Qumu (QUMU) Misses Q3 EPS by 2c, Revenue s Beat; Offers FY20 Revenue Outlook

Qumu (NASDAQ: QUMU) reported Q3 EPS of ($0.14), $0.02 worse than the analyst estimate of ($0.12). Revenue for the quarter came in at $6.63 million versus the consensus estimate of $6.51 million.

Q3 2020 Operational Highlights

• Launched new Qumu app for Zoom, enabling self-service streaming of Zoom events to audiences of 100,000+ while adding comprehensive video content management and enterprise-grade security
• Released the Qumu Cloud Build and Price Tool, which allows users to customize their own annual cloud video subscription based on parameters such as storage and bandwidth needs, user counts, live streams, distribution preferences and so on
• Launched Qumu Cloud for Audio Streaming, a large-scale audio streaming service that provides enterprises with secure, high-quality audio-only call delivery and management at a significantly lower cost than standard audio-conferencing services
• Hosted 30 million viewers on Qumu Cloud during the quarter, up 28% from Q2 2020 and up 911% from Q3 2019
• Strengthened leadership team with appointment of veteran technology executive TJ Kennedy as President and CEO
• Introduced Qumu Video Control Center (VCC) version 10.5, the customer-hosted deployment of Qumu’s intelligent Enterprise Video platform, adding key features such as the Qumu Analytics Engine (QAE), which provides comprehensive, real-time and historical usage reporting of both live and on demand video content

Management Commentary

“In the third quarter we began the initial implementation phase of our long-term strategic roadmap, which is designed to position Qumu as a more focused, cloud-first organization driving improved, high-margin recurring revenues,” said Qumu President and CEO TJ Kennedy. “Financially, our success along this path was highlighted by strong year-over-year growth in several metrics, including a 28% increase in subscription, maintenance and support revenue along with a 18% increase in subscription ARR, generating robust gross margins of 75% for the quarter. From an operational standpoint, since I joined the company in late July, we have made meaningful progress in cementing our long-term growth strategy, refining our product roadmap, and accelerating the evolution of our SaaS-based business model.

“The global pandemic forced organizations worldwide to rapidly adopt and expand the use of video, both internally and externally. While standard video conferencing and collaboration apps were able to meet the initial need for employees, we are now seeing a second wave of larger more sophisticated needs, where enterprises are exceeding the upper limits of what standard video conferencing and internal collaboration tools can deliver and manage. And this is where Qumu shines. In direct response to this second wave, we built and deployed a new app that enables Zoom to be used as the front end for any large-scale video broadcast, while Qumu handles all delivery, management and video security—changing the game for organizations looking to not only scale Zoom events over 10,000 attendees, but record and manage all Zoom meetings across the organization as secure, searchable, on demand assets. Video content management is the future for all enterprises to get the most out of their organizations and Qumu’s market leading content management capabilities allow video to be securely stored and managed to make businesses more effective and efficient.

“Beyond launching new innovative products for the current market, we’re also hard at work implementing longer-term strategic initiatives to effectively and profitably scale Qumu to the next level. One of these initiatives is expanding and diversifying our go-to-market strategy, which will provide more predictable revenues and long-term, sustainable growth. Consistent with our cloud-first approach, we have now launched an e-Commerce self-service solution that enables a highly automated and low-touch sale of Qumu’s cloud-based solution to small and medium-sized organizations, or SMBs. Now the SMB space can easily access and benefit from Qumu’s best-in-class platform for creating, managing and delivering live and on demand video at scale.

“Today, Qumu is at the forefront of a massive transformation in the way organizations drive communication. Our strategic roadmap is designed to capture the opportunities presented by this transformation. Our successful execution against this plan, which has already begun and will accelerate in the balance of 2020, is expected to drive revenue growth in excess of 20% in 2021 as compared to our current 2020 revenue estimate. Our sales pipeline, strong deferred revenue and our growing annual recurring revenue also give us confidence about our prospects for revenue growth in 2021. Looking ahead, we believe our building momentum and the successful execution of our strategic initiatives will translate to sustainable adjusted EBITDA profitability and, ultimately, net income profitability in the years ahead.”

GUIDANCE:

Qumu sees FY2020 revenue of $29 million, versus the consensus of $29.03 million.

Qumu provides revenue guidance based on current market conditions and expectations, including the unknown financial impact that COVID-19 will have on economies and enterprises around the world. Based on the Company’s third quarter 2020 financial results and pipeline of business, management currently expects revenue for 2020 to be approximately $29.0 million compared to $25.4 million in 2019, representing year-over-year growth of 14%.

For 2021, management anticipates that the successful execution of its new strategic roadmap has the potential to generate revenue growth of at least 20% compared to the current 2020 estimates.

For earnings history and earnings-related data on Qumu (QUMU) click here.

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