Traction with Partner-Led Sales Strategy
Contributes to Continued Growth in Quarterly SaaS Revenue and SaaS
Annual Recurring Revenue for Third Quarter 2022
Cost Management Yields 30% Year-Over-Year
Operating Expense Reduction
Qumu Corporation (Nasdaq: QUMU), a leading provider of
cloud-based enterprise video technology, today reported financial
results for the third quarter ended September 30, 2022.
Q3 2022 and Recent Operational Highlights
- Expanded partnership with AT&T to support the branding and
launch of AT&T’s Qumu-powered enterprise video-as-a service
product offering
- Launched Qumu Video Engagement Platform on Google Cloud
Marketplace
- Renewed several of our marquee customers, including
international banking group UniCredit, Birmingham County Football
Club and pediatric oncology center Prinses Máxima Centrum
Q3 2022 Financial Highlights
- Software as a Service (SaaS) revenue increased 6% to $2.8
million, compared to $2.6 million in Q3 2021
- SaaS Annual Recurring Revenue (SaaS ARR) grew to $13.5 million,
up 7% year-over-year
- SaaS revenue accounted for 51% of total revenue, compared to
54% in Q2 2022 and 41% in Q3 2021
- Gross margin improved to 77.5%, compared to 75.4% for Q2 2022
and 76.0% for Q3 2021
- Operating expenses decreased 12% sequentially and 30%
year-over-year
- Net cash used in operating activities decreased to $1.4
million, an improvement compared to $3.7 million in Q2 2022 and
$3.3 million in Q3 2021
- Solid balance sheet with $6.0 million of cash and cash
equivalents, inclusive of line of credit borrowings of $1.2
million
- Company reiterated its expectation that SaaS recurring revenue
will comprise approximately 65% of its overall recurring revenue
mix by the end of 2022, with targeted growth to approximately 75%
of recurring revenue mix by the end of 2023
Q3 2022 Key Performance Indicators
- SaaS revenue accounted for 63% of recurring revenue, up from
61% in Q2 2022 and 52% in Q3 2021
- SaaS revenue accounted for 51% of total revenue, compared to
54% in Q2 2022 and 41% in Q3 2021
- SaaS ARR increased to $13.5 million from $13.3 million in Q2
2022 and $12.6 million in Q3 2021
- SaaS customer retention metrics:
- Gross Retention Rate (GRR): 92% at end of Q3 2022 compared to
84% at end of Q3 2021
- Net Retention Rate (NRR): 100% at end of Q3 2022 compared to
123% at end of Q3 2021
Management Commentary
“Our improving financial results and strong SaaS KPIs in Q3
reflect the increasing success and momentum of our partner-led
sales strategy as well as our customers growing their investment
with Qumu as their trusted provider of live and asynchronous video
content,” said CEO of Qumu, Rose Bentley. “In particular, our
partner strategy has been validated by the volume of opportunities
we are seeing as well as by the rate we are closing new business.
In fact, our new logo count for the first nine months of the year
exceeds all new logos we secured in 2021 and we continue to see
over 80% of our new bookings being sourced by our partners.”
Qumu CFO Tom Krueger commented: “During Q3 we built on the
financial momentum we established in the first half of 2022 by
delivering solid growth across our key SaaS metrics. Highlighting
our success is the 6% increase in SaaS revenue and 7% increase in
SaaS ARR. Renewals and retention rates were especially strong in
the quarter, with gross retention rate of 92% and net retention
rate of 100%. Importantly, we were able to achieve these results
while reducing our operating expenses by 12% sequentially and 30%
year-over-year, which enabled us to improve cash used in operations
by $2.3 million compared to Q2 2022. We have made great strides
improving our cash usage, and we will continually look for ways to
further optimize our cost profile without sacrificing our ability
to scale.”
Bentley continued: “Looking ahead, our pipeline for renewals and
new customers is incredibly strong. Many of the renewals include
expansion of our customer relationships as they look to increase
usage of the Qumu platform resulting in a broader network of
technology partners and new enterprise use cases going forward. A
growing number of renewals secured in Q3 were for multi-year
contracts, and we expect future renewals to follow suit. In fact,
three-to-five-year contracts accounted for nearly 20% of our
renewals year-to-date, reflecting the confidence our customers have
in our cloud-based solution and unmatched level of customer
service.
“Longer term, our three-year vision for Qumu is to achieve $50
million in revenue as a profitable and predictable company by the
end of 2025. The strategic investments that we have made into the
business over the past several years position us to now focus on
scaling outwardly and promoting our platform through our network of
partners and collaborators. The benefits of our transformation will
become increasingly evident in growth in recurring revenues later
this year and in 2023.”
Third Quarter 2022 Financial Results
Revenue for Q3 2022 was $5.5 million, compared to $5.1 million
in Q2 2022 and $6.4 million in Q3 2021. The year-over-year decrease
was due to the company’s strategic shift away from perpetual
license sales, and the related maintenance revenue, and toward SaaS
sales.
Service revenue was $4.9 million in both Q3 2022 and Q2 2022 and
$5.7 million in Q3 2021. The year-over-year decrease resulted from
customer contracts sunsetting, which impacted maintenance revenue
associated with the company’s on-premise solution. Subscription and
support revenue, which is included in service revenue and comprises
the company's SaaS revenue, was $2.8 million in both Q3 2022 and Q2
2022 and $2.6 million in Q3 2021. The company expects subscription
revenue will continue to grow as Qumu executes on its cloud
transformation strategy.
Gross margin in Q3 2022 was 77.5%, compared to gross margin of
75.4% for Q2 2022 and 76.0% for Q3 2021. The gross margin
percentage improved due primarily to better margins on SaaS revenue
recognized compared to Q2 2022, a higher percentage of SaaS revenue
contributing to the overall sales mix compared to Q3 2021, and
improved utilization of professional services personnel.
Net loss in Q3 2022 totaled $(1.4) million, or $(0.08) loss per
basic and diluted share. This compares to net loss of $(2.6)
million, or $(0.15) loss per basic and diluted share, for Q2 2022
and net loss of $(3.7) million, or $(0.21) loss per basic and
diluted share, in Q3 2021.
Adjusted EBITDA loss, a non-GAAP measure, in Q3 2022 was $(1.6)
million, compared to $(3.1) million in Q2 2022 and $(3.5) million
in Q2 2021.
As of September 30, 2022, the company had cash and cash
equivalents of $6.0 million and borrowings on its line of credit of
$1.2 million.
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 plan,
transition to SaaS recurring revenue through channel partners, and
the COVID-19 pandemic, such as trends in distributed remote and
hybrid work impacting enterprise technology adoption and
procurement.
To give 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’s management reiterated its expectation that SaaS recurring
revenue will comprise approximately 65% of its overall recurring
revenue mix by the end of 2022, with targeted growth to
approximately 75% of recurring revenue mix by the end of 2023.
Conference Call
Qumu executive management will host a conference call today
(October 27, 2022) at 4:30 p.m. Eastern time. Register here to join
the conference call:
https://register.vevent.com/register/BI807fbf299aa44f1192b19c2c4a86ad99.
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 derivative and warrant liabilities, foreign currency
gains and losses, Employee Retention Credit income, gain on sale of
BriefCam, Ltd. 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 loss, a GAAP measure, to Adjusted EBITDA, a
non-GAAP measure, for the three and nine months ended September 30,
2022 and 2021.
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. The Qumu Cloud
platform enables global organizations to drive human engagement,
increase access to and insights from video use, 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 success of go-to-market strategies or the other
initiatives in the company’s strategic plan, the company's ability
to continue as a going concern, the expected use and adoption of
video in the enterprise, the ability to obtain additional capital
as needed, the ability to attract and retain necessary personnel,
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, or the demand for the company’s products or software. 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, 2021,
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.
QUMU CORPORATION
Condensed Consolidated Statements of
Operations
(unaudited - in thousands, except per
share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Revenues:
Software licenses and appliances
$
606
$
742
$
995
$
1,091
Service
4,865
5,683
14,547
17,021
Total revenues
5,471
6,425
15,542
18,112
Cost of revenues:
Software licenses and appliances
58
63
137
190
Service
1,173
1,481
3,764
4,470
Total cost of revenues
1,231
1,544
3,901
4,660
Gross profit
4,240
4,881
11,641
13,452
Operating expenses:
Research and development
1,628
2,305
5,383
6,519
Sales and marketing
2,436
4,490
8,931
14,139
General and administrative
1,990
1,881
6,684
6,550
Amortization of purchased intangibles
150
163
459
488
Total operating expenses
6,204
8,839
21,457
27,696
Operating loss
(1,964
)
(3,958
)
(9,816
)
(14,244
)
Other income (expense):
Employee Retention Credit income
623
—
1,272
—
Interest expense, net
(26
)
(12
)
(135
)
(81
)
Decrease in fair value of derivative
liability
—
—
—
37
Decrease in fair value of warrant
liability
26
94
143
1,469
Gain on sale of BriefCam, Ltd.
—
50
—
50
Other, net
(150
)
4
(334
)
(23
)
Total other income (expense), net
473
136
946
1,452
Loss before income taxes
(1,491
)
(3,822
)
(8,870
)
(12,792
)
Income tax benefit
(124
)
(77
)
(241
)
(276
)
Net loss
$
(1,367
)
$
(3,745
)
$
(8,629
)
$
(12,516
)
Net loss per share – basic:
Net loss per share – basic
$
(0.08
)
$
(0.21
)
$
(0.48
)
$
(0.72
)
Weighted average shares outstanding –
basic
18,143
17,872
18,077
17,358
Net loss per share – diluted:
Loss attributable to common
shareholders
$
(1,367
)
$
(3,788
)
$
(8,629
)
$
(13,985
)
Net loss per share – diluted
$
(0.08
)
$
(0.21
)
$
(0.48
)
$
(0.80
)
Weighted average shares outstanding –
diluted
18,143
17,881
18,077
17,525
QUMU CORPORATION
Condensed Consolidated Balance
Sheets
(unaudited - in thousands)
September 30,
December 31,
Assets
2022
2021
Current assets:
Cash and cash equivalents
$
6,032
$
20,563
Receivables, net
4,088
3,709
Contract assets
223
446
Income taxes receivable
750
556
Other receivable
1,272
—
Prepaid expenses and other current
assets
1,790
2,184
Total current assets
14,155
27,458
Property and equipment, net
167
337
Right of use assets – operating leases
—
146
Intangible assets, net
882
1,388
Goodwill
6,066
7,388
Deferred income taxes, non-current
17
17
Other assets, non-current
308
362
Total assets
$
21,595
$
37,096
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and other accrued
liabilities
$
3,206
$
2,742
Accrued compensation
1,415
1,725
Deferred revenue
9,757
10,862
Operating lease liabilities
82
597
Financing obligations
1,252
5,502
Warrant liability
658
801
Total current liabilities
16,370
22,229
Long-term liabilities:
Deferred revenue, non-current
1,169
1,507
Income taxes payable, non-current
647
630
Operating lease liabilities,
non-current
—
21
Financing obligations, non-current
74
113
Total long-term liabilities
1,890
2,271
Total liabilities
18,260
24,500
Stockholders’ equity:
Common stock
179
178
Additional paid-in capital
105,912
105,655
Accumulated deficit
(99,322
)
(90,693
)
Accumulated other comprehensive loss
(3,434
)
(2,544
)
Total stockholders’ equity
3,335
12,596
Total liabilities and stockholders’
equity
$
21,595
$
37,096
QUMU CORPORATION
Condensed Consolidated Statements of
Cash Flows
(unaudited - in thousands)
Nine Months Ended
September 30,
2022
2021
Operating activities:
Net loss
$
(8,629
)
$
(12,516
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
634
738
Loss on disposal of property and
equipment
(1
)
3
Stock-based compensation
293
1,403
Accretion of debt discount and issuance
costs
38
35
Decrease in fair value of derivative
liability
—
(37
)
Decrease in fair value of warrant
liability
(143
)
(1,469
)
Gain on sale of BriefCam, Ltd.
—
(50
)
Changes in operating assets and
liabilities:
Receivables
(559
)
913
Contract assets
223
37
Income taxes receivable / payable
(294
)
107
Other receivable
(1,272
)
—
Prepaid expenses and other assets
421
264
Accounts payable and other accrued
liabilities
472
(607
)
Accrued compensation
(269
)
(915
)
Deferred revenue
(882
)
(2,800
)
Net cash used in operating activities
(9,968
)
(14,894
)
Investing activities:
Proceeds from sale of BriefCam, Ltd.
—
50
Purchases of property and equipment
(10
)
(216
)
Net cash used in investing activities
(10
)
(166
)
Financing activities:
Principal payments on lines of credit
(7,000
)
(1,840
)
Proceeds from lines of credit
3,200
1,840
Principal payments on term loan
—
(1,833
)
Payment for line of credit issuance
costs
(86
)
(25
)
Principal payments on financing
obligations
(489
)
(342
)
Net proceeds from common stock
issuance
—
23,085
Proceeds from issuance of common stock
under employee stock plans
—
545
Common stock repurchases to settle
employee withholding liability
(35
)
(47
)
Net cash provided by (used in) financing
activities
(4,410
)
21,383
Effect of exchange rate changes on
cash
(143
)
(2
)
Net increase (decrease) in cash and cash
equivalents
(14,531
)
6,321
Cash and cash equivalents, beginning of
period
20,563
11,878
Cash and cash equivalents, end of
period
$
6,032
$
18,199
QUMU CORPORATION
Supplemental Financial
Information
(unaudited - in thousands)
A summary of revenue is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Software licenses and appliances
$
606
$
742
$
995
$
1,091
Service
Subscription and support
2,786
2,636
8,205
7,360
Maintenance and support
1,605
2,444
5,167
7,678
Subscription, maintenance and support
4,391
5,080
13,372
15,038
Professional services and other
474
603
1,175
1,983
Total service
4,865
5,683
14,547
17,021
Total revenue
$
5,471
$
6,425
$
15,542
$
18,112
A reconciliation from GAAP results to
Adjusted EBITDA is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2022
2021
2022
2021
Net loss
$
(1,367
)
$
(3,745
)
$
(8,629
)
$
(12,516
)
Interest expense, net
26
12
135
81
Income tax benefit
(124
)
(77
)
(241
)
(276
)
Depreciation and amortization expense:
Depreciation and amortization in operating
expenses
57
57
175
170
Total depreciation and amortization
expense
57
57
175
170
Amortization of intangibles included in
cost of revenues
—
26
—
80
Amortization of intangibles included in
operating expenses
150
163
459
488
Total amortization of intangibles
expense
150
189
459
568
Total depreciation and amortization
expense
207
246
634
738
EBITDA
(1,258
)
(3,564
)
(8,101
)
(11,973
)
Gain on sale of BriefCam, Ltd.
—
(50
)
—
(50
)
Employee Retention Credit income
(623
)
—
(1,272
)
—
Decrease in fair value of derivative
liability
—
—
—
(37
)
Decrease in fair value of warrant
liability
(26
)
(94
)
(143
)
(1,469
)
Other expense (income), net
150
(4
)
334
23
Stock-based compensation expense:
Stock-based compensation included in cost
of revenues
22
12
58
44
Stock-based compensation included in
operating expenses
121
236
235
1,359
Total stock-based compensation expense
143
248
293
1,403
Adjusted EBITDA
$
(1,614
)
$
(3,464
)
$
(8,889
)
$
(12,103
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221027005852/en/
Company Contact: Tom Krueger Chief Financial Officer Qumu
Corporation Tom.Krueger@qumu.com +1.612.638.9100
Investor Contact: Matt Glover or Tom Colton Gateway
Investor Relations QUMU@gatewayir.com +1.949.574.3860
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