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Qumu Releases 4Q 2013 Results

February 28, 2014

Qumu Corp. has reported its financial results for the fourth quarter ended December 31.

In a release on February 24, the Company noted that software contracted commitments for the quarter set a new record and backlog grew 56 percent from September 30, 2013. Total revenues for the fourth quarter of 2013 were $20.7 million, virtually flat compared with revenues in the fourth quarter of 2012. Disc publishing revenues grew slightly over the prior year period while Qumu software revenues declined slightly compared with the prior year's fourth quarter. Cash and marketable securities at December 31, 2013 totaled $51.0 million, an increase of $2.6 million from the balance at September 30, 2013, largely reflecting improved working capital management and a $1.9 million tax refund.

Qumu Software Fourth Quarter Highlights

-Contracted commitments were a record $9.8 million in the fourth quarter, up $6.0 million compared with $3.8 million in the third quarter of 2013 and up $1.1 million from the fourth quarter of 2012.

-Backlog of contracted commitments increased to a record $16.7 million at December 31, 2013 from $10.7 million at the end of September 2013.

-Software revenues declined slightly to $4.2 million in the fourth quarter of 2013, compared with $4.3 million in the fourth quarter of 2012 due to the timing of revenue recognition of contracted commitments.

Sherman L. Black, president and CEO, said, "We continued to demonstrate solid traction in our software business, setting new records in contracted commitments and backlog. Our new customers signed during the fourth quarter come from a cross section of industries including a global financial services institution, a leading e-commerce company, a large health care provider, a national health care insurer, a semiconductor company and a Japanese network solutions provider, which is our first customer based in Japan. Our success in the quarter is a proof point of our product differentiation around secure video delivery, breadth of enterprise integrations, flexible cloud and on-premise deployments, and rich mobile applications."

Disc Publishing Fourth Quarter Highlights

-Disc publishing revenues in the fourth quarter of 2013 totaled $16.5 million, slightly higher than the $16.4 million in revenues in fourth quarter of 2012.

-The increase was the result of an 6 percent increase in service revenues and a slight increase in hardware sales, partially offset by lower consumables revenue.

"Disc publishing revenues in the fourth quarter were stronger than anticipated due to some unexpected pockets of demand and the solid execution of the disc publishing team," continued Black. "We generated $2.7 million in cash from operations in the fourth quarter, which included a $1.9 million tax refund. The result was we ended 2013 with $51.0 million in cash and marketable securities on the balance sheet."

Fourth Quarter Financial Highlights

-Gross margin for the fourth quarter of 2013 was 48 percent compared with 51 percent in the fourth quarter last year. The decrease in the margin was primarily due to software product mix and increased hiring to support the future growth of the software business. Operating expenses in the fourth quarter totaled $12.7 million, an increase of 6 percent from the fourth quarter of 2012. The increase was largely due to higher consulting costs, professional fees and incentive compensation expenses, partially offset by lower disc publishing research and development and sales and marketing expenses, reflecting the impact of cost cutting measures implemented during the year.

-Net loss for the fourth quarter 2013 was $2.7 million, or $(0.32) per share. Excluding the impact of amortization of intangibles, the fourth quarter net loss was $(0.28) per share. The net loss in last year's fourth quarter was $1.1 million, or $(0.12) per share. Excluding the impact of intangibles amortization, the non- GAAP net loss for the fourth quarter of 2012 was $(0.09) per share.

Full Year 2013 Financial Highlights

-Total revenues for the full year 2013 were $82.5 million, an increase of 4 percent over 2012 revenues.

-Software revenues for 2013 grew 80 percent to $17.7 million. Disc publishing revenues for 2013 declined 7 percent to $64.7 million.

-The net loss for 2013 was $9.7 million, or $(1.12) per share compared to a loss of $48.3 million or $(4.85) per share in 2012. The net loss for 2012 included three non-recurring non cash charges related to the write-off of goodwill, reduction in the fair market value of intangible assets and the establishment of a valuation allowance against deferred tax assets. Excluding these charges the net loss on a non-GAAP basis for 2012 was $5.7 million, or $(0.57) per share. On a non-GAAP basis, excluding amortization and severance expense, the net loss per share for 2013 was $(0.89).

-For the full year, the Company generated $2.4 million in cash from operations.

"The market adoption for video content management software is in the beginning stages and our offering is proving to be a compelling proposition for potential customers. Recent agreements with global companies demonstrate the value customers place on our software and provide a very good start to the year. Demand for disc publishing in select markets -- including surveillance, entertainment, medical imaging, photo retail and financial services -- remains and we anticipate our disc publishing operation will continue to serve these markets and generate positive cash flow. In addition, the actions we took in 2013 to strengthen and cost optimize our software and disc publishing operations have provided an exceptional foundation for QUMU. As we look ahead, we are very optimistic about the outlook for our continued progress in 2014," Black concluded.

Financial Guidance

For 2014, the Company expects contracted commitments to increase 30 percent to 50 percent compared to 2013. The company anticipates continued growth in its software revenues of at least 30 percent over 2013 revenues. This software revenue growth is expected to be partially offset by a continued decline in disc publishing revenues. The Company expects 2014 cash used in operations to be in the single digit millions. First quarter 2014 revenues are expected to be between $18 million and $20 million.

Qumu Corp. provides the tools businesses need to create, manage, secure, distribute and measure the success of their videos.

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