Qumu Corporation
Q4 2019 Earnings Call Transcript

Published: 5 Mar 2020

[Operator:]

Ladies and gentlemen, thank you for standing by, and welcome to the Qumu Fourth Quarter 2019 Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Mr. Dave Ristow, Chief Financial Officer. Please go ahead, sir.

[David Ristow:]

Good afternoon, everyone, and thank you for joining our fourth quarter and year-end 2019 earnings conference call. At the market -- after the market closed, we issued a press release announcing our results for the fourth quarter and year ended December 31, 2019, a copy of which is available on the Investor Relations section of our website at qumu.com.We will make certain statements today with respect to our expected financial results, go-to-market strategy and efforts designed to increase our traction and penetration with customers, as well as our proposed merger with Synacor that was announced on February 11, 2020. These statements are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note, these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to our SEC filings, specifically our Form 10-K and Form 10-Q and other financial results press release for a more detailed description of risk factors that may affect our results. Our financial results press release also includes a description of the risk factors that may affect the anticipated timing of the proposed merger, completion of benefits of the proposed merger, anticipated future combined operations and offerings and expected synergies to be achieved.During our call today, we will discuss adjusted EBITDA, a non-GAAP financial measure in our press release and our filings with the SEC, each of which is posted to our website. You will find additional disclosures regarding this non-GAAP measure included -- including a reconciliation of this measure with its comparable GAAP measure. Non-GAAP financial measures are not intended to be considered in isolation from, a substitute for or superior to GAAP results. We encourage you to consider all measures when analyzing the company's performance.Please note that in consideration of the anticipated merger with Synacor which we announced on February 11, we will not be hosting a question-and-answer session at the conclusion of our remarks.So with that, I will turn the call over to Vern Hanzlik, President and CEO of Qumu.

[Vernon Hanzlik:]

Thank you, Dave, and welcome, everyone. I'd like to open with a few comments, then hand the call back to Dave for more details on the numbers. Qumu completed 2019 year-over-year improvements in revenue, gross margins, adjusted EBITDA and cash position. These improvements, combined with having a debt facility paid off, reflects the fundamental strength of our business. As you know, Qumu has pivoted its product set towards a SaaS model, giving customer implementation flexibility by building towards a predictable recurring revenue stream. We are also steady driving to build out our partner channel, resulting in notable relationships with organizations like V-cube in Japan and BT Worldwide, among others.Qumu remains steadfast in our commitment to serve large enterprise customers who currently -- which currently include 72 members of the Forbes Global 2000, 45 members of the Fortune 500, 14 of the world's most valuable brands, 10 of the Forbes World's Best Banks, and the top 5 credit card companies in the country based on current active accounts.With that said, as we announced our preliminary financial release on February 11, revenues fell short of our 2019 full year and fourth quarter targets. This was due to 3 large expansion agreements with existing customers for our intelligent delivery solution that were delayed in the contracting process, once again highlighting the lumpiness that can result from our on-premise business. That said, we have closed 2 of the 3 delayed deals Q1 2020. Also, our gross margin percentage for 2019 was 72%, which compares favorably to our financial guidance as expected gross margin percentage of high 60s to low 70s. Qumu also finished the year with customer retention at 92%. And as mentioned, our cash position remained strong at $10.6 million, having fully repaid our credit facility.These metrics underscore the strength of our business and confidence that customers have in Qumu. Let me take a minute to highlight 3 key elements that define Qumu. First, Qumu's excellence in serving the enterprise. Our ability to retain, grow our high-profile customers is due in a significant way to our customer's -- Qumu's dedication to sales and customer support teams. These are experts who differentiate Qumu from our competitors because they understand and solve tough challenges facing large enterprises today. They provide hands-on guidance and serve these global organizations required. Just last month, we held an annual sales kickoff as we do every year. The entire team committed to specific goals that will be important in the near-term as well as post-merger. These include

[David Ristow:]

Thank you, Vern. I'll begin with a brief commentary on some of our financial highlights. On a year-over-year basis, for the full year 2019, revenue increased $349,000. Gross margins were 72.2%, an improvement of 6.2%. Our operating loss was reduced by $1.6 million. Customer retention remains strong at 92%, annual recurring revenue increased $1.1 million or 6.4% and we raised $8.2 million net through the issuance of common stock and fully repaid the ESW credit facility.In a bit further greater detail, the highlights are as follows

[Vernon Hanzlik:]

Thanks, Dave. To wrap up, Qumu's underlying business is strong, and we believe the planned merger with Synacor will fully amplify our strategy of pivoting the business towards a SaaS model and building a stronger partner channel. Going forward, our focus will be as follows

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You now disconnect. Everyone, have a great day.