Qumu Corp - FORM 8-K - EX-99.1 - PRESS RELEASE ISSUED AUGUST 1, 2017 - August 2, 2017

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EX-99.2 - STATEMENTS OF VERN HANZLIK AND PETER J. GOEPFRICH - Qumu Corpq22017ex992.htm
8-K - FORM 8-K DATED AUGUST 1, 2017 - Qumu Corpa8-kq22017.htm


EXHIBIT 99.1
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Qumu Announces Second Quarter 2017 Results

Year-over-year improved gross margins and operating results

Conference Call Wednesday, August 2 at 10:00 a.m. ET

Minneapolis, MN – August 1, 2017 – Qumu Corporation (NASDAQ: QUMU) today reported financial results for the second quarter 2017.

Second quarter revenue was $6.7 million, compared to $6.5 million in the second quarter 2016, and net loss was $(2.6) million, or a loss of $(0.28) per share, compared to $(4.3) million, or a loss of $(0.46) per share, in the second quarter 2016. Second quarter adjusted EBITDA (a non-GAAP measure) was a loss of $(1.0) million, compared to an adjusted EBITDA loss of $(3.1) million for the second quarter 2016.

For the six months ended June 30, 2017, revenue was $13.4 million, compared to $15.3 million last year, and net loss was $(6.2) million, or a loss of $(0.66) per share, compared to $(8.4) million, or a loss of $(0.91) per share, last year. For the six months ended June 30, 2017, adjusted EBITDA was a loss of $(3.0) million, compared to an adjusted EBITDA loss of $(6.0) million last year.

“We continued to execute well this quarter, as adjusted EBITDA exceeded guidance. Operational efficiency continues to improve, even as we invest in our future. During the quarter, we announced our Qx product solution and vision, the industry’s most extensible, end-to-end enterprise video platform, to address the exponential growth of video in global businesses. That strategy was validated and enthusiastically received by analysts, prospects and customers during the global roll out this quarter. We completed the build out of our management team during the quarter, adding a Vice President of Worldwide Channel and Alliances, and a Vice President of Marketing to the senior leadership team,” said Vern Hanzlik, Qumu’s president and CEO. "With the increasing adoption of video among our prospects and clients, who see it as a staple of their digital workforce, and a strong management team in place, we anticipate a strong second half for 2017."

Other Financial Highlights
•
Subscription, maintenance and support revenue for the second quarter 2017 was $5.1 million compared to $4.7 million for the second quarter 2016. The variance in subscription, maintenance and support revenue primarily resulted from growth in the customer base, as well as the timing of customer renewals.
•
Gross margin for the second quarter 2017 was 65.6% compared to 54.7% for the second quarter 2016.
•
Total headcount was 119 as of June 30, 2017 compared to 145 as of March 31, 2017 and 165 as of June 30, 2016.
•
Cash and marketable securities were $9.0 million as of June 30, 2017, compared to $10.4 million as of March 31, 2017, reflecting the second quarter operating loss and the impact on cash from changes in working capital.

Guidance
For the third quarter 2017, revenue is expected to be in the range of $7.5 million to $8.5 million, compared to $7.1 million in the third quarter last year. Total gross margin percentage is expected to be in the mid to high 60s in the third quarter. Third quarter net loss is expected to be in the range of $(2.0) million to $(1.5) million, or $(0.21) to $(0.16) per diluted share, with weighted-average shares outstanding of approximately 9.4 million shares. Adjusted EBITDA for the third quarter 2017 is expected to be in the range of a loss of $(500,000) to breakeven, compared to an adjusted EBITDA loss of $(1.4) million in the third 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 $(9.5) million to

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$(8.0) million, or $(1.02) to $(0.87) per diluted share, with weighted-average shares outstanding of approximately 9.4 million shares. Adjusted EBITDA for the full year 2017 is expected to be in the range of a loss of $(3.5) million to $(2.0) million compared to an adjusted EBITDA loss of $(6.6) million in fiscal 2016. The Company expects a tax benefit of $100,000 in fiscal 2017. Additionally, the Company expects that it will be cash flow breakeven for the fourth quarter 2017.

Conference Call
The Company has scheduled a conference call and webcast to review its second quarter 2017 results tomorrow, August 2, 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, 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, 2017 and 2016.

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, 2016 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,
 
2017
 
2016
 
2017
 
2016
Revenues:
 

 
 

 
 

 
 

Software licenses and appliances
$
929

 
$
836

 
$
2,149

 
$
2,798

Service
5,725

 
5,679

 
11,216

 
12,453

Total revenues
6,654

 
6,515

 
13,365

 
15,251

Cost of revenues:
 

 
 

 
 

 
 

Software licenses and appliances
368

 
412

 
862

 
1,369

Service
1,918

 
2,542

 
4,008

 
5,403

Total cost of revenues
2,286

 
2,954

 
4,870

 
6,772

Gross profit
4,368

 
3,561

 
8,495

 
8,479

Operating expenses:
 

 
 

 
 

 
 

Research and development
1,798

 
2,410

 
3,907

 
4,760

Sales and marketing
2,524

 
2,978

 
4,975

 
6,510

General and administrative
2,009

 
2,265

 
4,469

 
5,235

Amortization of purchased intangibles
226

 
227

 
449

 
453

Total operating expenses
6,557

 
7,880

 
13,800

 
16,958

Operating loss
(2,189
)
 
(4,319
)
 
(5,305
)
 
(8,479
)
Other income (expense):
 

 
 

 
 

 
 

Interest expense, net
(334
)
 
(15
)
 
(651
)
 
(27
)
Change in value of warrant liability
11

 
—

 
(67
)
 
—

Other, net
(124
)
 
(47
)
 
(179
)
 
(11
)
Total other expense, net
(447
)
 
(62
)
 
(897
)
 
(38
)
Loss before income taxes
(2,636
)
 
(4,381
)
 
(6,202
)
 
(8,517
)
Income tax benefit
(25
)
 
(90
)
 
(29
)
 
(94
)
Net loss
$
(2,611
)
 
$
(4,291
)
 
$
(6,173
)
 
$
(8,423
)
 
 
 
 
 
 
 
 
Net loss per share – basic:
 
 
 
 
 
 
 
Net loss per share – basic
$
(0.28
)
 
$
(0.46
)
 
$
(0.66
)
 
$
(0.91
)
Weighted average shares outstanding – basic
9,356

 
9,236

 
9,301

 
9,227

Net loss per share – diluted:
 
 
 
 
 
 
 
Loss attributable to common shareholders
$
(2,622
)
 
$
(4,291
)
 
$
(6,173
)
 
$
(8,423
)
Net loss per share – diluted
$
(0.28
)
 
$
(0.46
)
 
$
(0.66
)
 
$
(0.91
)
Weighted average shares outstanding – diluted
9,357

 
9,236

 
9,301

 
9,227



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QUMU CORPORATION
Condensed Consolidated Balance Sheets
(in thousands)
Assets
June 30,
2017
 
December 31,
2016
Current assets:
(unaudited)
 
 
Cash and cash equivalents
$
8,982

 
$
10,364

Receivables, net
5,163

 
7,495

Income taxes receivable
186

 
317

Prepaid expenses and other current assets
2,089

 
2,470

Total current assets
16,420

 
20,646

Property and equipment, net
1,343

 
1,827

Intangible assets, net
7,242

 
8,110

Goodwill
7,112

 
6,749

Deferred income taxes, non-current
68

 
70

Other assets, non-current
4,514

 
4,827

Total assets
$
36,699

 
$
42,229

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable and other accrued liabilities
$
2,580

 
$
2,394

Accrued compensation
1,864

 
2,361

Deferred revenue
8,809

 
8,992

Deferred rent
280

 
283

Financing obligations
394

 
508

Warrant liability
960

 
893

Total current liabilities
14,887

 
15,431

Long-term liabilities:
 

 
 

Deferred revenue, non-current
380

 
423

Income taxes payable, non-current
3

 
6

Deferred tax liability, non-current
232

 
294

Deferred rent, non-current
567

 
712

Financing obligations, non-current
31

 
170

Term loan, non-current
6,728

 
6,617

Total long-term liabilities
7,941

 
8,222

Total liabilities
22,828

 
23,653

Stockholders’ equity:
 

 
 

Common stock
94

 
92

Additional paid-in capital
67,634

 
66,864

Accumulated deficit
(50,646
)
 
(44,473
)
Accumulated other comprehensive loss
(3,211
)
 
(3,907
)
Total stockholders’ equity
13,871

 
18,576

Total liabilities and stockholders’ equity
$
36,699

 
$
42,229



4


QUMU CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
 
Six Months Ended 
 June 30,
 
2017
 
2016
Operating activities:
 

 
 

Net loss
$
(6,173
)
 
$
(8,423
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
1,548

 
1,700

Stock-based compensation
783

 
740

Accretion of debt discount and issuance costs
236

 
—

Change in value of warrant liability
67

 
—

Deferred income taxes
(71
)
 
(90
)
Changes in operating assets and liabilities:
 
 
 
Receivables
2,425

 
5,192

Income taxes receivable / payable
135

 
241

Prepaid expenses and other assets
710

 
(1,171
)
Accounts payable and other accrued liabilities
315

 
330

Accrued compensation
(522
)
 
(1,113
)
Deferred revenue
(368
)
 
(1,749
)
Deferred rent
(150
)
 
(120
)
Other non-current liabilities
—

 
(226
)
Net cash used in operating activities
(1,065
)
 
(4,689
)
Investing activities:
 

 
 

Sales and maturities of marketable securities
—

 
6,000

Purchases of property and equipment
(20
)
 
(33
)
Net cash provided by (used in) investing activities
(20
)
 
5,967

Financing activities:
 

 
 

Principal payments on financing obligations
(255
)
 
(259
)
Payments for debt issuance costs
(125
)
 
—

Common stock repurchases to settle employee withholding liability
(11
)
 
(18
)
Net cash used in financing activities
(391
)
 
(277
)
Effect of exchange rate changes on cash
94

 
(41
)
Net increase (decrease) in cash and cash equivalents
(1,382
)
 
960

Cash and cash equivalents, beginning of period
10,364

 
7,072

Cash and cash equivalents, end of period
$
8,982

 
$
8,032


5


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,
 
2017
 
2016
 
2017
 
2016
Software licenses and appliances
$
929

 
$
836

 
$
2,149

 
$
2,798

Service
 
 
 
 
 
 
 
Subscription, maintenance and support
5,110

 
4,712

 
9,948

 
10,237

Professional services and other
615

 
967

 
1,268

 
2,216

Total service
5,725

 
5,679

 
11,216

 
12,453

Total revenue
$
6,654

 
$
6,515

 
$
13,365

 
$
15,251


A reconciliation from GAAP results to adjusted EBITDA is as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2017
 
2016
 
2017
 
2016
Net loss
$
(2,611
)
 
$
(4,291
)
 
$
(6,173
)
 
$
(8,423
)
Interest expense, net
334

 
15

 
651

 
27

Income tax benefit
(25
)
 
(90
)
 
(29
)
 
(94
)
Depreciation and amortization expense:
 
 
 
 
 
 
 
Depreciation and amortization in cost of revenues
9

 
18

 
19

 
40

Depreciation and amortization in operating expenses
241

 
280

 
489

 
562

Total depreciation and amortization expense
250

 
298

 
508

 
602

Amortization of intangibles included in cost of revenues
298

 
323

 
591

 
645

Amortization of intangibles included in operating expenses
226

 
227

 
449

 
453

Total amortization of intangibles expense
524

 
550

 
1,040

 
1,098

Total depreciation and amortization expense
774

 
848

 
1,548

 
1,700

EBITDA
(1,528
)
 
(3,518
)
 
(4,003
)
 
(6,790
)
Change in fair value of warrant liability
(11
)
 
—

 
67

 
—

Other expense, net
124

 
47

 
179

 
11

Stock-based compensation expense:
 
 
 
 
 
 
 
Stock-based compensation included in cost of revenues
18

 
25

 
32

 
18

Stock-based compensation included in operating expenses
352

 
364

 
751

 
722

Total stock-based compensation expense
370

 
389

 
783

 
740

Adjusted EBITDA
$
(1,045
)
 
$
(3,082
)
 
$
(2,974
)
 
$
(6,039
)


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