Qumu Reports Second Quarter 2022 Financial Results

Qumu Reports 10% Increase in Quarterly SaaS Revenue and SaaS Annual Recurring Revenue for Second Quarter 2022

Company Reiterated its SaaS Growth Expectations for 2022 and 2023

MINNEAPOLIS--(BUSINESS WIRE)-- Qumu Corporation (Nasdaq: QUMU), a leading provider of cloud-based enterprise video technology, today reported financial results for the second quarter ended June 30, 2022.

Q2 2022 and Recent Operational Highlights

  • Selected by Proprep for video management and distribution of e-learning Content to STEM students worldwide
  • Named a Top Purpose-Built Streaming Platform by Wainhouse Research
  • Won fourth consecutive Stevie® Award in 2022 for Customer Service

Q2 2022 Financial Highlights

  • Software as a Service (SaaS) revenue increased 10% to $2.8 million, compared to $2.5 million in Q2 2021
  • SaaS Annual Recurring Revenue (SaaS ARR) grew to $13.3 million, up 10% year-over-year
  • SaaS revenue accounted for 54% of total revenue, compared to 54% in Q1 2022 and 43% in Q2 2021
  • Gross margin improved to 75.4%, compared to 71.5% for Q1 2022 and 73.6% for Q2 2021
  • Operating expenses decreased 15% sequentially and 27% year-over-year
  • Net cash used in operating activities decreased to $3.7 million, an improvement compared to $4.9 million in Q1 2022 and $6.1 million in Q2 2021
  • Solid balance sheet with $6.4 million of cash and cash equivalents and no debt at quarter end
  • 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

Q2 2022 Key Performance Indicators

  • SaaS revenue accounted for 61% of recurring revenue, up from 60% in Q1 2022 and 49% in Q2 2021
  • SaaS revenue accounted for 54% of total revenue, compared to 54% in Q1 2022 and 43% in Q2 2021
  • SaaS ARR increased to $13.3 million from $13.0 million in Q1 2022 and $12.2 million in Q2 2021
  • SaaS customer retention metrics:
    • Gross Retention Rate (GRR): 90% at end of Q2 2022 compared to 81% at end of Q2 2021
    • Net Retention Rate (NRR): 103% at end of Q2 2022 compared to 144% at end of Q2 2021

Management Commentary

“Our strong results for the second quarter and first half of 2022 demonstrate the continued execution of our strategy to grow our cloud business and scale our SaaS revenue base,” said Qumu President and CEO Rose Bentley. “Highlighting our success in Q2 was a 10% increase in both SaaS revenue and SaaS ARR, putting us well on track to achieve our SaaS growth targets for 2022 and 2023. Our cloud transformation initiatives and increased SaaS contributions also helped produce a robust gross margin of 75.4% in Q2, a level we expect to build on as SaaS becomes a greater portion of our overall topline.”

Qumu CFO Tom Krueger commented: “Qumu’s improving financial performance and strong SaaS KPIs reflect the increasing success and momentum of our partner-led sales strategy as well as our current customers growing their investment. In fact, in Q2 we added new customers at twice the rate of Q1 and more than 80% of new bookings in the first half of 2022 were sourced or influenced by our partners. Additionally, over the last 12 months, our customers have added 51% more authorized users to our platform, and we have seen an increase of asynchronous video views increase by over 30%. The growing investment from our customers is exemplified by our average annual contract value increasing by 474% in the first half of 2022. Triple-digit growth in contract size demonstrates our ability to deliver greater value through additional use cases when we acquire new customers. As we continue to grow our cloud business, build our partner ecosystem, and further transition to a purely subscription-based model, we expect our financial performance to improve throughout 2022 and beyond.”

Bentley continued: “Overall, Qumu’s transformation is well underway, and our past investments are yielding strong returns. Our business is optimized and now hitting its stride. Our plan is supported by a solid cash position and available resources that provide sufficient runway to execute our growth strategy. We entered Q3 with a record pipeline of opportunities that we are converting at an escalating pace. Our partner-led sales strategy is gaining momentum and creating repeatable sales motions that give us confidence in our ability to secure a record number of new logos in 2022.

“Looking ahead we continue to expect our SaaS recurring revenue as a percentage of our total recurring revenue to be at least 65% by the end of 2022 and 75% by the end of 2023. We also continue to expect to crossover to cash flow breakeven in 2023. We remain confident Qumu will emerge as a 100% subscription company operating at scale, benefiting from high-margin recurring revenues, growing cash flow and adjusted EBITDA and net income profitability.”

Second Quarter 2022 Financial Results

Revenue for Q2 2022 was $5.1 million, compared to $4.9 million in Q1 2022 and $5.9 million in Q2 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 for Q2 2022 was $4.9 million, compared to $4.8 million in Q1 2022 and $5.7 million in Q2 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 for Q2 2022, compared to $2.7 million in Q1 2022 and $2.5 million in Q2 2021. The company expects subscription revenue will continue to grow as Qumu executes on its cloud transformation strategy.

Gross margin in Q2 2022 was 75.4%, compared to gross margin of 71.5% for Q1 2022 and 73.6% for Q2 2021. The gross margin percentage improved due primarily to better margins on SaaS revenue recognized in Q2 2022 compared to Q1 2022 and to a higher percentage of SaaS revenue contributing to the overall sales mix compared to Q2 2021.

Net loss in Q2 2022 totaled $(2.6) million, or $(0.15) loss per basic and diluted share. This compares to net loss of $(4.6) million, or $(0.26) loss per basic and diluted share, for Q1 2022 and net loss of $(4.3) million, or $(0.24) loss per basic share and $(0.30) loss per diluted share, in Q2 2021.

Adjusted EBITDA loss, a non-GAAP measure, in Q2 2022 was $(3.1) million, compared to $(4.1) million in Q1 2022 and $(4.5) million in Q2 2021.

As of June 30, 2022, the company had cash and cash equivalents of $6.4 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 (August 10, 2022) at 4:30 p.m. Eastern time. Register here to join the conference call:

https://register.vevent.com/register/BIb213b80569034b4e953e038a9d64a33f.

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 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 six months ended June 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

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues:

 

 

 

 

 

 

 

Software licenses and appliances

$

278

 

 

$

138

 

 

$

389

 

 

$

246

 

Service

 

4,853

 

 

 

5,729

 

 

 

9,682

 

 

 

11,441

 

Total revenues

 

5,131

 

 

 

5,867

 

 

 

10,071

 

 

 

11,687

 

Cost of revenues:

 

 

 

 

 

 

 

Software licenses and appliances

 

48

 

 

 

63

 

 

 

79

 

 

 

127

 

Service

 

1,212

 

 

 

1,486

 

 

 

2,591

 

 

 

2,989

 

Total cost of revenues

 

1,260

 

 

 

1,549

 

 

 

2,670

 

 

 

3,116

 

Gross profit

 

3,871

 

 

 

4,318

 

 

 

7,401

 

 

 

8,571

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

1,930

 

 

 

2,184

 

 

 

3,755

 

 

 

4,214

 

Sales and marketing

 

2,687

 

 

 

5,173

 

 

 

6,495

 

 

 

9,649

 

General and administrative

 

2,251

 

 

 

2,142

 

 

 

4,694

 

 

 

4,669

 

Amortization of purchased intangibles

 

153

 

 

 

163

 

 

 

309

 

 

 

325

 

Total operating expenses

 

7,021

 

 

 

9,662

 

 

 

15,253

 

 

 

18,857

 

Operating loss

 

(3,150

)

 

 

(5,344

)

 

 

(7,852

)

 

 

(10,286

)

Other income (expense):

 

 

 

 

 

 

 

Employee Retention Credit income

 

649

 

 

 

 

 

 

649

 

 

 

 

Interest expense, net

 

(39

)

 

 

(15

)

 

 

(109

)

 

 

(69

)

Decrease in fair value of derivative liability

 

 

 

 

 

 

 

 

 

 

37

 

Decrease in fair value of warrant liability

 

51

 

 

 

1,018

 

 

 

117

 

 

 

1,375

 

Other, net

 

(156

)

 

 

(89

)

 

 

(184

)

 

 

(27

)

Total other income (expense), net

 

505

 

 

 

914

 

 

 

473

 

 

 

1,316

 

Loss before income taxes

 

(2,645

)

 

 

(4,430

)

 

 

(7,379

)

 

 

(8,970

)

Income tax benefit

 

(23

)

 

 

(109

)

 

 

(117

)

 

 

(199

)

Net loss

$

(2,622

)

 

$

(4,321

)

 

$

(7,262

)

 

$

(8,771

)

 

 

 

 

 

 

 

 

Net loss per share – basic:

 

 

 

 

 

 

 

Net loss per share – basic

$

(0.15

)

 

$

(0.24

)

 

$

(0.40

)

 

$

(0.51

)

Weighted average shares outstanding – basic

 

18,072

 

 

 

17,741

 

 

 

18,042

 

 

 

17,096

 

Net loss per share – diluted:

 

 

 

 

 

 

 

Loss attributable to common shareholders

$

(2,622

)

 

$

(5,339

)

 

$

(7,262

)

 

$

(10,146

)

Net loss per share – diluted

$

(0.15

)

 

$

(0.30

)

 

$

(0.40

)

 

$

(0.59

)

Weighted average shares outstanding – diluted

 

18,072

 

 

 

17,899

 

 

 

18,042

 

 

 

17,299

 

QUMU CORPORATION

Condensed Consolidated Balance Sheets

(unaudited - in thousands)

 

 

June 30,

 

December 31,

Assets

 

2022

 

 

 

2021

 

Current assets:

 

 

 

Cash and cash equivalents

$

6,435

 

 

$

20,563

 

Receivables, net

 

3,467

 

 

 

3,709

 

Contract assets

 

676

 

 

 

446

 

Income taxes receivable

 

658

 

 

 

556

 

Other receivable

 

649

 

 

 

 

Prepaid expenses and other current assets

 

2,094

 

 

 

2,184

 

Total current assets

 

13,979

 

 

 

27,458

 

Property and equipment, net

 

222

 

 

 

337

 

Right of use assets – operating leases

 

45

 

 

 

146

 

Intangible assets, net

 

1,049

 

 

 

1,388

 

Goodwill

 

6,639

 

 

 

7,388

 

Deferred income taxes, non-current

 

17

 

 

 

17

 

Other assets, non-current

 

320

 

 

 

362

 

Total assets

$

22,271

 

 

$

37,096

 

Liabilities and Stockholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and other accrued liabilities

$

3,521

 

 

$

2,742

 

Accrued compensation

 

1,380

 

 

 

1,725

 

Deferred revenue

 

9,604

 

 

 

10,862

 

Operating lease liabilities

 

192

 

 

 

597

 

Financing obligations

 

152

 

 

 

5,502

 

Warrant liability

 

684

 

 

 

801

 

Total current liabilities

 

15,533

 

 

 

22,229

 

Long-term liabilities:

 

 

 

Deferred revenue, non-current

 

1,102

 

 

 

1,507

 

Income taxes payable, non-current

 

641

 

 

 

630

 

Operating lease liabilities, non-current

 

 

 

 

21

 

Financing obligations, non-current

 

87

 

 

 

113

 

Total long-term liabilities

 

1,830

 

 

 

2,271

 

Total liabilities

 

17,363

 

 

 

24,500

 

Stockholders’ equity:

 

 

 

Common stock

 

179

 

 

 

178

 

Additional paid-in capital

 

105,785

 

 

 

105,655

 

Accumulated deficit

 

(97,955

)

 

 

(90,693

)

Accumulated other comprehensive loss

 

(3,101

)

 

 

(2,544

)

Total stockholders’ equity

 

4,908

 

 

 

12,596

 

Total liabilities and stockholders’ equity

$

22,271

 

 

$

37,096

 

QUMU CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited - in thousands)

 

 

Six Months Ended

June 30,

 

 

2022

 

 

 

2021

 

Operating activities:

 

 

 

Net loss

$

(7,262

)

 

$

(8,771

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

427

 

 

 

492

 

Loss on disposal of property and equipment

 

 

 

 

3

 

Stock-based compensation

 

150

 

 

 

1,155

 

Accretion of debt discount and issuance costs

 

27

 

 

 

33

 

Decrease in fair value of derivative liability

 

 

 

 

(37

)

Decrease in fair value of warrant liability

 

(117

)

 

 

(1,375

)

Changes in operating assets and liabilities:

 

 

 

Receivables

 

138

 

 

 

1,802

 

Contract assets

 

(230

)

 

 

238

 

Income taxes receivable / payable

 

(152

)

 

 

221

 

Other receivable

 

(649

)

 

 

 

Prepaid expenses and other assets

 

151

 

 

 

(105

)

Accounts payable and other accrued liabilities

 

658

 

 

 

(242

)

Accrued compensation

 

(322

)

 

 

(1,305

)

Deferred revenue

 

(1,360

)

 

 

(3,724

)

Net cash used in operating activities

 

(8,541

)

 

 

(11,615

)

Investing activities:

 

 

 

Purchases of property and equipment

 

(8

)

 

 

(216

)

Net cash used in investing activities

 

(8

)

 

 

(216

)

Financing activities:

 

 

 

Principal payments on line of credit

 

(5,000

)

 

 

(1,840

)

Proceeds from line of credit

 

 

 

 

1,840

 

Principal payments on term loan

 

 

 

 

(1,833

)

Payment for line of credit issuance costs

 

(86

)

 

 

 

Principal payments on financing obligations

 

(376

)

 

 

(219

)

Net proceeds from common stock issuance

 

 

 

 

23,085

 

Proceeds from issuance of common stock under employee stock plans

 

 

 

 

226

 

Common stock repurchases to settle employee withholding liability

 

(19

)

 

 

(6

)

Net cash provided by (used in) financing activities

 

(5,481

)

 

 

21,253

 

Effect of exchange rate changes on cash

 

(98

)

 

 

28

 

Net increase (decrease) in cash and cash equivalents

 

(14,128

)

 

 

9,450

 

Cash and cash equivalents, beginning of period

 

20,563

 

 

 

11,878

 

Cash and cash equivalents, end of period

$

6,435

 

 

$

21,328

 

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,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

Software licenses and appliances

$

278

 

$

138

 

$

389

 

$

246

Service

 

 

 

 

 

 

 

Subscription and support

 

2,764

 

 

2,512

 

 

5,419

 

 

4,827

Maintenance and support

 

1,769

 

 

2,570

 

 

3,562

 

 

5,234

Subscription, maintenance and support

 

4,533

 

 

5,082

 

 

8,981

 

 

10,061

Professional services and other

 

320

 

 

647

 

 

701

 

 

1,380

Total service

 

4,853

 

 

5,729

 

 

9,682

 

 

11,441

Total revenue

$

5,131

 

$

5,867

 

$

10,071

 

$

11,687

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

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net loss

$

(2,622

)

 

$

(4,321

)

 

$

(7,262

)

 

$

(8,771

)

Interest expense, net

 

39

 

 

 

15

 

 

 

109

 

 

 

69

 

Income tax benefit

 

(23

)

 

 

(109

)

 

 

(117

)

 

 

(199

)

Depreciation and amortization expense:

 

 

 

 

 

 

 

Depreciation and amortization in operating expenses

 

58

 

 

 

59

 

 

 

118

 

 

 

113

 

Total depreciation and amortization expense

 

58

 

 

 

59

 

 

 

118

 

 

 

113

 

Amortization of intangibles included in cost of revenues

 

 

 

 

27

 

 

 

 

 

 

54

 

Amortization of intangibles included in operating expenses

 

153

 

 

 

163

 

 

 

309

 

 

 

325

 

Total amortization of intangibles expense

 

153

 

 

 

190

 

 

 

309

 

 

 

379

 

Total depreciation and amortization expense

 

211

 

 

 

249

 

 

 

427

 

 

 

492

 

EBITDA

 

(2,395

)

 

 

(4,166

)

 

 

(6,843

)

 

 

(8,409

)

Employee Retention Credit income

 

(649

)

 

 

 

 

 

(649

)

 

 

 

Decrease in fair value of derivative liability

 

 

 

 

 

 

 

 

 

 

(37

)

Decrease in fair value of warrant liability

 

(51

)

 

 

(1,018

)

 

 

(117

)

 

 

(1,375

)

Other expense (income), net

 

156

 

 

 

89

 

 

 

184

 

 

 

27

 

Stock-based compensation expense:

 

 

 

 

 

 

 

Stock-based compensation included in cost of revenues

 

17

 

 

 

17

 

 

 

36

 

 

 

32

 

Stock-based compensation included in operating expenses

 

(223

)

 

 

549

 

 

 

114

 

 

 

1,123

 

Total stock-based compensation expense

 

(206

)

 

 

566

 

 

 

150

 

 

 

1,155

 

Adjusted EBITDA

$

(3,145

)

 

$

(4,529

)

 

$

(7,275

)

 

$

(8,639

)

 

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

Source: Qumu Corporation