenue, non-current
423

 
2,215

Income taxes payable, non-current
6

 
9

Deferred tax liability, non-current
294

 
575

Deferred rent, non-current
712

 
998

Financing obligations, non-current
170

 
519

Term loan, non-current
6,617

 
—

Other non-current liabilities
—

 
226

Total long-term liabilities
8,222

 
4,542

Total liabilities
23,653

 
23,655

Stockholders’ equity:
 

 
 

Common stock
92

 
92

Additional paid-in capital
66,864

 
65,484

Accumulated deficit
(44,473
)
 
(33,298
)
Accumulated other comprehensive loss
(3,907
)
 
(1,521
)
Total stockholders’ equity
18,576

 
30,757

Total liabilities and stockholders’ equity
$
42,229

 
$
54,412



5


QUMU CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
 
Year Ended 
 December 31,
 
2016
 
2015
Operating activities:
 

 
 

Net loss
$
(11,175
)
 
$
(28,699
)
Net loss from discontinued operations, net of tax
—

 
(10
)
Net loss from continuing operations
(11,175
)
 
(28,689
)
Adjustments to reconcile net loss to net cash used in continuing operating activities:
 
 
 
Depreciation and amortization
3,303

 
3,118

Stock-based compensation
1,421

 
1,834

Accretion of debt discount and issuance costs
152

 
—

Loss on disposal of property and equipment
4

 
108

Change in value of warrant liability
(137
)
 
—

Deferred income taxes
(229
)
 
(564
)
Changes in operating assets and liabilities:
 
 
 
Receivables
3,244

 
(1,331
)
Income taxes receivable / payable
266

 
(378
)
Prepaid expenses and other assets
(138
)
 
748

Accounts payable and other accrued liabilities
(1,406
)
 
443

Accrued compensation
(1,575
)
 
(2,184
)
Deferred revenue
(2,673
)
 
2,729

Deferred rent
(265
)
 
48

Other non-current liabilities
(226
)
 
226

Net cash used in continuing operating activities
(9,434
)
 
(23,892
)
Net cash provided by (used in) discontinued operating activities
(50
)
 
665

Net cash used in operating activities
(9,484
)
 
(23,227
)
Investing activities:
 

 
 

Sales and maturities of marketable securities
6,250

 
27,465

Purchases of marketable securities
—

 
(10,250
)
Purchases of property and equipment
(76
)
 
(635
)
Proceeds from sale of property and equipment
—

 
43

Net cash provided by continuing investing activities
6,174

 
16,623

Net cash provided by discontinued investing activities
—

 
2,300

Net cash provided by investing activities
6,174

 
18,923

Financing activities:
 

 
 

Proceeds from debt financing
8,000

 
—

Payments for debt issuance costs
(505
)
 
—

Principal payments on financing obligations
(513
)
 
(320
)
Common stock repurchases to settle employee withholding liability
(26
)
 
(50
)
Proceeds from employee stock plans
—

 
142

Net cash provided by (used in) financing activities
6,956

 
(228
)
Effect of exchange rate changes on cash
(354
)
 
(80
)
Net increase (decrease) in cash and cash equivalents
3,292

 
(4,612
)
Cash and cash equivalents, beginning of period
7,072

 
11,684

Cash and cash equivalents, end of period
$
10,364

 
$
7,072


6


QUMU CORPORATION
Supplemental Financial Information
(unaudited - in thousands)

A summary of revenue is as follows:
 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2016
 
2015
 
2016
 
2015
Software licenses and appliances
$
1,887

 
$
2,486

 
$
5,839

 
$
9,456

Service
 
 
 
 
 
 
 
Subscription, maintenance and support
6,220

 
5,240

 
21,443

 
18,804

Professional services and other
1,214

 
2,393

 
4,400

 
6,194

Total service
7,434

 
7,633

 
25,843

 
24,998

Total revenue
$
9,321

 
$
10,119

 
$
31,682

 
$
34,454


A reconciliation from GAAP results to adjusted EBITDA is as follows:
 
Three Months Ended 
 December 31,
 
Year Ended 
 December 31,
 
2016
 
2015
 
2016
 
2015
Net loss
$
(267
)
 
$
(4,577
)
 
$
(11,175
)
 
$
(28,699
)
Interest (income) expense, net
247

 
14

 
287

 
(7
)
Income tax benefit
(119
)
 
(357
)
 
(252
)
 
(839
)
Depreciation and amortization expense:
 
 
 
 
 
 
 
Depreciation and amortization in cost of revenues
12

 
26

 
67

 
100

Depreciation and amortization in operating expenses
261

 
286

 
1,094

 
952

Total depreciation and amortization expense
273

 
312

 
1,161

 
1,052

Amortization of intangibles included in cost of revenues
298

 
315

 
1,251

 
1,268

Amortization of intangibles included in operating expenses
217

 
199

 
891

 
798

Total amortization of intangibles expense
515

 
514

 
2,142

 
2,066

Total depreciation and amortization expense
788

 
826

 
3,303

 
3,118

EBITDA
649

 
(4,094
)
 
(7,837
)
 
(26,427
)
Change in fair value of warrant liability
(137
)
 
—

 
(137
)
 
—

Other expense, net
(108
)
 
(26
)
 
(84
)
 
131

Loss from discontinued operations, net
—

 
—

 
—

 
10

Stock-based compensation expense:
 
 
 
 
 
 
 
Stock-based compensation included in cost of revenues
22

 
44

 
49

 
159

Stock-based compensation included in operating expenses
364

 
360

 
1,372

 
1,675

Total stock-based compensation expense
386

 
404

 
1,421

 
1,834

Adjusted EBITDA
$
790

 
$
(3,716
)
 
$
(6,637
)
 
$
(24,452
)


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